Income Taxes |
9 Months Ended |
|---|---|
Oct. 02, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company's effective tax rate for the third quarter of 2026 and 2025 was 13.2% and 9.6%, respectively, and 12.0% and 12.7% for the first nine months of 2026 and 2025, respectively. The effective tax rate for 2026 is lower than the statutory tax rate primarily due to the benefits of foreign-derived deduction eligible income, percentage depletion and foreign tax credits. The effective tax rate for 2025 was lower than the statutory tax rate primarily due to the benefits of percentage depletion, the advanced manufacturing production credit, and the foreign derived intangible income deduction. The effective tax rate for the first nine months of 2026 also includes a $6.8 million net discrete income tax benefit, primarily consisting of excess tax benefits from stock-based compensation awards, the release of a valuation allowance against the deferred tax assets of one of the Company’s foreign subsidiaries and prior-year return-to-provision adjustments. The effective tax rate for the first nine months of 2025 included a net discrete income tax benefit of $0.7 million, primarily consisting of prior-year return-to-provision adjustments. Government Tax Credits Pursuant to The Inflation Reduction Act of 2022 (IRA), the Company is eligible for the Advanced Manufacturing Production Credit (production credit). The production credit provides an annual cash benefit for a portion of the production costs for the sale of certain critical minerals produced in the U.S. and sold during the year. The Company records the production credit as a reduction in cost of goods sold as the applicable items are produced and sold. U.S. GAAP does not address the accounting for government grants received by a business entity that are outside the scope of ASC 740. Our accounting policy is to analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. We recognize the benefit of the production credit by applying IAS 20 in pretax income on a systematic basis in line with its recognition of the expenses that the grant is intended to compensate. Pillar Two The Organization for Economic Co-operation and Development (OECD) introduced rules to establish a global minimum corporate tax rate, commonly referred to as Pillar Two. Many of the key non-U.S. jurisdictions where the Company operates have enacted Pillar Two legislation. While the U.S. has negotiated a “side-by-side” arrangement for the existing U.S. minimum taxes with the intent to exempt U.S. multinational companies from certain Pillar Two provisions, the timing and consistency of implementation across jurisdictions continue to evolve. As more countries adopt the “side-by-side” provisions in 2026, the Company’s Pillar Two tax expense will decrease accordingly. We will continue to evaluate the impact of future Pillar Two legislation on the Company’s effective tax rate.
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