Income Taxes |
9 Months Ended |
|---|---|
Oct. 04, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate (“AETR”) and records any changes affecting the estimated AETR in the interim period in which the change occurs, including discrete tax items. During the nine months ended October 4, 2026, the Company recorded a total income tax provision of $38.4 million on pre-tax income of $152.6 million resulting in an effective tax rate of 25.2%, as compared to a total income tax provision of $18.1 million on pre-tax income of $109.8 million resulting in an effective tax rate of 16.5% during the nine months ended September 28, 2025. The increase in the effective tax rate for the nine months ended October 4, 2026 as compared to the nine months ended September 28, 2025, was primarily due to statutory tax rate changes requiring the remeasurement and adjustment of deferred taxes as discussed below partially offset by an increase in deductions related to foreign-derived income. In July 2025, Germany enacted tax legislation to gradually reduce the corporate income tax rate. The current income tax rate of 15% is set to decrease by 1% annually beginning in 2028 reaching 10% by 2032. As a result of this change to tax rates, deferred tax assets and liabilities were remeasured using the new rates applicable to the periods in which the underlying temporary differences are expected to reverse. The remeasurement of the Company’s German deferred tax positions and other deferred tax adjustments resulted in a favorable deferred income tax benefit of $10.4 million for the nine months ended September 28, 2025. On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Many non-U.S. tax jurisdictions have enacted legislation to adopt the Pillar Two Model Rules beginning in 2024 (including the European Union Member States) or announced plans to enact legislation in future years. For fiscal year 2026, we expect to meet the Transitional Country-by-Country Reporting (“CbCR”) Safe Harbor rules for most jurisdictions and do not expect these provisions to have a material impact on the Company’s financial statements. We will continue to closely monitor ongoing developments and evaluate any potential impact on future periods. In 2026, the OECD issued a Side-by-Side package (“SbS”) that simplifies Pillar Two, creates new safe harbors, fully exempts U.S. parent groups from two of the three top-up taxes, and extends the CbCR Safe Harbor through fiscal year 2027. In certain jurisdictions, local legislative action is needed to effectuate the SbS agreement and will be considered in our accounting estimate upon enactment. As of October 4, 2026, the Company had accrued approximately $5.3 million for unrecognized tax benefits.
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