Income Taxes

3 Months Ended

Mar. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes and the effective income tax rate are as follows:

	For the Three Months Ended
$ in millions	March 30, 2025			March 31, 2024
Federal, state and foreign income tax expense	$	0.9		$	2.7
Effective income tax rate	17.26		%	66.95		%

The Company’s first quarter 2025 effective tax rate (ETR) decreased to 17.26% from 66.95% in the prior year period principally due to increased tax benefits related to stock based compensation. The effective rate for the three months ended March 30, 2025 was lower than the federal statutory rate of 21% primarily due to excess tax benefits from employee share based compensation partially offset by nondeductible expenses. The effective rate for the three months ended March 31, 2024 was higher than the federal statutory rate of 21% primarily due to nondeductible expenses partially offset by excess tax benefits from employee share based compensation.

The Company calculates its interim income tax provision in accordance with ASC Topic 270, “Interim Reporting,” and ASC Topic 740, “Accounting for Income Taxes.” In 2025, the Company calculated the provision for income taxes during the interim reporting period by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Prior to 2025, a discrete effective tax rate method was used since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate.

As of March 30, 2025, the Company had $25.4 million of unrecognized tax benefits. Included in the balance of unrecognized tax benefits at March 30, 2025 are $22.8 million that, if recognized, would impact the Company’s effective income tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For the three months ended March 30, 2025 and March 31, 2024, the Company recorded an expense of $0.1 million in each period. For the three months ended March 30, 2025 and March 31, 2024, there was no material benefit recorded related to the removal of interest and penalties.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. Pillar 2 did not have a significant impact on our 2025 effective tax rate and we do not currently expect Pillar 2 to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows going forward.