Income Taxes

6 Months Ended

Jun. 29, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	Three Months Ended						Six Months Ended
$ in millions	June 29, 2025			June 30, 2024			June 29, 2025			June 30, 2024
Federal, state and foreign income tax expense	$	1.7		$	4.8		$	2.6		$	7.5
Effective income tax rate	35.42		%	38.18		%	25.61		%	45.20		%

The Company’s effective tax rate (ETR) for the three months ended June 29, 2025 decreased to 35.42% from 38.18% in the prior year period principally due to increased tax benefits related to stock based compensation. The provision for income taxes for the three months ended June 29, 2025 and the three months ended June 30, 2024 included a benefit of $0.6 million and $0.1 million, respectively, for stock compensation related items.

The Company’s ETR for the six months ended June 29, 2025 decreased to 25.61% from 45.20% in the prior year period principally due to increased tax benefits related to stock based compensation. The provision for income taxes for the six months ended June 29, 2025 and the six months ended June 30, 2024 included a benefit of $2.2 million and $0.6 million, respectively, for stock compensation related items.

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 June 29, 2025, the Company had $25.5 million of unrecognized tax benefits. Included in the balance of unrecognized tax benefits at June 29, 2025 are $21.8 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 six months ended June 29, 2025 and June 30, 2024, the Company recorded an expense of $0.1 million in each period. For the six months ended June 29, 2025 and June 30, 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.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the “Reconciliation Bill”). The Reconciliation Bill, among other things, reinstates full deduction of R&D expenditures beginning in 2025. The Company is in the process of evaluating the impact of the Reconciliation Bill Act on its consolidated financial statements, however, the Company does not expect the Reconciliation Bill to have a significant impact on its cash tax liability for 2025.