Income Taxes

9 Months Ended

Sep. 28, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes and the effective income tax rate are as follows ($ in millions):

	Three Months Ended						Nine Months Ended
	September 28, 2025			September 29, 2024			September 28, 2025			September 29, 2024
Federal, state and foreign income tax expense	$	3.2		$	2.6		$	5.8		$	10.1
Effective income tax rate	27.01		%	43.76		%	26.37		%	44.83		%

Current Quarter

The Company’s effective tax rate (ETR) for the three months ended September 28, 2025 decreased to 27.01% from 43.76% 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 September 28, 2025 and the three months ended September 29, 2024 included a benefit of $1.2 million and $0.1 million, respectively, for stock compensation related items.

Year to Date

The Company’s ETR for the nine months ended September 28, 2025 decreased to 26.37% from 44.83% in the prior year period principally due to increased tax benefits related to stock based compensation. The provision for income taxes for the nine months ended September 28, 2025 and the nine months ended September 29, 2024 included a benefit of $3.4 million and $0.7 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 September 28, 2025, the Company had $25.5 million of unrecognized tax benefits. Included in the balance of unrecognized tax benefits at September 28, 2025 are $21.7 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 nine months ended September 28, 2025 and September 29, 2024, the Company recorded an expense of $0.2 million and $0.2 million. For the nine months ended September 28, 2025 and September 29, 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 One Big Beautiful Bill Act (OBBBA) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of U.S. based research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. The Company recognized the income tax effects of the OBBBA, which were not material, in its fiscal quarter ended September 28, 2025.