Income Tax

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax

7. INCOME TAX

The Company's effective tax rate was 8300% and (66.9%) for the three months ended June 30, 2023 and July 1, 2022, respectively, and 295.0% and 65.5% for the six months ended June 30, 2023 and July 1, 2022, respectively. The 8300% effective tax rate for the three month period ended June 30, 2023 is primarily driven by foreign tax expense over a near breakeven pre-tax profit for the period. The Company’s income tax provision was $8.3 million and $8.7 million for the three months ended June 30, 2023 and July 1, 2022, respectively, and $11.8 and $17.3 million for the six months ended June 30, 2023 and July 1, 2022, respectively. The change in respective tax rates reflects, primarily, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates and the impact of losses in jurisdictions with full federal and state valuation allowances.

Company management continuously evaluates the need for a valuation allowance and, as of June 30, 2023, concluded that a full valuation allowance on its U.S. federal and state and certain of its foreign deferred tax assets was still appropriate.

As of June 30, 2023 and July 1, 2022, the Company’s gross liability for unrecognized tax benefits, excluding interest, was $2.7 million and $1.7 million, respectively. Increases or decreases to interest and penalties on uncertain tax positions are included in the income tax provision in the Condensed Consolidated Statements of Operations. Although it is possible that some of the unrecognized tax benefits could be settled within the next twelve months, the Company cannot reasonably estimate the outcome at this time.