Income Taxes

12 Months Ended

Dec. 27, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income before provision for income taxes was generated from the following geographic areas:

	Year Ended
(In millions)	December 27, 2024		December 29, 2023		December 30, 2022
United States	$	(106.4)	$	(133.5)	$	(61.9)
Foreign	173.6		122.2		150.2
Total pretax income	$	67.2	$	(11.3)	$	88.3

The provision for income taxes consisted of the following:

	Year Ended
(In millions)	December 27, 2024		December 29, 2023		December 30, 2022
Current:
Federal	$	(0.1)	$	0.1	$	(0.8)
State	0.5		0.3		1.1
Foreign	35.1		22.7		37.5
Total current	35.5		23.1		37.8
Deferred:
Federal	0.4		(9.4)		0.3
State	0.1		(1.5)		0.2
Foreign	(3.3)		(1.3)		(0.4)
Total deferred	(2.8)		(12.2)		0.1
Total provision	$	32.7	$	10.9	$	37.9

The effective tax rate differs from the U.S. federal statutory tax rate as follows:

	Year Ended
	December 27, 2024		December 29, 2023		December 30, 2022
Federal income tax provision at statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	(8.1)	%	48.5	%	(1.6)	%
Effect of foreign operations	(11.0)	%	21.5	%	(6.7)	%
Change in valuation allowance	37.4	%	(34.0)	%	24.3	%
Foreign income inclusions	18.9	%	(141.2)	%	4.0	%
Nondeductible executive compensation	1.4	%	(7.0)	%	1.8	%
Stock-based compensation	(0.5)	%	(3.7)	%	(0.3)	%
Acquisition related expenses	(9.1)	%	(8.0)	%	—
Tax credits	(0.7)	%	6.2	%	(0.7)	%
Tax reserves	(1.5)	%	(0.1)	%	1.1	%
Other	0.9	%	0.3	%	—	%
Effective Tax Rate	48.7	%	(96.5)	%	42.9	%

Significant components of deferred tax assets and liabilities are as follows:

	Year Ended
(In millions)	December 27, 2024		December 29, 2023
Deferred tax assets:
Interest expense limitation	$	39.5	$	29.4
Operating lease liabilities	28.3		27.3
Tax loss carryforwards	40.4		19.9
Capitalized research and development costs	12.5		10.9
Inventory valuation and basis difference	7.4		5.3
Accruals	4.6		4.4
Tax credits	6.5		7.3
Other timing differences	8.2		7.1
	147.4		111.6
Valuation allowance	(96.3)		(57.9)
Total deferred tax assets	51.1		53.7
Deferred tax liabilities:
Goodwill	(21.7)		(19.7)
Operating lease right-of-use assets	(27.2)		(26.1)
Intangibles	(9.6)		(12.9)
Depreciation	(3.6)		(9.0)
Other	(2.0)		(1.9)
Total deferred tax liabilities	(64.1)		(69.6)
Net deferred tax liabilities	$	(13.0)	$	(15.9)

As of December 27, 2024, the Company had undistributed earnings of certain foreign subsidiaries of approximately $555.0 million that are considered indefinitely reinvested and on which we have not recognized deferred taxes. It is not practicable to determine the tax liability that might be incurred if these earnings were to be distributed. For undistributed earnings of foreign subsidiaries which are not considered indefinitely reinvested deferred taxes have been accrued.

As of December 27, 2024, a valuation allowance of $96.3 million was established for deferred tax assets related to U.S. federal and state assets and certain foreign assets. For fiscal 2024, the valuation allowance increased by $38.4 million. The increase in the valuation allowance is primarily due to an increase in deferred tax assets attributable to U.S. taxable losses

and additional capital losses recognized by one of our subsidiaries in Israel on its income tax return related to divestitures of certain of its subsidiaries.

The Company’s gross liability for unrecognized tax benefits as of December 27, 2024 and December 29, 2023 was $2.3 million and $2.9 million, respectively. If the remaining balance of unrecognized tax benefits were recognized in a future period, it would result in a tax benefit of $1.4 million as of December 27, 2024 ($2.1 million as of December 29, 2023) and a reduction in the effective tax rate. Increases or decreases to interest and penalties on uncertain tax positions are included in the income tax provision in the Consolidated Statements of Operations. Interest related to uncertain tax positions for the periods ended December 27, 2024, December 29, 2023 and December 30, 2022, was not material. There are no penalties accrued within the liability for unrecognized benefits.

Although it is possible some of the unrecognized tax benefits could be settled within the next twelve months, the Company cannot reasonably estimate the outcome at this time.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):

Balance as of December 31, 2021	$	1.6
Increases related to prior year tax positions	0.1
Increases related to current year tax positions	1.0
Balance at December 30, 2022	$	2.7
Increases related to current year tax positions	0.3
Settlement	(0.1)
Balance at December 29, 2023	$	2.9
Increases related to prior year tax positions	0.1
Increases related to current year tax positions	0.5
Reduction due to lapse statute of limitations	(1.2)
Balance at December 27, 2024	$	2.3

As of December 27, 2024, the Company had U.S. federal, state and foreign net operating loss carryforwards (“NOLs”) of approximately $53.9 million, $169.2 million and $18.9 million, respectively. The Company's U.S. valuation allowance includes the deferred tax asset on the NOL carryforwards. The U.S. federal NOL’s can be carried forward indefinitely. The state NOLs begin expiring after 2029 and the foreign NOLs begin expiring after 2026. The Company also had federal tax credit carryforwards of approximately $7.3 million which expire in various years from fiscal 2028 through 2044. As of December 27, 2024, the Company had a foreign capital loss carryforward of approximately $56.4 million which can be carried forward indefinitely. The Company’s foreign valuation allowance includes the deferred tax asset on the capital loss carryforward.

The Company files federal, state and foreign income tax returns in several U.S. and foreign jurisdictions. The federal statute of limitation has closed for years prior to 2021. State statutes of limitation are generally closed for years prior to 2020. The statute of limitation for significant foreign jurisdictions has closed for years prior to 2020.

The Company is operating under a Development and Expansion Incentive (“DEI”) in Singapore that is in effect through 2028. The DEI reduces the local tax on certain Singapore income from a statutory rate of 17% to 5% until December 31, 2025 and 6% from 2026 through 2028. The Company has also been granted a tax holiday in Malaysia, subject to certain conditions. The Malaysia tax holiday period which provides a zero rate of tax on qualifying income commenced in fiscal year 2022 and is effective through February 28, 2037. The tax holidays in Singapore and Malaysia are conditional upon meeting certain employment and investment thresholds. The Singapore DEI decreased foreign taxes by $5.4 million, $4.1 million, and $11.9 million for fiscal years 2024, 2023 and 2022, respectively. The tax benefit of the Singapore DEI on net income per share (diluted) was approximately $0.12, $0.09 and $0.26 in fiscal years 2024, 2023 and 2022, respectively. The benefit of the tax holiday in Malaysia is zero for fiscal years 2024, 2023 and 2022 due to losses incurred in these years.