Income Taxes

9 Months Ended

Oct. 01, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12. INCOME TAXES

We had income tax expense of $10.1 million for the three months ended October 1, 2022, compared with income tax benefit of $2.4 million for the three months ended October 2, 2021. Our effective tax rate for the three months ended October 1, 2022, was 24.9%, compared with 31.9% for the three months ended October 2, 2021. Our income tax expense for the three months ended October 1, 2022, and income tax benefit for the three months ended October 2, 2021, includes income tax expenses of $291 thousand and $449 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco. We had an income tax expense of $29.9 million for the nine months ended October 1, 2022, compared with income tax expense of $4.3 million for the nine months ended October 2, 2021. Our effective tax rate for the nine months ended October 1, 2022, was 24.8%, compared with 18.8% for the nine months ended October 2, 2021. Our income tax expense for the nine months ended October 1, 2022, and October 2, 2021, includes $1.0 million and $1.2 million, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the three months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $60 thousand, and from research and development tax credits true-up adjustments, which totaled $472 thousand. The income tax benefit in the three months ended October 2, 2021 included discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards totaling $14 thousand, and other true-up adjustments totaling less than $0.1 million. Income tax expense in the nine months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $156 thousand, from research and development tax credits true-up adjustments, which totaled $472 thousand, and a refund from the state of Florida, received by the Company in the second quarter of 2022, relating to excess taxes received by the state in 2021, which was $584 thousand, benefiting tax expense by $462 thousand, net of its Federal tax effect. Income tax expense in the nine months ended October 2, 2021 include discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $714 thousand. Excluding discrete items of income tax, the effective tax rates for the three months ended October 1, 2022 and October 2, 2021, would have been an income tax expense rate of 26.2% and an income tax benefit rate of 30.8%, respectively. Excluding discrete items of income tax, the effective tax rates for the nine months ended October 1, 2022 and October 2, 2021, would have been income tax expense rates of 25.7% and 21.9%, respectively.

In September 2021, the state of Florida announced that the corporate income tax rate for the 2021 tax year was being lowered from its then current level of 4.458% to 3.535%. However, for 2022, Florida's corporate income tax rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for 2022 to include this increase in rate in Florida, where a substantial portion of our business is apportioned, to an estimated combined statutory federal and state rate of 25.7%, from our estimate in 2021 of 24.2%. During the first nine months of 2022, we made payments of estimated taxes totaling $21.7 million, which included $20.8 million in Federal estimated income taxes with the remainder to various states, primarily Florida. During the first nine months of 2021, we made payments of estimated taxes totaling $12.4 million, which included $8.3 million in Federal estimated income taxes with the remainder to various states, primarily Florida. As a result of Hurricane Ian, a large and destructive Category 4 Atlantic hurricane, which made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, the U.S. Internal Revenue Service and the state of Florida have both extended their deadlines for payment of the fourth quarter 2022 estimated tax payment, originally due December 15, 2022, to February 15, 2023.