Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11. INCOME TAXES

The income tax provision for interim periods is comprised of tax on ordinary income provided at the most recent estimated annual effective tax rate, adjusted for the tax effect of discrete items. We estimate the annual effective tax rate quarterly based on the forecasted annual pre-tax results of our operations. The tax effects of items that are unrelated to current year ordinary income are recognized entirely as discrete items in the period identified, including share-based compensation, changes in tax laws and adjustments to the actual liability determined upon filing tax returns.

We had income tax expense of $13.7 million for the three months ended September 30, 2023, compared with income tax expense of $10.1 million for the three months ended October 1, 2022. Our effective tax rate for the three months ended September 30, 2023, was 25.9%, compared with 24.9% for the three months ended October 1, 2022. We had income tax expense of $36.4 million for the nine months ended September 30, 2023, compared with income tax expense of $29.9 million for the nine months ended October 1, 2022. Our effective tax rate for the nine months ended September 30, 2023, was 25.7%, compared with 24.8% for the nine months ended October 1, 2022. Our income tax expense for the five months ended May 26, 2023, the date we acquired the 25% share of Eco we previously did not own, and the nine months ended October 1, 2022, includes income tax expenses of $0.9 million and $1.0 million, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the three and nine months ended September 30, 2023, and October 1, 2022, includes discrete items of income tax expense relating to excess taxes from the lapses of restrictions on stock awards and adjustments to tax expense relating to research credit true-ups we made during the third quarter of each period. Income tax expense in the nine months ended October 1, 2022 also includes 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. Excluding discrete items of income tax, the effective tax rates for the three months ended September 30, 2023 and October 1, 2022, would have been an income tax expense rate of 26.7% and 26.2%, respectively. Excluding discrete items of income tax, the effective tax rates for the nine months ended September 30, 2023 and October 1, 2022, would have been an income tax expense rate of 26.2% and 25.7%, respectively.

During the first nine months of 2023, we made payments of estimated taxes totaling $39.7 million. During the first nine months of 2022, we made payments of estimated taxes, net of refunds, totaling $20.9 million.