Income Taxes

12 Months Ended

Dec. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Income Tax Expense

The components of income tax expense are as follows (in thousands):

	Year Ended
	December 30,		December 31,			January 1,
	2023		2022			2022
Current:
Federal	$	24,402	$	34,411		$	790
State		6,856		9,595			1,337
Total current tax expense		31,258		44,006			2,127
Deferred:
Federal		5,506		(8,661	)		7,142
State		1,246		(2,679	)		490
Total deferred tax expense (benefit)		6,752		(11,340	)		7,632
Income tax expense	$	38,010	$	32,666		$	9,759

The aggregate amount of income taxes included in the consolidated statements of operations and consolidated statements of shareholders’ equity are as follows (in thousands):

	Year Ended
	December 30,		December 31,		January 1,
	2023		2022		2022
Consolidated statements of operations:
Income tax expense relating to continuing operations	$	38,010	$	32,666	$	9,759
Consolidated statements of shareholders' equity:
Income tax benefit (expense) relating to derivatives	$	11	$	2,345	$	(1,531	)

Reconciliation of the Statutory Rate to the Effective Rate

A reconciliation of the statutory federal income tax rate to our effective rate is provided below:

	Year Ended
	December 30,			December 31,			January 1,
	2023			2022			2022
Statutory federal income tax rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal income tax benefit		4.6	%		4.7	%		3.2	%
Non-deductible expenses		3.0	%		1.3	%		1.3	%
Research activities credits		(0.9	)%		(1.2	)%		(0.8	)%
Florida excess tax refund relating to the Tax Cuts and Jobs Act		—			(0.4	)%		—
Eco partnership income attributable to non-controlling interest		(0.2	)%		(0.3	)%		(1.2	)%
Excess stock-based compensation tax benefits		(1.4	)%		(0.1	)%		(2.0	)%
Other		(0.4	)%		(0.1	)%		0.2	%
Consolidated effective tax rate		25.7	%		24.9	%		21.7	%

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred tax liability are as follows:

	December 30,			December 31,
	2023			2022
	(in thousands)
Deferred tax assets:
Operating lease liability	$	34,517		$	21,496
Deferrals and accruals relating to ASC 606, net		5,530			5,707
State bonus depreciation and tax credits		3,897			3,926
Stock-based compensation expense		2,113			2,926
Accrued warranty		3,900			3,564
Acquisition costs		3,354			2,236
Advance supplier consideration		664			1,388
Other deferrals and accruals, net		9,247			10,039
Obsolete inventory, UNICAP and other related items		—			4,054
Allowance for credit losses		4,216			3,885
Total deferred tax assets		67,438			59,221
Deferred tax liabilities:
Property, plant and equipment		(21,453	)		(21,257	)
Trade names and other intangible assets, net		(38,221	)		(39,193	)
Goodwill		(23,823	)		(21,303	)
Operating lease right-of-use asset		(31,741	)		(19,655	)
Obsolete inventory, UNICAP and other related items		(2,612	)		—
Eco partnership basis difference		—			(2,921	)
Derivative financial instruments		(66	)		(77	)
Prepaid expenses		(2,207	)		(2,222	)
Total deferred tax liabilities		(120,123	)		(106,628	)
Total deferred tax liabilities, net	$	(52,685	)	$	(47,407	)

Tax Basis in Goodwill

We have goodwill deductible for tax purposes in certain of our acquisitions as the transactions were acquisitions of stock treated as step-up acquisitions of assets and assumption of liabilities pursuant to elections under section 338(h)(10) or 743(b) of the Internal Revenue Code, or the transactions were structured as acquisitions of assets and assumptions of liabilities. The unamortized amount of this goodwill for tax purposes, including the goodwill as a result of the Anlin Acquisition discussed below.

In the Martin Acquisition, we acquired goodwill. Because the Martin Acquisition was structured as an acquisition of the stock of a C corporation, a step-up election is not available. Therefore, we do not believe any of the goodwill as a result of the Martin Acquisition is deductible for tax purposes.

Excess Tax Benefits

Excess tax benefits resulting from the exercise of stock options and lapse of restriction on stock awards are recognized as a component of tax expense. Income tax expense in the years ended December 30, 2023, December 31, 2022, and January 1, 2022, includes excess tax benefits totaling $2.0 million, $0.2 million, and $0.9 million, respectively.

Income Taxes Payable and Payments

Accrued liabilities at December 30, 2023 and December 31, 2022 include income taxes currently payable of $7.0 million and $16.4 million, respectively. During the years ended December 30, 2023 and December 31, 2022, we made payments of income taxes totaling $40.6 million and $21.5 million, respectively.

Income Tax Effects of Accumulated Other Comprehensive Income (Loss)

We reclassify to the income tax effects of accumulated other comprehensive income (loss) to income taxes in the same period as the reclassification of the related item of accumulated other comprehensive income (loss) to earnings.

Open Tax Years

The tax years 2019 to 2022 remain open for examination.