INCOME TAXES

3 Months Ended

Apr. 04, 2026

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income tax expense was $2.4 million and $6.7 million for the three months ended April 4, 2026 and March 29, 2025, respectively. The decrease in income tax expense was primarily due to lower income before income taxes. The effective tax rate for the three months ended April 4, 2026 was 19.9% compared to 28.9% for the three months ended March 29, 2025. The lower effective tax rate was primarily due to the impact of a discrete tax benefit related to stock-based compensation in the three months ended April 4, 2026.

Deferred tax liabilities were $27.4 million as of April 4, 2026 and $22.3 million as of January 3, 2026. Deferred tax liabilities are presented in other liabilities on our unaudited condensed consolidated balance sheet.

The Organization for Economic Co-operation and Development enacted model rules for a new global minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or are in the process of enacting, legislation to address Pillar Two. For the three months ended April 4, 2026, the impact of Pillar Two on our consolidated financial statements was not material.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The effects of the OBBBA were incorporated into our income tax provision for the three months ended April 4, 2026. There was no material impact to our income tax expense for the first quarter of 2026. We will continue to evaluate the impacts of the OBBBA and do not expect the OBBBA to have a material impact on our consolidated financial statements.

For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions, and other items.