Income Taxes

9 Months Ended

Sep. 27, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company’s effective tax rates of 14.6% and 39.9% for the three months ended September 27, 2024 and September 29, 2023, respectively, differ from the U.S. federal statutory rate of 21.0% primarily due to a shift in the geographical mix of earnings, the impact of a valuation allowance against certain U.S. interest carryforwards in 2024, and the impact of the nondeductible convertible debt inducement expense in 2023.

The Company’s effective tax rates of 0.1% and 26.8% for the nine months ended September 27, 2024 and September 29, 2023, respectively, differ from the U.S. federal statutory rate of 21.0% primarily due to the impact of nondeductible impairment charges for goodwill and intangible assets, the impact of a valuation allowance against certain U.S. interest carryforwards in 2024, and the impact of the nondeductible convertible debt inducement expense in 2023.

The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of its deferred tax assets will not be realized. In assessing whether it is more likely than not that deferred tax assets will be realized, the Company considers all available evidence, both positive and negative, including its recent cumulative earnings experience and expectations of future taxable income of the appropriate character by taxing jurisdiction, tax attribute carryback and carryforward periods, reversal patterns of existing deferred tax liabilities, and prudent and feasible tax planning strategies, however, there can be no assurance that the Company’s deferred tax assets will be fully realized. As of the quarter ended September 27, 2024, the Company maintains valuation allowances primarily against certain net operating losses and the portion of its U.S. nondeductible interest expense carryforward that it believes it will more likely than not be unable to realize.

On January 1, 2024, certain provisions of the Organisation for Economic Co-operation and Development base Erosion and Profit Shifting 2.0 Pillar Two global minimum tax (“GMT”) became effective in various jurisdictions. Based on currently enacted law, the impact of GMT on the Company’s 2024 financial results is not expected to be material.