Income Taxes

9 Months Ended

Sep. 28, 2024

Income Tax Disclosure [Abstract]

Income Taxes

15.INCOME TAXES

The Company’s effective tax rates were 22.9% and 24.1% for the three months ended September 28, 2024 and September 30, 2023, and 31.7% and 25.7% for the nine months ended September 28, 2024 and September 30, 2023, respectively. Compared to the statutory rate, the difference in the effective tax rate for both the three months ended September 28, 2024 and September 30, 2023 was primarily due to state income taxes, partially offset by federal tax credits. Compared to the statutory rate, the difference in the effective tax rate for the nine months ended September 28, 2024 was primarily due to the partial release of the receivable related to uncertain tax positions as a result of the portion of ERC recognized, tax expense from equity-based compensation, and state income taxes. Compared to the statutory rate, the difference in the effective tax rate for the nine months ended September 30, 2023 was primarily driven by state income taxes.

Due to the unprecedented nature of ERC legislation and the changing administrative guidance, the Company recorded a $17.1 million receivable related to uncertain tax positions in December 2022 when applying for the ERC. As of December 30, 2023, the Company's receivable related to uncertain tax positions was $17.1 million within other assets, and as of September 28, 2024, the Company reduced the receivable to $7.9 million and $3.1 million within prepaid expenses and other current assets and other assets, respectively, on the unaudited condensed consolidated balance sheets in connection with the portion of ERC recognized during the nine months ended September 28, 2024.

The Company considers all available positive and negative evidence when assessing the carrying amount of its deferred tax assets. Evidence includes the anticipated impact on future taxable income arising from the reversal of temporary differences, actual operating results for the trailing twelve quarters, the ongoing assessment of financial performance, and available tax planning strategies, if any, that management considers prudent and feasible. No valuation allowance was required as of September 28, 2024 and December 30, 2023. The Company will continue to reassess the carrying amount of its deferred tax assets.

The Company is no longer subject to examination by tax authorities for years before 2012.