Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The current income tax provision represents the estimated amount of income taxes paid or payable for the year, as well as changes in estimates from prior years. The deferred income tax provision (benefit) represents the change in deferred tax liabilities and assets. The following table presents the significant components of the provision for income taxes:

	Fiscal Year
(in thousands)	2024		2023		2022
Current:
Federal	$	179,019	$	158,475	$	109,899
State	41,981		39,652		26,053
Total current provision	$	221,000	$	198,127	$	135,952
Deferred:
Federal	$	958	$	(40,658)	$	7,478
State	1,571		(8,363)		1,499
Total deferred provision (benefit)	$	2,529	$	(49,021)	$	8,977
Income tax expense	$	223,529	$	149,106	$	144,929

The Company’s effective income tax rate was 26.1% for 2024, 26.7% for 2023 and 25.2% for 2022. The following table provides a reconciliation of income tax expense at the statutory federal rate to actual income tax expense:

	Fiscal Year
	2024				2023				2022
(in thousands)	Income tax expense		% pre-tax income		Income tax expense		% pre-tax income		Income tax expense		% pre-tax income
Statutory expense	$	179,898	21.0	%	$	117,071	21.0	%	$	120,768	21.0	%
State income taxes, net of federal benefit	32,581		3.8		21,001		3.8		21,572		3.8
Nondeductible compensation	7,285		0.8		7,372		1.3		4,005		0.7
Meals, entertainment and travel expense	2,640		0.3		3,336		0.6		1,694		0.3
Valuation allowance change	1,414		0.2		701		0.1		(932)		(0.2)
Adjustment for uncertain tax positions	55		—		52		—		(1,351)		(0.2)
Other, net	(344)		—		(427)		(0.1)		(827)		(0.2)
Income tax expense	$	223,529	26.1	%	$	149,106	26.7	%	$	144,929	25.2	%

The Company records liabilities for uncertain tax positions related to income tax positions. These liabilities reflect the Company’s best estimate of the ultimate income tax liability based on known facts and information. Material changes in facts or information, as well as the expiration of statutes of limitations and/or settlements with individual tax jurisdictions, may result in material adjustments to these estimates in the future.

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. During 2024, 2023 and 2022, the interest and penalties related to uncertain tax positions recognized in income tax expense were not material. In addition, the amount of interest and penalties accrued at December 31, 2024 and December 31, 2023 were not material.

The Company had uncertain tax positions, including accrued interest, of $0.4 million on both December 31, 2024 and December 31, 2023, all of which would affect the Company’s effective income tax rate if recognized. While it is expected the amount of uncertain tax positions may change in the next 12 months, the Company does not expect such change would have a material impact on the consolidated financial statements.

A reconciliation of uncertain tax positions, excluding accrued interest, is as follows:

	Fiscal Year
(in thousands)	2024		2023		2022
Beginning balance - gross uncertain tax positions	$	330	$	285	$	1,254
Increase as a result of tax positions taken in the current year	105		105		105
Increase as a result of tax positions taken in a prior year	—		—		—
Reduction as a result of the expiration of the applicable statute of limitations	(61)		(60)		(1,074)
Ending balance - gross uncertain tax positions	$	374	$	330	$	285

Deferred income taxes are recorded based upon temporary differences between the financial statement and tax bases of assets and liabilities and available net operating loss and tax credit carryforwards. Temporary differences and carryforwards that comprised deferred income tax assets and liabilities were as follows:

(in thousands)	December 31, 2024		December 31, 2023
Acquisition related contingent consideration	$	160,120	$	163,827
Accrued liabilities	35,912		32,516
Deferred compensation	34,308		27,017
Operating lease liabilities	28,299		31,443
Deferred revenue	25,474		26,750
Postretirement benefits	13,179		13,601
Transactional costs	2,670		3,101
Net operating loss carryforwards	754		437
Financing lease agreements	287		470
Other	956		3,511
Deferred income tax assets	$	301,959	$	302,673
Less: Valuation allowance for deferred tax assets	5,535		4,130
Net deferred income tax asset	$	296,424	$	298,543
Depreciation	$	(212,926)	$	(201,875)
Intangible assets	(167,428)		(170,504)
Right-of-use assets - operating leases	(27,499)		(30,034)
Prepaid expenses	(9,784)		(8,028)
Inventory	(8,547)		(11,425)
Patronage dividend	(3,181)		(5,112)
Deferred income tax liabilities	$	(429,365)	$	(426,978)
Net deferred income tax liability	$	(132,941)	$	(128,435)

The Company’s deferred income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such deferred assets and liabilities and new information available to the Company.

Valuation allowances are recognized on deferred tax assets if the Company believes it is more likely than not that some or all of the deferred tax assets will not be realized. The Company believes the majority of the deferred tax assets will be realized due to the reversal of certain significant temporary differences and anticipated future taxable income from operations.

The valuation allowance of $5.5 million on December 31, 2024 and $4.1 million on December 31, 2023 was established primarily for certain loss carryforwards and deferred compensation.

As of December 31, 2024, the Company had no federal net operating losses and $16.6 million of state net operating losses available to reduce future income taxes, which expire in varying amounts through 2045.

Prior tax years beginning in year 2021 remain open to examination by the Internal Revenue Service, and various tax years beginning in year 2001 remain open to examination by certain state tax jurisdictions due to loss carryforwards.