Income Taxes

12 Months Ended

Dec. 28, 2025

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income before income taxes consisted of the following:

	Fiscal Year
	2025		2024		2023
	(in thousands)
U.S. operations	$	64,601	$	37,060	$	3,611
Foreign operations	72,250		76,494		60,043
Income before income taxes	$	136,851	$	113,554	$	63,654

Provisions for federal, foreign and state income taxes in the consolidated statements of operations consisted of the following components:

	Fiscal Year
	2025		2024		2023
	(in thousands)
Current expense:
Federal	$	7,209	$	7,599	$	5,523
Foreign	23,235		20,982		18,330
State	2,843		2,481		2,167
Current expense	33,287		31,062		26,020
Deferred (benefit) expense:
Federal	182		(3,279)		(4,810)
Foreign	(12,846)		(841)		(1,212)
State	130		(334)		(861)
Deferred benefit	(12,534)		(4,454)		(6,883)
Total income tax expense	$	20,753	$	26,608	$	19,137

Income taxes paid (net of refunds) consisted of the following:

	Fiscal Year
	2025
	(in thousands)
Federal	$	9,118
Foreign:
Germany	11,538
Netherlands	5,546
China	2,069
Other Foreign	5,684
State and local	3,384
Total Income taxes paid, net of refunds	$	37,339

Income tax payments amounted to approximately $37.8 million and $25.8 million for the years 2024 and 2023, respectively. During the years 2024 and 2023, the Company received income tax refunds of $3.3 million and $2.5 million, respectively.

We adopted ASU 2023-09 on a prospective basis beginning with fiscal year 2025. The following table reconciles the U.S. federal statutory rate of 21% to our effective income tax rate for fiscal year 2025 in accordance with ASU 2023-09:

	Fiscal Year
	2025
	(in thousands)
	Amount		Percent
Income taxes at U.S. federal statutory rate	$	28,739	21.0	%
State and local income taxes, net of federal income tax effect (1)	2,369		1.7	%
Foreign Tax Effects
Germany
Statutory tax rate difference between Germany and U.S.	(1,651)		(1.2)	%
Trade tax	5,974		4.4	%
Enacted changes in tax laws or rates	(6,331)		(4.6)	%
Remeasurement of deferred tax liability	(4,048)		(3.0)	%
Other	(1,207)		(0.9)	%
Other foreign jurisdictions	2,521		1.9	%
Effect of Cross-Border Tax Laws
Other	(1,506)		(1.1)	%
Tax credits
Other	(887)		(0.6)	%
Nontaxable or non-deductible items
Non-deductible employee compensation	1,823		1.3	%
Other	(1,383)		(1.0)	%
Changes in valuation allowances	(3,693)		(2.7)	%
Changes in unrecognized tax benefits	33		—	%
Income tax expense and effective tax rate	$	20,753	15.2	%

(1) State taxes in California, Georgia, Massachusetts, Minnesota, New Jersey, and New York comprise the majority (greater than 50 percent) of the tax effect in this category.

The following table reconciles the U.S. federal statutory income tax rate of 21% to our effective income tax rate for fiscal years 2024 and 2023 based on the required disclosure prior to our adoption of ASU 2023-09:

	Fiscal Year
	2024		2023
	(in thousands)
Income taxes at U.S. federal statutory rate	$	23,846	$	13,367
Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax effect	2,319		(432)
Non-deductible business expenses	940		747
Non-deductible employee compensation	1,587		1,681
Tax effects of Company-owned life insurance	(576)		(587)
Tax effects of undistributed earnings from foreign subsidiaries not deemed to be indefinitely reinvested	443		779
Foreign and U.S. tax effects attributable to foreign operations	4,532		1,537
Expiring tax attributes	4,125		3,780
Valuation allowance effect	(7,330)		(879)
Research and development tax credits	(703)		(820)
Foreign tax rate change related to UK pension	(2,493)		—
Unrecognized tax benefits	(135)		(79)
Other	53		43
Income tax expense	$	26,608	$	19,137

On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). 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 OBBBA did not have a material impact on our estimated annual effective tax rate in 2025.

On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. While the U.S. has not adopted Pillar Two, many non-U.S. tax jurisdictions have enacted legislation to adopt Pillar Two Model Rules beginning in 2024 (including the European Union Member States) or announced their plans to enact legislation in future years. For fiscal year 2025, these provisions did not have a material impact on the Company’s financial statements. We will continue to closely monitor ongoing developments and evaluate any potential impact on future periods.

Deferred income taxes for the years ended December 28, 2025 and December 29, 2024, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:

	End of Fiscal Year
	2025		2024
	(in thousands)
Deferred tax assets
Lease liability	$	22,504	$	22,329
Net operating loss and interest carryforwards	5,091		7,964
Federal tax credit carryforwards	2,131		4,036
Deferred compensation	17,314		16,521
Pensions	4,155		4,982
Property and equipment	658		438
Inventory	2,516		3,121
Prepaids, accruals and reserves	10,493		9,235
Capitalized costs	11,727		10,327
Deferred tax assets, gross	76,589		78,953
Valuation allowance	(5,235)		(10,028)
Deferred tax assets, net	$	71,354	$	68,925
Deferred tax liabilities
Property and equipment	$	27,283	$	24,899
Inventory	3,152		4,014
Intangible assets	12,823		20,970
Lease asset	20,983		20,887
Pensions	3,694		3,866
Foreign currency	667		556
Foreign withholding and U.S. state taxes on unremitted earnings	681		773
Other	164		158
Deferred tax liabilities	69,447		76,123
Net deferred tax assets (liabilities)	$	1,907	$	(7,198)

Management believes, based on the Company’s history of taxable income and expectations for the future, that it is more likely than not that future taxable income will be sufficient to fully utilize the material U.S. federal and foreign deferred tax assets at December 28, 2025. The Company recorded a valuation allowance on certain state net operating loss carryforwards that it does not believe are more likely than not to be utilized in the future.

In July 2025, Germany enacted tax legislation to gradually reduce the corporate income tax rate. The current income tax rate of 15% is set to decrease by 1% annually beginning in 2028 reaching 10% by 2032. As a result of this change to tax rates, deferred assets and liabilities were remeasured using the new rates applicable to the periods in which the underlying temporary differences are expected to reverse. The remeasurement of the Company’s German deferred tax positions and other deferred tax adjustments resulted in a favorable deferred income tax benefit of $10.4 million in fiscal year 2025.

As of December 28, 2025, the Company has approximately $2.1 million of foreign tax credit carryforwards with expiration dates through 2034. As of December 29, 2024, the Company had a full valuation allowance on all of its foreign tax credit carryforwards. During fiscal year 2025, the Company released $3.7 million of the valuation allowance on its foreign tax credit carryforwards that the Company expects to utilize and retained $0.3 million on the portion that the Company does not expect to utilize before the expiration date.

As of December 28, 2025, the Company has approximately $153.7 million in state net operating loss carryforwards relating to continuing operations with expiration dates through 2044 and has provided a valuation allowance against $107.0 million of such losses, which the Company does not expect to utilize.

Historically, the Company has not provided for U.S. income taxes and foreign withholding taxes on the undistributed accumulated earnings of its foreign subsidiaries, with the exception of Canada, China, and Thailand where a portion of our undistributed earnings are not deemed to be permanently reinvested. The Company provided for U.S. income taxes and foreign withholding taxes on the undistributed earnings that were not permanently reinvested at December 28, 2025 and December 29, 2024.

Although the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) created a dividends received deduction that generally eliminates additional U.S. federal income taxes on dividends from our foreign subsidiaries, the Company continues to assert that all of its undistributed earnings in its non-U.S. subsidiaries, excluding undistributed earnings for which U.S. income taxes and foreign withholding taxes have been provided, are indefinitely reinvested outside of the U.S. The Company expects that domestic cash resources will be sufficient to fund its domestic operations and cash commitments in the future. In the event the Company determines not to continue to assert that all or part of its undistributed earnings in its non-U.S. subsidiaries are permanently reinvested, an actual repatriation of earnings from its non-U.S. subsidiaries could still be subject to additional foreign withholding and U.S. state taxes, the determination of which is not practicable.

The Company’s federal income tax returns are subject to examination for the years 2022 to the present. The Company files returns in numerous state and local jurisdictions and in general it is subject to examination by the state tax authorities for the years 2020 to the present. The Company files returns in numerous foreign jurisdictions and in general it is subject to examination by the foreign tax authorities for the years 2020 to the present.

As of December 28, 2025 and December 29, 2024, non-current deferred tax assets were reduced by approximately $1.9 million and $2.6 million of unrecognized tax benefits, respectively. As of December 28, 2025, and December 29, 2024, the Company had $4.9 million and $4.8 million, respectively, of unrecognized tax benefits, including accrued interest and penalties.

The Company recognizes accrued interest and income tax penalties related to unrecognized tax benefits as a component of income tax expense. As of December 28, 2025 and December 29, 2024, the Company accrued interest and penalties of $0.5 million and $0.4 million, respectively, which are included in the total unrecognized tax benefit noted above.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows:

	Fiscal Year
	2025		2024		2023
	(in thousands)
Balance at beginning of year	$	4,351	$	4,532	$	5,352
Increases related to tax positions taken during the current year	323		316		320
Increases related to tax positions taken during the prior years	55		—		19
Decreases related to tax positions taken during the prior years	(142)		(208)		(30)
Decreases related to lapse of applicable statute of limitations	(249)		(289)		(1,142)
Changes due to foreign currency translation	6		—		13
Balance at end of year	$	4,344	$	4,351	$	4,532

If the Company were to prevail on all uncertain tax positions, there would be a favorable impact on the Company’s effective tax rate of approximately $4.9 million in future periods. The timing of the ultimate resolution of the Company’s tax matters is dependent on a number of factors, many of which are outside the Company’s control.