INCOME TAXES

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company recorded income tax expense of $152.7 million, a 23.3% effective tax rate, for the six months ended June 30, 2024 compared to an income tax benefit of $24.1 million, a (56.7)% effective tax rate, for the six months ended June 25, 2023. The change from an income tax benefit to income tax expense in 2024 resulted primarily from the increase of profit before income taxes, the statutory reporting adjustment on prior year deferred tax assets in a corporate legal entity, and the intercompany dividend distributions from the Company’s Mexico reportable segment to the U.S. reportable segment.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment. As of June 30, 2024, the Company did not believe it had sufficient positive evidence to conclude that a portion of its foreign net deferred tax assets are more likely than not to be realized.

For the six months ended June 30, 2024 and June 25, 2023, there is a tax effect of $(2.1) million and $(3.2) million, respectively, reflected in other comprehensive income.

For the six months ended June 30, 2024 and June 25, 2023, there are immaterial tax effects reflected in income tax expense (benefit) due to excess tax windfalls and shortfalls related to stock-based compensation.

The Company operates in the U.S. (including multiple state jurisdictions), Puerto Rico and several foreign locations including Mexico, the U.K., the Republic of Ireland, and continental Europe. With a few exceptions, the Company is no longer subject to examinations by taxing authorities for years prior to 2019 in U.S. federal, state and local jurisdictions, for years prior to 2010 in Mexico, and for years prior to 2017 in the U.K.