Income Taxes

12 Months Ended

Dec. 28, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense (benefit) consisted of the following (in thousands):

	2024	2023	2022
Current:
Federal	$6,904	$5,474	$15,518
State	1,256	3,106	5,174
	8,160	8,580	20,692
Deferred:
Federal	(12,568)	(10,151)	(7,264)
State	(754)	(2,895)	(1,143)
	(13,322)	(13,046)	(8,407)
Income tax (benefit) expense	$(5,162)	$(4,466)	$12,285

The following table provides a reconciliation between the statutory federal income tax rate and the Company’s effective

income tax rate:

	2024	2023	2022
Statutory federal income tax	21.0%	21.0%	21.0%
State income taxes, net of federal benefit	0.8	(3.5)	6.4
R&D tax credits	9.0	14.1	(5.5)
Return to provision	6.2	6.1	0.8
Investment tax credit	—	1.1	—
Stock-based compensation	(9.5)	(6.2)	(1.2)
Non-deductible compensation	(2.6)	(5.7)	1.7
Non-deductible expenses	(2.1)	(2.8)	1.3
Changes in unrecognized tax benefits	(0.5)	(0.5)	(0.4)
Valuation allowance	(3.0)	—	—
Other	0.9	(1.0)	1.0
Effective income tax rate	20.2%	22.6%	25.1%

The Company files income tax returns with the U.S. federal government and various state jurisdictions. In the normal

course of business, the Company is subject to examination by federal and state taxing authorities. The Company is no

longer subject to federal income tax examinations for years prior to 2021 or state income tax examinations prior to 2020.

Deferred Income Taxes

The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands):

	2024	2023
Deferred tax assets:
Stock-based compensation	$7,090	$7,006
Operating lease liabilities	97,604	108,952
Warranty and returns liabilities	5,880	6,894
Net operating loss carryforwards and credits	2,327	1,738
Compensation and benefits	7,220	7,484
Research and development	19,017	18,079
Interest	9,503	3,747
Other	4,163	5,184
Total gross deferred tax assets	152,804	159,084
Valuation allowance	(806)	(48)
Total gross deferred tax assets after valuation allowance	151,998	159,036
Deferred tax liabilities:
Property and equipment	23,240	33,772
Operating lease right-of-use assets	89,276	99,351
Deferred revenue	2,516	3,065
Other	3,391	2,595
Total gross deferred tax liabilities	118,423	138,783
Net deferred tax assets	$33,575	$20,253

At December 28, 2024, the Company had net operating loss carryforwards for federal purposes of $0.4 million, which

will expire between 2025 and 2027.

The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required. As part of

this evaluation, the Company assess whether valuation allowances should be established for any deferred tax assets that

are not considered more likely than not to be realized, using all available evidence, both positive and negative. This

assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future

profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments,

significant weight is given to evidence that can be objectively verified. The Company has provided a $0.81 million

valuation allowance resulting primarily from its inability to utilize certain net operating losses and state R&D tax credits.

Unrecognized Tax Benefits

Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands):

	Federal and State Tax
	2024	2023	2022
Beginning balance	$3,671	$3,645	$3,869
Increases related to current-year tax positions	639	753	910
Increases related to prior-year tax positions	51	40	252
Decreases related to prior-year tax positions	(15)	—	(328)
Lapse of statute of limitations	(688)	(601)	(1,058)
Settlements with taxing authorities	—	(166)	—
Ending balance	$3,658	$3,671	$3,645

At December 28, 2024 and December 30, 2023, the Company had $3.5 million and $3.4 million, respectively, of

unrecognized tax benefits, which if recognized, would affect its effective tax rate. The amount of unrecognized tax

benefits is not expected to change materially within the next 12 months.