Income Taxes

6 Months Ended

Jun. 29, 2025

Income Taxes [Abstract]

Income Taxes

Note 5.  Income Taxes

Provision (benefit) for taxes was $13.9 million and $(18.2) million during the three-month and six-month periods ended June 29, 2025. Provision for taxes was $15.6 million and $29.5 million during the three-month and six-month periods ended June 30, 2024.  The benefit from taxes for the six-month period ended June 29, 2025 relates to pre-tax losses, primarily as a result of the provision for litigation reserve and credit losses recorded in the first quarter of 2025. The effective tax rate was 23.5% for the three-month period ended June 29, 2025, as compared with 45.1% for the three-month period ended June 30, 2024. The effective tax rate was 15.5% for the six-month period ended June 29, 2025, as compared with 31.2% for the six-month period ended June 30, 2024.  The lower rate in the current year was primarily due to the provision for the litigation reserve and credit losses and the mixture of earnings.

As of June 29, 2025, the Company had approximately $2.0 million of total unrecognized income tax benefits. Included in this amount were a total of $1.4 million of unrecognized income tax benefits that, if recognized, would affect the Company’s effective tax rate.  While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The Company’s accounting policy is to recognize interest and penalties accrued, relating to unrecognized income tax or benefit as part of its provision for income taxes. The Company recorded net immaterial additions during the three-month period ended June 29, 2025 and had an accrued balance of $0.4 million of interest and penalties as of June 29, 2025.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S.  In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to U.S. federal, state, local, and international income tax examinations by tax authorities for years prior to 2017.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses.  The Company is currently evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position, but we expect that the legislation will likely not have a material impact on our financial statements.

In December 2021, the Organization for Economic Co-operation and Development (“OECD”) released the Pillar Two Model Rules which aim to reform international corporate taxation rules, including the implementation of a global minimum tax rate. The Company began implementation of the Pillar Two Model Rules in the first quarter of 2024. The Company continues to assess the effect of the Pillar 2 Model Rules in all jurisdictions and does not expect that Pillar 2 will have a material impact on its consolidated financial statements.