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Income Taxes
 12 Months Ended
Dec. 28, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

L. Income Taxes

 

Significant components of the income tax provision (benefit) for fiscal 2024, 2023, and 2022 were as follows:

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

37,971

 

 

$

36,556

 

 

$

10,453

 

State

 

 

9,880

 

 

 

7,650

 

 

 

4,683

 

Total current

 

 

47,851

 

 

 

44,206

 

 

 

15,136

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(17,175

)

 

 

(10,816

)

 

 

8,196

 

State

 

 

(2,769

)

 

 

(52

)

 

 

841

 

Total deferred

 

 

(19,944

)

 

 

(10,868

)

 

 

9,037

 

Total income tax provision

 

$

27,907

 

 

$

33,338

 

 

$

24,173

 

 

The reconciliations to statutory rates for fiscal 2024, 2023, and 2022 were as follows:

 

 

 

2024

 

 

2023

 

 

2022

 

Statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

5.5

 

 

 

4.8

 

 

 

4.1

 

Non-deductible compensation under Internal Revenue Code Section 162(m)

 

 

1.1

 

 

 

3.4

 

 

 

0.2

 

Non-deductible meals & entertainment

 

 

2.1

 

 

 

1.2

 

 

 

0.6

 

Change in valuation allowance

 

 

3.0

 

 

 

1.0

 

 

 

1.2

 

Deduction relating to excess stock-based compensation

 

 

0.6

 

 

 

0.1

 

 

 

(0.9

)

Other

 

 

(1.4

)

 

 

(1.1

)

 

 

0.2

 

 

 

 

31.9

%

 

 

30.4

%

 

 

26.4

%

 

Significant components of the Company’s deferred tax assets and liabilities were as follows at:

 

 

 

December 28,
2024

 

 

December 30,
2023

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Lease liabilities

 

$

9,669

 

 

$

12,034

 

Stock-based compensation expense

 

 

9,415

 

 

 

8,062

 

Accrued expenses

 

 

3,714

 

 

 

4,146

 

Inventory reserves

 

 

8,282

 

 

 

4,689

 

Loss carryforwards and tax credit carryforwards

 

 

3,216

 

 

 

2,553

 

Capitalized research and development

 

 

3,598

 

 

 

2,954

 

Intangible assets amortization

 

 

433

 

 

 

—

 

Other

 

 

1,710

 

 

 

1,091

 

Total deferred tax assets

 

 

40,037

 

 

 

35,529

 

Valuation allowance

 

 

(8,203

)

 

 

(5,808

)

Total deferred tax assets, net of valuation allowance

 

 

31,834

 

 

 

29,721

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant, and equipment

 

 

(84,081

)

 

 

(90,372

)

Right-of-use assets

 

 

(7,643

)

 

 

(9,590

)

Intangible assets amortization

 

 

—

 

 

 

(8,244

)

Prepaid expenses

 

 

(5,913

)

 

 

(7,236

)

Total deferred tax liabilities

 

 

(97,637

)

 

 

(115,442

)

Net deferred tax liabilities

 

$

(65,803

)

 

$

(85,721

)

 

The Company’s policy is to classify interest and penalties related to income tax matters in income tax expense. Interest and penalties included in the provision for income taxes amounted to $(0.2) million in fiscal year 2024, $0.1 million in fiscal year 2023, and $0 in fiscal years 2022. Accrued interest and penalties amounted to $0.1 million at December 28, 2024 and $0.2

million at December 30, 2023.
 

A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal 2024 and 2023 was as follows:

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

303

 

 

$

243

 

Increases related to current period tax positions

 

 

33

 

 

 

69

 

Increases related to prior period tax positions

 

 

309

 

 

 

4

 

Decreases related to lapse of statute of limitations

 

 

(165

)

 

 

(13

)

Balance at end of period

 

$

480

 

 

$

303

 

 

Included in the balance of unrecognized tax benefits at December 28, 2024 and December 30, 2023 are potential net benefits of $0.5 million and $0.3 million, respectively, that would favorably impact the effective tax rate if recognized. Unrecognized tax benefits are included in accrued expenses in the accompanying consolidated balance sheets and adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.

 

As of December 28, 2024, the Company’s 2021, 2022, and 2023 federal income tax returns remain subject to examination by the IRS. The Company’s state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits. The Company is not currently under any income tax audits as of December 28, 2024.

 

As of December 28, 2024, the Company’s deferred tax assets include a valuation allowance of $8.2 million, compared to $5.8 million at December 30, 2023. The valuation allowance as of December 28, 2024 and December 30, 2023 was primarily related to stock-based compensation expected by management to be non-deductible under Internal Revenue Code, Section 162(m), as well as jurisdictional losses not expected to be utilized before expiring. The net increase in total valuation allowance was $2.4 million from December 30, 2023 to December 28, 2024, compared to a net increase of $1.2 million from December 31, 2022 to December 30, 2023 and a net increase of $1.3 million from December 25, 2021 to December 31, 2022.