Income Taxes

12 Months Ended

Sep. 28, 2024

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The components of income tax (expense) benefit were as follows for the fiscal years presented: 

(in thousands)	2024		2023		2022
Current tax provision:
Federal	$	(30,188)	$	(645)	$	380
State	(4,447)		(243)		—
Foreign	(267)		—		—
Total current tax (expense) benefit	$	(34,902)	$	(888)	$	380
Deferred tax provision:
Federal	$	2,046	$	(6,230)	$	10,862
State	(372)		(1,835)		209
Total deferred tax benefit (expense)	1,674		(8,065)		11,071
Income tax (expense) benefit	$	(33,228)	$	(8,953)	$	11,451

At September 28, 2024, the Company had $8.0 million (tax effected) in total state tax attributes, primarily comprised of $6.7 million (tax effected) in state tax credit carryforwards and $0.6 million (tax effected) in state net operating loss ("NOL") carryforwards. The Company maintains a partial valuation allowance on these state tax attributes. Specifically, the Company estimates that approximately $5.3 million (tax effected) of state tax credit carryforwards will expire unused between 2025 and 2032 and approximately $0.5 million (tax effected) of state NOL carryforwards will expire unused between 2028 and 2033.

At September 28, 2024, the Company had no federal NOL carryforwards.

The effective tax rates for fiscal 2024, fiscal 2023 and fiscal 2022 were 26.2%, 34.7% and 21.6%, respectively.

The effective tax rate for fiscal 2024 differed from the statutory federal income tax rate of 21.0%. The increase in the effective tax rate to 26.2% was primarily due to the impacts of state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items.

The effective tax rate for fiscal 2023 differed from the statutory federal income tax rate of 21.0%. The increase in the effective tax rate to 34.7% was primarily due to the impacts of state taxes and certain permanent items on the federal rate.

The effective tax rate for fiscal 2022 differed from the statutory federal income tax rate of 21.0%. The increase in the effective tax rate to 21.6% was primarily due to the impacts of state taxes on the federal rate. This increase was partially offset by an increase in the valuation allowance.

A reconciliation between the reported income tax (expense) benefit and the amount computed by applying the statutory federal income tax rate is as follows: 

(in thousands)	2024		2023		2022
Federal tax (expense) benefit at statutory rate	$	(26,594)	$	(5,419)	$	11,141
(Increase) reduction in income tax expense resulting from:
State taxes, net	(4,808)		(1,700)		2,240
Change in uncertain tax positions	—		240		395
Share-based compensation	(675)		(95)		(513)
Permanent items	(700)		(1,582)		(31)
Valuation allowance	(17)		(319)		(2,050)
Tax credits	273		330		285
Return to accrual adjustments	4		3		(212)
Investor tax on non-consolidated affiliate income	(700)		(404)		231
Other	(11)		(7)		(35)
Income tax (expense) benefit	$	(33,228)	$	(8,953)	$	11,451

The guidance for accounting for uncertainty in income taxes requires that a determination be made regarding whether a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination, which is the threshold required for

recognition of the tax position in the financial statements. The Company's liability arising from uncertain tax positions ("UTPs"), including accrued interest and penalties, is recorded in other liabilities in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2024		2023		2022
Balance, beginning of year	$	—	$	110	$	370
Additions for tax positions of prior years	—		—		—
Lapses of applicable statute of limitations	—		(110)		(260)
Balance, end of year	$	—	$	—	$	110

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no accrued interest and penalties at September 28, 2024 or September 30, 2023.

The Company is subject to taxation mostly in the U.S. and various state jurisdictions. At September 28, 2024, tax years prior to 2020 are generally no longer subject to examination by federal and most state tax authorities.

The following table sets forth the sources of and differences between the financial accounting and tax bases of the Company’s assets and liabilities which give rise to the net deferred tax liabilities at the dates indicated:

(in thousands)	September 28, 2024		September 30, 2023
Deferred tax liabilities
Property, plant and equipment	$	(9,894)	$	(10,880)
Other intangible assets	(10,679)		(11,167)
Investor tax on non-consolidated affiliate income	(1,261)		(866)
Other	(566)		—
Total deferred tax liabilities	$	(22,400)	$	(22,913)
Deferred tax assets
NOL carryforward	$	731	$	1,168
Accrued expenses	8,017		5,586
Compensation	2,257		2,839
Interest limitation carryforward	—		5,235
Inventories	812		743
Capitalized research & development	5,035		3,052
Unearned income	4,301		3,096
Tax credits	6,702		6,685
Total deferred tax assets	$	27,855	$	28,404
Less: valuation allowance	(5,839)		(5,822)
Deferred tax assets less valuation allowance	$	22,016	$	22,582
Net deferred tax liabilities	$	(384)	$	(331)