Income Taxes

12 Months Ended

Dec. 25, 2021

Income Tax Disclosure [Abstract]

Income Taxes

M. Income Taxes

Significant components of the income tax (benefit) provision are as follows:

	2021			2020		2019
	(in thousands)
Current:
Federal	$	(4,473	)	$	25,115	$	18,510
State		2,078			9,455		8,084
Total current		(2,395	)		34,570		26,594
Deferred:
Federal		(2,762	)		16,363		8,081
State		(2,487	)		1,337		(346	)
Total deferred		(5,249	)		17,700		7,735
Total income tax (benefit) provision	$	(7,644	)	$	52,270	$	34,329

The reconciliations to statutory rates are as follows:

	2021			2020			2019
Statutory rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal benefit		11.0			4.4			4.6
Deduction relating to excess stock based compensation		(153.8	)		(4.3	)		(3.2	)
Non-deductible meals & entertainment		5.6			0.2			0.7
Change in unrecognized tax benefits (including interest and penalty)		(8.7	)		—			—
Federal and state provision to return		(7.1	)		(0.1	)		(0.3	)
Change in valuation allowance		21.9			0.1			0.4
Other		(0.6	)		0.1			0.6
		(110.7	)%		21.4	%		23.8	%

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

	December 25, 2021			December 26, 2020
	(in thousands)
Deferred tax assets:
Lease Liabilities	$	16,236		$	17,951
Inventory		14,343			4,114
Stock-based compensation expense		6,713			5,568
Loss carryforwards		3,859			—
Accrued expenses		3,449			1,581
Accrued commitments for inventory at vendor locations		2,607			—
Tax credit carryforwards		1,874			774
Accrued destruction costs		1,538			—
Accrued noncancellable purchase orders for cancelled projects		1,134			—
Other		1,569			1,439
Total deferred tax assets		53,322			31,427
Valuation allowance		(3,341	)		(2,022	)
Total deferred tax assets net of valuation allowance		49,981			29,405
Deferred tax liabilities:
Property, plant and equipment		(102,696	)		(88,947	)
Right-of-use assets		(14,035	)		(15,695	)
Amortization		(15,024	)		(12,900	)
Prepaid expenses		(5,721	)		(4,528	)
Total deferred tax liabilities		(137,476	)		(122,070	)
Net deferred tax liabilities	$	(87,495	)	$	(92,665	)

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 in each of the fiscal years 2021, 2020, and 2019.

Accrued interest and penalties amounted to $0.2 million and $0.2 million at December 25, 2021 and December 26, 2020, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2021			2020
	(in thousands)
Balance at beginning of year	$	812		$	811
Increases related to current year tax positions		59			—
Increases related to prior year tax positions		36			13
Decreases related to lapse of statute of limitations		(675	)		(12	)
Balance at end of year	$	232		$	812

Included in the balance of unrecognized tax benefits at December 25, 2021 and December 26, 2020 are potential net benefits of $0.2 million and $0.8 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 25, 2021, the Company’s 2018, 2019, and 2020 federal income tax returns remain subject to examination by 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 25, 2021.

It is reasonably possible that the Company’s unrecognized tax benefits may increase or decrease in 2021 if there are changes as a result of potential income tax audits; however, the Company cannot estimate the range of such possible changes. The Company does not expect that any potential changes would have a material impact on the Company’s financial position, results of operations or cash flows.

As of December 25, 2021, the Company’s deferred tax assets included a capital loss carryforward totaling $0.9 million, which is expected to expire before being utilized. The Company has included a valuation allowance against this loss carryforward.