v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

L. Income Taxes

 

Significant components of the income tax provision (benefit) for fiscal 2023, 2022, and 2021 were as follows:

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

36,556

 

 

$

10,453

 

 

$

(4,473

)

State

 

 

7,650

 

 

 

4,683

 

 

 

2,078

 

Total current

 

 

44,206

 

 

 

15,136

 

 

 

(2,395

)

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(10,816

)

 

 

8,196

 

 

 

(2,762

)

State

 

 

(52

)

 

 

841

 

 

 

(2,487

)

Total deferred

 

 

(10,868

)

 

 

9,037

 

 

 

(5,249

)

Total income tax provision (benefit)

 

$

33,338

 

 

$

24,173

 

 

$

(7,644

)

 

The reconciliations to statutory rates for fiscal 2023, 2022, and 2021 were as follows:

 

 

 

2023

 

 

2022

 

 

2021

 

Statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

4.8

 

 

 

4.1

 

 

 

11.0

 

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

 

 

3.4

 

 

 

0.2

 

 

 

5.7

 

Non-deductible meals & entertainment

 

 

1.2

 

 

 

0.6

 

 

 

5.6

 

Change in valuation allowance

 

 

1.0

 

 

 

1.2

 

 

 

21.9

 

Deduction relating to excess stock-based compensation

 

 

0.1

 

 

 

(0.9

)

 

 

(153.8

)

Change in unrecognized tax benefits (including interest and penalty)

 

 

0.1

 

 

 

—

 

 

 

(8.7

)

Federal and state provision to return

 

 

0.0

 

 

 

(0.2

)

 

 

(7.1

)

Other

 

 

(1.2

)

 

 

0.4

 

 

 

(6.3

)

 

 

 

30.4

%

 

 

26.4

%

 

 

(110.7

)%

 

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

 

 

 

December 30,
2023

 

 

December 31,
2022

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Lease liabilities

 

$

12,034

 

 

$

13,994

 

Stock-based compensation expense

 

 

8,062

 

 

 

7,441

 

Accrued expenses

 

 

7,100

 

 

 

4,609

 

Inventory reserves

 

 

4,689

 

 

 

8,595

 

Loss carryforwards

 

 

1,864

 

 

 

968

 

Tax credit carryforwards

 

 

689

 

 

 

813

 

Accrued commitments for inventory at vendor locations

 

 

108

 

 

 

1,799

 

Other

 

 

983

 

 

 

1,833

 

Total deferred tax assets

 

 

35,529

 

 

 

40,052

 

Valuation allowance

 

 

(5,808

)

 

 

(4,600

)

Total deferred tax assets, net of valuation allowance

 

 

29,721

 

 

 

35,452

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant, and equipment

 

 

(90,372

)

 

 

(103,561

)

Right-of-use assets

 

 

(9,590

)

 

 

(11,375

)

Intangible assets amortization

 

 

(8,244

)

 

 

(10,373

)

Prepaid expenses

 

 

(7,236

)

 

 

(6,735

)

Total deferred tax liabilities

 

 

(115,442

)

 

 

(132,044

)

Net deferred tax liabilities

 

$

(85,721

)

 

$

(96,592

)

 

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 $0.1 million in fiscal year 2023, and $0 in each of the fiscal years 2022, and 2021. Accrued interest and penalties amounted to $0.2 million at December 30, 2023 and December 31, 2022.

 

A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal 2023 and 2022 was as follows:

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

243

 

 

$

232

 

Increases related to current period tax positions

 

 

69

 

 

 

41

 

Increases (decreases) related to prior period tax positions

 

 

4

 

 

 

(30

)

Decreases related to lapse of statute of limitations

 

 

(13

)

 

 

—

 

Balance at end of period

 

$

303

 

 

$

243

 

 

Included in the balance of unrecognized tax benefits at December 30, 2023 and December 31, 2022 are potential net benefits of $0.3 million and $0.2 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 30, 2023, the Company’s 2020, 2021, and 2022 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 30, 2023.

 

As of December 30, 2023, the Company’s deferred tax assets include a valuation allowance of $5.8 million, compared to $4.6 million at December 31, 2022. The valuation allowance as of December 30, 2023 and December 31, 2022 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 $1.2 million from December 31, 2022 to December 30, 2023, compared to a net increase of $1.3 million from December 25, 2021 to December 31, 2022.