Quarterly report [Sections 13 or 15(d)]

Income Taxes

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Income Taxes
 3 Months Ended
Jan. 03, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10—Income Taxes

Our effective income tax rate was (0.8)% for the three months ended January 3, 2026, compared to 19.7% for the three months ended December 28, 2024. For the three months ended January 3, 2026, the Company’s provision for income taxes is based upon an estimated annual effective tax rate for the year applied to ordinary income. The differences between the statutory rate and our effective rate for the three months ended January 3, 2026 were primarily attributable to state taxes and change in valuation allowance. The difference

between the statutory rate and our effective rate for the three months ended December 28, 2024 was primarily attributable to state taxes and change in valuation allowance related to our interest expense limitation. Our effective income tax rate can fluctuate due to factors including valuation allowances, changes in tax laws, federal and state audits, and the impact of other discrete items.

For the three months ended December 28, 2024, we utilized the discrete effective tax rate method, as allowed by Accounting Standards Codification 740- 270-30-18, “Income Taxes—Interim Reporting,” to calculate our interim income tax provision. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. The Company believed that the use of this discrete method was more appropriate than the annual effective tax rate method due to the sensitivity of tax adjustments to marginal pre-tax book profitability anticipated for the year.