Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.23.3
Income Taxes
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

Note 12—Income Taxes

The provision for income taxes consists of the following (in thousands):

 

 

 

Year Ended

 

 

 

September 30, 2023

 

 

October 1, 2022

 

 

October 2, 2021

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

13,425

 

 

$

37,886

 

 

$

25,914

 

State

 

 

2,404

 

 

 

8,736

 

 

 

7,733

 

Total Current

 

 

15,829

 

 

 

46,622

 

 

 

33,647

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(5,608

)

 

 

2,556

 

 

 

2,633

 

State

 

 

(722

)

 

 

(90

)

 

 

215

 

Total Deferred

 

 

(6,330

)

 

 

2,466

 

 

 

2,848

 

Total income tax provision

 

$

9,499

 

 

$

49,088

 

 

$

36,495

 

 

A reconciliation of the provision for income taxes to the amount computed at the federal statutory rate is as follows (in thousands):

 

 

 

Year Ended

 

 

 

September 30, 2023

 

 

October 1, 2022

 

 

October 2, 2021

 

Federal income tax at statutory rate

 

$

7,716

 

 

$

43,705

 

 

$

34,257

 

Equity-based compensation

 

 

129

 

 

 

(1,025

)

 

 

(2,360

)

Section 162(m) limitation

 

 

520

 

 

 

805

 

 

 

2,826

 

Permanent differences

 

 

82

 

 

 

96

 

 

 

564

 

Change in valuation allowance

 

 

—

 

 

 

—

 

 

 

(5,425

)

State taxes, net of federal benefit

 

 

1,109

 

 

 

6,734

 

 

 

7,072

 

Other

 

 

(57

)

 

 

(1,227

)

 

 

(439

)

Total income tax provision

 

$

9,499

 

 

$

49,088

 

 

$

36,495

 

Our effective income tax rate for fiscal 2023 was 25.9% as compared to 23.6% in fiscal 2022.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are summarized below (in thousands):

 

 

 

September 30, 2023

 

 

October 1, 2022

 

Deferred tax assets:

 

 

 

 

 

 

Compensation accruals

 

$

1,878

 

 

$

4,067

 

Inventories

 

 

1,237

 

 

 

3,496

 

Lease liabilities

 

 

64,619

 

 

 

58,710

 

Equity-based compensation

 

 

2,503

 

 

 

2,151

 

Reserves and other accruals

 

 

2,696

 

 

 

1,059

 

Interest limitation

 

 

7,615

 

 

 

—

 

Capitalized research expenditures

 

 

2,017

 

 

 

—

 

Total deferred tax assets

 

 

82,565

 

 

 

69,483

 

Deferred tax liabilities:

 

 

 

 

 

 

Property, plant, and equipment

 

 

(4,387

)

 

 

(4,066

)

Intangibles

 

 

(6,109

)

 

 

(4,302

)

Lease assets

 

 

(61,835

)

 

 

(57,798

)

Deferred financing cost

 

 

(253

)

 

 

(310

)

Other

 

 

(2,383

)

 

 

(1,739

)

Total deferred tax liabilities

 

 

(74,967

)

 

 

(68,215

)

Deferred tax assets (liabilities), net

 

$

7,598

 

 

$

1,268

 

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. The interest expense limitation passed in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) created a deferred tax asset for the fiscal year ended October 3, 2020 that we did not anticipate realizing in the immediate future; as a result, a valuation allowance was recorded. The $5.4 million valuation allowance was removed during the first quarter of fiscal 2021 as the realization of the CARES Act deferred tax asset was deemed probable due to the Company's paydown of debt with proceeds from the IPO, which decreased interest expense.

We are subject to United States federal and state taxes in the normal course of business and our income tax returns are subject to examination by the relevant tax authorities. We are no longer subject to United States federal examinations by taxing authorities for calendar years before 2019 and no longer subject to state examinations for calendar years before 2018.

We have not identified any material uncertain tax positions.

In August 2022, the Inflation Reduction Act of 2022 was signed into law and contains provisions effective January 1, 2023 which were not material to the Company’s income tax provision.