Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In 2024, 2023 and 2022, pre-tax income (loss) was attributed to the following jurisdictions: 

	Year Ended December 31,
(In thousands)	2024		2023		2022
Domestic operations	$	(53,708)	$	(95,876)	$	(69,058)
Foreign operations	35,110		3,622		80,451
Total pre-tax income (loss)	$	(18,598)	$	(92,254)	$	11,393

The provision for income taxes charged to operations was as follows: 

	Year Ended December 31,
(In thousands)	2024		2023		2022
Current tax expense:
U.S. federal	$	37	$	23	$	573
State and local	45		44		73
Foreign	5,068		7,193		8,523
Total current	5,150		7,260		9,169
Deferred tax (benefit) expense:
U.S. federal	269		(813)		230
State and local	—		(126)		36
Foreign	12		(337)		1,551
Total deferred	281		(1,276)		1,817
Total provision for income taxes	$	5,431	$	5,984	$	10,986

Net deferred tax assets were comprised of the following: 

	December 31,
(In thousands)	2024		2023
Deferred tax assets:
Accounts receivable	$	464	$	—
Accrued liabilities	4,820		3,958
Amortization of intangible assets	9,223		9,999
Capitalized inventory costs	3,553		3,369
Capitalized research and development costs	10,245		8,035
Depreciation	3,797		4,058
Income tax credits	20,375		19,615
Inventory reserves	2,371		2,154
Net operating losses	14,003		12,053
Operating lease obligations	2,865		4,112
Stock-based compensation	2,915		4,453
Total deferred tax assets	74,631		71,806
Deferred tax liabilities:
Accounts receivable	—		(20)
Right-of-use assets	(3,175)		(4,385)
Other	(1,333)		(2,920)
Total deferred tax liabilities	(4,508)		(7,325)
Net deferred tax assets before valuation allowance	70,123		64,481
Less: Valuation allowance	(65,629)		(59,686)
Net deferred tax assets	$	4,494	$	4,795

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income from operations as a result of the following: 

	Year Ended December 31,
(In thousands)	2024		2023		2022
Tax provision (benefit) at statutory U.S. rate	$	(3,906)	$	(19,373)	$	2,392
Increase (decrease) in tax provision (benefit) resulting from:
Distribution of previously taxed foreign earnings and profits	—		(9,450)		(16,776)
Federal research and development credits	(816)		(1,043)		(715)
Foreign participation exemption	—		(12,571)		—
Foreign permanent benefit	(650)		(1,426)		(1,620)
Foreign tax rate differential	(295)		21,794		15,133
Foreign undistributed earnings, net of credits	6,231		7,198		6,486
Goodwill impairment	—		5,383		—
Non-deductible items	635		594		601
Non-territorial income	(2,088)		(945)		(2,323)
Provision to return	(350)		(19)		(435)
Sale of intangible asset	—		—		(3,385)
State and local taxes, net	(992)		(2,629)		(2,408)
Stock-based compensation	2,045		980		693
Tax rate change	(2,286)		1,648		(640)
Valuation allowance	5,943		15,090		12,058
Withholding tax	1,521		1,229		2,188
Other	439		(476)		(263)
Tax provision	$	5,431	$	5,984	$	10,986

At December 31, 2024, we had U.S. federal and state Research and Development ("R&D") income tax credit carryforwards of approximately $6.0 million and $17.6 million, respectively. The federal R&D income tax credits begin expiring in 2039. The state R&D income tax credits do not have an expiration date.

At December 31, 2024, we had U.S. federal, state and local, and foreign net operating loss carryforwards of approximately $28.6 million, $91.0 million and $7.5 million, respectively. The U.S. federal net operating loss carryforwards do not have an expiration date. The state and local and foreign net operating loss carryforwards begin to expire in 2025 and 2027, respectively.

At December 31, 2024, we assessed the realizability of the Company's deferred tax assets by considering whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We considered the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. Due to cumulative operating losses for the three years ended December 31, 2024, we have recorded a valuation allowance against our U.S. federal and state deferred tax assets of $39.3 million and $23.8 million, respectively, as we have determined that it is more likely than not that the tax benefits will not be realized in the future. The valuation allowance increased by $6.0 million and $15.1 million during the years ended December 31, 2024 and 2023, respectively. The Company had an overall U.S. federal deferred tax liability as of December 31, 2024 for foreign withholding taxes that cannot be used as a source of income to offset deferred tax assets.

In general, under Section 382, a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize pre-change net operating losses and tax credits to offset future taxable income. We do not believe that we have experienced such an ownership change and do not expect our net operating losses and tax credits to be subject to the limitations under Section 382.

Uncertain Tax Positions

At December 31, 2024 and 2023, we had gross unrecognized tax benefits of approximately $3.7 million and $3.4 million, respectively, including interest and penalties. In accordance with accounting guidance, we have elected to classify interest and penalties as components of tax expense. Interest and penalties were immaterial for the year ended December 31, 2024, 2023 and 2022. Interest and penalties are included in the unrecognized tax benefits.

Changes to our gross unrecognized tax benefits were as follows: 

	Year Ended December 31,
(In thousands)	2024		2023		2022
Balance at beginning of period	$	3,315	$	3,150	$	3,001
Additions as a result of tax positions taken during the current year	322		165		149
Balance at end of period	$	3,637	$	3,315	$	3,150

Approximately $3.7 million, $3.3 million and $3.2 million of the total amount of unrecognized tax benefits at December 31, 2024, 2023 and 2022, respectively, would favorably effect the annual effective tax rate if not for the valuation allowance. We are unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within the next twelve months. We do not anticipate a decrease in unrecognized tax benefits within the next twelve months based on federal, state, and foreign statute expirations in various jurisdictions. We have classified uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year.

We file income tax returns in the U.S. and in various state and foreign jurisdictions. As of December 31, 2024, the open statutes of limitations for our significant tax jurisdictions are as follows: U.S. federal for 2021 through 2023, state and local for 2020 through 2023, and non-U.S. for 2018 through 2023.

Indefinite Reinvestment Assertion

Beginning in 2018, the Tax Act generally provides a 100% federal deduction for dividends received from foreign subsidiaries. Nevertheless, companies must still apply the guidance of ASC Topic 740 to account for the tax consequences of outside basis differences and other tax impacts of their investments in foreign subsidiaries, including potential foreign withholding taxes on distributions. For the years ended December 31, 2024, 2023 and 2022, we recorded a deferred tax liability of $0.4 million, $0.4 million and $0.5 million, respectively, relating to state tax and foreign tax withholding liabilities on future distributions.