Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to U.S. federal income tax as well as income tax in multiple state and local jurisdictions. With few exceptions, the statute of limitations for these jurisdictions is no longer open for audit or examinations for the years before 2020 for federal and state income taxes in the U.S.

We file consolidated federal income tax returns that include all of our U.S. subsidiaries. The components of income from continuing operations before income taxes were as follows (in thousands):

	For the years ended December 31,
	2024		2023		2022
Domestic	$	41,599	$	52,137	$	36,694
Foreign	4,881		4,776		(983)
Income from continuing operations before income taxes	$	46,480	$	56,913	$	35,711

The components of the provision for income taxes from continuing operations were as follows (in thousands):

	For the years ended December 31,
	2024		2023		2022
Current:
Federal	$	11,670	$	11,556	$	9,483
State	2,132		2,205		1,485
Foreign	1,573		1,138		35
Total current	15,375		14,899		11,003
Deferred:
Federal	(4,725)		(1,148)		(1,890)
State	(489)		3		(61)
Foreign	(179)		7		—
Total deferred	(5,393)		(1,138)		(1,951)
Provision for income taxes	$	9,982	$	13,761	$	9,052

The Company's effective tax rate differs from the federal statutory rate. A reconciliation of the provision for income taxes from continuing operations to the amount computed by applying the statutory federal income tax rate is as follows (in thousands):

	For the years ended December 31,
	2024			2023			2022
Tax at statutory federal income tax rate	$	9,761		$	11,952		$	7,499
Increases (decreases) in tax resulting from:
State taxes, net of federal tax benefit	1,738			2,019			1,459
Permanent differences, net	(634)			(193)			287
Tax credits	(454)			(461)			(418)
Prior year true-up adjustment	(931)			269			(45)
Valuation allowance	378			77			324
Other provision adjustments	124			98			(54)
Provision for income taxes	$	9,982		$	13,761		$	9,052
Effective tax rate	21.5		%	24.2		%	25.3		%

The tax effect of temporary differences representing deferred tax assets and liabilities was as follows (in thousands):

	As of December 31,
	2024		2023
Deferred compensation and accrued paid leave	$	2,767	$	3,003
Accrued expense	2,094		1,429
Inventory reserve	23,463		13,980
Operating lease liabilities	14,362		6,249
Stock-based compensation	2,084		1,697
Capitalized inventory	1,741		1,335
US operating and capital loss carryforward	12,777		7,637
Disallowed interest expense	9,450		1,663
Tax credit carryforward	1,421		1,492
Foreign country operating loss carryforward	1,364		806
Interest capitalized	2,030		—
Transaction costs	357		—
	73,910		39,291
Valuation allowance (a)	(19,301)		(9,906)
Total gross deferred tax assets	54,609		29,385
Interest rate swaps	(1,021)		(708)
Depreciation	(3,959)		(2,925)
Goodwill and intangible assets	(38,279)		(26,666)
Operating lease right-of-use assets	(10,962)		(5,939)
Other	(270)		(132)
Total gross deferred tax liabilities	(54,491)		(36,370)
Net deferred tax assets (liabilities) (b)	$	118	$	(6,985)
(a) A valuation allowance was provided against US capital loss in connection with the stock sale of Prime Turbines, certain state net operating loss, tax credit, and foreign tax loss deferred tax assets arising from carryforwards of unused tax benefits.
(b) Deferred tax assets are included within other assets in our consolidated balance sheets.

As of December 31, 2024, we had various tax losses and tax credits that may be applied against future taxable income. The majority of such tax attributes will expire in 2025 through 2044; however, some may be carried forward indefinitely.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the US has not yet adopted the Pillar Two rules, many countries took steps to incorporate Pillar Two model rule concepts into their domestic laws in 2023. Considering that we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, we do not expect these rules will significantly increase our global tax costs. We will continue to monitor US and global legislative action related to Pillar Two for future potential impacts.