Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9. Income Taxes

Income (loss) before income taxes was as follows:

	Year ended December 31,
	2024		2023		2022
	(in thousands)
United States	$	52,829	$	37,356	$	26,274
Foreign		4,046		2,119		1,216
Total	$	56,875	$	39,475	$	27,490

Certain of the Company’s foreign subsidiaries are included in the Company’s U.S. tax return as branches but are included as foreign for purposes of the table above.

The provision (benefit) for income taxes was as follows:

	Year ended December 31,
	2024			2023		2022
				(in thousands)
Current:
Federal	$	10,308		$	6,203	$	5,063
State		1,840			1,300		938
Foreign		1,140			1,084		1,035
		13,288			8,587		7,036
Deferred:
Federal		(363	)		616		(144	)
State		(94	)		122		(83	)
Foreign		6			45		45
		(451	)		783		(182	)
Provision for income taxes	$	12,837		$	9,370	$	6,854

The Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority. As of December 31, 2024, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $0.5 million, which may increase within the 12 months ending December 31, 2025. The Company remains subject to examination until the statute of limitations expires for each remaining respective tax jurisdiction. The statute of limitations will be open with respect to these tax positions through 2031. A reconciliation of the beginning and ending amount of the Company’s unrecognized tax benefits is as follows:

	2024			2023			2022
	(in thousands)
Unrecognized tax benefits at the beginning of year	$	587		$	612		$	768
Additions/adjustments for tax positions of current year		-			-			-
Additions/adjustments for tax positions of prior years		(33	)		(25	)		(57	)
Reductions for settlements with taxing authorities		-			-			-
Reductions for lapses of the applicable statutes of limitations		(39	)		-			(99	)
Unrecognized tax benefits at the end of the year	$	515		$	587		$	612

Deferred taxes were attributable to the following temporary differences:

	As of December 31,
	2024			2023
	(in thousands)
Deferred tax assets:
Inventory	$	2,682		$	2,280
Net operating loss carryforwards		774			942
Tax credit carryforwards		1,138			1,092
Capital loss carryforwards		422			462
Reserves and accruals		908			823
Operating lease liabilities		3,419			3,721
Intangible assets		4,488			4,503
Stock options		746			696
Other		2,526			1,741
Total deferred tax assets		17,103			16,260
Deferred tax liabilities:
Property and equipment		(3,166	)		(2,996	)
Goodwill		(7,039	)		(6,311	)
Operating lease right-of-use assets		(3,152	)		(3,472	)
Foreign branch deferred offset		(593	)		(700	)
Other		(160	)		(183	)
Total deferred tax liabilities		(14,110	)		(13,662	)
Net deferred tax assets before valuation allowance		2,993			2,598
Valuation allowance		(1,653	)		(1,702	)
Net deferred tax asset	$	1,340		$	896
Deferred tax classification
Long-term deferred tax asset	$	1,425		$	1,003
Long-term deferred tax liability		(85	)		(107	)
Net long-term deferred tax asset	$	1,340		$	896

In 2022, the Company decreased its valuation allowance by $0.1 million mainly attributable to Australian net operating loss carry forwards and Massachusetts credit carryforwards. In 2023, the Company increased its valuation allowance by $0.1 million mainly attributable to Australian net operating loss carry forwards and Massachusetts credit carryforwards. In 2024, the Company decreased its valuation allowance by less than $0.1 million, with this decrease being mainly attributable to Australian net operating loss carry forwards and Massachusetts credit carryforwards.

As of December 31, 2024, the Company has provided a valuation allowance of $1.7 million for deferred tax assets primarily related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards that are not expected to be realized. The valuation allowance against the Company’s deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance.

Realization of the Company’s deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. Although the Company believes it is more likely than not that future taxable income will be sufficient to allow it to recover substantially all of the value of its deferred tax assets remaining after the Company applies the valuation allowances, realization is not assured and future events could cause the Company to change its judgment. In the event that actual results differ from the Company’s estimates, or the Company adjusts these estimates in the future periods, further adjustments to the Company’s valuation allowance may be recorded, which could materially impact its financial position and net income (loss) in the period of the adjustment.

As of December 31, 2024, the Company had net operating loss carryforwards in Australia of $1.0 million that do not expire, in France of $1.3 million that do not expire, in Spain of $0.5 million that do not expire, in Norway of $0.1 million that do not expire, and in China of $0.3 million that expire in three years. The Company has a capital loss carryforward in Australia of $1.4 million that does not expire. The Company also has state tax credit carryforwards of approximately $1.8 million that are available to reduce future tax liabilities, which begin to expire in 2030, or can be carried forward indefinitely.

In December 2018, the Company reevaluated its international operations and as a result, is no longer indefinitely reinvested with respect to undistributed earnings from its German and Australian subsidiaries. There was no material deferred tax expense recorded for foreign and state tax costs associated with the future remittance of these undistributed earnings. The Company remains permanently reinvested with respect to undistributed earnings from our other foreign subsidiaries. The Company has determined that it is not practicable to estimate the amount of deferred tax liability, if any, with respect to these permanently reinvested undistributed earnings.

A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate is as follows:

	2024			2023			2022
Federal statutory rate		21.0	%		21.0	%		21.0	%
State tax, net of federal benefit		2.5	%		2.8	%		2.7	%
Effect of foreign taxes		0.6	%		1.7	%		4.0	%
Federal tax on foreign income		0.2	%		0.3	%		0.0	%
Valuation allowance		0.1	%		0.2	%		(0.2	%)
Foreign deferred tax liability offset		(0.1	%)		(0.1	%)		(0.2	%)
Research & development tax credits		(0.7	%)		(0.6	%)		0.0	%
Stock options		(1.7	%)		(1.8	%)		0.0	%
Uncertain tax positions		0.0	%		0.1	%		(0.3	%)
Other permanent differences		0.6	%		0.4	%		(1.8	%)
Other		0.1	%		(0.3	%)		(0.3	%)
Effective tax rate		22.6	%		23.7	%		24.9	%

The Company is not currently under income tax audit in any tax jurisdictions.

As of December 31, 2024, the Company remains subject to examination in our most significant tax jurisdictions as follows:

United States	2020 and forward
Foreign	2016 and forward

Supplemental disclosures of cash flow information are as follows:

	Year ended December 31,
	2024		2023		2022
	(in thousands)
Cash paid for income taxes, net	$	12,837	$	7,549	$	8,343