Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11. Income Taxes

The provision for income tax expense consists of the following:

	Year ended December 31
	2024			2023			2022
Current:
Federal	$	18,176		$	(2,854	)	$	10,515
State		2,606			804			1,505
		20,782			(2,050	)		12,020
Deferred:
Federal		(2,617	)		7,709			(2,187	)
State		(425	)		(148	)		(1,081	)
		(3,042	)		7,561			(3,268	)
	$	17,740		$	5,511		$	8,752

A reconciliation of income tax expense computed at the federal statutory rate to the provision for income taxes for the years ended December 31, 2024, 2023 and 2022 is as follows:

	2024			2023			2022
Federal income tax expense at statutory rate	$	15,517		$	6,139		$	9,946
State taxes, net of federal benefit		2,295			762			1,445
Valuation allowance		(495	)		(67	)		(1,202	)
Change in uncertain tax positions, net		540			225			356
Research and development credit		(704	)		(1,012	)		(1,333	)
Investment tax credit		-			(682	)		-
State rate change		(165	)		92			(168	)
Other		752			54			(292	)
	$	17,740		$	5,511		$	8,752

Significant components of the Company’s deferred tax liabilities and assets are as follows:

	December 31,
	2024			2023
Deferred tax assets:
Allowance for doubtful accounts	$	588		$	413
Inventory reserves		1,749			1,468
Warranty liability		1,343			1,690
Deferred compensation		2,237			2,124
Pension and retiree health benefit obligations		866			1,225
Accrued vacation		844			1,137
Research expenditures		6,723			5,842
Operating lease liabilities		17,625			4,730
Net operating losses		1,194			1,663
Other accrued liabilities		4,550			4,376
State credit carryforwards		1,060			1,032
Other		338			404
Valuation allowance		(1,510	)		(2,005	)
Total deferred tax assets		37,607			24,099
Deferred tax liabilities:
Interest rate swaps		(573	)		(994	)
Tax deductible goodwill and other intangibles		(37,125	)		(35,974	)
Accelerated depreciation		(6,754	)		(9,924	)
Operating leases - right of use assets		(17,289	)		(4,430	)
Other		(440	)		(680	)
Total deferred tax liabilities		(62,181	)		(52,002	)
Net deferred tax liabilities	$	(24,574	)	$	(27,903	)

Deferred income tax balances reflect the effects of temporary differences between the carrying amount of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

State operating loss carry forwards for tax purposes will result in future tax benefits of approximately $906. These loss carry-forwards began to expire in 2021. The Company evaluated the need to maintain a valuation allowance against certain deferred tax assets. Based on this evaluation, which included a review of recent profitability, future projections of profitability, and future deferred tax liabilities, the Company concluded that a valuation allowance of approximately $1,222 is necessary at December 31, 2024 for the state net operating loss carry-forwards which are likely to expire prior to the Company's ability to use the tax benefit. The Company also carries a valuation allowance for approximately $288 related to non-state net operating loss carry-forwards which are likely to expire prior to the Company’s ability to use the tax benefit.

A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:

	2024			2023			2022
Balance at beginning of year	$	1,701		$	1,519		$	1,214
Increases for tax positions taken in the current year		681			277			350
Increases for tax positions taken in prior years		951			-			-
Decreases due to lapses in the statute of limitations		(828	)		(95	)		(45	)
Balance at the end of year	$	2,505		$	1,701		$	1,519

The amount of the unrecognized tax benefits that would affect the effective tax rate, if recognized, was approximately $2,505 at December 31, 2024. The Company recognizes interest and penalties related to the unrecognized tax benefits in income tax expense. Approximately $567 and $662 of accrued interest and penalties is reported as an income tax liability at December 31, 2024 and 2023, respectively. The liability for unrecognized tax benefits is reported in Other long‑term liabilities on the Consolidated Balance Sheets at December 31, 2024 and 2023.

The Company files income tax returns in the United States (federal) and various states. Tax years open to examination by tax authorities under the statute of limitations include 2021, 2022 and 2023 for Federal and 2020 through 2023 for most states. Tax returns for the 2024 tax year have not yet been filed.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures in the year incurred and required taxpayers to amortize them over a period of five years for tax purposes. This mandatory capitalization requirement increases the Company's deferred tax assets and cash tax liabilities.