Income Tax

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Tax

11.Income Taxes

Income tax expense (benefit) included in the Company’s accompanying Condensed Consolidated Statements of Operations was as follows (in thousands, except percentages):

	Three months ended						Nine months ended
	September 30,						September 30,
		2024			2023			2024			2023
Income tax expense (benefit)	$	82		$	(123)		$	347		$	475
Effective tax rate		1.9	%		15.7	%		(4.3)	%		(3.6)	%

The effective rate for the three and nine months ended September 30, 2024 differed from the Company’s statutory federal rate of 21% primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

The Company's effective tax rate is typically based on expected income for the calendar year, statutory rates and tax planning opportunities available. This estimated annual effective tax rate is then applied to year-to-date operations.  The Company expects near break-even operations for the full year ended December 31, 2024, such that a small change in the year-to-date operations could result in a large change to the estimated annual effective tax rate.  Therefore, the Company’s effective tax rate for the period ending September 30, 2024, is based off actual year-to-date operations. 

The Company assessed the realizability of its deferred tax assets and determined that it was more likely than not that some portion or all the deferred tax assets would not be realized and therefore recorded a valuation allowance on the net deferred tax assets. The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. The Company considers the scheduled reversal of deferred tax liabilities, available carryback periods, and tax-planning strategies in making this assessment. For the period ended September 30, 2024 the Company evaluated all positive and negative evidence in determining the amount of deferred tax assets more likely than not to be realized. Based on the review of available evidence, management believes that a valuation allowance on the net deferred tax assets at September 30, 2024 remains appropriate.

The Company reduced its previously unrecognized tax benefits by $1.6 million in the quarter ended September 30, 2024 due to a lapse in the statute of limitations.  The Company does not have any unrecognized tax benefits as of September 30, 2024.