XML 37 R22.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company is subject to income tax in multiple jurisdictions and the use of estimates is required to determine the provision for income taxes. For the years ended December 31, 2023, 2022 and 2021, the Company recorded an income tax provision of $10.7 million, $5.6 million and $6.8 million, respectively. The effective income tax rate for the years ended December 31, 2023, 2022 and 2021 was 38.4 percent, (5.7) percent and 17.0 percent, respectively.
The effective tax rate increased by 44.1% for the year ended December 31, 2023 when compared to 2022 primarily due to the tax rate impact of the goodwill impairment recorded during the year ended December 31, 2022 as well as the overall change from a loss to income position in 2023.
The provision for income taxes is based on income before income taxes reported for financial statement purposes. The components of income before income taxes are as follows:
Year Ended December 31,
(in thousands)202320222021
Domestic$38,099 $33,731 $42,449 
Foreign(10,147)(131,608)(2,265)
Total$27,952 $(97,877)$40,184 
Significant components of the provision for income taxes for the following periods are as follows:
Year Ended December 31,
(in thousands)202320222021
Current:
Federal$15,717 $15,366 $5,552 
State2,418 (393)975 
Foreign34 (99)(64)
Deferred
Federal(8,202)(9,159)(377)
State(385)(723)(814)
Foreign1,379 (4,641)(1,181)
Valuation Allowance(229)5,234 2,721 
Total$10,732 $5,585 $6,812 
A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows:
Year Ended December 31,
202320222021
Federal tax statutory rate21.0 %21.0 %21.0 %
State tax (net of federal benefit)3.5 (0.8)2.1 
Share based compensation6.0 (2.1)(2.3)
Valuation allowance against deferred tax assets(2.4)(5.0)8.9 
Goodwill impairment— (24.4)— 
Contingent consideration reduction— — (7.0)
Research and development credit(3.8)1.2 (4.0)
Foreign rate differential(1.6)2.9 (2.2)
Tax reserves1.9 1.0 (1.0)
Provision to return difference(0.2)— (0.7)
Unrealized foreign exchange losses2.9 — — 
Revaluation of deferred tax liability1.1 — — 
Closure of Japan branch net operating loss reversal11.1 — — 
Miscellaneous(1.1)0.5 2.2 
Total38.4 %(5.7 %)17.0 %
Significant components of deferred tax assets and liabilities are as follows:
December 31,
(in thousands)20232022
Deferred tax assets:
Accrued expenses$2,155 $2,254 
Section 174 expenses13,084 8,119 
Leases1,186 4,822 
Warrants and stock options4,588 4,087 
Inventories275 198 
Research and development credit2,327 2,374 
Other assets1,094 838 
Net operating loss16,237 16,586 
Less valuation allowance(17,667)(17,562)
Total deferred tax assets23,279 21,716 
Deferred tax liabilities:  
Depreciation(25,552)(29,397)
Goodwill(12,921)(10,716)
Intangible assets(2,362)(3,103)
Leases(1,186)(4,822)
Total deferred tax liabilities(42,021)(48,038)
Net deferred tax liability$(18,742)$(26,322)
The Company has recorded no U.S. deferred taxes related to the undistributed earnings of its non-U.S. subsidiaries as of December 31, 2023. Such amounts are intended to be reinvested outside of the United States indefinitely. It is not practicable to estimate the amount of additional tax that might be payable on the foreign earnings. As of December 31, 2023, the Company had accumulated undistributed earnings in non-U.S. subsidiaries of $3.4 million.
As of December 31, 2023, the Company had estimated net operating loss carry forwards of $16.2 million for tax purposes. The net operating losses relate to operations in Germany and Netherlands. Germany net operating losses may be carried forward without any time limitations but are limited to €1 million, plus 60 percent of taxable income exceeding €1 million. Netherlands net operating losses may be carried forward without any time limitations, but are limited to €1 million, plus 50 percent of taxable income exceeding €1 million.
The Company establishes valuation allowances for deferred tax assets when, after consideration of all positive and negative evidence, it is considered more-likely-than-not that a portion of the deferred tax assets will not be realized. The Company's valuation allowances of $17.7 million and $17.6 million at December 31, 2023 and 2022, respectively, reduce the carrying value of deferred tax assets associated with certain net operating loss carry forwards and other assets with insufficient positive evidence for recognition. The increase in the valuation allowance is primarily attributable to additional net operating losses generated in 2023.
The Company files a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state, or foreign income tax examinations by tax authorities for years before 2019.
The Company has liabilities related to unrecognized tax benefits totaling $3.6 million and $3.2 million at December 31, 2023 and 2022, respectively, that if recognized would result in a reduction of the Company’s effective tax rate. The liabilities are classified as other long-term liabilities in the accompanying consolidated balance sheets. The Company recognizes interest and penalties related to income tax matters in income tax expense and reports the liability in current or long-term income taxes payable as appropriate.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year Ended December 31,
20232022
Balance at beginning of period$3,236 $4,364 
Additions for tax positions of current year632 634 
Additions for tax positions of prior years86 23 
Decrease related to the expiration of statutes of limitations(338)— 
Reduction for tax positions of prior years— (1,785)
Balance at period end$3,616 $3,236