Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 18. Income Taxes

U.S. and international components of income (loss) before income taxes is as follows:

	Year Ended December 31,
(Thousands)	2024		2023		2022
U.S.	$	(77,808)	$	(34,695)	$	(51,607)
International		1,430		(6,130)		(3,743)
Loss before income taxes and equity in earnings from unconsolidated entities	$	(76,378)	$	(40,825)	$	(55,350)

Income tax expense (benefit) consisted of the following:

	Year Ended December 31,
(Thousands)	2024		2023		2022
Current expense (benefit)
Federal	$	—	$	—	$	—
State		447		266		529
Foreign		(6)		(112)		1,619
Total current		441		154		2,148
Deferred expense (benefit)
Federal		1,244		(7,365)		173
State		(27)		236		81
Foreign		2,070		617		(2,291)
Total deferred		3,287		(6,512)		(2,037)
Income tax expense (benefit)	$	3,728	$	(6,358)	$	111

A reconciliation of income tax expense (benefit) to the federal statutory rate is as follows:

	Year Ended December 31,
(Thousands)	2024		2023		2022
Income tax expense (benefit) at U.S. statutory income tax rate	$	(16,039)	$	(8,573)	$	(11,624)
State income tax expense (benefit), net of federal benefit		(2,197)		(862)		(1,507)
Foreign rate differential		101		(260)		(15)
Change in fair value of warrants		(1,473)		(2,144)		6,232
Global intangible low-taxed income ("GILTI") inclusion		1,021		—		—
Stock compensation (windfall)/shortfall		390		(838)		(195)
Corporate interest restriction		617		677		291
Excess compensation (§162(m))		36		717		182
Other permanent differences		272		161		146
Change in valuation allowance		20,788		4,414		7,319
Provision to return adjustments		—		—		(320)
Effect of change in foreign tax rates		—		—		(552)
Other		212		350		154
Income tax expense (benefit)	$	3,728	$	(6,358)	$	111
Effective tax rate		(4.9)%		15.6%		(0.2)%

Deferred income tax assets and liabilities were recognized on temporary differences between the financial and tax basis of existing assets and liabilities as follows:

(Thousands)	December 31, 2024		December 31, 2023
Deferred tax assets
Liabilities and reserves	$	2,058	$	2,158
Interest limitation		20,633		18,217
Net operating losses		65,630		21,804
Transaction expenses		165		186
Inventories		—		1,146
Stock compensation		1,753		1,205
Operating lease liabilities		15,709		16,223
Other		1,438		2,131
Total		107,386		63,070
Valuation allowance		(30,542)		(12,878)
Total deferred tax assets, net	$	76,844	$	50,192
Deferred tax liabilities
Property, plant and equipment	$	(42,659)	$	(15,649)
Intangible assets		(25,061)		(26,392)
Derivatives		(7,071)		(2,214)
Right-of-use assets		(15,267)		(16,041)
Inventories		(1,278)		—
Other		(462)		(743)
Total		(91,798)		(61,039)
Net deferred tax liability	$	(14,954)	$	(10,847)

We establish a valuation allowance to reduce deferred tax assets if, based on the weight of the available evidence, both positive and negative, for each respective tax jurisdiction, it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance related to domestic deferred tax assets of $26.7 million was recorded as of December 31, 2024, of which $21.0 million and $5.7 million were against the Company’s federal and state net operating loss carryforwards, respectively. A valuation allowance related to domestic deferred tax assets of $9.9 million was recorded as of December 31, 2023, of which $7.6 million was against a portion of the Company’s Section 163(j) interest limitation carryforward, and the remainder was against certain state net operating losses. A valuation allowance related to foreign deferred tax assets of $3.8 million and $3.0 million was recorded against certain foreign net operating losses as of December 31, 2024 and 2023, respectively. The amount of deferred tax assets considered realizable could be adjusted in the near term, resulting in an increase to the valuation allowance, if estimates of future taxable income during the carryforward period are reduced.

Activity in the valuation allowance is as follows:

(Thousands)	December 31, 2024		December 31, 2023		December 31, 2022
Beginning balance	$	12,878	$	8,464	$	1,145
Additions		17,664		4,414		7,319
Ending Balance	$	30,542	$	12,878	$	8,464

During the year ended December 31, 2024, the valuation allowance increased $17.7 million, which was comprised of additional income tax expense of $20.8 million that is reflected as a component of the effective tax rate against continuing operations, partially offset by an income tax benefit of $3.1 million, which is reflected as a component of other comprehensive income.

As of December 31, 2024, the Company had federal net operating loss carryforwards of approximately $283.1 million which do not expire. As of December 31, 2024, the Company had post-apportionment state net operating loss carryforwards of approximately $153.3 million which begin to expire in 2030. As of December 31, 2024, the Company had foreign net operating loss carryforwards of approximately $15.9 million which begin to expire in 2025.

As of December 31, 2024 and 2023, the Company’s reserve for uncertain tax positions was $5.0 million and $4.0 million, respectively. It is reasonably possible the Company’s reserve for uncertain tax positions could increase or decrease in the next 12 months. However, it is not practical to estimate the change, which may be influenced by several factors. Of the total reserve for uncertain tax positions as of December 31, 2024 and 2023, only $0.1 million and $0.1 million, respectively, would impact the effective tax rate if released. As indicated in Note 3, the Company re-revaluates uncertain tax positions on a quarterly basis. The Company recognizes potential interest and penalties relating to unrecognized tax positions as a component of income tax expense (benefit). A reconciliation of the beginning and ending balances of the reserve for uncertain tax positions is as follows:

(Thousands)	December 31, 2024		December 31, 2023		December 31, 2022
Beginning balance	$	3,990	$	96	$	96
Additions for tax positions in prior period		—		2,473		—
Additions for tax positions in current period		1,009		1,421		—
Ending Balance	$	4,999	$	3,990	$	96

As of December 31, 2024, undistributed earnings of certain foreign subsidiaries of approximately $9.9 million are intended to be permanently reinvested outside the U.S. Accordingly, no provision for foreign withholding tax, foreign exchange gains/losses or state income taxes associated with a distribution of these earnings has been made. The amount of the unrecognized deferred tax liability on these unremitted earnings is not material.

We are subject to taxation in the United States and various states and foreign jurisdictions, including the United Kingdom. As of December 31, 2024, we have no tax years under examination by the IRS, and there are currently no state or foreign income tax examinations in process. The Company is subject to United States federal income tax examinations for years after 2020 and to state and foreign income tax examinations for years after 2020.