INCOME TAXES

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income (loss) from continuing operations before provision for income taxes are taxed under the following jurisdictions (dollar amounts in thousands):

Year Ended December 31,	2025		2024
Domestic	$	(32,345)	$	(29,434)
Foreign	62,157		47,860
Total	$	29,812	$	18,426

Components of the provision for income taxes are as follows (dollar amounts in thousands):

Year Ended December 31,	2025		2024
Current:
Federal	$	953	$	1,061
State	101		824
Foreign	10,580		10,311
Subtotal	11,634		12,196
Deferred:
Federal	(2,455)		(1,705)
State	341		(1,109)
Foreign	(159)		1,152
Subtotal	(2,273)		(1,662)
Total provision for income taxes	$	9,361	$	10,534

The provision for income taxes, presented as dollar amounts in thousands and as a percentage of income from continuing operations before provision for income taxes, differs from the statutory U.S. federal income tax rate due to the following:

Year Ended December 31,	2025				2024
Statutory U.S. federal income tax rate	$	6,261	21.0	%	$	3,869	21.0	%
State income taxes, net of U.S. federal income tax*	349		1.2		(213)		(1.2)
Foreign tax effects
Canada	191		0.6		218		1.2
China
Withholding tax on royalties	340		1.1		413		2.2
Disallowance of prior years expenses	—		—		240		1.3
Other	592		2.0		249		1.4
Ecuador
Changes in valuation allowance	(49)		(0.2)		238		1.3
Other	53		0.2		(22)		(0.1)
Hong Kong	(221)		(0.7)		297		1.6
Indonesia
Loss adjustment	83		0.3		260		1.4
Other	120		0.4		(115)		(0.6)
Japan
Non-deductible entertainment	104		0.3		310		1.7

Other	(24)		(0.1)		(121)		(0.7)
Korea
Withholding tax on royalties	1,200		4.0		1,213		6.6
Withholding tax on unremitted earnings	479		1.6		583		3.2
Other	(22)		(0.1)		20		0.1
Mexico
Changes in valuation allowance	(275)		(0.9)		429		2.3
Other	134		0.4		(112)		(0.6)
Netherlands
Loss adjustment	368		1.2		(191)		(1.0)
Changes in valuation allowance	(429)		(1.4)		637		3.5
Other	17		0.1		(75)		(0.4)
Poland
Withholding tax on royalties	581		2.0		416		2.3
Other	(34)		(0.1)		(9)		—
Taiwan
Withholding tax on royalties	—		—		3,200		17.4
Non-deductible commissions	276		0.9		485		2.6
Other	(30)		(0.1)		(25)		(0.1)
Thailand
Changes in valuation allowance	19		0.1		240		1.3
Other	47		0.2		(13)		(0.1)
Other foreign jurisdictions	188		0.6		439		2.4
Effect of cross-border tax laws
Foreign derived income deduction	300		1.0		(2,874)		(15.6)
Global intangible low-taxed income, net of credits	154		0.5		(350)		(1.9)
Foreign flow-through income	4,028		13.5		346		1.9
Transfer pricing adjustments	207		0.7		621		3.3
Other	39		0.1		(130)		(0.7)
Tax credits
Foreign tax credits	(8,182)		(27.4)		170		0.9
Other	(146)		(0.5)		(99)		(0.6)
Changes in valuation allowance	2,669		9.0		(975)		(5.3)
Non-taxable or non-deductible items
Executive compensation	442		1.5		616		3.3
Other	(279)		(1.0)		18		0.1
Changes in unrecognized benefits	(189)		(0.6)		331		1.8
Effective income tax rate	$	9,361	31.4	%	$	10,534	57.2	%

*State taxes in California, Texas, and Georgia made up the majority (greater than 50 percent ) of the tax effect in this category each year.

During the current period, we updated our estimate of intercompany charges for the prior period. This revision affected the calculation of withholding taxes, foreign derived income deduction, and foreign tax credits and required a corresponding adjustment to the valuation allowance. The net impact is not significant to our provision for income taxes, but as a result of these updates, the comparability of certain tax items between periods may appear inconsistent.

The significant components of the deferred tax assets (liabilities) are as follows (dollar amounts in thousands):

As of December 31,	2025		2024
Inventory	$	2,584	$	2,159
Accrued liabilities	2,674		2,256
Operating lease liabilities	3,183		2,136
Share-based compensation	1,254		1,260
Net operating losses	5,094		5,407
Foreign tax and withholding credits	14,822		12,393
Accrued compensation	2,194		1,096
Fixed assets	10,481		8,824
Other deferred tax assets	2,466		3,109
Valuation allowance	(20,878)		(18,864)
Total deferred tax assets	23,874		19,776
Right of use assets	(2,959)		(1,867)
Tax on unremitted earnings	(1,731)		(1,233)
Other deferred tax liabilities	(70)		(39)
Total deferred tax liabilities	(4,760)		(3,139)
Total deferred taxes, net	$	19,114	$	16,637

The components of deferred tax assets (liabilities), net are as follows (dollar amounts in thousands):

As of December 31,	2025		2024
Net deferred tax assets	$	20,068	$	17,644
Net deferred tax liabilities	(954)		(1,007)
Total deferred taxes, net	$	19,114	$	16,637

We have elected the period cost method (costs are treated as a current period expense when incurred) under U.S. GAAP as it relates to GILTI income inclusions in U.S. taxable income. Each reporting period we analyze our indefinite reinvestment assertions with respect to undistributed foreign earnings. As of December 31, 2025, we continue to assert that we do not intend to reinvest undistributed foreign earnings indefinitely in our foreign subsidiaries.

We have provided a valuation allowance of $20.9 million and $18.9 million as of December 31, 2025 and 2024, respectively, for certain deferred tax assets, including foreign net operating losses, which we cannot conclude it is more likely than not that they will be realized. For financial reporting purposes, the increase in valuation allowances increases income tax expense in the year recorded. At December 31, 2025, we had approximately $14.8 million of foreign tax and withholding credits. Of the $14.8 million credits, $14.7 million are foreign tax credits, which begin expiring in 2028. We do not expect to use these credits before expiration and they are offset by a valuation allowance.

At December 31, 2025, foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $5.1 million, tax effected. The net operating losses will expire at various dates from 2026 through 2036, with the exception of those in some foreign jurisdictions where there is no expiration. The foreign net operating losses have a valuation allowance recorded against the portion expected to expire before utilization.

Cash paid for taxes, net of refunds, was as follows (dollar amounts in thousands):

Year Ended December 31,	2025		2024
Federal	$	1,053	$	2,598
State	488		401
Foreign
Taiwan	4,993		5,199
Korea	3,571		3,586
China	996		1,346
Other foreign jurisdictions	1,446		1,658
Total	$	12,547	$	14,788

We are subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. We believe we have appropriately provided for income taxes for all years. Several factors drive the calculation of our tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) the issuance of tax rulings and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to our reserves, which would impact our reported financial results.

Our U.S. federal income tax returns for 2022 through 2024 are open to examination for federal tax purposes. We have several foreign tax jurisdictions that have open tax years from 2020 through 2024.

The total outstanding balance for liabilities related to unrecognized tax benefits at December 31, 2025 and 2024 was $0.7 million and $0.9 million, respectively, all of which would favorably impact the rate if recognized. Included in these amounts is approximately $34,000 and $0.1 million, respectively, of combined interest and penalties. We decreased interest and penalties approximately $84,000 for the year ended December 31, 2025 and increased interest and penalties approximately $8,000 for the year ended December 31, 2024. We account for interest expense and penalties for unrecognized tax benefits as part of our income tax provision.

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax benefits, excluding interest and penalties, is as follows for the years (dollar amounts in thousands):

Year Ended December 31,	2025		2024
Unrecognized tax benefits, opening balance	$	779	$	471
Tax positions taken in a prior period
Gross increases	—		318
Gross decreases	(89)		—
Lapse of applicable statute of limitations	(67)		—
Currency translation adjustments	11		(10)
Unrecognized tax benefits, ending balance	$	634	$	779

Although we believe our estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in our historical income tax provisions and accruals. Such differences could have a material impact on our income tax provision and operating results in the period in which we make such determination.