XML 40 R23.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes 13. Income Taxes
Income before income taxes, as shown in the accompanying Consolidated Statements of Operations, includes the following components for the years ended December 31, 2024 and 2023:
Year Ended December 31,
20242023
Domestic$21,200 $14,575 
Foreign(6,755)(13,631)
Income before income taxes$14,445 $944 

Significant components of the provision for income taxes for the years ended December 31, 2024 and 2023 were as follows:

Year Ended December 31,
20242023
Current:
Federal$— $(16)
State2 53 
Foreign745 1,460 
Total current747 1,497 
Deferred:
Federal(21,441)— 
State(7,691)— 
Foreign(13)(1,852)
Total deferred(29,145)(1,852)
Total income tax (benefit) expense$(28,398)$(355)
The reconciliation of income tax computed at statutory rates to income tax expense for the years ended December 31, 2024 and 2023 is as follows:
Year Ended December 31,
20242023
AmountPercentAmountPercent
Statutory rate$3,033 21.0 %$198 21.0 %
Foreign tax rate differential(249)(1.7)(520)(55.1)
State income taxes, net of federal benefit772 5.3 322 34.1 
Non-deductible expenses221 1.5 206 21.8 
Non-deductible executive compensation400 2.8 256 27.1 
Income tax credits(164)(1.1)(218)(23.1)
Change in income tax rates(229)(1.6)(38)(4.0)
Tax on unremitted foreign earnings148 1.0 181 19.2 
Change in valuation allowance(31,937)(221.1)(723)(76.6)
Other(393)(2.7)(19)(2.0)
Total income tax (benefit) expense / effective rate
$(28,398)(196.6)%$(355)(37.6)%

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 were as follows:

December 31,
20242023
Deferred tax assets:
Goodwill and other intangibles$1,224 $1,762 
Accrued settlement— 2,001 
Deferred compensation3,885 4,127 
Contingent liabilities448 600 
Net operating loss / tax credit carryforwards35,431 36,217 
Pension and post-retirement liability— 149 
Inventories1,082 852 
Warranty reserve138 146 
Accounts receivable265 201 
Interest deduction carryforward1,444 1,882 
Capitalized research expenditures1,882 1,599 
Other453 680 
Total deferred tax assets46,252 50,216 
Less: valuation allowance(8,223)(40,125)
Net deferred tax assets38,029 10,091 
Deferred tax liabilities:
Goodwill and other intangibles(1,472)(2,181)
Depreciation(7,845)(8,596)
Pension and post-retirement liability(410)— 
Unrealized income on interest rate swap contracts(110)(306)
Unremitted earnings of foreign subsidiaries(195)(50)
Other(247)(190)
Total deferred tax liabilities(10,279)(11,323)
Net deferred tax (liabilities) assets$27,750 $(1,232)
A valuation allowance is required to be established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company has considered all available evidence, both positive and negative, in assessing the need for a valuation allowance in each jurisdiction.
During 2024, the Company reversed $34,210 of its valuation allowance previously recorded against certain U.S. federal and state deferred tax assets. The positive evidence considered in evaluating U.S. federal and state deferred tax assets included the Company's cumulative financial income position over the previous three years, as well as the composition and reversal patterns of existing taxable and deductible temporary differences between financial reporting and tax. Based on our evaluation, the Company believed it was appropriate to rely on forecasted future taxable income to support its U.S. federal and state deferred tax assets. The amount of deferred tax assets considered realizable, however, could be adjusted if negative evidence outweighs additional subjective evidence such as the Company's projections for growth.
As of December 31, 2024, the Company had a federal Net Operating Loss (“NOL”) carryforward of $93,344, which is limited to 80% of taxable income annually, but may be carried forward indefinitely. The Company also has federal research tax credit carryforwards in the amount of $1,228 that will expire at various times from 2036 through 2044. Based on information available as of December 31, 2024, the Company believes it is more likely than not that the tax benefits from the federal loss carryforwards and research tax credit carryforwards will be realized.
As of December 31, 2024 and 2023, the tax benefit of NOL carryforwards available for state income tax purposes was $9,802 and $10,137, respectively. Many state NOL carryforwards will expire in various years through 2044, while some may be carried forward indefinitely. Based on information available as of December 31, 2024, the Company believes it is more likely than not that a portion of the tax benefit from state operating loss carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $2,153 against deferred tax assets related to state operating loss carryforwards as of December 31, 2024.
As of December 31, 2024, the Company has NOL carryforwards in certain foreign jurisdictions of $26,346, which may be carried forward indefinitely. The foreign jurisdictions have incurred cumulative financial losses over the three-year period ended December 31, 2024 and have projected future taxable losses. Based on information available as of December 31, 2024, the Company believes it is more likely than not that the tax benefit from these loss carryforwards will not be realized. In recognition of this risk, it has provided a valuation allowance of $6,070, collectively, against deferred tax assets in foreign jurisdictions as of December 31, 2024.
The determination to record or not record a valuation allowance involves management's judgment, based on the consideration of positive and negative evidence available at the time of the assessment. Management will continue to assess the realization of its deferred tax assets based upon future evidence, and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income.
Each quarter, management reviews operations and liquidity needs in each jurisdiction to assess the Company’s intent to reinvest foreign earnings outside of the United States. As of December 31, 2024, management determined that a portion of the Company’s outside basis differences in its foreign subsidiaries would not be indefinitely reinvested outside of the United States. The Company has accrued foreign withholding taxes of $195 related to $3,900 of outside basis differences in its foreign subsidiaries that are not indefinitely reinvested as of December 31, 2024. It is management’s intent and practice to indefinitely reinvest all other undistributed earnings outside of the United States. Determination of the amount of any unrecognized deferred income tax liability associated with these undistributed earnings is not practicable because of the complexities of the hypothetical calculation.
The following table provides a reconciliation of unrecognized tax benefits as of December 31, 2024 and 2023:
December 31,
20242023
Unrecognized tax benefits at beginning of period:$307 $354 
Decreases based on tax positions for prior periods(42)(47)
Balance at end of period$265 $307 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $265 as of December 31, 2024. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 31, 2024 and 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of $294 and $332, respectively. As of December 31, 2024, the Company did not expect any material increases or decreases to its unrecognized tax benefits within the next 12 months. Ultimate realization of these tax benefits is dependent upon the occurrence of certain events, including the completion of audits by tax authorities and expiration of statutes of limitations.
The Company files income tax returns in the US and in various state, local, and foreign jurisdictions. The Company is subject to federal income tax examinations for the 2021 period and thereafter. With respect to the state, local, and foreign filings, certain entities of the Company are subject to income tax examinations for the 2020 period and thereafter.