Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

    The provision (benefit) for income taxes was as follows:

	Year Ended December 31,
(In thousands)	2022		2021		2020
Current:
U.S. Federal	$	318	$	773	$	1,591
State	338		525		365
Foreign	7,099		7,204		5,011
Total current	7,755		8,502		6,967
Deferred:
U.S. Federal	(3,204)		547		(16,309)
State	(142)		(545)		598
Foreign	(38)		(1,211)		(3,139)
Total deferred	(3,384)		(1,209)		(18,850)
Total provision (benefit) for income taxes	$	4,371	$	7,293	$	(11,883)

 Income (loss) before income taxes was as follows:

	Year Ended December 31,
(In thousands)	2022		2021		2020
U.S.	$	(38,001)	$	(36,250)	$	(92,838)
Foreign	21,538		18,017		259
Loss before income taxes	$	(16,463)	$	(18,233)	$	(92,579)

The effective income tax rate is reconciled to the statutory federal income tax rate as follows:

	Year Ended December 31,
(In thousands)	2022		2021		2020
Income tax expense (benefit) at federal statutory rate	$	(3,457)	$	(3,829)	$	(19,442)
Tax benefit on restructuring of certain subsidiary legal entities	(3,111)		—		—
Recognition of Brazil cumulative foreign currency translation losses	—		—		2,456
Nondeductible executive compensation	958		999		170
Other nondeductible expenses	684		557		616
Stock-based compensation	5		880		1,602
Different rates on earnings of foreign operations	63		(115)		274
Dividend taxes on unremitted earnings	874		980		322
U.S. tax on foreign earnings	378		—		—
Research and development credits	(649)		(1,093)		(521)
Change in valuation allowance	8,156		10,416		2,226
State tax expense (benefit), net	55		(1,302)		196
Other items, net	415		(200)		218
Total provision (benefit) for income taxes	$	4,371	$	7,293	$	(11,883)

The provision for income taxes was $4.4 million for 2022, which includes an income tax benefit of $3.1 million related to the restructuring of certain subsidiary legal entities within Europe, as the undistributed earnings for an international subsidiary are no longer subject to certain taxes upon future distribution. The provision for income taxes in 2022 was unfavorably impacted as we are unable to recognize a tax benefit related to the $37.3 million of impairment charges. The provision for income taxes was $7.3 million for 2021, despite reporting a pretax loss for the period. In both years, income tax expense primarily reflects earnings from our international operations since we are unable to recognize the tax benefit from our U.S. losses as they may not be realized. The benefit for income taxes was $11.9 million for 2020 reflecting an effective tax benefit rate of 13%. This result primarily reflects the impact of the $11.7 million non-cash recognition of cumulative foreign currency translation losses related to the substantial liquidation of our subsidiary in Brazil and other nondeductible expenses, as well as the impact of the geographic composition of our pretax loss, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in March 2020 in the United States. The CARES Act contains several tax provisions, including additional carry back opportunities for net operating losses, temporary increases in the interest deductibility threshold, and the acceleration of refunds for any remaining alternative minimum tax (“AMT”) carryforwards. There was no material impact from the CARES Act in our provision for income taxes for 2020. In addition, we filed an amendment to our 2018 U.S. federal income tax return in the second quarter of 2020 and received a refund of $0.7 million for AMT carryforwards in July 2020.

The CARES Act also permitted most companies to defer paying their portion of certain applicable payroll taxes from the date the CARES Act was signed into law through December 31, 2020. The deferred amount was due and paid in two equal installments in December 2021 and 2022.

Temporary differences and carryforwards which give rise to deferred tax assets and liabilities consisted of the following at December 31:

(In thousands)	2022		2021
Deferred tax assets:
Net operating losses	$	35,430	$	38,746
Foreign tax credits	8,836		8,330
Accruals not currently deductible	2,989		4,393
Unrealized foreign exchange losses, net	5,353		4,590
Research and development credits	5,181		4,695
Stock-based compensation	1,359		1,856
Capitalized inventory costs	1,821		1,706
Capitalized research and development expenditures	4,342		—
Other	6,551		5,839
Total deferred tax assets	71,862		70,155
Valuation allowance	(47,280)		(38,406)
Total deferred tax assets, net of allowances	24,582		31,749
Deferred tax liabilities:
Accelerated depreciation and amortization	(24,099)		(31,816)
Tax on unremitted earnings	(5,656)		(8,214)
Other	(673)		(1,222)
Total deferred tax liabilities	(30,428)		(41,252)
Total net deferred tax liabilities	$	(5,846)	$	(9,503)
Noncurrent deferred tax assets	$	2,275	$	2,316
Noncurrent deferred tax liabilities	(8,121)		(11,819)
Net deferred tax liabilities	$	(5,846)	$	(9,503)

We have U.S. federal income tax net operating loss carryforwards (“NOLs”) of approximately $83.7 million available to reduce future U.S. taxable income, which do not expire. We also have state NOLs of approximately $217.8 million available to reduce future state taxable income, including approximately $158.3 million which do not expire and approximately $59.5 million which expire in varying amounts beginning in 2023 through 2042. Foreign NOLs of approximately $22.8 million are available to reduce future taxable income, some of which expire beginning in 2023. Effective January 1, 2022, certain research and development expenditures are now required under regulations enacted as part of the 2017 U.S. Tax Cuts and Jobs Act (“Tax Act”) to be capitalized and amortized over five years, resulting in a $4.3 million deferred tax asset at December 31, 2022.

The realization of our net deferred tax assets is dependent on our ability to generate taxable income in future periods. At December 31, 2022 and 2021, we have recorded a valuation allowance in the amount of $47.3 million and $38.4 million, respectively, primarily related to certain U.S. federal, state, and foreign NOL carryforwards, including Australia, as well as for certain foreign tax credits recognized related to the accounting for the impact of the Tax Act, which may not be realized.

We file income tax returns in the U.S. and several non-U.S. jurisdictions and are subject to examination in the various jurisdictions in which we file. We are no longer subject to income tax examinations for U.S. federal and substantially all state jurisdictions for years prior to 2018 and for substantially all foreign jurisdictions for years prior to 2008.

We are under examination by various tax authorities in countries where we operate, and certain foreign jurisdictions have challenged the amounts of taxes due for certain tax periods. These audits are in various stages of completion. We fully cooperate with all audits but defend existing positions vigorously. We evaluate the potential exposure associated with various filing positions and record a liability for uncertain tax positions as circumstances warrant. Although we believe all tax positions are reasonable and properly reported in accordance with applicable tax laws and regulations in effect during the periods involved, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals.

A reconciliation of the beginning and ending provision for uncertain tax positions is as follows: 

(In thousands)	2022		2021		2020
Balance at January 1	$	485	$	213	$	291
Additions (reductions) for tax positions of prior years	(8)		(6)		(6)
Additions (reductions) for tax positions of current year	—		306		—
Reductions for settlements with tax authorities	(93)		—		—
Reductions for lapse of statute of limitations	(66)		(28)		(72)
Balance at December 31	$	318	$	485	$	213

Approximately $0.3 million of unrecognized tax benefits at December 31, 2022, if recognized, would favorably impact the effective tax rate.

We recognize accrued interest and penalties related to uncertain tax positions in operating expenses. The amount of interest and penalties was immaterial for all periods presented.