Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

11.Income Taxes

The components of income before income taxes are as follows:

	For the Years Ended December 31,
	2023			2022		2021
	(Amounts in thousands)
Domestic	$	(17,601	)	$	153,446	$	81,984
Foreign		81,733			65,694		71,559
Income before income taxes	$	64,132		$	219,140	$	153,543

The components of the income tax provision are as follows:

	For the Years Ended December 31,
	2023		2022			2021
	(Amounts in thousands)
Components of the income tax provision:
Current	$	20,238	$	34,800		$	20,166
Deferred		2,317		(1,619	)		5,086
Total	$	22,555	$	33,181		$	25,252
Jurisdictional components of the income tax provision:
Federal	$	3,512	$	17,662		$	8,321
State		142		1,381			1,251
Foreign		18,901		14,138			15,680
Total	$	22,555	$	33,181		$	25,252

At December 31, 2023, the Company had federal net operating loss carryforwards of $31.1 million, state net operating loss carryforwards of $1.5 million, and foreign net operating loss carryforwards of $4.9 million. The state net operating loss carryforwards will expire at various dates through 2043, while the federal and foreign net operating loss carryforwards have unlimited carryforward periods and do not expire. At December 31, 2023, the Company had federal and state business tax credits carryforwards of $5.0 million available to reduce future federal and state income taxes. The business tax credit carryforwards will expire at various dates through 2043. The net operating loss and business tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant shareholders.

The components of deferred income taxes are as follows:

	December 31,
	2023			2022
	(Amounts in thousands)
Deferred tax assets:
Stock-based compensation expense	$	5,120		$	5,323
Operating leases		30,727			31,564
Capitalized research and development		17,568			9,102
Inventory		10,131			5,983
Net operating loss carryforwards		7,578			9,808
Business tax credit carryforwards		4,697			2,639
Other		5,314			4,440
Total deferred tax assets		81,135			68,859
Less: valuation allowance		(20	)		(19	)
Net deferred tax assets		81,115			68,840
Deferred tax liabilities:
Fixed assets		(17,716	)		(18,965	)
Acquired intangible assets		(56,956	)		(43,549	)
Operating lease right of use assets		(26,373	)		(28,486	)
Debt discount		(19,006	)		—
Total deferred tax liabilities		(120,051	)		(91,000	)
Total net deferred tax liabilities	$	(38,936	)	$	(22,160	)

The net change in the total valuation allowance for the year ended December 31, 2023 and 2022 was an increase of approximately $1,000 and a decrease of approximately $0.7 million, respectively.

The reconciliation of the federal statutory rate to the effective income tax rate for the years ended December 31, 2023, 2022 and 2021 is as follows:

	For the Years Ended December 31,
	2023						2022						2021
	Amount			%			Amount			%			Amount			%
	(Amounts in thousands, except percentages)
Income before income taxes	$	64,132					$	219,140					$	153,543
Expected tax at statutory rate		13,469			21.0	%		46,020			21.0	%		32,247			21.0	%
Adjustments due to:
Difference between U.S. and foreign tax		1,084			1.7	%		1,024			0.5	%		530			0.3	%
State income taxes		1,387			2.2	%		3,509			1.6	%		1,462			1.0	%
Business tax credits		(4,522	)		(7.1	%)		(5,139	)		(2.3	%)		(2,239	)		(1.5	%)
Stock-based compensation expense		(2,461	)		(3.8	%)		(5,638	)		(2.6	%)		(9,049	)		(5.9	%)
U.S. taxation of foreign earnings		343			0.5	%		83			0.0	%		30			0.0	%
Foreign-derived intangible income		(88	)		(0.1	%)		(5,042	)		(2.3	%)		(2,547	)		(1.7	%)
Executive compensation		3,084			4.8	%		5,441			2.5	%		3,397			2.2	%
Contingent consideration		(6,412	)		(10.0	%)		(6,033	)		(2.8	%)		1,232			0.8	%
Loss on extinguishment of debt		2,634			4.1	%		—			0.0	%		—			0.0	%
Debt discount		16,650			26.0	%		—			0.0	%		—			0.0	%
Foreign exchange loss		(2,288	)		(3.6	%)		—			0.0	%		—			0.0	%
Uncertain tax provisions		165			0.3	%		234			0.1	%		(443	)		(0.3	%)
Change in valuation allowance		—			0.0	%		(688	)		(0.3	%)		(48	)		(0.0	%)
Return to provision adjustments		(1,255	)		(2.0	%)		(498	)		(0.2	%)		(50	)		(0.0	%)
Other		765			1.2	%		(92	)		(0.0	%)		730			0.5	%
Income tax provision	$	22,555			35.2	%	$	33,181			15.1	%	$	25,252			16.4	%

The Company’s tax returns are subject to examination by federal, state and foreign tax authorities. The Company’s two major tax jurisdictions are subject to examination for the following periods:

Jurisdiction	Fiscal Years Subject to Examination
United States - federal and state	2019-2023
Sweden	2018-2023

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

	For the Years Ended December 31,
	2023			2022
	(Amounts in thousands)
Balance of gross unrecognized tax benefits, beginning of period	$	2,996		$	2,786
Gross amounts of increases in unrecognized tax benefits as a result      of tax positions taken in the current period		178			146
Gross amounts of increases in unrecognized tax benefits as a result      of tax positions taken in the prior period		53			64
Gross amounts of decreases due to release		(88	)		—
Balance of gross unrecognized tax benefits, end of period	$	3,139		$	2,996

Included in the balance of unrecognized tax benefits as of December 31, 2023, are $3.1 million of tax benefits that, if recognized, would affect the effective tax rate. The Company classifies interest and penalties related to income taxes as components of its income tax provision. In 2023, a net expense of approximately $15,000, was recorded to the income tax provision related to interest and penalties while in 2022, a net expense of approximately $24,000 was recorded. The amount of interest and penalties recorded in the accompanying consolidated balance sheets was approximately $67,000 and $52,000 as of December 31, 2023 and 2022, respectively. In the next twelve months, it is reasonably possible the Company will reduce its gross unrecognized tax benefits, excluding interest by up to $1.1 million due to expiring statutes of limitations.

In 2021, the Organization of Economic Co-operation and Development announced an Inclusive Framework on Base Erosion and Profit Sharing with the goal of achieving consensus around substantial changes to international tax policies, including the implementation of a minimum global effective tax rate of 15%. We continue to evaluate the impacts of enacted legislation and

pending legislation in the tax jurisdictions in which we operate. While various countries have implemented the legislation as of January 1, 2024, we do not expect a resulting material change to our income tax provision for the 2024 fiscal year.

As of December 31, 2023, the Company has accumulated undistributed earnings generated by its foreign subsidiaries of approximately $212.4 million. Because $5.7 million of such earnings have previously been subject to the one-time transition tax on foreign earnings required by the Tax Cuts and Jobs Act enacted in December 2017, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes. At December 31, 2023, the Company has not provided for taxes on outside basis differences of its foreign subsidiaries as it is not practicable and the Company has the ability and intent to indefinitely reinvest the undistributed earnings of its foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict its plan to indefinitely reinvest.