Income Taxes

3 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 – Income Taxes

Income tax expense consists of the following:

	Three Months Ended March 31,
(in thousands)	2025			2024
Income before income taxes	$	8,394		$	19,099
Income tax expense	$	4,750		$	5,097
Effective tax rate		56.6	%		26.7	%

The Company’s effective income tax rate was 56.6% and 26.7%% for the three months ended March 31, 2025 and 2024, respectively, and differed from the U.S. federal statutory income tax rate of 21% primarily due to losses generated in a jurisdiction where no tax benefit can be recognized, the U.S. tax under the global intangible low-taxed income (GILTI) provisions, and the Global Minimum Tax (GMT) as defined under the Pillar Two directives of the Organization of Economic Co-operation and Development, partially offset by the benefit of tax incentives and tax holidays in foreign locations.

The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Thailand and China that expire at various dates, unless extended or otherwise renegotiated and are subject to certain conditions with which the Company expects to comply. The tax incentives in Thailand will expire at various dates through December 31, 2030. In the fourth quarter of 2024, the Company was awarded a China tax holiday retroactive to January 1, 2024 through December 31, 2026. The tax holiday reduces the statutory tax rate from 25% to 15%. The net impact of these tax incentives was to lower foreign income tax expense for the three months ended March 31, 2025 and 2024 by approximately $1.5 million (approximately $0.04 per diluted share) and $0.8 million (approximately $0.02 per diluted share), respectively.

A summary of the Company’s tax incentives follows:

	Three Months Ended March 31,
(in thousands)	2025		2024
Thailand	$	1,087	$	804
China		458		—
Total tax incentives	$	1,545	$	804

As of March 31, 2025, the Company has a remaining transition tax liability of $20.1 million from the U.S. Tax Cuts and Jobs Act enacted in December 2017. The Company fully paid this liability in April 2025.

Determining the consolidated income tax expense, income tax liabilities and deferred tax assets and liabilities involves judgment. The Company calculates and provides for income taxes in each of the tax jurisdictions in which the Company operates, which involves estimating current tax exposures as well as making judgments regarding the recoverability of deferred tax assets in each jurisdiction. The estimates used could differ from actual results, which may have a significant impact on operating results in future periods.