Income Taxes

6 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 – Income Taxes

Income tax expense consists of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2025			2024			2025			2024
Income before income taxes	$	16,607		$	20,523		$	25,001		$	39,622
Income tax expense	$	15,635		$	4,995		$	20,385		$	10,092
Effective tax rate		94.1	%		24.3	%		81.5	%		25.5	%

During the three months ended June 30, 2025, the Company, as part of its ongoing assessment of global liquidity needs, evaluated the cash balances held in foreign jurisdictions relative to anticipated operational and investment requirements. Driven by a time-sensitive opportunity to recover foreign withholding taxes, along with the Company’s debt refinancing and cash diversification objectives, the Company repatriated gross dividends of $151.6 million from its operations in China and Thailand during the quarter. These dividends were subject to foreign withholding taxes paid totaling $15.2 million.

As part of this evaluation, the Company determined that current and projected cash balances in China exceeded the levels required to fund local business activities. As a result, management changed its assertion with respect to remaining unremitted earnings from China, which are now considered available for distribution. There was no change to the Company’s indefinite reinvestment assertion with respect to Thailand.

Accordingly, during the three months ended June 30, 2025, the Company recorded discrete tax charges totaling $10.4 million. This amount includes (i) foreign withholding taxes paid on the repatriated dividends, net of anticipated recoveries, and (ii) the recognition of deferred tax liabilities on the remaining earnings in China, consistent with the change in reinvestment assertion.

The Company’s effective income tax rate was 94.1% and 81.5% for the three and six months ended June 30, 2025, respectively, and differed from the U.S. federal statutory income tax rate of 21% primarily due to the discrete tax expense recorded for the foreign withholding taxes on the repatriated dividends and recognition of deferred tax liabilities on China unremitted earnings and losses generated in a jurisdiction where no tax benefit can be realized.

The Company’s effective income tax rate was 24.3% and 25.5% for the three and six months ended June 30, 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 six months ended June 30, 2025 and 2024 by approximately $3.0 million (approximately $0.08 per diluted share) and $1.8 million (approximately $0.05 per diluted share), respectively.

A summary of the Company’s tax incentives follows:

	Six Months Ended June 30,
(in thousands)	2025		2024
Thailand	$	2,115	$	1,801
China		859		—
Total tax incentives	$	2,974	$	1,801

In April 2025, the Company fully paid its remaining transition tax liability of $20.1 million from the U.S. Tax Cuts and Jobs Act enacted in December 2017.

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and

development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025. The Company is evaluating the future impact of these tax law changes on its financial statements.

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.