Income taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Income (Loss) from Continuing Operations Before Provision for Income Taxes

Income (loss) from continuing operations before provision for income taxes consisted of the following:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2019			2018			2017
U.S.	$	(24,890	)	$	28,642		$	27,774
Non-U.S.		(2,159	)		(5,757	)		8,617
Income (loss) before income taxes	$	(27,049	)	$	22,885		$	36,391

Schedule of Provision for Income Taxes on Continuing Operations

The provision for income taxes on continuing operations consists of the following:

	Year Ended December 31,
(U.S. Dollars, in thousands)	2019			2018			2017
U.S.
Current	$	(1,911	)	$	9,480		$	3,620
Deferred		2,008			(3,430	)		20,222
		97			6,050			23,842
Non-U.S.
Current		1,931			2,255			4,062
Deferred		(615	)		769			1,196
		1,316			3,024			5,258
Income tax expense	$	1,413		$	9,074		$	29,100

Schedule of Effective Income Tax Rate Reconciliation for Continuing Operations

The differences between the income tax provision at the U.S. federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2019, 2018, and 2017 consist of the following:

	2019						2018						2017¹
(U.S. Dollars, in thousands, except percentages)	Amount			Percent			Amount			Percent			Amount			Percent
Statutory U.S. federal income tax rate	$	(5,680	)		21.0	%	$	4,806			21.0	%	$	12,737			35.0	%
State taxes, net of U.S. federal benefit		1,043			(3.9	)		1,038			4.5			1,598			4.4
Foreign rate differential, including withholding taxes		131			(0.5	)		784			3.4			(3,849	)		(10.6	)
Valuation allowances, net		(165	)		0.6			4,116			18.0			3,548			9.7
Research credits		(829	)		3.1			(710	)		(3.1	)		(397	)		(1.1	)
Italian subsidiary intangible asset		—			—			(230	)		(1.0	)		(381	)		(1.0	)
Domestic manufacturing deduction		—			—			—			—			(818	)		(2.2	)
Unrecognized tax benefits, net of settlements		(2,745	)		10.1			81			0.4			6,002			16.5
Impact of the Tax Act		—			—			(560	)		(2.4	)		8,347			22.9
Equity compensation		626			(2.3	)		(1,646	)		(7.2	)		272			0.7
Executive compensation		1,504			(5.6	)		606			2.6			123			0.3
Contingent consideration		5,678			(21.0	)		528			2.3			—			—
Other, net		1,850			(6.7	)		261			1.2			1,918			5.4
Income tax expense/effective rate	$	1,413			(5.2	)%	$	9,074			39.7	%	$	29,100			80.0	%

¹ The rate reconciliation for 2017 is based on the U.S. federal income tax rate, rather than the Company’s country of domicile rate at that time. The Company believes, given the large proportion of taxable income earned in the U.S., this presentation is more meaningful.

Schedule of Deferred Tax Assets and Liabilities

The Company’s deferred tax assets and liabilities are as follows:

	December 31,
(U.S. Dollars, in thousands)	2019			2018
Intangible assets and goodwill	$	1,390		$	1,682
Inventories and related reserves		13,216			12,151
Deferred revenue and cost of goods sold		4,652			4,652
Other accruals and reserves		4,337			2,799
Accrued compensation		9,221			8,317
Allowance for doubtful accounts		971			2,346
Net operating loss and tax credit carryforwards		44,230			52,664
Lease liabilities		6,268			—
Other, net		1,567			2,200
		85,852			86,811
Valuation allowance		(38,741	)		(49,014	)
Deferred tax asset	$	47,111		$	37,797
Withholding taxes		(40	)		—
Property, plant and equipment		(5,881	)		(4,569	)
Right-of-use lease assets		(6,073	)		—
Deferred tax liability		(11,994	)		(4,569	)
Net deferred tax assets	$	35,117		$	33,228

Schedule of Gross Unrecognized Tax Benefits (Excluding Interest and Penalties)

A reconciliation of the gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2019, 2018, and 2017 follows:

(U.S. Dollars, in thousands)	2019			2018
Balance as of January 1,	$	21,351		$	23,676
Additions for current year tax positions		309			170
Increases for prior year tax positions		1,711			1,653
Settlements of prior year tax positions		(1,183	)		(1,499	)
Expiration of statutes		(5,284	)		(2,649	)
Balance as of December 31,	$	16,904		$	21,351