Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Statement Components

Earnings before income taxes were as follows:

	December 31,
(in thousands)	2021		2020		2019
Income before income taxes:
Domestic	$	74,070	$	50,977	$	54,830
Foreign	35,428		28,780		29,769
	$	109,498	$	79,757	$	84,599

The components of income tax expense (benefit) were as follows:

	December 31,
(in thousands)	2021		2020		2019
Current:
Domestic	$	16,846	$	10,823	$	6,403
Foreign	8,646		8,759		8,419
State	4,943		3,226		3,291
	30,435		22,808		18,113
Deferred:
Domestic	(679)		1,238		3,906
Foreign	(274)		(1,199)		(280)
State	(229)		(894)		(243)
	(1,182)		(855)		3,383
Total income taxes	$	29,253	$	21,953	$	21,496

A reconciliation of the income tax at the Company’s U.S. statutory federal income tax rate to the provision for income taxes follows: 

	December 31,
(in thousands)	2021			2020			2019
Income tax expense at statutory rates	$	22,995		$	16,749		$	17,765
Increase (reduction) from:
Jurisdictional rate differences	1,599			1,034			988
Executive compensation limitation	1,314			170			715
Stock based compensation	(322)			(366)			(358)
U.S. state taxes	3,724			2,556			3,137
Foreign tax expense	—			704			—
R&D credit	(670)			(415)			(699)
GILTI	—			50			872
Previously unrecognized tax (benefit)/expense	8			2,219			(1,504)
Other, net	605			(748)			580
Provision for income taxes	$	29,253		$	21,953		$	21,496
Effective tax rate	27		%	28		%	25		%

Deferred Income Tax Assets and Liabilities

The components of the Company’s deferred income tax assets and liabilities were as follows:

	December 31,
(in thousands)	2021		2020
Deferred income tax assets:
Inventory basis difference	$	892	$	519
Accounts receivable reserve	240		255
Rental equipment and Property, plant and equipment	201		144
Stock based compensation	688		606
Pension liability	3,116		3,655
Employee benefit accrual	2,747		1,585
Product liability and warranty reserves	2,155		2,242
Foreign net operating loss	3,764		3,566
Lease liability	3,858		3,376
State net operating loss	157		148
Other	1,016		1,891
Total deferred income tax assets	$	18,834	$	17,987
Less: Valuation allowance	(4,129)		(3,641)
Net deferred income tax assets	$	14,705	$	14,346
Deferred income tax liabilities:
Inventory basis differences	$	(165)	$	(287)
Rental equipment and Property, plant and equipment	(13,844)		(14,818)
Lease asset	(3,794)		(3,351)
Intangible assets	(16,197)		(16,496)
Expenses not currently deductible for book purposes	(1,053)		(1,003)
Total deferred income tax liabilities	$	(35,053)	$	(35,955)
Net deferred income taxes	$	(20,348)	$	(21,609)

As of December 31, 2021, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions’ net operating loss carry-forwards are approximately $11.8 million with an unlimited carry-forward period, and $0.8 million with a carry-forward expiring in 2035. The Company also has U.S. state net operating loss carry-forwards in the amount of $3.6 million which will expire between 2022 and 2030.

The Company's valuation allowances as of December 31, 2021 and 2020 related primarily to foreign net operating losses and foreign tax credits.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

Unrecognized Tax Benefits
	December 31,
(in thousands)	2021		2020
Balance as of beginning of year	$	262	$	262
Increases for tax positions related to the current year	82		88
Decreases due to lapse of statute of limitations	(74)		(88)
Balance as of end of year	$	270	$	262

The Company has adopted the policy to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2021, no interest or penalties have accrued. With few exceptions, the Company’s open tax years for its federal and state income tax returns are for the tax years ended 2018 through 2021, and for tax years ended 2014 through 2021 for its foreign income tax returns.

The Company currently intends to permanently reinvest its earnings in certain foreign subsidiaries. No U.S. corporate income taxes or foreign withholding taxes should be imposed on future distributions of the earnings not permanently reinvested. If the amounts asserted as permanent reinvestment were distributed, the Company would be subject to approximately $4.5 million in withholding taxes.