Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Statement Components

Earnings before income taxes were as follows:

	December 31,
(in thousands)	2023		2022		2021
Income before income taxes:
Domestic	$	121,065	$	86,680	$	74,070
Foreign	54,055		47,630		35,428
	$	175,120	$	134,310	$	109,498

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

	December 31,
(in thousands)	2023		2022		2021
Current:
Domestic	$	24,168	$	19,197	$	16,846
Foreign	11,356		11,848		8,646
State	7,688		3,674		4,943
	43,212		34,719		30,435
Deferred:
Domestic	(4,451)		(2,246)		(679)
Foreign	353		(51)		(274)
State	(155)		(40)		(229)
	(4,253)		(2,337)		(1,182)
Total income taxes	$	38,959	$	32,382	$	29,253

A reconciliation of the income tax at the Company’s U.S. statutory federal income tax rate to the provision for income tax follows. Some prior year components have been reclassified to conform to the current year presentation.  

	December 31,
(in thousands)	2023			2022			2021
Income tax expense at statutory rates	$	36,775		$	28,205		$	22,995
Increase (reduction) from:
Jurisdictional rate differences	2,766			1,989			1,599
Executive compensation limitations	183			481			1,314
Valuation allowance	(789)			(316)			(269)
Stock based compensation	(24)			122			(322)
U.S. state taxes	6,076			2,632			3,724
Foreign tax (credit) / expense	(371)			267			—
R&D credit (net)	(3,618)			(1,585)			(782)
Other credits	(628)			—			—
GILTI	109			500			—
FDII	(731)			(192)			—
Previously unrecognized tax (benefit) / expense	170			51			8
Other (net)	(959)			228			986
Provision for income taxes	$	38,959		$	32,382		$	29,253
Effective tax rate	22.2		%	24.1		%	26.7		%

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)	2023		2022
Deferred income tax assets:
Inventory basis difference	$	3,580	$	3,459
Accounts receivable reserve	798		334
Rental equipment and Property, plant and equipment	—		347
Stock based compensation	944		826
Pension liability	2,922		2,900
Employee benefit accrual	3,150		2,451
Product liability and warranty reserves	2,415		2,177
Foreign net operating loss	2,736		3,078
Lease liability	4,052		4,738
Capitalized R&D costs	10,335		4,230
Other	447		1,635
Total deferred income tax assets	$	31,379	$	26,175
Less: Valuation allowance	(2,512)		(3,637)
Net deferred income tax assets	$	28,867	$	22,538
Deferred income tax liabilities:
Inventory basis differences	$	(75)	$	(264)
Rental equipment and Property, plant and equipment	(17,074)		(14,373)
Lease asset	(3,941)		(4,637)
Intangible assets	(20,878)		(19,301)
Expenses not currently deductible for book purposes	(1,624)		(1,244)
Total deferred income tax liabilities	$	(43,592)	$	(39,819)
Net deferred income taxes	$	(14,725)	$	(17,281)

As of December 31, 2023, 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 $9.2 million, and substantially all of these foreign jurisdiction net operating losses have an unlimited carry-forward period.

The Company's valuation allowance as of December 31, 2023 related primarily to foreign net operating losses and as of December 31, 2022 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)	2023		2022
Balance as of beginning of year	$	321	$	270
Increases for tax positions related to the current year	252		156
Decreases due to lapse of statute of limitations	(83)		(105)
Balance as of end of year	$	490	$	321

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, 2023, no interest or penalties have been 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 2023, and for tax years ended 2017 through 2023 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 $6.4 million in withholding taxes.