Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXESThe Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

The components of income (loss) before taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):

	2020		2019		2018
Domestic	$	108,930	$	78,351	$	70,783
Foreign	(1,171)		(270)		(3,660)
Income before taxes from continuing operations	$	107,759	$	78,081	$	67,123

The provision for (benefit of) income taxes from continuing operations for the years ended December 31 consisted of the following (in thousands):

	2020		2019		2018
Current:
U.S. Federal	$	16,505	$	10,394	$	8,316
State	4,071		3,547		2,942
Foreign	106		92		(2,972)
Total current	20,682		14,033		8,286
Deferred:
U.S. Federal	3,620		3,740		4,253
State	672		486		853
Foreign	(506)		(106)		(381)
Total deferred	3,786		4,120		4,725
Provision for income taxes	$	24,468	$	18,153	$	13,011

The provision for (benefit of) income taxes from discontinued operations for the years ended December 31 consisted of the following (in thousands):

	2020		2019		2018
Current:
U.S. Federal	$	1,345	$	885	$	1,086
State	57		4		202
Foreign	1,725		1,447		1,781
Total current	3,127		2,336		3,069
Deferred:
U.S. Federal	(876)		(823)		(95)
State	10		23		194
Foreign	(138)		(17)		(43)
Total deferred	(1,004)		(817)		56
Provision for income taxes	$	2,123	$	1,519	$	3,125

The provision for income taxes from continuing operations differs from the federal statutory rate of 21% due to the following (in thousands) for the years ended December 31:

	2020				2019				2018
Statutory rate	22,629		21.0	%	16,397		21.0	%	14,096		21.0	%
State taxes, less federal effect	3,650		3.4	%	3,194		4.1	%	2,901		4.3	%
Federal tax credits	(1,064)		(1.0)	%	(1,621)		(2.1)	%	(742)		(1.1)	%
Excess tax benefit on stock based compensation	(1,674)		(1.6)	%	(871)		(1.1)	%	(2,224)		(3.3)	%
Uncertain tax positions	—		—	%	(260)		(0.3)	%	(3,051)		(4.5)	%
Executive compensation	1,114		1.0	%	1,132		1.4	%	1,369		2.0	%
Change in valuation allowance	(130)		(0.1)	%	88		0.1	%	(1,694)		(2.5)	%
Net operating loss (NOL) write down	—		—	%	—		—	%	1,640		2.4	%
Change in Indemnification Asset	—		—	%	—		—	%	643		1.0	%
Other	(57)		—	%	94		0.1	%	73		0.1	%
	$	24,468	22.7	%	$	18,153	23.2	%	$	13,011	19.4	%

Deferred tax liabilities (assets) at December 31 consist of the following (in thousands):

	2020		2019
Depreciation	$	7,697	$	7,556
Goodwill	41,842		38,610
Intangible assets	5,632		6,171
Other	6,878		6,158
Gross deferred tax liabilities	62,049		58,495
Equity compensation	(7,496)		(9,530)
Other	(15,682)		(13,939)
Gross deferred tax assets	(23,178)		(23,469)
Valuation allowances	111		298
Deferred tax assets, net of valuation allowances	(23,067)		(23,171)
Net deferred tax liabilities	$	38,982	$	35,324

At December 31, 2020, the Company had total net operating loss carry forwards of $14.7 million, which included $0.5 million for federal, $10.2 million for state, and $4.0 million for foreign income tax purposes. The federal and state net operating loss carry forwards expire between 2021 and 2040. The foreign net operating loss carry forwards expire between 2022 and 2040. The Company recognized a total of $1.5 million of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances, which included $0.1 million of federal and $0.3 million of state deferred tax assets and $1.1 million of foreign deferred tax assets.

Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized. The Company derecognized net operating loss carry forwards, and the corresponding valuation allowances of $1.7 million in Germany and Brazil since it exited both markets in 2018. In 2019, a valuation allowance was recorded in China. In 2020, the valuation allowance in China was reversed and a tax attribute valuation allowance was also reversed as the Company expects to utilize the attribute. The following sets forth a reconciliation of the beginning and ending amount of the Company’s valuation allowance (in thousands):

	2020		2019		2018
Balance as of January 1	$	298	$	206	$	2,002
Cost charged to the tax provision	70		100		45
Reductions	(248)		(10)		(1,747)
Currency translation	(9)		2		(94)
Balance as of December 31	$	111	$	298	$	206

Interest (net of federal tax benefit) and penalties recognized during the years ended December 31 were (in thousands):

	2020	2019	2018
Interest and penalties recognized as income	—	—	13

The Company made net payments for income taxes for the following amounts for the years ended December 31 (in thousands):

	2020		2019		2018
Payments made for income taxes, net	$	21,351	$	16,744	$	14,128

At December 31, 2020, the Company had approximately $0.2 million of undistributed earnings of foreign subsidiaries. The Company continues to maintain its assertion that all remaining foreign earnings will be indefinitely reinvested. Any excess earnings could be used to grow the Company's foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability related to our remaining unremitted foreign earnings is not practicable due to the complexities associated with its hypothetical calculation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2020		2019		2018
Balance as of January 1	$	—	$	329	$	3,536
Additions for tax positions of the current year	—		—		15
Additions for tax positions of prior years	—		—		—
Reductions for tax positions of prior years for:
Settlements and changes in judgment	—		—		—
Lapses of applicable statute of limitations	—		(329)		(3,060)
Divestitures and foreign currency translation	—		—		(162)
Balance as of December 31	$	—	$	—	$	329

In 2020, the Company did not have any unrecognized tax benefits. In 2019, unrecognized tax benefit of $0.3 million was reversed as a result of the lapse of the statute of limitations. In 2018, the corresponding indemnification asset was also reversed in pretax income. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to ten years. The Company's U.S. federal consolidated income tax return is under examination for 2015 through 2018.