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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The 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 before taxes consisted of the following for the years ended December 31 (in thousands):
202420232022
Domestic$167,870 $149,348 $112,635 
Foreign6,055 (356)(1,145)
Income before taxes$173,925 $148,992 $111,490 
The provision for income taxes for the years ended December 31 consisted of the following (in thousands):
202420232022
Current:
U.S. Federal$28,126 $21,579 $17,014 
State7,838 6,048 5,647 
Foreign1,103 32 86 
Total current37,067 27,659 22,747 
Deferred:
U.S. Federal(440)8,617 5,259 
State(244)2,112 1,381 
Foreign202 71 (303)
Total deferred(482)10,800 6,337 
Provision for income taxes$36,585 $38,459 $29,084 
The provision for income taxes differs from the federal statutory rate of 21% due to the following for the years ended December 31 (in thousands, except for percentages) :
 202420232022
Statutory rate$36,524 21.0 %$31,288 21.0 %$23,413 21.0 %
State taxes, less federal effect5,990 3.5 %6,446 4.3 %5,541 5.0 %
Federal tax credits(2,194)(1.3)%(787)(0.5)%(549)(0.5)%
Excess tax benefit on stock based compensation(292)(0.2)%(203)(0.1)%(214)(0.2)%
Executive compensation1,756 1.0 %1,369 0.9 %960 0.9 %
Valuation allowance(6,027)(3.5)%— — %— — %
Other828 0.5 %346 0.2 %(67)(0.1)%
$36,585 21.0 %$38,459 25.8 %$29,084 26.1 %
Deferred tax liabilities at December 31 consisted of the following (in thousands):
20242023
Depreciation$13,523 $13,838 
Goodwill69,155 65,967 
Operating leases11,265 11,325 
Intangible assets— 1,919 
Other1,890 1,847 
Gross deferred tax liabilities95,833 94,896 
Capitalized research and development costs(8,184)(6,286)
Equity compensation(7,148)(6,907)
Operating leases(11,670)(11,678)
Intangible assets(854)— 
Capital loss carryforward(19,392)(26,527)
Warranty reserves(3,901)(1,790)
Other(7,476)(11,215)
Gross deferred tax assets(58,625)(64,403)
Valuation allowances19,434 26,593 
Deferred tax assets, net of valuation allowances(39,191)(37,810)
Net deferred tax liabilities$56,642 $57,086 
At December 31, 2024, the Company had total net operating loss carry forwards of $16.9 million, which included $0.2 million for federal and $16.7 million for state. There was no foreign net operating loss carry forward. The federal and state net operating loss carry forwards expire between 2031 and 2044. The Company recognized a
total of $0.8 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 $0.8 million of state deferred tax assets.
As a result of the sale of the Industrial business during 2021, the Company generated a capital loss of $113.7 million for federal and state purposes to the extent allowable under state tax regulations. Amended Federal returns were filed to carry back $3.7 million of capital loss. As a result of the sale of the Company's electronic locker business within its Residential segment in 2024, $28.7 million of the capital loss was utilized to offset the capital gain from the sale, and the valuation allowance was subsequently adjusted. As of December 31, 2024, the remaining capital loss carry forward is $81.3 million. The capital loss carryforward will expire in 2026. The Company recognized a total of $19.4 million of deferred tax assets, net of the federal benefit, related to this carryforward prior to any valuation allowances, which included $16.5 million of federal and $2.9 million of state deferred tax assets. The Company has a full valuation allowance on the capital loss carry forward and as a result there is no deferred tax asset related to the capital loss.
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 following sets forth a reconciliation of the beginning and ending amount of the Company’s valuation allowance (in thousands):
202420232022
Balance as of January 1$26,593 $26,488 $26,581 
Cost charged to the tax provision11 105 10 
Reductions(7,170)— (103)
Balance as of December 31$19,434 $26,593 $26,488 
At December 31, 2024, the Company had approximately $3.7 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 the Company's remaining unremitted foreign earnings is not practicable due to the complexities associated with its hypothetical calculation.
The Company did not have any unrecognized tax benefits or activity related to such benefits in any of the years presented in the consolidated financial statements. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense. No interest or penalties have been recognized during the years presented.
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.
In December 2021, the Organization for Economic Cooperation and Development introduced Base Erosion and Profit Shifting ("BEPS") Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted or are expected to enact legislation to be effective for tax years beginning as early as January 1, 2024, with general implementation of global minimum tax by January 1, 2025. The Company considered the impacts of BEPS Pillar 2 on its consolidated financial statements and determined that it meets the revenue threshold to be a BEPS taxpayer, however, the Company has met the safe harbor tests such that no additional tax liability applies.