Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes [Abstract]

Income Taxes

Income Taxes

For financial statement purposes, earnings before income taxes by source was comprised of the following:

	Year Ended December 31,
(in thousands)	2024		2023		2022
Domestic	$	165,020	$	38,375	$	43,977
Foreign	12,521		14,492		17,494
Earnings before income taxes	$	177,541	$	52,867	$	61,471

A reconciliation of the federal statutory rate of 21% to the effective rate follows:

	Year Ended December 31,
	2024		2023		2022
Tax at statutory rate	21.0	%	21.0	%	21.0	%
Non-deductible compensation	3.2	%	57.1	%	53.4	%
State income taxes	5.7	%	16.5	%	13.4	%
Effect of foreign operations	1.6	%	19.5	%	6.6	%
Effect of current year credits	(2.5)	%	(9.9)	%	(13.2)	%
Change in unrecognized tax benefits	(0.1)	%	(6.9)	%	0.1	%
Other permanent differences	0.9	%	1.7	%	0.9	%
Prior year return to provision adjustments	0.2	%	0.3	%	1.7	%
Valuation allowance	(0.3)	%	11.4	%	(3.0)	%
Other, net	0.8	%	(0.9)	%	(1.0)	%
Effective income tax rate	30.5	%	109.8	%	79.9	%

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

	Year Ended December 31,
(in thousands)	2024		2023		2022
Current expense (benefit)
Federal	$	79,751	$	58,480	$	62,878
State	2,451		9,644		21,473
Foreign	1,537		4,385		4,570
Total current	83,739		72,509		88,921
Deferred (benefit) expense
Federal	(39,712)		(28,084)		(25,923)
State	11,462		1,316		(13,321)
Foreign	(1,426)		12,305		(563)
Total deferred	(29,676)		(14,463)		(39,807)
Total income tax expense	$	54,063	$	58,046	$	49,114

Deferred tax assets (liabilities) consist of the following:

	December 31,
(in thousands)	2024		2023
Deferred tax assets
Net operating loss carryforwards	$	12,814	$	20,852
Accrued liabilities	63,258		64,410
Intangible assets	133,235		143,386
Property assets	9,641		—
Lease obligations	72,790		79,645
Other assets	3,892		4,082
Foreign tax credit carryforwards	2,348		856
Total deferred tax assets	297,978		313,231
Valuation allowance	(8,599)		(9,340)
Deferred tax assets, net	289,379		303,891
Deferred tax liabilities
Rental merchandise	(176,375)		(212,137)
Property assets	—		(2,089)
Lease assets	(70,786)		(77,825)
Other liabilities	(1,874)		(650)
Total deferred tax liabilities	(249,035)		(292,701)
Net deferred taxes	$	40,344	$	11,190

As of each reporting date, our management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. At December 31, 2024, we had net operating loss carryforwards of approximately $147 million for state, none for federal and $23 million for foreign jurisdictions.

After review of the evidence generated during the year, we have determined that a valuation allowance is required against Mexico and certain state net operating losses due to the forecasted expiration of net operating losses. We also had federal, state and foreign tax credit carryforwards of approximately $3.2 million of which a portion has been offset by a valuation allowance. The net operating losses and credits will expire in various years between 2025 and 2043.

We file income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, we are subject to examination by various taxing authorities. We are currently under examination by certain state revenue authorities for the fiscal years 2013 through 2022. The following is a summary of all tax years that are open to examination.

•U.S. Federal - 2021 and forward

•U.S. States - 2013 and forward

•Foreign - 2019 and forward

We do not anticipate that adjustments as a result of these audits, if any, will have a material impact to our Consolidated Statements of Operations, Consolidated Balance Sheets, and statement of cash flows or earnings per share.

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

	Year Ended December 31,
(in thousands)	2024		2023		2022
Beginning unrecognized tax benefit balance	$	1,221	$	5,100	$	6,536
Additions based on tax positions related to current year	—		97		14
Reductions based on tax positions related to current year	—		—		(488)
Additions for tax positions of prior years	—		759		21
Reductions for tax positions of prior years	(653)		(4,735)		(983)
Settlements	(200)		—		—
Ending unrecognized tax benefit balance	$	368	$	1,221	$	5,100

Included in the balance of unrecognized tax benefits at December 31, 2024, is $0.3 million, net of federal benefit, which, if ultimately recognized, will affect our annual effective tax rate.

During the year ended December 31, 2024, we recorded interest expense of $0.4 million for remaining uncertain tax positions, partially offset by $0.2 million of interest income primarily related to the reversal of the accrual of interest for matters settled during the year in our favor, both of which are excluded from the reconciliation of unrecognized tax benefits presented above.