Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

Income Taxes

19. Income Taxes

The income tax provision (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2023			2022			2021
Current:
Domestic	$	15,422		$	16,182		$	26,528
Foreign		9,224			8,669			5,851
Total current		24,646			24,851			32,379
Deferred:
Domestic		(5,769	)		1,102			(1,161	)
Foreign		(509	)		(747	)		(174	)
Total deferred		(6,278	)		355			(1,335	)
Total income tax provision	$	18,368		$	25,206		$	31,044

Reconciliations between taxes at the U.S. Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2023			2022			2021
U.S. Federal income tax rate of 21%	$	17,160		$	20,650		$	27,398
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		2,086			3,118			4,579
Change in valuation allowance		674			1,068			466
Income tax (benefit) attributable to foreign income		377			(53	)		(122	)
Other non-deductible items, net		(1,929	)		423			(1,277	)
Provision for income taxes	$	18,368		$	25,206		$	31,044

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands):

	December 31,
	2023			2022
Deferred tax assets:
Inventories	$	10,493		$	11,604
Allowance for customer returns		13,083			14,506
Accrued asbestos liabilities		20,758			17,208
Accrued salaries and benefits		11,816			12,048
Tax credit and NOL carryforwards		5,968			5,103
Allowance for expected credit losses		3,567			2,965
Other		17			215
		65,702			63,649
Valuation allowance		(3,830	)		(3,155	)
Total deferred tax assets		61,872			60,494
Deferred tax liabilities:
Intangible assets acquired, net of amortization		12,668			13,292
Depreciation		7,597			8,715
Interest rate swap agreement		990			1,299
Other		84			3,530
Total deferred tax liabilities		21,339			26,836
Net deferred tax assets	$	40,533		$	33,658

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized.  Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized.  We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted.  We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to manage our business.

The valuation allowance of $3.8 million as of December 31, 2023 is intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers. Based on these considerations, we believe it is more likely than not that we would realize the benefit of the net deferred tax asset of $40.5 million as of December 31, 2023, which is net of the remaining valuation allowance. At December 31, 2023, we have foreign tax credit carryforwards of approximately $3.8 million that will expire in varying amounts by 2032.

As related to the taxation of our foreign subsidiaries, we aggregate our foreign earnings and profits, and utilize allowable deductions and available foreign tax credits in computing our U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest most, or all, of these earnings indefinitely outside of the U.S., and do not expect to incur any significant additional taxes related to such amounts.

In accordance with generally accepted accounting practices, we recognize in our financial statements only those tax positions that meet the more-likely-than-not recognition threshold.  We establish tax reserves for uncertain tax positions that do not meet this threshold.  During the years ended December 31, 2023, 2022 and 2021, we did not establish a liability for uncertain tax positions.

We are subject to taxation in the U.S. and various state, local and foreign jurisdictions.  As of December 31, 2023, the Company is no longer subject to U.S. Federal tax examinations for years before 2020.  We remain subject to examination by state and local tax authorities for tax years 2019 through 2022.  Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years.  Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2019 onward), Hong Kong (2018 onward), China (2021 onward), Mexico (2019 onward), Poland (2018 onward), Hungary (2018 onward), U.K. (2017 onward) and Germany (2019 onward).  We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months; however, actual developments in this area could differ from those currently expected.