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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of the Company's income (loss) before provision for income taxes were as follows:
202420232022
Domestic$266,060 $291,203 $(151,551)
Foreign(71,010)546 (1,113)
Net income (loss) before provision for income taxes$195,050 $291,749 $(152,664)
The provision for income tax expense consisted of the following:
Current202420232022
Domestic$43,321 $79,840 $10,498 
State and local
15,536 27,596 2,601 
Foreign294 192 — 
Current federal, state and local, tax expense$59,151 $107,628 $13,099 
Deferred202420232022
Domestic$1,000 $(34,535)$18,558 
State and local(178)(8,261)4,034 
Foreign(9,997)116 (1,073)
Deferred federal, state and local, tax expense$(9,175)$(42,680)$21,519 
Provision for income taxes$49,976 $64,948 $34,618 
The reconciliation of the U.S. federal statutory rate to the effective rate on net income (loss) before taxes is as follows:
 202420232022
U.S. Statutory federal rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit6.2 %4.7 %(3.9)%
Earnings in jurisdictions with tax rates differing from U.S. federal rate3.3 %0.1 %— %
Tax effect of Pepsi valuation premium— %— %(38.9)%
Stock based compensation(5.2)%(3.4)%(0.9)%
Change in valuation allowance(0.7)%(0.3)%0.4 %
Change in deferred balances0.2 %0.3 %— %
Other0.9 %(0.2)%(0.4)%
Effective tax rate25.7 %22.2 %(22.7)%
The Tax Cuts and Jobs Act introduced a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a measure to tax certain intercompany payments under the base erosion anti-abuse tax “BEAT” regime. For the years ended December 31, 2024, 2023 and 2022, the Company did not generate intercompany transactions that met the BEAT threshold but had to include GILTI relating to the Company’s foreign subsidiaries. The Company elected to account for GILTI as a current period cost.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
Deferred tax assets and liabilities consisted of the following:
December 31,
2024		December 31,
2023
Net operating loss carryforwards$10,869 $3,441 
Foreign disallowed interest carryforwards739 — 
Deferred revenue
43,289 45,907 
Fixed assets(7,742)(3,338)
Pepsi valuation premium(64,356)(68,250)
Right of use liability3,566 157 
Right of use asset(4,527)(275)
Distributor termination fees33,960 40,429 
Stock-based compensation2,728 4,892 
Accrued legal
14,562 977 
Inventory allowance6,033 8,244 
Intangibles(1,825)(2,495)
Total deferred tax assets 37,296 29,689 
Valuation allowance(927)(2,496)
Net deferred tax assets$36,369 $27,193 
At December 31, 2024, the Company has approximately $1.5 million of Federal net operating loss carryforwards and $1.5 million of state net operating loss ("NOL") carryforwards, which will begin to expire in 2027. The Federal and State NOLs are subject to limitation under Section 382 of the U.S. Internal Revenue Code due to a December 2008 ownership change of greater than 50% over a three-year testing period. The Company had foreign NOL carryforwards of approximately $80.6 million, some of which will begin to expire in 2026. Additionally, the Company had foreign disallowed interest carryforward of $3.7 million which is indefinitely available.
The Company considers the earnings of its foreign entities to be permanently reinvested outside the U.S. based on estimates that future cash generation will be sufficient to meet future domestic cash needs. Accordingly, deferred taxes have not been recorded for the undistributed earnings of the Company’s foreign subsidiaries. All other outside basis differences not related to earnings were impractical to account for at this period of time and are currently considered as being permanent in duration.
As required by ASC 740, Income Taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred taxes will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance. During the fourth quarter of 2022, the Company concluded that it was more likely than not that its Celsius Europe deferred tax assets would be realized, based on Finland profitability and NOL utilization in 2021 and 2022. During the fourth quarter of 2024, the Company concluded that it was more likely than not that its Celsius Finland deferred tax assets would be realized, based on Finland profitability and NOL utilization in 2023 and 2024. For the year ended December 31, 2022, the Company reported a release of non-U.S. valuation of $0.5 million. For the year ended December 31, 2024, the Company reported a release of non-U.S. valuation allowance of $1.6 million. The Company continues to maintain a valuation allowance on certain of its foreign net operating losses as it is not more likely than not that the losses in those specific jurisdictions will be realized.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
20242023
Gross unrecognized tax benefit, beginning of period$1,257 $702 
Additions based on tax positions related to the current year410 555 
Additions based on tax positions related to the prior years— — 
Reductions due to lapse in statute of limitations and settlements(255)— 
Gross unrecognized tax benefit, end of period$1,412 $1,257 
The Company recognizes only those tax positions that meet the more-likely-than-not recognition threshold and establishes tax reserves for uncertain tax positions that do not meet this threshold. To the extent these unrecognized tax benefits are ultimately recognized, approximately $1.4 million will impact the Company’s effective tax rate in future periods. Tax positions will potentially decrease by $0.2 million within the next twelve months. Interest and penalties associated with income tax matters are included in the provision for income taxes. As of December 31, 2024, the Company had uncertain tax positions of approximately $1.5 million, inclusive of $0.1 million of interest and penalties.
The Company files U.S., state, and foreign income tax returns in jurisdictions with various statutes of limitations. Below is a summary of the filing jurisdictions and open tax years:
Open Years
U.S. Federal
2021-2023
U.S. State and local
2020-2023
Non-U.S.
2018-2023