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Note 15 - Income Taxes | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
15. | Income Taxes
The Company’s provision for income taxes consists of the following:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 117,749 |  |  | $ | 71,741 |  |  | $ | 118,320 |
State |  |  | 20,970 |  |  |  | 13,802 |  |  |  | 25,743 |
Foreign |  |  | 14,356 |  |  |  | 22,115 |  |  |  | 51,055 |
|  |  | 153,075 |  |  |  | 107,658 |  |  |  | 195,118 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (46,526 | ) |  |  | (26,504 | ) |  |  | (43,475 | )
State |  |  | (8,613 | ) |  |  | (5,254 | ) |  |  | (10,966 | )
Foreign |  |  | (5,565 | ) |  |  | (3,218 | ) |  |  | (40,109 | )
|  |  | (60,704 | ) |  |  | (34,976 | ) |  |  | (94,550 | )
Change in valuation allowance |  |  | 89 |  |  |  | 498 |  |  |  | (972 | )
Provision for income taxes |  | $ | 92,460 |  |  | $ | 73,180 |  |  | $ | 99,596 |
The Company files U.S. federal, U.S. state and foreign jurisdiction tax returns which are subject to examination up to the expiration of the statute of limitations. The Company believes the tax positions taken on its returns would be sustained upon an exam, or where a position is uncertain, adequate reserves have been recorded. As of December 31, 2024, the Company is no longer subject to income tax examinations for United States federal income taxes for tax years prior to 2021. Due to the carryforward of net operating losses and research & development credits, the Company’s Wisconsin state income tax returns for tax years 2007 through 2023 remain open for potential examination. In addition, the Company is subject to audit by various foreign taxing jurisdictions for tax years 2013 through 2023. The Company is regularly under tax return examination by tax authorities in the various jurisdictions in which we operate. The Company is actively managing the examinations and working to address any open matters. While the Company does not believe any material taxes or penalties are due, there is a possibility that the ultimate tax outcome of an examination may result in differences from what was recorded. Such differences may affect the provision for income taxes in the period in which the determination is made and could impact the Company’s financial results. Significant components of deferred tax assets and liabilities are as follows:
|  | December 31, |
|  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 52,351 |  |  | $ | 48,758 |
Deferred revenue |  |  | 43,261 |  |  |  | 36,927 |
Inventories |  |  | 14,103 |  |  |  | 12,549 |
Stock-based compensation |  |  | 16,959 |  |  |  | 14,143 |
Operating loss and credit carryforwards |  |  | 50,327 |  |  |  | 54,753 |
Bad debt |  |  | 1,803 |  |  |  | 1,380 |
Other |  |  | 13,031 |  |  |  | 8,722 |
Capitalized R&D |  |  | 98,323 |  |  |  | 65,523 |
Valuation allowance |  |  | (5,225 | ) |  |  | (5,136 | )
Total deferred tax assets |  |  | 284,933 |  |  |  | 237,619 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Goodwill and intangible assets |  |  | 234,271 |  |  |  | 253,342 |
Depreciation |  |  | 49,935 |  |  |  | 45,964 |
Debt refinancing costs |  |  | - |  |  |  | 828 |
Interest swap and derivative instruments |  |  | 6,496 |  |  |  | 9,521 |
Prepaid expenses |  |  | 3,284 |  |  |  | 2,444 |
Total deferred tax liabilities |  |  | 293,986 |  |  |  | 312,099 |
Net deferred tax liabilities |  | $ | (9,053 | ) |  | $ | (74,480 | )
As of December 31, 2024 and 2023, deferred tax assets of $24,132 and $15,532, and deferred tax liabilities of $33,185 and $90,012, respectively, were reflected in the consolidated balance sheets. The Company maintains a $5,225 valuation allowance against the deferred tax assets primarily related to certain tax loss carryforwards which may not be realized. Realization of the deferred income tax asset related to the tax loss carryforward is dependent upon generating sufficient taxable income in these jurisdictions prior to their expiration. During 2024, the valuation allowance increased by $89 on our deferred tax assets where we believe the tax asset may not be fully utilized. At December 31, 2024, the Company had tax loss carryforwards of approximately $182,431, which have varying expiration periods ranging from 2025 to indefinite. For carryforward amounts which the Company believes the losses will expire prior to use, a valuation allowance has been established. For all other carryforwards, the Company believes it will generate sufficient taxable income in these jurisdictions to utilize its loss carryforwards. At December 31, 2024, the Company had state manufacturing tax credit carryforwards of approximately $27,510, which expire between 2028 and 2040. The Company believes it will generate sufficient taxable income in these jurisdictions to fully utilize the credits prior to their expiration. Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows:
|  | December 31, |
|  | 2024 |  |  | 2023 |
Unrecognized tax benefit, beginning of period |  | $ | 9,703 |  |  | $ | 8,895 |
Increase in unrecognized tax benefit for positions taken in prior period |  |  | 1,068 |  |  |  | 3,081 |
Increase in unrecognized tax benefit for positions taken in current period |  |  | 943 |  |  |  | 1,122 |
Statute of limitation expirations |  |  | (536 | ) |  |  | (3,395 | )
Settlements |  |  | - |  |  |  | - |
Unrecognized tax benefit, end of period |  | $ | 11,178 |  |  | $ | 9,703 |
The unrecognized tax benefit as of December 31, 2024 and 2023, if recognized, would favorably impact the effective tax rate. As of December 31, 2024 and 2023, total accrued interest of approximately $1,142 and $532, respectively, and accrued penalties of approximately $954 and $1,275, respectively, associated with net unrecognized tax benefits are included in the consolidated balance sheets. Interest and penalties are recorded as a component of income tax expense. The Company does not expect a significant change to the total amount of unrecognized tax benefits during the fiscal year ending December 31, 2025. A reconciliation of the U.S. federal statutory tax rate to the effective tax rate for the years ended December 31, 2024, 2023 and 2022 is as follows:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
U.S. statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State taxes |  |  | 3.8 |  |  |  | 4.0 |  |  |  | 4.0 |
State tax rate differential |  |  | (0.2 | ) |  |  | 0.0 |  |  |  | (0.3 | )
Research and development credits |  |  | (1.2 | ) |  |  | (2.4 | ) |  |  | (1.1 | )
State credits |  |  | (0.5 | ) |  |  | (0.9 | ) |  |  | (1.5 | )
Share-based compensation benefit |  |  | (1.2 | ) |  |  | (0.4 | ) |  |  | (2.7 | )
Nondeductible U.S. compensation expense |  |  | 1.2 |  |  |  | 1.0 |  |  |  | 1.6 |
Foreign tax deduction |  |  | 0.0 |  |  |  | 0.0 |  |  |  | (0.4 | )
Uncertain tax positions reserve |  |  | 0.6 |  |  |  | 0.9 |  |  |  | 0.0 |
Global intangible low tax income |  |  | 0.4 |  |  |  | 1.7 |  |  |  | 0.2 |
Other |  |  | (1.3 | ) |  |  | 0.3 |  |  |  | (1.2 | )
Effective tax rate |  |  | 22.6 | % |  |  | 25.2 | % |  |  | 19.6 | %

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