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Note 15 - Income Taxes
 12 Months Ended
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%