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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes from operations consisted of the following:
| Years Ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
Current |  |  |  |  |
Federal | $ | 90,703 |  |  | $ | 65,861 |  |  | $ | 42,337 |
State | 25,347 |  |  | 19,515 |  |  | 12,571 |
Foreign | 12,544 |  |  | 7,641 |  |  | 4,478 |
Deferred |  |  |  |  | 0
Federal | (5,806) |  |  | 802 |  |  | 2,330 |
State | (801) |  |  | (169) |  |  | 598 |
Foreign | (7,917) |  |  | (1,548) |  |  | 250 |
| $ | 114,070 |  |  | $ | 92,102 |  |  | $ | 62,564 |
Income and loss from operations before income taxes for the years ended December 31, 2022, 2021, and 2020, respectively, consisted of the following:
| Years Ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
Domestic | $ | 437,506 |  |  | $ | 336,085 |  |  | $ | 238,320 |
Foreign | 10,559 |  |  | 22,464 |  |  | 11,244 |
| $ | 448,065 |  |  | $ | 358,549 |  |  | $ | 249,564 |
As of December 31, 2022, the Company had $36.1 million of net operating loss carryforwards in various foreign taxing jurisdictions. Most of the tax losses can be carried forward indefinitely. As of December 31, 2022, and 2021, the Company has valuation allowances of $11.2 million and $12.0 million, respectively. The valuation allowance decreased by $0.8 million and increased by $0.7 million for the years ended December 31, 2022, and December 31, 2021, respectively. The decrease in the 2022 valuation allowances was primarily a result of exchange rate fluctuation. The increase in the 2021 valuation allowances was primarily the result of an impairment on a foreign equity investment. As of December 31, 2022, the Company asserts that its accumulated undistributed earnings generated by our foreign subsidiaries are permanently reinvested and as such, has not recognized a US deferred tax liability on its investment in foreign subsidiaries. The Company will continue to assess its permanent reinvestment assertion on a quarterly basis. Reconciliations between the statutory federal income tax rates and the Company’s effective income tax rates as a percentage of income before income taxes for its operations were as follows:
| Years Ended December 31,
(in thousands) | 2022 |  | 2021 |  | 2020
Federal tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal benefit | 4.4 | % |  | 4.3 | % |  | 4.2 | %
Change in valuation allowance | — | % |  | — | % |  | 0.1 | %
True-up of prior year tax returns to tax provision | — | % |  | (0.1) | % |  | (0.4) | %
Difference between U.S. statutory and foreign local tax rates | 0.2 | % |  | 0.4 | % |  | 0.4 | %
Change in uncertain tax position | — | % |  | — | % |  | — | %
Other | (0.1) | % |  | 0.1 | % |  | (0.2) | %
Effective income tax rate | 25.5 | % |  | 25.7 | % |  | 25.1 | %
The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities as of December 31, 2022, and 2021, respectively, were as follows:
| As of December 31,
(in thousands) | 2022 |  | 2021
Deferred asset taxes |  |  |
State tax | $ | 1,857 |  |  | $ | 1,490 |
Health claims | 2,877 |  |  | 1,351 |
Inventories | 7,902 |  |  | 7,497 |
Sales incentive and advertising allowances | 2,191 |  |  | 1,777 |
Lease obligations | 14,827 |  |  | 11,562 |
Stock-based compensation | 2,251 |  |  | 2,612 |
Foreign tax credit carryforwards | 4,961 |  |  | 4,983 |
Non-United States tax loss carry forward | 6,557 |  |  | 7,824 |
Acquisition expense | 2,409 |  |  | 609 |
Capitalized research & development expenditures | 6,671 |  |  | — |
Other | 2,533 |  |  | 1,889 |
Total deferred tax assets | $ | 55,036 |  |  | $ | 41,594 |
Less valuation allowances | (11,180) |  |  | (11,992) |
Total deferred asset taxes | $ | 43,856 |  |  | $ | 29,602 |
Deferred tax liabilities |  |  |
Depreciation | $ | (28,271) |  |  | $ | (14,999) |
Goodwill and other intangibles amortization | (102,998) |  |  | (16,682) |
Right of use assets | (14,635) |  |  | (11,453) |
Hedging OCI | (10,284) |  |  | — |
Total deferred tax liabilities | (156,188) |  |  | (43,134) |
Total Deferred tax asset/(liability) | $ | (112,332) |  |  | $ | (13,532) |
A reconciliation of the beginning and ending amounts of unrecognized tax benefits in 2022, 2021 and 2020, respectively, were as follows, including foreign translation amounts:
Reconciliation of Unrecognized Tax Benefits | 2022 |  | 2021 |  | 2020
Balance as of January 1 | $ | 944 |  |  | $ | 1,168 |  |  | $ | 1,706 |
Additions based on tax positions related to prior years | 6,528 |  |  | 9 |  |  | 78 |
Reductions based on tax positions related to prior years | (38) |  |  | (47) |  |  | (7) |
Additions for tax positions of the current year | 73 |  |  | 3 |  |  | 48 |
Lapse of statute of limitations | (275) |  |  | (189) |  |  | (657) |
Balance as of December 31 | $ | 7,232 |  |  | $ | 944 |  |  | $ | 1,168 |
During 2022, the Company’s uncertain tax positions increased by $6.5 million, primarily due to positions for open years of which were assumed in the Company’s acquisition of ETANCO. Tax positions of $0.2, $0.3, and $0.3 million are included in the balance of unrecognized tax benefits as of December 31, 2022, 2021, and 2020, respectively, which if recognized, would reduce the effective tax rate. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in accordance with the Company’s historical accounting policy. During the years ended December 31, 2022, 2021 and 2020, accrued interest increased by $673 thousand, and decreased by $39 thousand and $108 thousand, respectively. The Company had accrued $0.9 million, $0.2 million and $0.3 million as of December 31, 2022, 2021 and 2020, respectively for the potential payment of interest and penalties before income tax benefits. The Company does not expect any material changes in unrecognized tax benefits within the next 12 months. As of December 31, 2022, the Company remained subject to federal income tax examinations in the U.S. for the tax years 2019 through 2022. In addition, tax years 2017 through 2022 remain open to examination in states, local and foreign jurisdictions. On August 16, 2022, President Biden signed into law the Inflation Reduction Act “IRA”. The provisions include the new Corporate Alternative Minimum Tax "CAMT", an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, all effective for tax year 2023. The Company is not subject to the provisions of CAMT but will evaluate the impact, if any, of the other provisions under the IRA when they become effective in tax year 2023.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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