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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes
12.
Income Taxes

The components of income (loss) before income taxes are as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(Amounts in thousands)

 

Domestic

 

$

(89,321

)

 

$

(24,888

)

 

$

153,446

 

Foreign

 

 

62,286

 

 

 

81,595

 

 

 

65,694

 

(Loss) income before income taxes

 

$

(27,035

)

 

$

56,707

 

 

$

219,140

 

 

 

 

 

 

 

 

 

 

 

 

The components of the income tax (benefit) provision are as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(Amounts in thousands)

 

Components of the income tax (benefit) provision:

 

 

 

 

 

 

 

 

 

Current

 

$

15,037

 

 

$

19,941

 

 

$

34,800

 

Deferred

 

 

(16,558

)

 

 

1,170

 

 

 

(1,619

)

Total

 

$

(1,521

)

 

$

21,111

 

 

$

33,181

 

Jurisdictional components of the income tax (benefit) provision:

 

 

 

 

 

 

 

 

 

Federal

 

$

(13,684

)

 

$

2,272

 

 

$

17,662

 

State

 

 

(2,059

)

 

 

(26

)

 

 

1,381

 

Foreign

 

 

14,222

 

 

 

18,865

 

 

 

14,138

 

Total

 

$

(1,521

)

 

$

21,111

 

 

$

33,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2024, the Company had federal net operating loss carryforwards of $19.3 million, state net operating loss carryforwards of $11.9 million, and foreign net operating loss carryforwards of $26.0 million. The federal net operating loss carryforwards have unlimited carryforward periods and do not expire. The state net operating loss carryforwards will expire at various dates through 2044. Approximately $4.8 million of the foreign net operating loss carryforwards have unlimited carryforward periods and do not expire, while $21.2 million of the foreign net operating loss carryforwards will expire at various dates through 2034. At December 31, 2024, the Company had federal and state business tax credit carryforwards of $6.6 million available to reduce future federal and state income taxes. The business tax credit carryforwards will expire at various dates through 2044. Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant stockholders.

The components of deferred income taxes are as follows:

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(Amounts in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Stock-based compensation expense

 

$

6,809

 

 

$

5,120

 

Operating leases

 

 

36,415

 

 

 

30,727

 

Capitalized research and development

 

 

20,641

 

 

 

17,568

 

Inventory

 

 

15,539

 

 

 

10,131

 

Net operating loss carryforwards

 

 

9,877

 

 

 

7,648

 

Business tax credit carryforwards

 

 

5,172

 

 

 

5,531

 

Other

 

 

11,587

 

 

 

7,063

 

Total deferred tax assets

 

 

106,040

 

 

 

83,788

 

Less: valuation allowance

 

 

(517

)

 

 

(20

)

Net deferred tax assets

 

 

105,523

 

 

 

83,768

 

Deferred tax liabilities:

 

 

 

 

 

 

Fixed assets

 

 

(18,318

)

 

 

(17,716

)

Acquired intangible assets

 

 

(63,132

)

 

 

(58,467

)

Operating lease right of use assets

 

 

(29,897

)

 

 

(26,373

)

Debt discount

 

 

(16,202

)

 

 

(19,006

)

Total deferred tax liabilities

 

 

(127,549

)

 

 

(121,562

)

Total net deferred tax liabilities

 

$

(22,026

)

 

$

(37,794

)

 

 

 

 

 

 

 

The net change in the total valuation allowance for the year ended December 31, 2024 and 2023 was an increase of approximately $497,000 and a increase of approximately $1,000, respectively.

The reconciliation of the federal statutory rate to the effective income tax rate for the years ended December 31, 2024, 2023 and 2022 is as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

 

(Amounts in thousands, except percentages)

 

(Loss) income before income taxes

 

$

(27,035

)

 

 

 

 

$

56,707

 

 

 

 

 

$

219,140

 

 

 

 

Expected tax at statutory rate

 

 

(5,677

)

 

 

21.0

%

 

 

11,910

 

 

 

21.0

%

 

 

46,020

 

 

 

21.0

%

Adjustments due to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Difference between U.S. and foreign tax

 

 

1,200

 

 

 

(4.4

%)

 

 

1,078

 

 

 

1.9

%

 

 

1,024

 

 

 

0.5

%

State income taxes

 

 

(1,812

)

 

 

6.7

%

 

 

1,224

 

 

 

2.2

%

 

 

3,509

 

 

 

1.6

%

Business tax credits

 

 

(1,523

)

 

 

5.6

%

 

 

(4,522

)

 

 

(8.0

%)

 

 

(5,139

)

 

 

(2.3

%)

Stock-based compensation expense

 

 

1,782

 

 

 

(6.6

%)

 

 

(2,461

)

 

 

(4.3

%)

 

 

(5,638

)

 

 

(2.6

%)

U.S. taxation of foreign earnings

 

 

422

 

 

 

(1.6

%)

 

 

539

 

 

 

1.0

%

 

 

83

 

 

 

0.0

%

Foreign-derived intangible income

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

 

 

(5,042

)

 

 

(2.3

%)

Executive compensation

 

 

2,718

 

 

 

(10.1

%)

 

 

3,084

 

 

 

5.4

%

 

 

5,441

 

 

 

2.5

%

Contingent consideration

 

 

796

 

 

 

(2.9

%)

 

 

(6,412

)

 

 

(11.3

%)

 

 

(6,033

)

 

 

(2.8

%)

Nondeductible transactions cost

 

 

330

 

 

 

(1.2

%)

 

 

604

 

 

 

1.1

%

 

 

—

 

 

 

0.0

%

Loss on extinguishment of debt

 

 

—

 

 

 

0.0

%

 

 

2,634

 

 

 

4.6

%

 

 

—

 

 

 

0.0

%

Debt discount

 

 

—

 

 

 

0.0

%

 

 

16,650

 

 

 

29.4

%

 

 

—

 

 

 

0.0

%

Foreign exchange loss

 

 

—

 

 

 

0.0

%

 

 

(2,288

)

 

 

(4.0

%)

 

 

—

 

 

 

0.0

%

Change in U.S. and foreign tax rates

 

 

494

 

 

 

(1.8

%)

 

 

—

 

 

 

0.0

%

 

 

—

 

 

 

0.0

%

Uncertain tax (benefit) provisions

 

 

(805

)

 

 

3.0

%

 

 

165

 

 

 

0.3

%

 

 

234

 

 

 

0.1

%

Change in valuation allowance

 

 

106

 

 

 

(0.4

%)

 

 

—

 

 

 

0.0

%

 

 

(688

)

 

 

(0.3

%)

Return to provision adjustments

 

 

346

 

 

 

(1.3

%)

 

 

(1,255

)

 

 

(2.2

%)

 

 

(498

)

 

 

(0.2

%)

Other

 

 

102

 

 

 

(0.4

%)

 

 

161

 

 

 

0.3

%

 

 

(92

)

 

 

(0.0

%)

Income tax (benefit) provision

 

$

(1,521

)

 

 

5.6

%

 

$

21,111

 

 

 

37.2

%

 

$

33,181

 

 

 

15.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company’s tax returns are subject to examination by federal, state and foreign tax authorities. The Company’s two major tax jurisdictions are subject to examination for the following periods:

 

Jurisdiction

 

Fiscal Years Subject to Examination

United States - federal and state

 

2020-2024

Sweden

 

2019-2024

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

 

 

 

2024

 

 

2023

 

 

 

(Amounts in thousands)

 

Balance of gross unrecognized tax benefits, beginning of period

 

$

3,139

 

 

$

2,996

 

Gross amounts of increases in unrecognized tax benefits as a result
     of tax positions taken in the current period

 

 

76

 

 

 

178

 

Gross amounts of changes in unrecognized tax benefits as a result
     of tax positions taken in the prior period

 

 

(20

)

 

 

53

 

Gross amounts of decreases due to release

 

 

(1,066

)

 

 

(88

)

Balance of gross unrecognized tax benefits, end of period

 

$

2,129

 

 

$

3,139

 

 

 

 

 

 

 

 

 

Included in the balance of unrecognized tax benefits as of December 31, 2024, are $2.1 million of tax benefits that, if recognized, would affect the effective tax rate. The Company classifies interest and penalties related to income taxes as components of its income tax (benefit) provision. In 2024, a net expense of approximately $58,000, was recorded to the income tax provision related to interest and penalties while in 2023, a net expense of approximately $15,000 was recorded. The amount of interest and penalties recorded in the accompanying consolidated balance sheets was approximately $125,000 and $67,000 as of December 31, 2024 and 2023, respectively. In the next twelve months, it is reasonably possible the Company will reduce its gross unrecognized tax benefits, excluding interest by up to $1.4 million due to expiring statutes of limitations.

In 2021, the Organization of Economic Co-operation and Development announced an Inclusive Framework on Base Erosion and Profit Sharing with the goal of achieving consensus around substantial changes to international tax policies, including the implementation of a minimum global effective tax rate of 15%. We continue to evaluate the impacts of enacted legislation and pending legislation in the tax jurisdictions in which we operate. While various countries have implemented the legislation as of January 1, 2024, and various countries continue to implement, we do not expect a resulting material change to our income tax provision for the 2025 fiscal year.

As of December 31, 2024, the Company has accumulated undistributed earnings generated by its foreign subsidiaries of approximately $266.2 million. Because $5.7 million of such earnings have previously been subject to the one-time transition tax on foreign earnings required by the Tax Cuts and Jobs Act enacted in December 2017, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes. At December 31, 2024, the Company has not provided for taxes on outside basis differences of its foreign subsidiaries as it is not practicable and the Company has the ability and intent to indefinitely reinvest the undistributed earnings of its foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict its plan to indefinitely reinvest.