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Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
The components of income/(loss) before income taxes were as follows:
Years Ended December 31,
(in thousands)202120202019
Domestic$171,297 $(63,025)$119,166 
Foreign70,771 33,040 62,060 
$242,068 $(29,985)$181,226 
The components of provision/(benefit) for income taxes were as follows:
Years Ended December 31,
(in thousands)202120202019
Current:
Federal$32,983 $(10,764)$18,655 
State and local3,711 (545)3,765 
Foreign11,635 7,958 11,940 
48,329 (3,351)34,360 
Deferred:
Federal(1,402)(4,940)2,309 
State and local1,888 (2,962)1,343 
Foreign794 (451)1,492 
1,280 (8,353)5,144 
$49,609 $(11,704)$39,504 
A reconciliation between income taxes computed at the federal statutory rate and the effective tax rate is as follows:
Years Ended December 31,
(in thousands)202120202019
Income taxes at federal statutory rate21.0 %21.0 %21.0 %
Effects of foreign operations(0.8)10.3 (0.1)
Stock-based compensation(2.4)11.8 (3.4)
State and local income taxes - net of federal income tax benefit2.1 12.9 2.3 
Nondeductible items1.2 (0.4)0.7 
Impact of tax reform— 14.0 — 
Global intangible low-taxed income ("GILTI")— (18.2)— 
Valuation allowance(0.5)(9.3)0.6 
Other(0.1)(3.1)0.7 
Effective tax rate20.5 %39.0 %21.8 %
The primary changes between the Company’s effective tax rate for the year ended December 31, 2021 and 2020 are due to the year-over-year benefit resulting from the exercising and vesting of share-based awards, a decrease in tax benefit related to a net operating loss carryback claim set forth by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), a decrease in the GILTI tax and an increase in pre-tax income in jurisdictions with higher tax rates.
The components of deferred tax assets and liabilities were as follows:
As of December 31,
(in thousands)20212020
Deferred tax assets
Receivable allowances$8,313 $5,226 
Inventory7,992 4,681 
Accrued expenses310 1,109 
Deferred compensation6,486 7,418 
Net operating loss carryforwards6,129 9,987 
Lease liability26,436 31,975 
Other1,169 1,345 
Gross deferred tax assets before valuation allowance56,835 61,741 
Less: valuation allowance(3,753)(4,968)
Gross deferred tax assets after valuation allowance53,082 56,773 
Deferred tax liabilities
Depreciation and amortization(16,144)(13,744)
Unremitted earnings of foreign subsidiaries(3,138)(2,964)
Right-of-use asset(20,365)(24,211)
Amortization of goodwill(7,578)(7,665)
Indefinite-lived intangibles(4,654)(5,336)
Gross deferred tax liabilities(51,879)(53,920)
Net deferred tax assets/(liabilities)$1,203 $2,853 
The Company applies the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax‑planning strategies in making this assessment.
The Company’s decrease in valuation allowance of $1,215 is due to usage of net operating loss deferred tax assets in various foreign subsidiaries, which resulted in an aggregate valuation allowance of $3,753 for the year ended December 31, 2021.
A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
Years Ended December 31,
(in thousands)202120202019
Beginning Balance$2,295 $1,150 $1,511 
Additions for tax positions of prior years— 1,145 — 
Reductions for tax positions of prior years(1,150)— (361)
Ending Balance$1,145 $2,295 $1,150 
For the years ended December 31, 2021, 2020 and 2019 the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $1,145, $2,295 and $1,150, in the aggregate, respectively. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Accrued interest and penalties on unrecognized tax benefits and interest and penalty expense was immaterial to the consolidated financial
statements for all periods presented. The unrecognized tax benefits are not expected to materially change in the next twelve months.
The Company files income tax returns in the U.S., for federal, state, and local purposes, and in certain other foreign jurisdictions. The Company's tax years 2018 through 2021 remain open to examination by most taxing authorities. During 2017, the U.S. Internal Revenue Service completed its audit of the Company's 2014 U.S. income tax return.
The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated from foreign operations, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. The deferred tax liability of $3,138 at December 31, 2021 reflects the withholding tax on amounts that may be repatriated from foreign operations.
In response to the COVID-19 pandemic, the CARES Act was signed into law on March 27, 2020, which includes significant corporate income tax and payroll tax provisions aimed at providing economic relief. The Company received or expects to continue to receive a corporate income tax benefit on the net operating loss carryback provision set forth by the CARES act, as well as favorable cash flow benefits related to the employee retention credit, employer payroll tax deferral, and accelerated depreciation related to qualified improvement property.