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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14 – Income Taxes
The components of income before income taxes were as follows:
Years Ended December 31,
(in thousands)202420232022
Domestic$131,859 $131,343 $188,265 
Foreign98,618 89,271 94,055 
$230,477 $220,614 $282,320 
The components of provision for income taxes were as follows:
Years Ended December 31,
(in thousands)202420232022
Current:
Federal$32,894 $18,491 $36,983 
State and local6,326 3,594 6,057 
Foreign20,058 18,449 18,462 
59,278 40,534 61,502 
Deferred:
Federal(4,558)5,229 2,705 
State and local(465)682 466 
Foreign320 194 430 
(4,703)6,105 3,601 
$54,575 $46,639 $65,103 
A reconciliation between income taxes computed at the federal statutory rate and the effective tax rate is as follows:
Years Ended December 31,
202420232022
Income taxes at federal statutory rate21.0 %21.0 %21.0 %
Effects of foreign operations(0.3)0.4 (0.2)
Stock-based compensation0.6 (1.8)(0.5)
State and local income taxes - net of federal income tax benefit3.0 1.9 2.0 
Nondeductible items0.5 0.3 0.5 
Valuation allowance(0.4)(0.1)0.1 
Other(0.7)(0.6)0.2 
Effective tax rate23.7 %21.1 %23.1 %
The primary changes between the Company’s effective tax rate for the years ended December 31, 2024 and 2023 are due to a lower tax benefit related to equity-based awards and an increase in pre-tax income in jurisdictions with higher tax rates. The primary changes between the Company’s effective tax rate for the years ended December 31, 2023, and 2022 are due to a higher tax benefit related to equity-based awards and a decrease 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)20242023
Deferred tax assets
Receivable allowances$8,073 $7,087 
Inventory7,748 7,780 
Accrued expenses484 343 
Deferred compensation5,858 3,468 
Net operating loss carryforwards4,208 5,393 
Lease liability34,706 33,232 
Other2,435 2,332 
Gross deferred tax assets before valuation allowance63,512 59,635 
Less: valuation allowance3,051 3,715 
Gross deferred tax assets after valuation allowance60,461 55,920 
Deferred tax liabilities
Depreciation and amortization(22,547)(22,648)
Unremitted earnings of foreign subsidiaries(3,041)(2,917)
Right-of-use asset(31,234)(29,290)
Amortization of goodwill(7,655)(7,613)
Indefinite-lived intangibles— (1,449)
Gross deferred tax liabilities(64,477)(63,917)
Net deferred tax liabilities$(4,016)$(7,997)
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 $663 is due to a decrease of net operating loss deferred tax assets in various foreign subsidiaries, which resulted in an aggregate valuation allowance of $3,051 for the year ended December 31, 2024.
A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
Years Ended December 31,
(in thousands)202420232022
Beginning Balance$238 $1,145 $1,145 
Additions for tax positions of prior years— — — 
Reductions for tax positions of prior years(238)(907)— 
Ending Balance$— $238 $1,145 
For the years ended December 31, 2024, 2023, and 2022 the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $0, $238, and $1,145, 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. It is reasonably possible that the unrecognized tax benefits will decrease in the next twelve months.
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 $3,041 as of December 31, 2024 reflects the withholding tax on amounts that may be repatriated from foreign operations.
The Company files income tax returns in the U.S. for federal, state, and local purposes, and in certain foreign jurisdictions. The Company's tax years 2021 through 2023 remain open to examination by most taxing authorities.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which contains certain revisions to the Internal Revenue Code, including a 15% corporate minimum income tax for tax years beginning after December 31, 2022. While the 15% corporate minimum income tax has no effect on the Company’s results of operations in the near term, the Company will continue to evaluate its impact on future years. The IRA also assesses a 1% excise tax on repurchases of corporate stock which impacts the Company’s stock repurchases effective January 1, 2023. The excise tax is recorded as an incremental cost in treasury stock on the Company's Consolidated Balance Sheets and was $752 and $765 for the twelve months ended December 31, 2024 and 2023, respectively.
The Organization for Economic Cooperation and Development (“OECD”) has implemented the global minimum tax rate of at least 15% for large multinational companies as of 2024 (“Pillar Two”). Under Pillar Two, a top-up tax will be required for any jurisdiction that has enacted Pillar Two and whose effective tax rate falls below the 15% global minimum rate. Additionally, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Under the safe harbor, companies would be excluded from Pillar Two requirements provided certain criteria are met. Based on the Company’s analysis, the enactment of Pillar Two legislation does not have a material effect on the Company’s financial position. The Company will continue to monitor and reflect the impact of such legislative changes in future periods, as appropriate.