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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 13. Income Taxes Income before income taxes was generated in the United States and globally as follows:
(in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Domestic |  | $ | 8,222 |  |  | $ | 7,444 |  |  | $ | 11,971 |
Foreign |  |  | 9,469 |  |  |  | 14,081 |  |  |  | 11,718 |
Total income before income taxes |  | $ | 17,691 |  |  | $ | 21,525 |  |  | $ | 23,689 |
Certain of the Company’s undistributed earnings of its foreign subsidiaries are not permanently reinvested, as management intends to repatriate foreign-held cash as needed to meet domestic cash needs for operating, investing, and financing activities. A liability of $0.9 million has been recorded for the deferred taxes on such undistributed foreign earnings as of December 31, 2024. The deferred taxes are attributable primarily to the foreign withholding taxes that would become payable should the Company repatriate cash held in its foreign operations. Income tax expense consisted of the following for the years ended December 31:
(in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,829 |  |  | $ | 3,939 |  |  | $ | 5,009 |
State |  |  | 754 |  |  |  | 1,100 |  |  |  | 836 |
Foreign |  |  | 3,359 |  |  |  | 2,107 |  |  |  | 1,755 |
Total current tax expense |  |  | 6,942 |  |  |  | 7,147 |  |  |  | 7,600 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  | $ | (1,905 | ) |  |  | (495 | ) |  |  | (3,001 | )
State |  |  | (295 | ) |  |  | (208 | ) |  |  | (231 | )
Foreign |  |  | (1,472 | ) |  |  | 580 |  |  |  | 1,058 |
Total deferred tax expense |  |  | (3,672 | ) |  |  | (123 | ) |  |  | (2,174 | )
Total tax expense |  | $ | 3,270 |  |  | $ | 7,024 |  |  | $ | 5,426 |
The income tax expense differs from the statutory rate due to the following:
(in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Tax expense at statutory rate |  | $ | 3,715 |  |  | $ | 4,488 |  |  | $ | 4,975 |
Increase (decrease) in tax resulting from: |  |  |  |  |  |  |  |  |
State income tax, net of federal benefit |  |  | 296 |  |  |  | 541 |  |  |  | 340 |
Capital loss carryforward |  |  | (618 | ) |  |  | — |  |  |  | — |
Other permanent differences |  |  | 961 |  |  |  | 290 |  |  |  | 383 |
Impact of rate differences and adjustments |  |  | 1,438 |  |  |  | (1,046 | ) |  |  | 565 |
United States tax credits and incentives |  |  | (534 | ) |  |  | (532 | ) |  |  | (626 | )
Foreign tax credits and incentives |  |  | (3,142 | ) |  |  | (812 | ) |  |  | (895 | )
Change in valuation allowance |  |  | (1,508 | ) |  |  | 1,782 |  |  |  | (526 | )
Foreign withholding taxes on repatriation of foreign earnings |  |  | 253 |  |  |  | (592 | ) |  |  | 139 |
Earnout expense (income) |  |  | 28 |  |  |  | 85 |  |  |  | (48 | )
Equity compensation |  |  | (82 | ) |  |  | 460 |  |  |  | 339 |
Excess compensation |  |  | 859 |  |  |  | 360 |  |  |  | 11 |
Provision-to-return adjustments |  |  | (468 | ) |  |  | 528 |  |  |  | (189 | )
Investment in joint venture |  |  | (371 | ) |  |  | (155 | ) |  |  | 375 |
Net effect GILTI and FDII |  |  | 2,871 |  |  |  | 1,400 |  |  |  | 565 |
Other |  |  | (428 | ) |  |  | 227 |  |  |  | 18 |
Total tax expense |  | $ | 3,270 |  |  | $ | 7,024 |  |  | $ | 5,426 |
Deferred income taxes reflect the future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and tax credit carry forwards. The net deferred tax liabilities consisted of the following at December 31:
(in thousands) |  | 2024 |  |  | 2023 |
Gross deferred tax assets: |  |  |  |  |  |
Accrued expenses |  | $ | 3,135 |  |  | $ | 729 |
Reserves on assets |  |  | 2,370 |  |  |  | 2,769 |
Share-based compensation awards |  |  | 731 |  |  |  | 372 |
Minimum pension |  |  | - |  |  |  | 920 |
Net operating loss carry-forwards |  |  | 3,437 |  |  |  | 3,785 |
Tax credit carry-forwards |  |  | 2,461 |  |  |  | 2,302 |
Investment in joint venture |  |  | 1,333 |  |  |  | 926 |
Leases |  |  | 6,020 |  |  |  | 3,699 |
Research and development costs |  |  | 4,549 |  |  |  | 3,857 |
Total gross deferred tax assets |  |  | 24,036 |  |  |  | 19,359 |
Valuation allowances |  |  | (5,415 | ) |  |  | (6,545 | )
|  | $ | 18,621 |  |  | $ | 12,814 |
Gross deferred tax liabilities: |  |  |  |  |  |
Depreciation |  |  | (2,099 | ) |  |  | (1,809 | )
Goodwill and intangibles |  |  | (19,652 | ) |  |  | (14,299 | )
Prepaid expenses and inventory |  |  | (45 | ) |  |  | (95 | )
Withholding tax on unremitted foreign earnings |  |  | (915 | ) |  |  | (662 | )
Leases |  |  | (5,883 | ) |  |  | (3,571 | )
Revenue recognition |  |  | (407 | ) |  |  | (694 | )
Minimum pension |  |  | (106 | ) |  |  | — |
Other |  |  | 130 |  |  |  | (218 | )
Total gross deferred tax liabilities |  |  | (28,977 | ) |  |  | (21,348 | )
Net deferred tax liabilities |  | $ | (10,356 | ) |  | $ | (8,534 | )
As of December 31, 2024, federal net operating loss carry forwards t otal $3.7 million, which expire from 2029 to 2034. As of December 31, 2024, state and local net operating loss carry forwards total $28.3 million, which expire from 2025 to 2044. The Company has recorded a valuation allowance on certain of these net operating loss carry forwards to reflect expected realization. The Company also has net operating loss carry forwards in foreign jurisdictions totaling $7.3 million. As of December 31, 2024 and 2023, the Company has recorded a valuation reserve, including but not limited to net operating losses, in the amount of $5.4 million and $6.5 million, respectively. The changes in the valuation allowance resulted in additional income tax expense (benefit) of $(1.1) million, $1.5 million, and $(0.5) million in 2024, 2023, and 2022, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. 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 carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. Based on this assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2024. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The Company accounts for uncertain tax positions pursuant to FASB ASC Topic 740. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. A reconciliation of the beginning and ending amount of uncertain tax position reserves included in Other liabilities on the Consolidated Balance Sheets is as follows:
(in thousands) |  | 2024 |  |  | 2023 |
Balance as of January 1, |  | $ | 151 |  |  | $ | 144 |
Additions for tax positions of acquired companies |  |  | 927 |  |  |  | — |
Additions for tax positions taken in prior years |  |  | 6 |  |  |  | 7 |
Balance as of December 31, |  | $ | 1,084 |  |  | $ | 151 |
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The reserve for uncertain tax positions includes $0.1 million of interest and penalties as of both December 31, 2024 and 2023. The favorable settlement of all uncertain tax positions would impact the Company’s effective income tax rate. Tax years going back to 2019 remain open for examination by all significant federal, state and foreign authorities. The Organization for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to address the tax challenges arising from the digitalization of the global economy which introduces a 15% global minimum corporate tax for companies with revenues above €750 million calculated on a country-by-country basis. On February 1, 2023, the FASB indicated that it believes the minimum tax imposed under Pillar Two is an alternative minimum tax, and, accordingly, deferred tax assets and liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period incurred. Aspects of Pillar Two legislation have been enacted in certain jurisdictions in which the Company operates effective for accounting periods commencing on or after January 1, 2024. However, based on the current revenue threshold, the Company is currently not subject to Pillar Two taxes.

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