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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Provision for income taxes consisted of the following:
|  | Years ended December 31,
(in thousands) |  | 2024 |  | 2023 |  | 2022
Income before income taxes: |  |  |  |  |  |
U.S. |  | $ | 26,660 |  |  | $ | 68,872 |  |  | $ | 20,422 |
Non-U.S. |  | 90,429 |  |  | 91,584 |  |  | 111,558 |
|  | $ | 117,089 |  |  | $ | 160,456 |  |  | $ | 131,980 |
Income tax expense/(benefit) |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal |  | $ | 2,682 |  |  | $ | 17,005 |  |  | $ | 9,781 |
State |  | 4,724 |  |  | 2,030 |  |  | 5,126 |
Non-U.S. |  | 34,053 |  |  | 34,110 |  |  | 28,605 |
|  | $ | 41,459 |  |  | $ | 53,145 |  |  | $ | 43,512 |
Deferred: |  |  |  |  |  |
Federal |  | $ | 1,699 |  |  | $ | (1,700) |  |  | $ | (9,592) |
State |  | (804) |  |  | 863 |  |  | (1,866) |
Non-U.S. |  | (13,320) |  |  | (3,462) |  |  | 3,418 |
|  | $ | (12,425) |  |  | $ | (4,299) |  |  | $ | (8,040) |
Total income tax expense |  | $ | 29,034 |  |  | $ | 48,846 |  |  | $ | 35,472 |
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:
| Years ended December 31, |
| 2024 |  | 2023 |  | 2022 |
U.S. federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | % |
State taxes, net of federal benefit | 2.3 |  |  | 1.9 |  |  | 2.5 |  |
Non-U.S. local income taxes | 2.3 |  |  | 1.4 |  |  | 3.8 |  |
U.S. permanent adjustments | 0.6 |  |  | 0.8 |  |  | 1.4 |  |
Foreign permanent adjustments | 1.0 |  |  | 0.7 |  |  | (2.1) |  |
Foreign rate differential | 2.1 |  |  | 2.0 |  |  | 3.1 |  |
Net U.S. tax on non-U.S. earnings and foreign withholdings | 2.8 |  |  | 5.1 |  |  | 3.5 |  |
Provision for/(resolution) of tax audits and contingencies, net | (1.3) |  |  | 0.3 |  |  | 0.3 |  |
U.S. Pension Settlement - Release of Residual Tax Effect | — |  |  | — |  |  | (4.0) |  |
Change in valuation allowances | 4.4 |  |  | (1.2) |  |  | (0.6) |  |
Impact of Mexico net operating loss inflation revaluation | (2.2) |  |  | — |  |  | — |  |
Establishment of deferred tax asset for Non-U.S. reserves | (4.3) |  |  | — |  |  | — |  |
Impact of amended tax returns | (0.8) |  |  | — |  |  | (0.1) |  |
Return to provision | (2.2) |  |  | (1.2) |  |  | (1.1) |  |
Other adjustments | (0.9) |  |  | (0.4) |  |  | (0.8) |  |
Effective income tax rate | 24.8 | % |  | 30.4 | % |  | 26.9 | % |
In 2024, the Company recorded a net tax benefit of $5.0 million for the establishment of a deferred tax asset for reserves in a foreign jurisdiction in accordance with newly adopted local law. The Company does not believe it will be able to realize the benefit of these deferred tax assets, as such an offsetting valuation allowance was recorded. This valuation allowance is included in the change in valuation allowances line above. In 2024, the Company also recorded new valuation allowances totaling $6.7 million and released a valuation allowance of $6.3 million in a non-U.S. jurisdiction due to positive evidence indicating that a full valuation allowance was no longer required. The remaining increase in valuation allowance is due to increases in deferred tax assets in entities that already had established valuation allowances. In 2022, the Company recorded a net tax benefit of $5.2 million for the release of the residual tax effects that were stranded within other comprehensive income related to the U.S. pension settlement. The residual tax effects were created as a result of the remeasurement of deferred tax assets and liabilities originally established in other comprehensive income in accordance with the Tax Cuts and Jobs Act lowering the U.S. corporate tax rate from 35% to 21% as of December 31, 2017. No similar charges were incurred during 2023 or 2024. The Company has operations which constitute a taxable presence in 22 countries outside of the United States. The Company is subject to audit in the U.S. and various foreign jurisdictions. Our open tax years for major jurisdictions generally range from 2013-2024. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years. During the periods reported, income outside of the U.S. was heavily concentrated within Brazil (34% tax rate), China (25% tax rate), and Mexico (30% tax rate). The foreign rate differential of these jurisdictions was partially offset by Switzerland (15% tax rate). As a result, the foreign income tax rate differential was primarily attributable to these tax rate differences. Cash payments for taxes amounted to $47.3 million in 2024, $54.5 million in 2023, and $50.0 million in 2022. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of certain assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
For the year ended December 31 |  | U.S. |  | Non-U.S.
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |  |  |  |  |
Accounts receivable, net |  | $ | 502 |  |  | $ | 528 |  |  | $ | 1,138 |  |  | $ | 1,489 |
Inventories |  | 2,473 |  |  | 1,608 |  |  | 1,636 |  |  | 1,429 |
Incentive compensation |  | 1,453 |  |  | 5,843 |  |  | 750 |  |  | 1,162 |
Property, plant, equipment and intangibles, net |  | — |  |  | — |  |  | — |  |  | — |
Pension, post retirement benefits - non-current |  | 6,440 |  |  | 6,939 |  |  | 2,202 |  |  | 4,899 |
Tax loss carryforwards |  | 49 |  |  | 110 |  |  | 32,963 |  |  | 29,811 |
Tax credit carryforwards |  | 3,602 |  |  | 3,167 |  |  | 29 |  |  | 19 |
Leases |  | 12,192 |  |  | 8,685 |  |  | 2,205 |  |  | 2,463 |
Reserves |  | 2,639 |  |  | 877 |  |  | 7,150 |  |  | 1,299 |
Deferred revenue |  | — |  |  | 244 |  |  | — |  |  | — |
Other |  | 373 |  |  | — |  |  | 909 |  |  | — |
Deferred tax assets before valuation allowance |  | 29,723 |  |  | 28,001 |  |  | 48,982 |  |  | 42,571 |
Less: valuation allowance |  | (1,826) |  |  | (118) |  |  | (13,670) |  |  | (9,730) |
Total deferred tax assets |  | $ | 27,897 |  |  | $ | 27,883 |  |  | $ | 35,312 |  |  | $ | 32,841 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Unrepatriated foreign earnings |  | $ | 4,961 |  |  | $ | 4,270 |  |  | $ | — |  |  | $ | — |
Property, plant, equipment and intangibles, net |  | 4,626 |  |  | 8,433 |  |  | 14,483 |  |  | 19,000 |
Basis difference in partner capital |  | 1,420 |  |  | 1,719 |  |  | — |  |  | — |
Basis difference in investment |  | 5,081 |  |  | 4,192 |  |  | — |  |  | — |
Derivatives |  | 38 |  |  | 3,009 |  |  | 125 |  |  | 109 |
Leases |  | 11,433 |  |  | 8,091 |  |  | 2,053 |  |  | 2,331 |
Deferred revenue |  | 380 |  |  | — |  |  | 4,663 |  |  | 9,843 |
Other |  | — |  |  | 117 |  |  | — |  |  | 249 |
Total deferred tax liabilities |  | 27,939 |  |  | 29,831 |  |  | 21,324 |  |  | 31,532 |
Net deferred tax (liability)/asset |  | $ | (42) |  |  | $ | (1,948) |  |  | $ | 13,988 |  |  | $ | 1,309 |
Deferred income tax assets, net of valuation allowances, are expected to be realized through the reversal of existing taxable temporary differences and future taxable income. As of December 31, 2024, the Company's net operating loss, capital loss and tax credit carryforwards were as follows:
(in thousands) |  | Expiration Period |  | Net Operating and Capital Loss Carryforwards |  | Tax Credit Carryforwards
Jurisdiction |  |  |
U.S. Federal |  | 2025 - 2034 |  | $ | — |  |  | $ | 2,797 |
U.S. State |  | 2033 - 2048 |  | 940 |  |  | 357 |
U.S. State |  | Indefinite |  | — |  |  | 448 |
Non-U.S. |  | 2025 - 2040 |  | 6,192 |  |  | — |
Non-U.S. |  | Indefinite |  | 133,174 |  |  | — |
Balance at end of year |  |  |  | $ | 140,306 |  |  | $ | 3,602 |
The Company records the residual U.S. and foreign taxes on certain amounts of foreign earnings that have been targeted for repatriation to the U.S. These amounts are not considered to be indefinitely reinvested, and the Company accrued for the tax cost on these earnings to the extent they cannot be repatriated in a tax-free manner. The Company has targeted for repatriation $163.0 million of current year and prior year earnings of the Company’s foreign operations. If these earnings were distributed, the Company would be subject to foreign withholding taxes of $4.5 million and U.S. income taxes of $0.7 million which have already been recorded. The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S. were approximately $132.9 million, and are intended to remain indefinitely invested in foreign operations. No additional income taxes have been provided on the indefinitely invested foreign earnings at December 31, 2024. If these earnings were distributed, the Company could be subject to income taxes and additional foreign withholding taxes. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practical due to the complexities of the hypothetical calculation. The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits. If recognized, the $3.1 million would impact the effective tax rate as of December 31, 2024 as follows:
(in thousands) |  | 2024 |  | 2023 |  | 2022
Unrecognized tax benefits balance at January 1, |  | $ | 2,741 |  |  | $ | 792 |  |  | $ | 1,459 |
Increase in gross amounts of tax positions related to prior years |  | 1,102 |  |  | 2,373 |  |  | 399 |
Decrease in gross amounts of tax positions related to prior years |  | (224) |  |  | — |  |  | (929) |
Increase in gross amounts of tax positions related to current years |  | — |  |  | 196 |  |  | 37 |
Decrease due to settlements with tax authorities |  | (460) |  |  | — |  |  | — |
Increase (decrease) due to lapse in statute of limitations |  | 116 |  |  | (656) |  |  | — |
Currency translation |  | (133) |  |  | 36 |  |  | (174) |
Unrecognized tax benefits balance at December 31, |  | $ | 3,142 |  |  | $ | 2,741 |  |  | $ | 792 |
Of the $3.1 million total unrecognized tax benefits balance as of December 31, 2024, $1.0 million is related to unrecognized tax benefits acquired in the Heimbach acquisition. The Company recognizes interest and penalties related to unrecognized tax benefits within its global operations as a component of income tax expense. The Company recognized $0.4 million, $0.5 million and $0.1 million interest and penalties related to the unrecognized tax benefits noted above, for the years 2024, 2023 and 2022, respectively. It is reasonably possible that within the next 12 months, unrecognized tax benefits related to international tax matters may decrease by up to $2.4 million based on current estimates.

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