XML 63 R18.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income from operations before income taxes consisted of the following:
| (Dollars in thousands)
| Year Ended December 31,
| 2021 |  | 2020
United States | $ | 5,421 |  |  | $ | 16,226 |
Canada | 6,498 |  |  | 4,559 |
Total | $ | 11,919 |  |  | $ | 20,785 |
Provision (benefit) for income taxes from operations for the years ended December 31, consisted of the following:
| (Dollars in thousands)
| Year Ended December 31,
| 2021 |  | 2020
Current income tax expense: |  |  |
U.S. federal | $ | 3,042 |  |  | $ | 3,858 |
U.S. state | 777 |  |  | 710 |
Canada | 1,133 |  |  | 1,288 |
Total | $ | 4,952 |  |  | $ | 5,856 |
Deferred income tax expense (benefit): |  |  |
U.S. federal | $ | (817) |  |  | $ | 236 |
U.S. state | (394) |  |  | 52 |
Canada | (1,228) |  |  | (472) |
Total | $ | (2,439) |  |  | $ | (184) |
Total income tax expense (benefit): |  |  |
U.S. federal | $ | 2,225 |  |  | $ | 4,094 |
U.S. state | 383 |  |  | 762 |
Canada | (95) |  |  | 816 |
Total | $ | 2,513 |  |  | $ | 5,672 |
The reconciliation between the effective income tax rates and the statutory federal rates for operations are as follows:
| Year Ended December 31,
| 2021 |  | 2020
Statutory Federal rate | 21.0 | % |  | 21.0 | %
Increase (decrease) resulting from: |  |  |
Change in valuation allowance - current period activity | — |  |  | (2.2) |
Change in valuation allowance - reversal | (10.3) |  |  | — |
Foreign rate differential | 1.9 |  |  | — |
Stock compensation | (3.7) |  |  | (2.0) |
Compensation deduction limitation | 0.9 |  |  | 1.5 |
State and local taxes, net | 3.3 |  |  | 3.8 |
Asset basis true-up | 5.5 |  |  | — |
Meals & entertainment | 1.2 |  |  | 0.6 |
Change in uncertain tax positions | 0.4 |  |  | 4.6 |
Provision to return differences | 0.2 |  |  | (0.1) |
Other items, net | 0.7 |  |  | 0.1 |
Provision for income taxes | 21.1 | % |  | 27.3 | %
Global Intangible Low Taxed Income (GILTI) is a deemed amount of income derived from controlled foreign corporations (CFC) in which a US person is a 10% direct or indirect shareholder. The Company owns two Canadian CFC’s, which are subject to GILTI inclusion. However, the Company can utilize a foreign tax credit to fully offset a significant portion of all the tax from the GILTI inclusion based on foreign taxes paid in Canada. At December 31, 2021, the Company had $3.5 million of U.S. federal net operating loss carryforwards which are subject to expiration beginning in 2030 and $6.5 million of various state net operating loss carryforwards which expire at varying dates through 2034. After recording pre-tax losses for many years, Lawson’s Canadian subsidiary recorded pre-tax profits in 2019 and 2020. Lawson’s Canadian subsidiary continued to generate pre-tax profits in 2021 and have utilized some of the net operating loss carryforwards. Based on available evidence, we now believe it is more likely than not that we will be able to utilize Lawson’s Canadian subsidiary deferred tax assets to offset future taxable income. Lawson released the $1.2 million valuation allowance on the Lawson Canada deferred tax assets as of December 31, 2021. As a result of acquisitions completed in recent years, the Company recorded $21.4 million of tax deductible goodwill that may result in a tax benefit in future periods. Deferred income tax assets and liabilities contain the following temporary differences:
| (Dollars in thousands)
| December 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |
Net operating loss carryforward | $ | 4,073 |  |  | $ | 5,431 |
Compensation and benefits | 11,407 |  |  | 10,980 |
Inventory reserve | 2,222 |  |  | 1,772 |
Transaction costs | 2,077 |  |  | — |
Accounts receivable reserve | 203 |  |  | 167 |
Leased assets | 1,302 |  |  | 1,061 |
Property, plant & equipment | 2,046 |  |  | — |
Intangible assets | 202 |  |  | — |
Other | 58 |  |  | 329 |
Total deferred tax assets | 23,590 |  |  | 19,740 |
Deferred tax liabilities: |  |  |
Intangible assets and goodwill | 1,771 |  |  | 1,948 |
Lease liabilities | 2,647 |  |  | 1,366 |
Property, plant and equipment | 134 |  |  | (975) |
Other | 598 |  |  | 503 |
Total deferred liabilities | 5,150 |  |  | 2,842 |
Net deferred tax assets before valuation allowance | 18,440 |  |  | 16,898 |
Valuation allowance | — |  |  | (1,257) |
Net deferred tax assets | $ | 18,440 |  |  | $ | 15,641 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| (Dollars in thousands)
| December 31,
| 2021 |  | 2020
Balance at beginning of year | $ | 3,686 |  |  | $ | 3,242 |
Additions for tax positions of current year | — |  |  | 15 |
Additions for tax positions of prior years | 554 |  |  | 1,413 |
Reductions for tax positions of prior year | — |  |  | — |
Lapse of statute of limitations | (539) |  |  | (984) |
Balance at end of year | $ | 3,701 |  |  | $ | 3,686 |
The recognition of the unrecognized tax benefits would have a favorable effect on the effective tax rate. Due to the uncertainty of both timing and resolution of income tax examinations, the Company is unable to determine whether any amounts included in the December 31, 2021 balance of unrecognized tax benefits represent tax positions that could significantly change during the next twelve months. The unrecognized tax benefits are recorded as a component of Other liabilities in the Consolidated Balance Sheets. Interest and penalties related to unrecognized tax benefits are recorded as a component of Income tax expense in the Consolidated Statements of Income and Comprehensive Income. Including the impact of interest and the impact of net operating losses, the unrecognized tax benefit is $3.9 million and $3.7 million as of December 31, 2021 and December 31, 2020, respectively, which is recorded in Other liabilities on the Consolidated Balance Sheets.The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. As of December 31, 2021, the Company was subject to U.S. federal income tax examinations for the years 2018 through 2020 and income tax examinations from various other jurisdictions for the years 2014 through 2020.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration