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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of the Company’s income (loss) before provision for income taxes are as follows (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
U.S. | $ | 34,344 |  |  | $ | (61,332) |  |  | $ | 77,778 |
Foreign | (39,296) |  |  | 211 |  |  | — |
Income (loss) before provision for income taxes | $ | (4,952) |  |  | $ | (61,121) |  |  | $ | 77,778 |
The provision for income taxes charged to operations consists of the following (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Current expense (benefit): |  |  |  |  |
Federal | $ | 12,826 |  |  | $ | (8) |  |  | $ | 17,248 |
State | 1,630 |  |  | (668) |  |  | 4,196 |
Foreign | 7,725 |  |  | 60 |  |  | — |
| 22,181 |  |  | (616) |  |  | 21,444 |
Deferred expense (benefit): |  |  |  |  |
Federal | (6,160) |  |  | (9,085) |  |  | (2,799) |
State | (960) |  |  | (1,017) |  |  | 60 |
Foreign | (24,445) |  |  | — |  |  | — |
| (31,565) |  |  | (10,102) |  |  | (2,739) |
Total income tax expense (benefit) | $ | (9,384) |  |  | $ | (10,718) |  |  | $ | 18,705 |
Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
| December 31,
| 2022 |  | 2021
Deferred tax assets: |  |  |
Bad debts | $ | 234 |  |  | $ | 32 |
Inventories | 2,780 |  |  | 2,411 |
Accrued warranties | 3,575 |  |  | 1,242 |
Accrued compensation | 637 |  |  | 315 |
Net operating loss | 1,014 |  |  | 1,944 |
Equity-based compensation | 2,240 |  |  | 948 |
Lease liabilities | 4,588 |  |  | 2,661 |
Premium on capped call | 10,792 |  |  | 12,356 |
Interest expense carryforward | 6,750 |  |  | 5,301 |
Capitalized research and development expenses | 1,752 |  |  | — |
Other | 2,435 |  |  | 275 |
Deferred tax assets | 36,797 |  |  | 27,485 |
Valuation allowance | (1,449) |  |  | (222) |
Deferred tax assets, net | 35,348 |  |  | 27,263 |
Deferred tax liabilities: |  |  |
Property, plant, and equipment | (1,592) |  |  | (1,083) |
Intangible assets | (85,927) |  |  | (14,165) |
ROU assets | (3,969) |  |  | (2,670) |
Deferred tax liabilities | (91,488) |  |  | (17,918) |
Deferred tax asset (liability), net | $ | (56,140) |  |  | $ | 9,345 |
A reconciliation of income tax expense computed at the federal statutory rate of 21% to actual income tax expense at the Company’s effective rate is as follows (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Income tax rate reconciliation |  |  |  |  |
Income tax expense (benefit) at U.S. statutory rate | $ | (1,040) |  |  | $ | (12,835) |  |  | $ | 16,333 |
State income taxes | 530 |  |  | (1,545) |  |  | 3,375 |
Officer’s compensation | 740 |  |  | 435 |  |  | — |
Equity-based compensation | 712 |  |  | 1,542 |  |  | 852 |
Contingent consideration | (947) |  |  | 567 |  |  | 5,553 |
Tax credits | (421) |  |  | (620) |  |  | (79) |
Effect of CARES Act | — |  |  | — |  |  | (6,608) |
Non-U.S. income taxed at different rate than U.S. statutory rate | (4,274) |  |  | — |  |  | — |
Non-U.S. tax incentives | (4,183) |  |  | — |  |  | — |
Foreign derived intangible income benefit | (1,668) |  |  | — |  |  | (1,201) |
Transaction costs | 1,628 |  |  | 950 |  |  | — |
Change in valuation allowance | (534) |  |  | 14 |  |  | — |
Nondeductible expenses | 10 |  |  | 69 |  |  | 437 |
Other | 63 |  |  | 705 |  |  | 43 |
Total income tax expense (benefit) | $ | (9,384) |  |  | $ | (10,718) |  |  | $ | 18,705 |
The Company operates under a non-U.S. tax incentive which reduces the overall effective tax rate of the Company. As of December 31, 2022, the Company had satisfied the conditions enumerated in these agreements. Included in the accompanying Consolidated Financial Statements are tax benefits of $4.2 million for 2022 from the non-U.S. tax incentive. As of December 31, 2022, the Company has federal income tax net operating loss (“NOL”) carryforwards of approximately $4.8 million that do not expire, state income tax NOL carryforwards of approximately $4.5 million that will expire in future years beginning in 2029, and foreign NOLs are immaterial. As of December 31, 2021, the Company has federal income tax NOL carryforwards of approximately $5.1 million that do not expire, state income tax NOL carryforwards of approximately $9.7 million that will expire in future years beginning in 2029, and foreign NOLs are immaterial. Realization of deferred tax assets is dependent upon generating sufficient taxable income of the appropriate type and in the appropriate jurisdictions. In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. It is not more likely than not that deferred tax assets from certain U.S. Federal, state and foreign net operating loss would be realized due to type and location of future earnings and as such the Company has a valuation allowance of $1.4 million and $0.2 million for the years ended years ended December 31, 2022 and 2021. A valuation allowance of $1.8 million was recorded as of the acquisition date of STI for deferred tax assets. ASC 740 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. In accordance with ASC 740, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company’s assessments of its tax positions in accordance with ASC 740 did not result in changes that had a material impact on results of operations, financial condition or liquidity. The Company had no unrecognized income tax benefits at either December 31, 2022 or 2021. The Company files income tax returns in the U.S. federal jurisdiction, in multiple U.S. states, as well as in non-U.S. jurisdictions. Through global expansion and the acquisition of STI, the Company has a significant presence in Spain and Brazil. The Company and its subsidiaries are routinely examined by various U.S. and non-U.S. taxing authorities. The Company is not subject to U.S. federal, state and non-U.S. income tax examinations by tax authorities for years before 2017. There are currently no income tax audits in any material jurisdictions. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments. Repatriation of funds could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or state income taxes and the impact of foreign currency movements. At December 31, 2022, management believed that sufficient liquidity was available in the U.S. The Company will consider repatriating certain funds from its non-U.S. subsidiaries that are not needed to finance local operations; however, these particular repatriation activities have not and are not expected to result in a significant incremental tax liability to the Company. As of December 31, 2022, the Company has accumulated deficits in undistributable earnings in material non-U.S. jurisdictions. As such, no deferred taxes have been recorded. The Company does not receive tax basis for payments made related to the Tax Receivable Agreement (“TRA”) payable to the former owner. Refer to Note 15 - Commitments and Contingencies, for detail on the TRA, which was a contingent consideration at the time of the Array acquisition.

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- 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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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