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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 19 — Income Taxes

The income tax provisions were calculated based upon the following components of earnings before income tax for the years ended December 31, 2024, 2023 and 2022:

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

(Loss) earnings before income tax:

 

 

 

 

 

 

 

 

 

Domestic

 

$

(54,073

)

 

$

(37,222

)

 

$

(34,211

)

Foreign

 

 

156,338

 

 

 

92,176

 

 

 

72,593

 

Earnings before income tax

 

$

102,265

 

 

$

54,954

 

 

$

38,382

 

 

The components of the provision for income taxes for the years ended December 31, 2024, 2023 and 2022 are summarized as follows:

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current income tax (benefit) expense:

 

 

 

 

 

 

 

 

 

Federal

 

$

(1,181

)

 

$

3,510

 

 

$

3,006

 

State and local

 

 

679

 

 

 

414

 

 

 

650

 

Foreign

 

 

27,240

 

 

 

23,759

 

 

 

17,607

 

Total current income tax expense

 

 

26,738

 

 

 

27,683

 

 

 

21,263

 

Deferred income tax (benefit) expense:

 

 

 

 

 

 

 

 

 

Federal

 

 

(7,944

)

 

 

(7,495

)

 

 

(5,971

)

State and local

 

 

66

 

 

 

444

 

 

 

(213

)

Foreign

 

 

18,458

 

 

 

(6,021

)

 

 

(1,138

)

Total deferred income tax expense (benefit)

 

 

10,580

 

 

 

(13,072

)

 

 

(7,322

)

Total income tax expense

 

$

37,318

 

 

$

14,611

 

 

$

13,941

 

No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries at December 31, 2024. In addition, deferred U.S. income taxes have not been provided on the undistributed earnings of the Company’s foreign subsidiaries since these earnings will not be taxable upon repatriation to the United States. These earnings will be primarily treated as previously taxed income from either the one-time transition tax or global intangible low-taxed income provision, or they will be offset with a 100% dividend received deduction.

To the extent dividends are paid within foreign tiered subsidiaries, withholding and income taxes may be incurred upon repatriation through the chain. Taxes of $5,088 have been accrued on undistributed earnings that are not indefinitely reinvested and are primarily related to China, Germany, Ukraine, North Macedonia, Czech Republic and Malta. As of December 31, 2024, taxes have not been provided on $194,777 of undistributed earnings in various subsidiaries as those earnings have been indefinitely invested. If, in the future, these earnings were to be repatriated to foreign affiliates, additional tax provisions would be required. It is not practicable to determine the unrecognized deferred tax liability on these undistributed earnings. There are no other material liabilities for income taxes on the undistributed earnings of foreign subsidiaries, as the Company has concluded that such earnings are either indefinitely reinvested or should not give rise to additional income tax liabilities as a result of the distribution of such earnings.

The deferred tax assets and deferred tax liabilities and related valuation allowance were comprised of the following as of December 31, 2024 and 2023:

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating losses

 

$

35,966

 

 

$

44,053

 

Intangible assets

 

 

10,893

 

 

 

4,314

 

Research and development credits

 

 

5,475

 

 

 

7,127

 

Property and equipment

 

 

4,132

 

 

 

4,800

 

Valuation reserves and accrued liabilities

 

 

8,446

 

 

 

11,221

 

Capitalized research and development costs

 

 

28,318

 

 

 

23,658

 

Stock compensation

 

 

2,039

 

 

 

3,227

 

Defined benefit obligation

 

 

1,514

 

 

 

1,691

 

Inventory

 

 

717

 

 

 

181

 

Other credits

 

 

—

 

 

 

8,946

 

Other

 

 

8,707

 

 

 

9,154

 

Total deferred tax asset

 

 

106,207

 

 

 

118,372

 

Valuation allowance

 

 

(25,272

)

 

 

(35,888

)

Deferred tax liabilities:

 

 

 

 

 

 

Unrealized foreign currency exchange gains

 

$

(1,092

)

 

$

—

 

Undistributed profits of subsidiary

 

 

(5,016

)

 

 

(4,609

)

Property and equipment

 

 

(10,524

)

 

 

(12,627

)

Intangible assets

 

 

(8,720

)

 

 

—

 

Other

 

 

(1,383

)

 

 

(1,550

)

Total deferred tax liability

 

 

(26,735

)

 

 

(18,786

)

Net deferred tax asset

 

$

54,200

 

 

$

63,698

 

Reconciliations between the statutory Federal income tax rate and the effective rate of income tax expense for the years ended December 31, 2024, 2023 and 2022 are as follows:

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Statutory Federal income tax rate

 

 

21.0

 %

 

 

21.0

 %

 

 

21.0

 %

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

Change in valuation allowance

 

 

(9.0

)%

 

 

(3.1

)%

 

 

6.4

 %

Effect of different tax rates of foreign jurisdictions

 

 

(0.7

)%

 

 

0.9

 %

 

 

(4.9

)%

Tax credits & deductions related to R&D

 

 

(3.7

)%

 

 

(8.5

)%

 

 

(10.1

)%

Goodwill impairment

 

 

—

 

 

 

4.1

 %

 

 

—

 

Non-deductible expenses

 

 

15.7

 %

 

 

6.8

 %

 

 

14.9

 %

Non-deductible expenses related to acquisitions

 

 

—

 

 

 

—

 

 

 

7.0

 %

Other foreign, state and local taxes

 

 

2.1

 %

 

 

3.5

 %

 

 

0.7

 %

Tax impact of foreign income

 

 

7.5

 %

 

 

3.6

 %

 

 

4.2

 %

Stock option compensation

 

 

1.0

 %

 

 

—

 

 

 

(3.8

)%

Audit settlements and statute expirations

 

 

11.0

 %

 

 

—

 

 

 

—

 

Incentive tax rates in foreign jurisdictions

 

 

(5.5

)%

 

 

(1.9

)%

 

 

—

 

Other

 

 

(2.9

)%

 

 

0.2

 %

 

 

0.9

 %

Effective rate

 

 

36.5

 %

 

 

26.6

 %

 

 

36.3

 %

 

The Company has Net Operating Loss (“NOL”) carryforwards as follows:

Jurisdiction

 

Amount as of December 31, 2024

 

 

Years of Expiration

U.S. state income tax

 

$

41,396

 

 

2025-2043

Foreign

 

 

199,365

 

 

Never

As of December 31, 2024, the Company has consolidated deferred tax assets of $106,207 with a valuation allowance of $25,272 principally related to tax net operating losses, credit carryforwards and other deferred tax assets in the U.S. and various foreign jurisdictions, and certain U.S. state income tax attributes. The Company has considered historical pre-tax income or loss and the four sources of income in determining the need for a valuation allowance when the realization of its deferred tax assets are not more likely than not. The four sources of income considered are 1) taxable income in prior carryback years where carryback is allowable, 2) future reversals of existing temporary differences, 3) consideration of reasonable and prudent tax planning strategies, and 4) forecasts of future taxable income, exclusive of reversing temporary differences and carryforwards. In the cases where a valuation allowance has been recorded, the evidence described above did not result in a conclusion that the deferred tax assets are more likely than not.

The Company has NOL carryforwards in various states associated with the benefits of the state dividends received reduction and foreign royalty exclusion. The state NOL carryforwards generally expire at various dates from 2025 to 2043. We have concluded that there is not sufficient evidence these NOL carryforwards will be utilized, and thus have not recognized the benefit of these NOL carryforwards as of December 31, 2024.

At December 31, 2024, certain non-U.S. subsidiaries had gross NOL carryforwards totaling $199,365 which have no expiration date. The Company has a valuation allowance recorded of $15,263 recorded against deferred tax assets of $31,441 of the total non-U.S. subsidiaries’ net operating loss carryforwards as of December 31, 2024.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2024, the Company was no longer subject to U.S. Federal examinations by tax authorities for tax years before 2020 and was no longer subject to foreign examinations by tax authorities for tax years before 2015.

The Company currently benefits from incentive tax rates in various non-U.S. jurisdictions with expiration dates from 2025 – 2029. Certain of the Company’s Chinese subsidiaries began to benefit from a reduced corporate income tax rate in 2024 as a result of their High and New Technology Enterprises (“HNTE”) status. For the years ended December 31, 2024, 2023 and 2022, income in foreign jurisdictions with such holidays was $50,372, $8,185, and $2,414, respectively.

At December 31, 2024, 2023 and 2022, the Company had total unrecognized tax benefits of $8,266, $5,486 and $6,185, respectively, all of which, if recognized, would affect the effective income tax rates. The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at beginning of year

 

$

5,486

 

 

$

6,185

 

 

$

5,665

 

Additions based on tax position related to current year

 

 

78

 

 

 

87

 

 

 

972

 

Additions based on tax position related to prior year

 

 

4,587

 

 

 

347

 

 

 

433

 

Reductions from settlements and statute of limitation expiration

 

 

(1,636

)

 

 

(1,266

)

 

$

(610

)

Effect of foreign currency translation

 

 

(249

)

 

 

133

 

 

 

(275

)

Balance at end of year

 

$

8,266

 

 

$

5,486

 

 

$

6,185

 

The Company classifies income tax-related penalties and net interest as income tax expense. In the years ended December 31, 2024, 2023 and 2022, income tax related interest and penalties were not material. It is reasonably possible that audit settlements, the conclusions of current examinations or the expiration of the statute of limitations in several jurisdictions could impact the Company’s unrecognized tax benefits. A reversal of approximately $4,000 is reasonably possible in the next 12 months due to the statute of limitations in various taxing jurisdictions as well as conclusion ongoing tax audits.