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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company’s breakdown of its income before provision for income taxes for the years ended December 31, 2024, 2023 and 2022 was as follows:
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
U.S. | $ | 26,719 |  |  | $ | 76,580 |  |  | $ | 305,192 |
Foreign | 193 |  |  | 140 |  |  | 49 |
Total income before taxes | $ | 26,912 |  |  | $ | 76,720 |  |  | $ | 305,241 |
The components of the provision for income taxes were as follows:
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
Current provision: |  |  |  |  |
Federal | $ | 3,895 |  |  | $ | 10,701 |  |  | $ | 44,063 |
State & Local | 623 |  |  | 2,618 |  |  | 7,918 |
Foreign | 77 |  |  | 40 |  |  | 9 |
Total current provision | 4,595 |  |  | 13,359 |  |  | 51,990 |
Deferred provision: |  |  |  |  |
Federal | 2,091 |  |  | 1,395 |  |  | 8,172 |
State & Local | 738 |  |  | 379 |  |  | 1,007 |
Foreign | (34) |  |  | — |  |  | — |
Total deferred provision | 2,795 |  |  | 1,774 |  |  | 9,179 |
Total provision for income taxes | $ | 7,390 |  |  | $ | 15,133 |  |  | $ | 61,169 |
Significant components of the Company’s deferred tax assets and liabilities were as follows:
Deferred tax assets: | December 31, 2024 |  | December 31, 2023
Inventory adjustments | $ | 4,057 |  |  | $ | 4,248 |
Capitalized transaction costs | 2,006 |  |  | 2,301 |
Deferred revenue | 94 |  |  | 150 |
Accrued expenses and other current liabilities | 5,470 |  |  | 4,264 |
Capitalized research & development expense | 3,518 |  |  | 2,249 |
Interest expense limitation | 8,837 |  |  | 3,297 |
Lease liability | 557 |  |  | 473 |
Share-based compensation | 2,100 |  |  | 2,307 |
Other | 624 |  |  | 176 |
Total deferred tax assets | $ | 27,263 |  |  | $ | 19,465 |
Deferred tax liabilities: |  |  |
Intangible assets | $ | 17,780 |  |  | $ | 10,128 |
Goodwill | 11,563 |  |  | 9,128 |
Prepaid expenses and other current assets | 1,005 |  |  | 1,175 |
Fixed assets | 1,535 |  |  | 1,169 |
Right-of-use asset | 544 |  |  | 473 |
Unrealized gain on derivatives | — |  |  | 408 |
Total deferred tax liabilities | 32,427 |  |  | 22,481 |
Net deferred tax liabilities | $ | (5,164) |  |  | $ | (3,016) |
The following table provides a reconciliation between the U.S. federal statutory rate and the Company’s effective tax rates for the years ended December 31, 2024, 2023 and 2022:
| December 31, 2024 |  | December 31, 2023 |  | December 31, 2022
U.S. federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Foreign derived intangible income deduction | (4.3) | % |  | (3.9) | % |  | (2.9) | %
Changes in prior year estimates | (4.4) | % |  | (0.4) | % |  | (0.2) | %
State and local income taxes, net of federal benefit | 4.9 | % |  | 4.0 | % |  | 2.3 | %
Share-based compensation | 6.6 | % |  | (0.1) | % |  | (0.4) | %
Tax Receivable Agreement | 3.1 | % |  | (2.0) | % |  | (0.2) | %
Other | 0.6 | % |  | 1.1 | % |  | 0.4 | %
Effective Tax Rate | 27.5 | % |  | 19.7 | % |  | 20.0 | %
The Company assesses positive and negative evidence for each jurisdiction to determine whether it is more likely than not that existing deferred tax assets will be realized. As of December 31, 2024 and 2023, no valuation allowance was recorded as the Company has concluded that its deferred tax assets are more likely than not to be realized. As of December 31, 2024, the Company had state net operating loss carryforwards of $0.3 million, which are available to offset future taxable income through tax year 2044. The Company is expected to utilize the losses before they expire. Additionally, as of December 31, 2024 and 2023, the Company had a tax-effected interest expense limitation carryforward of $8.8 million and $3.3 million, respectively. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority based on the technical merits. The Company had no uncertain tax positions as of December 31, 2024 and 2023, and does not expect any significant change in its unrecognized tax benefits within the next 12 months. In the normal course of business, the Company and its subsidiaries may be examined by various taxing authorities, including the U.S. Internal Revenue Service. As of December 31, 2024, the Company remained subject to examination in the U.S. and the U.K. for the 2020 through 2024 tax years. Tax Receivable Agreement During the years ended December 31, 2024 and 2023, the Company had a net payment to the Pre-IPO Stockholders of $12.8 million and $16.6 million, respectively, as required pursuant to the terms of the Tax Receivable Agreement. The tax liability is calculated based on current tax laws and the assumption that the Company and its subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the Tax Receivable Agreement. Updates to the Company’s blended state tax rate, allocation of U.S. versus foreign sourced income and changes in tax rules on the amortization and depreciation of assets may significantly impact the established liability and changes would be recorded to other expense (income) in the period the Company made the determination. The Company expects that future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets could aggregate to $189.3 million, with payments expected to continue through 2041. Payments under the Tax Receivable Agreement, which began in fiscal year 2022, are not conditioned upon the parties’ continued ownership of equity in the Company. During the years ended 2024, 2023 and 2022, the Company recognized other expense of $3.9 million and other income of $7.4 million and $3.1 million, respectively, for changes to the liability for the Tax Receivable Agreement resulting primarily from an update to the blended state income tax rate and a change in the effective federal tax rate used to measure the obligation. The change in the effective federal tax rate was due to a change in the portion of federal taxable income that is eligible for the FDII deduction. The Tax Receivable Agreement liability as of December 31, 2024 was $189.3 million, of which $177.5 million was recorded in long term liabilities and $11.8 million was recorded in current liabilities. The Tax Receivable Agreement liability as of December 31, 2023 was $198.2 million, of which $185.5 million was recorded in long term liabilities and $12.7 million was recorded in current liabilities.

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