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INCOME TAXES
 12 Months Ended
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, 2024December 31, 2023December 31, 2022
U.S.$26,719 $76,580 $305,192 
Foreign193 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, 2024December 31, 2023December 31, 2022
Current provision:
Federal$3,895 $10,701 $44,063 
State & Local623 2,618 7,918 
Foreign77 40 9 
Total current provision4,595 13,359 51,990 
Deferred provision:
Federal2,091 1,395 8,172 
State & Local738 379 1,007 
Foreign(34)— — 
Total deferred provision2,795 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, 2024December 31, 2023
Inventory adjustments$4,057 $4,248 
Capitalized transaction costs2,006 2,301 
Deferred revenue94 150 
Accrued expenses and other current liabilities5,470 4,264 
Capitalized research & development expense3,518 2,249 
Interest expense limitation8,837 3,297 
Lease liability557 473 
Share-based compensation2,100 2,307 
Other 624 176 
Total deferred tax assets$27,263 $19,465 
Deferred tax liabilities:
Intangible assets$17,780 $10,128 
Goodwill11,563 9,128 
Prepaid expenses and other current assets
1,005 1,175 
Fixed assets1,535 1,169 
Right-of-use asset
544 473 
Unrealized gain on derivatives— 408 
Total deferred tax liabilities32,427 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, 2024December 31, 2023December 31, 2022
U.S. federal statutory income tax rate21.0 %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 benefit4.9 %4.0 %2.3 %
Share-based compensation
6.6 %(0.1)%(0.4)%
Tax Receivable Agreement3.1 %(2.0)%(0.2)%
Other0.6 %1.1 %0.4 %
Effective Tax Rate27.5 %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.