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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Consolidated Income Before Provision for Income Taxes

Consolidated income before provision for income taxes consists of the following for the years ended December 31, 2022, 2021 and 2020 (U.S. dollars in thousands):

		2022				2021				2020
U.S.		$	24,411			$	45,371			$	71,138
Foreign			64,559				187,088				185,094
Total		$	88,970			$	232,459			$	256,232

Current and Deferred Taxes

The provision for current and deferred taxes for the years ended December 31, 2022, 2021 and 2020 consists of the following (U.S. dollars in thousands):

		2022				2021				2020
Current
Federal		$	—			$	—			$	—
State			1,515				1,458				1,629
Foreign			34,117				77,393				77,079
			35,632				78,851				78,708
Deferred
Federal			(65,733	)			3,705				(14,430	)
State			(1,239	)			(38	)			(563	)
Foreign			15,532				2,675				1,162
			(51,440	)			6,342				(13,831	)
Provision for income taxes		$	(15,808	)		$	85,193			$	64,877

Deferred Tax Assets and Liabilities

The principal components of deferred taxes are as follows (U.S. dollars in thousands):

		Year Ended December 31,
		2022				2021
Deferred tax assets:
Inventory differences		$	41,127			$	5,859
Foreign tax credit and other foreign benefits			51,273				69,401
Stock-based compensation			5,981				9,392
Accrued expenses not deductible until paid			37,181				36,401
Foreign currency exchange			—				605
Net operating losses			12,773				9,479
Capitalized research and development			26,406				22,962
R&D credit carryforward			1,795				1,451
Other			242				34
Gross deferred tax assets			176,778				155,584
Deferred tax liabilities:
Foreign currency exchange			3,225				—
Foreign withholding taxes			15,375				15,412
Intangibles step-up			4,446				4,446
Overhead allocation to inventory			3,504				3,373
Amortization of intangibles			21,211				21,936
Other			6,129				6,133
Gross deferred tax liabilities			53,890				51,300
Valuation allowance			(33,557	)			(80,186	)
Deferred taxes, net		$	89,331			$	24,098

Deferred Tax Asset Valuation Adjustments

The deferred tax asset valuation adjustments for the years ended December 31, 2022, 2021 and 2020 are as follows (U.S. dollars in thousands):

		Year Ended December 31,
		2022				2021				2020
Balance at the beginning of period		$	80,186			$	67,340			$	77,042
Additions charged to cost and expenses			3,231	(1)			12,674	(4)			2,154	(6)
Decreases			(50,315	)(2)			—	(5)			(12,100	)(7)
Adjustments			455	(3)			172	(3)			244	(3)
Balance at the end of the period		$	33,557			$	80,186			$	67,340

(1) Increase in valuation is due primarily to net operating losses in foreign markets.

(2) The decrease was due to utilization of $18.1 million of foreign tax credits and the valuation allowance release of $32.2 million foreign tax credits.

(3) Represents the net currency effects of translating valuation allowances at current rates of exchange.

(4) Increase in valuation is primarily due to $11.9 million that was recorded on the foreign tax credit carryforward due to the disposal of the Company’s Grow Tech segment. The additional amount is due to net operating losses in foreign markets.

(5) No decreases in 2021.

(6) Increase in valuation is due primarily to net operating losses in foreign markets.

(7) The decrease was due primarily to the utilization of foreign tax credits that had previously had a valuation allowance recorded against the asset.

Deferred Taxes, Net on a Jurisdiction Basis

The components of deferred taxes, net on a jurisdiction basis are as follows (U.S. dollars in thousands):

		Year Ended December 31,
		2022				2021
Net noncurrent deferred tax assets		$	89,770			$	26,483
Net noncurrent deferred tax liabilities			439				2,385
Deferred taxes, net		$	89,331			$	24,098

Reconciliation of Statutory to Effective Tax Rate

The actual tax rate for the years ended December 31, 2022, 2021 and 2020 compared to the statutory U.S. Federal tax rate is as follows:

		Year Ended December 31,
		2022				2021				2020
Income taxes at statutory rate			21.00	%			21.00	%			21.00	%
Excess tax benefit from equity award			(0.12	)%			(0.19	)%			0.70	%
Deferred compensation			2.18	%			(0.46	)%			(0.30	)%
Executive salary limitation			2.06	%			0.47	%			0.04	%
Non-U.S. income taxed at different rates			4.78	%			6.06	%			3.37	%
Foreign withholding taxes			(0.73	)%			4.71	%			5.21	%
Change in reserve for uncertain tax positions			17.69	%			(0.06	)%			1.98	%
Valuation allowance recognized foreign tax credit & others			(56.17	)%			5.12	%			(4.59	)%
Foreign-Derived Intangible Income (FDII)			(8.14	)%			(0.87	)%			(2.78	)%
Other			(0.32	)%			0.87	%			0.69	%
			(17.77	)%			36.65	%			25.32	%

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