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

Consolidated income (loss) before provision for income taxes consists of the following for the years ended December 31, 2024, 2023 and 2022 (U.S. dollars in thousands):

 
2024
    
2023
    
2022
  
U.S.
  
$
(237,693
)
  
$
(37,152
)
  
$
24,411
  
Foreign
    
62,642
      
63,730
      
64,559
  
Total
  
$
(175,051
)
  
$
26,578
    
$
88,970
  

The provision (benefit) for current and deferred taxes for the years ended December 31, 2024, 2023 and 2022 consists of the following (U.S. dollars in thousands):

 
2024
    
2023
    
2022
  
Current
                  
Federal
  
$
998
    
$
—
    
$
—
  
State
    
708
      
3,903
      
1,515
  
Foreign
    
25,314
      
29,179
      
34,117
  
     
27,020
      
33,082
      
35,632
  
Deferred
                        
Federal
    
(60,354
)
    
(18,039
)
    
(65,733
)
State
    
(1,593
)
    
(1,440
)
    
(1,239
)
Foreign
    
6,470
      
4,380
      
15,532
  
     
(55,477
)
    
(15,099
)
    
(51,440
)
Provision (benefit) for income taxes
  
$
(28,457
)
  
$
17,983
    
$
(15,808
)

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

 
Year Ended December 31,
  
   
2024
    
2023
  
Deferred tax assets:
            
Inventory differences
  
$
108,895
    
$
78,338
  
Foreign tax credit and other foreign benefits
    
36,689
      
37,369
  
Stock-based compensation
    
3,882
      
4,556
  
Accrued expenses not deductible until paid
    
26,529
      
33,066
  
Net operating losses
    
19,710
      
21,864
  
Interest Expense Limitation - 163(j)
     2,832
        —
  
Capitalized research and development
    
27,917
      
27,750
  
R&D credit carryforward
    
2,594
      
2,294
  
Other
    
285
      
293
  
Gross deferred tax assets
    
229,333
      
205,530
  
Deferred tax liabilities:
                
Foreign currency exchange
     1,341       3,596  
Foreign withholding taxes
    
10,936
      
14,591
  
Intangibles step-up
    
1,020
      
3,787
  
Overhead allocation to inventory
    
—
      
106
  
Amortization of intangibles
    
11,215
      
22,857
  
Other
    
6,580
      
6,281
  
Gross deferred tax liabilities
    
31,092
      
51,218
  
Valuation allowance
    
(24,337
)
    
(47,142
)
Deferred taxes, net
  
$
173,904
    
$
107,170
  

At December 31, 2024, the Company had foreign operating loss carryforwards of $35.9 million for tax purposes, which will be available to offset future taxable income. If not used, $25.1 million of carryforwards will expire between 2025 and 2044, while $10.8 million do not expire. Tax effected, the foreign operating losses are $17.7 million. A valuation allowance has been placed on foreign operating loss carryforwards of $17.7 million. In addition, a valuation allowance of $6.6 million has been recorded on a portion of the foreign tax credit carryforwards which will expire between 2028 and 2034.

The Company uses the tax law ordering approach when determining when excess tax benefits have been realized.

Valuation allowances have been recognized for a portion of the foreign tax credit and all of the foreign net operating loss carryforwards. On January 2, 2025 the Company sold its subsidiary Mavely, which will affect its U.S. earnings. The gain from the sale in the U.S. will increase the Company’s ability to utilize foreign tax credits. As a result, the Company released $18.3 million of the valuation allowance against the Company’s foreign tax credits and the $2.3 million valuation allowance against R&D credits. The remaining valuation allowances were recognized for assets which it is more likely than not some portion or all of the deferred tax asset will not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary difference, projected future taxable income, tax planning strategies and recent financial operations. When the Company determines that there is sufficient positive evidence to utilize the remaining foreign tax credits or the foreign net operating losses, the valuation allowance will be released which would reduce the provision for income taxes.

The deferred tax asset valuation adjustments for the years ended December 31, 2024, 2023 and 2022 are as follows (U.S. dollars in thousands):

 
Year Ended December 31,
  
   
2024
    
2023
    
2022
  
Balance at the beginning of period
  
$
47,142
    
$
33,557
    
$
80,186
  
Additions charged to cost and expenses
    
2,245
(1) 
    
13,183
(4) 
    
3,231
(6) 
Decreases
    
(27,086
)(2)
    
(1,825
)(5)
    
(50,315
)(7)
Adjustments
    
2,036
(3) 
    
2,227
(3) 
    
455
(3) 
Balance at the end of the period
  
$
24,337
    
$
47,142
    
$
33,557
  

(1)
Increase in valuation is due primarily to net operating losses in foreign markets.
(2)
The decrease was due primarily to the release of the valuation allowance against $18.3 million of foreign tax credits and $2.3 million of R&D credits.
(3)
Represents the net currency effects of translating valuation allowances at current rates of exchange.
(4)
Increase in valuation is due primarily to net operating losses in foreign markets and $6.1 million that was recorded on the foreign tax credit carryforward.
(5)
The decrease was due to expiration of foreign net operating losses.
(6)
Increase in valuation is primarily due to net operating losses in foreign markets.
(7)
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.

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

 
Year Ended December 31,
  
   
2024
    
2023
  
Net noncurrent deferred tax assets
  
$
174,249
    
$
107,692
  
Net noncurrent deferred tax liabilities
    
345
      
522
  
Deferred taxes, net
  
$
173,904
    
$
107,170
  

The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in proposed assessments that may result in additional tax liabilities.

The actual tax rate for the years ended December 31, 2024, 2023 and 2022 compared to the statutory U.S. Federal tax rate is as follows:

 
Year Ended December 31,
  
   
2024
    
2023
    
2022
  
Income taxes at statutory rate
    
21.00
%
    
21.00
%
    
21.00
%
Excess tax benefit from equity award
    
(0.73
)%
    
5.04
%
    
(0.12
)%
Deferred compensation
     1.35 %     (4.28 )%     2.18 %
Executive salary limitation
     (1.15 )%     1.59 %     2.06 %
State taxes     0.38 %     7.34 %     0.25 %
Foreign exchange     0.20 %     (1.91 )%     0.68 %
Non-U.S. income taxed at different rates
    
(2.55
)%
    
12.70
%
    
4.78
%
Foreign withholding taxes
    
(0.89
)%
    
13.31
%
    
(0.73
)%
Change in reserve for uncertain tax positions
    
(3.77
)%
    
1.74
%
    
17.69
%
Valuation allowance recognized foreign tax credit & others
    
11.89
%
    
24.66
%
    
(56.17
)%
Foreign-Derived Intangible Income (FDII)
    
—
      
(14.11
)%
    
(8.14
)%
Acquisition adjustments
     (1.55 )%     (0.05 )%     (0.93 )%
Goodwill impairment
     (7.86 )%     —       —  
Other
    
(0.06
)%
    
0.63
%
    
(0.32
)%
     
16.26
%
    
67.66
%
    
(17.77
)%

The decrease in the effective tax rate for 2024 is primarily due to the company having an overall book loss but still paying taxes primarily in foreign jurisdictions. The increase in the Company’s effective tax rate for 2023 was primarily due to the Company incurring restructuring charges that primarily affected their U.S. earnings. These additional expenses in the U.S. reduced the Company’s ability to utilize foreign tax credits. 

The cumulative amount of undistributed earnings of the Company’s non-U.S. Subsidiaries held for indefinite reinvestment is approximately $60.0 million, at December 31, 2024.  If this amount were repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million.