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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense is composed of the following:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 19,746 |  |  | $ | 10,825 |  |  | $ | 6,426 |
State | 3,489 |  |  | 1,291 |  |  | 412 |
Foreign | 294 |  |  | — |  |  | — |
| 23,529 |  |  | 12,116 |  |  | 6,838 |
Deferred: |  |  |  |  |
Federal | 5,345 |  |  | (302) |  |  | 352 |
State | 1,405 |  |  | 442 |  |  | (46) |
| 6,750 |  |  | 140 |  |  | 306 |
Total | $ | 30,279 |  |  | $ | 12,256 |  |  | $ | 7,144 |
Income tax expense also included tax expense allocated to comprehensive income for 2021, 2020, and 2019 of $19, $229, and $14, respectively (see the Consolidated Statements of Comprehensive Income). A reconciliation of income tax expense at the normal statutory federal rate to income tax expense included in the accompanying Consolidated Statements of Income is below:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
“Expected” provision at federal statutory rate | $ | 25,435 |  |  | $ | 11,046 |  |  | $ | 9,654 |
State income taxes, net | 5,713 |  |  | 2,408 |  |  | 1,540 |
Foreign income taxes | 294 |  |  | — |  |  | — |
Change in valuation allowance | 204 |  |  | (422) |  |  | (168) |
Share-based compensation | 31 |  |  | 56 |  |  | (2,877) |
Federal and state tax credits | (1,363) |  |  | (1,035) |  |  | (1,302) |
Other | (35) |  |  | 203 |  |  | 297 |
Income tax expense | $ | 30,279 |  |  | $ | 12,256 |  |  | $ | 7,144 |
Effective tax rate | 25.0 | % |  | 23.3 | % |  | 15.6 | %
The tax effects of temporary differences giving rise to deferred income taxes shown on the Consolidated Balance Sheets are as follows:
| December 31,
| 2021 |  | 2020
Deferred income tax assets: |  |  |
Share-based compensation | $ | 1,973 |  |  | $ | 2,123 |
State tax credit carryforwards | 2,343 |  |  | 2,986 |
Operating loss carryforwards | 2,416 |  |  | 1,264 |
Inventories | 1,923 |  |  | 2,077 |
Operating lease liabilities | 2,536 |  |  | 1,322 |
Deferred compensation | 1,357 |  |  | 1,250 |
Other | 3,362 |  |  | 1,732 |
Gross deferred income tax assets | 15,910 |  |  | 12,754 |
Less: valuation allowance | (1,657) |  |  | (862) |
Net deferred income tax assets | 14,253 |  |  | 11,892 |
Deferred income tax liabilities: |  |  |
Property, plant and equipment | (24,627) |  |  | (12,205) |
Intangibles | (46,956) |  |  | — |
Inventory | (4,307) |  |  | — |
Operating lease right-of-use assets | (2,487) |  |  | (1,318) |
Other | (1,977) |  |  | (667) |
Gross deferred income tax liabilities | (80,354) |  |  | (14,190) |
Net deferred income tax liability | $ | (66,101) |  |  | $ | (2,298) |
A schedule of the change in valuation allowance is as follows:
Balance at December 31, 2019 | $ | 1,284 |
Decrease | (422) |
Balance at December 31, 2020 | 862 |
Increase | 795 |
Balance at December 31, 2021 | $ | 1,657 |
As of December 31, 2021, the Company’s total valuation allowance of $1,657 related to net operating loss and tax credits carryforwards in states and foreign countries in which it is not “more likely than not” to create enough taxable income to fully utilize the carryforwards before expiration of the carryforward periods. As of December 31, 2020, the Company’s total valuation allowance of $862 related to net operating loss carryforwards and certain tax credits in states in which it is not “more likely than not” to create enough state taxable income to fully utilize the carryforwards before expiration of the carryforward periods. The increase of the valuation allowance year-over-year is primarily due to the acquisition of certain foreign entities that created the inability to fully utilize certain foreign tax credits and net operating losses. The Merger with Luxco was largely structured as a non-taxable merger for U.S. income tax purposes. This merger required the Company to book an additional $57,034 in deferred tax liabilities to its opening balance sheet. In addition, at December 31, 2021, the Company had book tax differences resulting in a net deferred tax liability balance of $66,101. This increase in the Company’s deferred tax balances could make the Company more susceptible to the tax impact of tax rate changes and its effect on earnings and earnings per share in the future. As of December 31, 2021 and 2020, the Company had $19,823 and $18,697 in gross state net operating loss carryforwards, respectively. Due to varying state carryforward periods, the state net operating loss carryforwards will expire in varying years between calendar years 2022 and 2042. As of December 31, 2021 and 2020, the Company had gross state tax credit carryforwards of $2,966 and $3,778, respectively. State credits, if not used to offset income tax expense in their respective jurisdictions, will expire in varying years between 2022 and 2038. The Company treats accrued interest and penalties related to tax liabilities, if any, as a component of income tax expense. During 2021, 2020, and 2019, the Company’s activity in accrued interest and penalties was not significant. The following is a reconciliation of the total amount of unrecognized tax benefits (excluding interest and penalties) for 2021, 2020, and 2019:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019 |  |
Beginning of year balance | $ | 112 |  |  | $ | 255 |  |  | $ | 193 |  |  |
Additions based on prior year tax positions | — |  |  | 2 |  |  | 3 |  |  |
Additions based on current year tax positions | 31 |  |  | 20 |  |  | 78 |  |  |
Reduction for prior year tax positions | (30) |  |  | — |  |  | (19) |  |  |
Reductions for settlements | — |  |  | (165) |  |  | — |  |  |
End of year balance | $ | 113 |  |  | $ | 112 |  |  | $ | 255 |  |  |
For each period presented, substantially all of the amount of unrecognized benefits (excluding interest and penalties) would impact the effective tax rate, if recognized. The Company reasonably expects that the amount of unrecognized tax benefit will not change significantly over the next 12 months. The Company is not under any federal, state or foreign income tax audits. For federal tax purpose, all tax years after 2017 remain open to adjustment. Amounts paid for income tax in foreign jurisdictions are not material to the financial statements. In addition, the Company is subject to examination for its state tax returns for years 2017, and forward, with the exception of certain net operating losses and credit carryforwards originating in years prior to 2017 that remain subject to adjustment.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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