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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense is composed of the following:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 32,296 |  |  | $ | 26,107 |  |  | $ | 19,746 |
State | 5,926 |  |  | 4,438 |  |  | 3,489 |
Foreign | 330 |  |  | (223) |  |  | 294 |
| 38,552 |  |  | 30,322 |  |  | 23,529 |
Deferred: |  |  |  |  |
Federal | (4,100) |  |  | 2,870 |  |  | 5,345 |
State | 120 |  |  | (1,821) |  |  | 1,405 |
Foreign | 44 |  |  | (71) |  |  | — |
| (3,936) |  |  | 978 |  |  | 6,750 |
Total | $ | 34,616 |  |  | $ | 31,300 |  |  | $ | 30,279 |
Income tax expense also included tax expense allocated to comprehensive income for 2023, 2022, and 2021 of $172, $33, and $19, 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,
| 2023 |  | 2022 |  | 2021
“Expected” provision at federal statutory rate | $ | 29,895 |  |  | $ | 29,442 |  |  | $ | 25,435 |
State income taxes, net | 6,545 |  |  | 6,446 |  |  | 5,713 |
Foreign income taxes | 330 |  |  | (223) |  |  | 294 |
Change in valuation allowance | 1,135 |  |  | 416 |  |  | 204 |
Share-based compensation | (288) |  |  | (34) |  |  | 31 |
Federal and state tax credits | (1,685) |  |  | (3,506) |  |  | (1,363) |
Other | (1,316) |  |  | (1,241) |  |  | (35) |
Income tax expense | $ | 34,616 |  |  | $ | 31,300 |  |  | $ | 30,279 |
Effective tax rate | 24.4 | % |  | 22.3 | % |  | 25.0 | %
The tax effects of temporary differences giving rise to deferred income taxes shown on the Consolidated Balance Sheets are as follows:
| December 31,
| 2023 |  | 2022
Deferred income tax assets: |  |  |
Share-based compensation | $ | 4,453 |  |  | $ | 2,462 |
U.S. state and foreign tax credit carryforwards | 3,350 |  |  | 3,991 |
Mexico and U.S. state loss carryforwards | 3,890 |  |  | 3,040 |
Inventories | 2,656 |  |  | 1,936 |
Operating lease liabilities | 3,740 |  |  | 3,949 |
Deferred compensation | 848 |  |  | 691 |
Section 174 timing difference | 2,032 |  |  | — |
Other | 4,279 |  |  | 3,002 |
Gross deferred income tax assets | 25,248 |  |  | 19,071 |
Less: valuation allowance | (3,208) |  |  | (2,073) |
Net deferred income tax assets | 22,040 |  |  | 16,998 |
Deferred income tax liabilities: |  |  |
Property, plant and equipment | (24,084) |  |  | (25,623) |
Intangibles | (48,460) |  |  | (47,187) |
Inventory | (2,007) |  |  | (2,812) |
Operating lease right-of-use assets | (3,577) |  |  | (3,850) |
Convertible Senior Note | (4,716) |  |  | (2,424) |
Other | (2,267) |  |  | (2,214) |
Gross deferred income tax liabilities | (85,111) |  |  | (84,110) |
Net deferred income tax liability | $ | (63,071) |  |  | $ | (67,112) |
A schedule of the change in valuation allowance is as follows:
Balance at December 31, 2021 | $ | 1,657 |
Increase | 416 |
Balance at December 31, 2022 | 2,073 |
Increase | 1,135 |
Balance at December 31, 2023 | $ | 3,208 |
As of December 31, 2023, the Company’s total valuation allowance of $3,208 related to net operating loss in U.S. 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 and certain foreign tax credit carryforwards. As of December 31, 2022, the Company’s total valuation allowance of $2,073, related to net operating loss in U.S. 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, 2023 and 2022, the Company had $23,590 and $21,537 in gross U.S. state net operating loss carryforwards, respectively. Due to varying U.S. state carryforward periods, the state net operating loss carryforwards will primarily expire in varying years between calendar years 2024 and 2044. As of December 31, 2023 and 2022, the Company had gross U.S. state tax credit carryforwards of $3,890 and $5,052, respectively. U.S. state credits, if not used to offset income tax expense in their respective jurisdictions, will expire in varying years between 2024 and 2040. The Company treats accrued interest and penalties related to tax liabilities, if any, as a component of income tax expense. During 2023, 2022, and 2021, 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 2023, 2022, and 2021:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021 |  |
Beginning of year balance | $ | 156 |  |  | $ | 113 |  |  | $ | 112 |  |  |
Additions based on prior year tax positions | 83 |  |  | 75 |  |  | — |  |  |
Additions based on current year tax positions | 245 |  |  | 2 |  |  | 31 |  |  |
Reduction for prior year tax positions | (60) |  |  | (34) |  |  | (30) |  |  |
End of year balance | $ | 424 |  |  | $ | 156 |  |  | $ | 113 |  |  |
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 U.S. federal, state or foreign income tax audits. For U.S. federal tax purpose, all tax years after 2019 remain open to examination. 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 2019, and forward, with the exception of certain net operating losses and credit carryforwards originating in years prior to 2019 that remain subject to adjustment.

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