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

7. Income Taxes

Income before income taxes consisted of the following:

 

Year Ended December 31,

 

2024

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

U.S.

 

$

21,429

 

 

$

35,620

 

 

$

39,297

 

Foreign

 

 

19,683

 

 

 

11,737

 

 

 

(34,251

)

Income before income taxes

 

$

41,112

 

 

$

47,357

 

 

$

5,046

 

The provision for income taxes consisted of the following:

 

Year Ended December 31,

 

2024

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

Current:

 

 

 

 

 

 

 

 

 

U.S. federal and state

 

$

10,516

 

 

$

17,509

 

 

$

12,336

 

Foreign

 

 

6,601

 

 

 

11,867

 

 

 

3,845

 

Deferred:

 

 

 

 

 

 

 

 

 

U.S. federal and state

 

 

(2,617

)

 

 

(9,452

)

 

 

(1,523

)

Foreign

 

 

83

 

 

 

(2,827

)

 

 

8,920

 

Provision for income taxes

 

$

14,583

 

 

$

17,097

 

 

$

23,578

 

Net cash payments for income taxes were $19,993,000, $16,050,000, and $20,866,000 in 2024, 2023, and 2022, respectively.

The provision for income taxes is reconciled to the federal statutory income tax rate of 21% in 2024, 2023, and 2022, as follows:

 

Year Ended December 31,

 

2024

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

Federal income taxes at statutory rate

 

$

8,634

 

 

$

9,945

 

 

$

1,060

 

State income taxes, net of federal benefit

 

 

1,890

 

 

 

2,082

 

 

 

3,087

 

Goodwill impairment

 

 

—

 

 

 

—

 

 

 

4,221

 

Foreign taxes

 

 

3,024

 

 

 

5,872

 

 

 

3,232

 

Change in valuation allowance

 

 

2,064

 

 

 

2,131

 

 

 

11,611

 

Research and development credits

 

 

(789

)

 

 

(607

)

 

 

(400

)

Foreign tax credits

 

 

(1,681

)

 

 

(1,668

)

 

 

(492

)

Nondeductible meals and entertainment

 

 

565

 

 

 

643

 

 

 

439

 

Change in permanent reinvestment assertion

 

 

(8

)

 

 

280

 

 

 

320

 

Disposals and liquidations of businesses

 

 

—

 

 

 

(305

)

 

 

188

 

Foreign-derived intangible income deduction

 

 

(156

)

 

 

(223

)

 

 

(189

)

Tax rate changes

 

 

422

 

 

 

(104

)

 

 

(36

)

Other

 

 

618

 

 

 

(949

)

 

 

537

 

Provision for income taxes

 

$

14,583

 

 

$

17,097

 

 

$

23,578

 

The Company's consolidated effective income tax rate may change periodically due to changes in enacted statutory tax rates, changes in tax law or policy, changes in the composition of taxable income from the countries in which it operates, the Company's ability to utilize net operating loss and tax credit carryforwards, and changes in unrecognized tax benefits.

The Company’s effective income tax rate in 2024 was impacted by performance in certain foreign jurisdictions and changes in valuation allowances. The Company’s effective income tax rate in 2023 was impacted by changes in domestic tax guidance and changes in valuation allowances. The Company’s effective income tax rate in 2022 was impacted by the goodwill impairment and change in valuation allowances for certain foreign jurisdictions, primarily the U.K.

The Company maintained its permanent reinvestment position on a portion of prior year undistributed earnings for certain foreign operations and accrued deferred taxes attributable to these earnings. Beyond these earnings the Company has not changed the reinvestment assertion on its undistributed earnings or other outside basis differences of its remaining foreign subsidiaries. Excluding the operations that are not permanently reinvested, no additional income or withholding taxes have been provided for indefinitely reinvested undistributed foreign earnings, other than those previously taxed nor have any taxes been provided for outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. The Company has estimated that it has book over tax basis differences of approximately $111,081,000. Due to withholding tax, basis computations, and other related tax considerations, it is not practicable to estimate any taxes to be provided on outside basis differences at this time.

Deferred income taxes consisted of the following at December 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

 

 

(In thousands)

 

Accounts receivable allowance

 

$

2,286

 

 

$

2,957

 

Accrued compensation

 

 

14,013

 

 

 

14,412

 

Accrued pension liabilities

 

 

3,314

 

 

 

3,685

 

Self-insured risks

 

 

5,551

 

 

 

4,513

 

Deferred revenues

 

 

4,684

 

 

 

5,602

 

Interest

 

 

3,223

 

 

 

2,987

 

Tax credit carryforwards

 

 

2,654

 

 

 

2,152

 

Loss carryforwards

 

 

33,315

 

 

 

32,304

 

Lease liability

 

 

23,418

 

 

 

26,361

 

Other

 

 

1,986

 

 

 

337

 

Gross deferred income tax assets

 

 

94,444

 

 

 

95,310

 

Unbilled revenues

 

 

5,265

 

 

 

5,596

 

Repatriated earnings

 

 

1,152

 

 

 

1,249

 

Depreciation and amortization

 

 

12,901

 

 

 

15,129

 

Lease right-of-use asset

 

 

20,054

 

 

 

22,612

 

Gross deferred income tax liabilities

 

 

39,372

 

 

 

44,586

 

Net deferred income tax assets before valuation allowances

 

 

55,072

 

 

 

50,724

 

Valuation allowance

 

 

(35,310

)

 

 

(29,644

)

Net deferred income tax assets

 

$

19,762

 

 

$

21,080

 

Amounts recognized in the Consolidated Balance Sheets consist of:

 

 

 

 

 

 

Long-term deferred income tax assets included in "Deferred income tax assets"

 

 

25,305

 

 

 

26,247

 

Long-term deferred income tax liabilities included in "Other noncurrent liabilities"

 

 

(5,543

)

 

 

(5,167

)

Net deferred income tax assets

 

$

19,762

 

 

$

21,080

 

At December 31, 2024, the Company had deferred tax assets related to loss carryforwards of $33,315,000, with no netting of unrecognized tax benefits applied. An estimated $28,948,000 of the deferred tax assets will not expire, and $4,367,000 will expire over the next 20 years if not utilized by the Company.

Changes in the Company's deferred tax valuation allowance are recorded as adjustments to the provision for income taxes. An analysis of the Company's deferred tax asset valuation allowances is as follows for the years ended December 31, 2024, 2023, and 2022.

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

Balance, beginning of year

 

$

29,644

 

 

$

23,295

 

 

$

14,114

 

Other changes

 

 

5,666

 

 

 

6,349

 

 

 

9,181

 

Balance, end of year

 

$

35,310

 

 

$

29,644

 

 

$

23,295

 

Changes to the valuation allowance for the year ended December 31, 2024 were primarily due to foreign jurisdictions deferred tax attributes and losses in certain of the Company's international operations, as well as a change in realization for various U.S. state loss carryforwards. Changes to the valuation allowance for the year ended December 31, 2023 were primarily due to establishments for various foreign jurisdictions deferred tax attributes and losses in certain of the Company’s international operations. Changes to the valuation allowance for the year ended December 31, 2022 were primarily due to establishments for U.K. deferred tax attributes and losses in certain of the Company's international operations, net of anticipated expiration of certain foreign tax credits after consideration of the four sources of taxable income.

A reconciliation of the beginning and ending balance of unrecognized income tax benefits follows:

 

 

 

(In thousands)

 

Balance at December 31, 2021

 

$

3,750

 

Reductions for tax positions related to prior years

 

 

(97

)

Balance at December 31, 2022

 

$

3,653

 

   Additions for tax positions related to prior years

 

 

432

 

Reductions for tax positions related to prior years

 

 

(153

)

Lapses of applicable statutes of limitation

 

 

(344

)

Balance at December 31, 2023

 

$

3,588

 

Currency Translation Adjustment

 

 

2

 

Lapses of applicable statutes of limitation

 

 

(3,156

)

Balance at December 31, 2024

 

$

434

 

The Company accrues interest and, if applicable, penalties related to unrecognized tax benefits in income taxes. Total accrued interest expense at December 31, 2024, 2023, and 2022, was $1,000, $13,000, and $160,000, respectively.

Included in the total unrecognized tax benefits at December 31, 2024, 2023, and 2022 were $434,000, $685,000, and $685,000, respectively, of tax benefits that, if recognized, would affect the effective income tax rate.

The Company conducts business in a number of countries and, as a result, files U.S. federal and various state and foreign jurisdiction income tax returns. In the normal course of business, the Company is subject to examination by various taxing jurisdictions throughout the world, including Canada, the U.K., and the U.S. With few exceptions, the Company is no longer subject to income tax examinations for years before 2014.

Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, including interest and penalties, have been provided for any adjustments that are expected to result from those years.

The Company expects $164,000 of reductions to unrecognized income tax benefits within the next 12 months as a result of projected resolutions of income tax uncertainties.