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Note 17 - Income Taxes
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

17.

INCOME TAXES:

 

The United States and foreign components of Income before income taxes are as follows (in thousands):

 

  

Year Ended December 31,

 
  

2022

  

2021

  

2020

 
             

United States

 $40,271  $14,000  $24,768 

Foreign

  1,079   1,158   866 

Total

 $41,350  $15,158  $25,634 

 

The components of Income tax expense are as follows (in thousands):

 

  

Year Ended December 31,

 
  

2022

  

2021

  

2020

 

Current:

            

Federal

 $8,443  $2,256  $958 

State

  1,264   1,064   1,342 

Foreign

  198   213   243 

Total current income tax expense

  9,905   3,533   2,543 

Deferred:

            

Federal

  (22)  573   4,380 

State

  340   (464

)

  (386

)

Foreign

  (22)  (7

)

  47 

Total deferred income tax expense

  296   102   4,041 

Total income tax expense

 $10,201  $3,635  $6,584 

 

The difference between the Company’s effective income tax rate and the federal statutory income tax rate is explained as follows (dollar amounts in thousands):

 

  

Year Ended December 31,

 
  

2022

  

2021

  

2020

 
             

Income tax expense at federal statutory rate

 $8,683  $3,183  $5,383 

State expense, net of federal income tax effect

  1,463   547   953 

Change in valuation allowance

  (1)  (247

)

  (181

)

Nondeductible expenses

  (35)  (31

)

  447 

Foreign rate differential

  97   104   78 

Other

  (6)  79   (96

)

Income tax expense

 $10,201  $3,635  $6,584 

Effective income tax rate

  24.7

%

  24.0

%

  25.7

%

 

The income tax effect of temporary differences that give rise to significant portions of deferred income tax assets and liabilities is presented below (in thousands):

 

  

December 31,

 
  

2022

  

2021

 

Deferred income tax assets:

        

Accrued employee benefits

 $3,840  $3,125 

Inventories

  350   30 

Trade receivable, net

  329   833 

Net operating loss carryforwards

  2,944   3,099 

Tax credit carryforwards

  2,863   2,888 

Contract assets, net

  403   313 

Other

  1,074   984 
   11,803   11,272 

Valuation allowance

  (6,051

)

  (5,899

)

   5,752   5,373 

Deferred income tax liabilities:

        

Property and equipment

  (13,550

)

  (12,937

)

Intangible assets

  (1,319

)

  (1,902

)

Goodwill

  (606

)

  (129

)

Prepaid expenses

  (1,285

)

  (1,005

)

   (16,760

)

  (15,973

)

         

Net deferred income tax liabilities

 $(11,008

)

 $(10,600

)

         

Amounts are presented in the Consolidated Balance Sheets as follows:

        

Deferred income tax assets, included in Other assets

 $394  $384 

Deferred income taxes

  (11,402

)

  (10,984

)

Net deferred income tax liabilities

 $(11,008

)

 $(10,600

)

 

In assessing the ability to realize deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, taxable income in carryback periods, and tax planning strategies in making this assessment. The Company believes it is more likely than not it will realize the benefits of its deductible differences as of December 31, 2022, net of any valuation allowance. As of December 31, 2022, the Company continues to maintain a valuation allowance on federal tax credits, capital loss carryforwards, and select state jurisdictions.

 

As of December 31, 2022, the Company had approximately $0.4 million of federal income tax credit carryforwards, which expire on various dates between 2023 and 2026, and $0.8 million of capital loss carryforwards, which expire in 2023. As of December 31, 2022, the Company also had approximately $18.4 million of state net operating loss carryforwards, which expire on various dates between 2022 and 2038, and state income tax credit carryforwards of $4.4 million, which began to expire in 2022. As of December 31, 2022, the Company also had approximately $6.0 million of foreign net operating loss carryforwards, which expire on various dates between 2023 and 2030.

 

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. With few exceptions, the Company is no longer subject to United States Federal, state, or foreign income tax examinations for years before 2018.

 

A summary of the changes in the unrecognized income tax benefits is presented below (in thousands):

 

  

Year Ended December 31,

 
  

2022

  

2021

  

2020

 
             

Unrecognized income tax benefits, beginning of year

 $4,366  $4,350  $4,350 

Increases for positions taken in prior years

  106

 

  16   - 

Unrecognized income tax benefits, end of year

 $4,472

 

 $4,366  $4,350 

 

The Company does not believe it is reasonably possible that the total amounts of unrecognized income tax benefits will change in the following twelve months; however, actual results could differ from those currently expected. Effectively all of the unrecognized income tax benefits would affect the Company’s effective income tax rate if recognized at some point in the future.

 

The Company recognizes interest and penalties related to uncertain income tax positions in Income tax expense. As of December 31, 2022 and 2021, the Company had $0.1 million and approximately $0, respectively, of accrued interest related to uncertain income tax positions. Total interest for uncertain income tax positions did not change materially in 2022, 2021, or 2020.