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Note 17 - Income Taxes
 12 Months Ended
Dec. 31, 2024
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,

 
  

2024

  

2023

  

2022

 
             

United States

 $40,626  $27,814  $40,271 

Foreign

  1,745   1,465   1,079 

Total

 $42,371  $29,279  $41,350 

 

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

 

  

Year Ended December 31,

 
  

2024

  

2023

  

2022

 

Current:

            

Federal

 $8,308  $6,817  $8,443 

State

  2,104   1,519   1,264 

Foreign

  286   289   198 

Total current income tax expense

  10,698   8,625   9,905 

Deferred:

            

Federal

  (2,127)  (612)  (22)

State

  (419)  195   340 

Foreign

  13   (1)  (22)

Total deferred income tax expense (benefit)

  (2,533)  (418)  296 

Total income tax expense

 $8,165  $8,207  $10,201 

 

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,

 
  

2024

  

2023

  

2022

 
             

Income tax expense at federal statutory rate

 $8,902  $6,148  $8,683 

State expense, net of federal income tax effect

  1,482   942   1,463 

Change in valuation allowance

  (48)  (30)  (1)

Uncertain income tax positions

  (2,277)  -   - 

Nondeductible expenses

  54   257   (35)

Foreign rate differential

  157   133   97 

Accrued interest on uncertain income tax positions

  73   264   106 

State franchise tax

  174   250   110 

Other

  (352)  243   (222)

Income tax expense

 $8,165  $8,207  $10,201 

Effective income tax rate

  19.3%  28.0%  24.7%

 

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,

 
  

2024

  

2023

 

Deferred income tax assets:

        

Accrued employee benefits

 $4,237  $3,096 

Inventories

  373   380 

Trade receivable, net

  536   532 

Net operating loss carryforwards

  2,733   3,429 

Tax credit carryforwards

  2,628   2,777 

Contract assets, net

  680   934 

Other

  2,476   1,952 
   13,663   13,100 

Valuation allowance

  (5,709)  (6,641)
   7,954   6,459 

Deferred income tax liabilities:

        

Property and equipment

  (12,804)  (13,850)

Intangible assets

  (312)  (800)

Goodwill

  (1,692)  (1,164)

Prepaid expenses

  (1,238)  (1,217)
   (16,046)  (17,031)
         

Net deferred income tax liabilities

 $(8,092) $(10,572)
         

Amounts are presented in the Consolidated Balance Sheets as follows:

        

Deferred income tax assets, included in Other assets

 $205  $370 

Deferred income taxes

  (8,297)  (10,942)

Net deferred income tax liabilities

 $(8,092) $(10,572)

 

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, 2024, net of any valuation allowance. As of December 31, 2024, the Company continues to maintain a valuation allowance on federal tax credits and select state jurisdictions.

 

As of December 31, 2024, the Company had approximately $0.2 million of federal income tax credit carryforwards, which expire on various dates between 2025 and 2026. As of December 31, 2024, the Company also had approximately $15.4 million of state net operating loss carryforwards, which expire on various dates between 2025 and 2036, and state income tax credit carryforwards of $4.3 million, which began to expire in 2024. As of December 31, 2024, the Company also had approximately $7.2 million of foreign net operating loss carryforwards, which expire on various dates between 2025 and 2033.

 

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 2020.

 

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

 

  

Year Ended December 31,

 
  

2024

  

2023

  

2022

 
             

Unrecognized income tax benefits, beginning of year

 $4,736  $4,472  $4,366 

Decreases for lapse in statute of limitations

  (2,277)  -   - 

Increases for positions taken in prior years

  73   264   106 

Unrecognized income tax benefits, end of year

 $2,532  $4,736  $4,472 

 

During the year ended December 31, 2024, the Company recorded a reduction in the uncertain income tax positions due to the lapse of the statute of limitations of $2.3 million. Additional unrecognized tax benefits, including interest, related to uncertain income tax positions may be affected by expiring statutes of limitations within the next twelve months. 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, 2024 and 2023, the Company had $0.2 million and $0.4 million, respectively, of accrued interest related to uncertain income tax positions. Total interest for uncertain income tax positions did not change materially in 2024, 2023, or 2022.