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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

Components of the Company's pretax income (loss) before taxes are as follows:

						Year ended December 31,
(in thousands)						2021						2020						2019
Domestic (including U.S. exports)						$	27,799					$	6,092					$	(72,264)
Foreign subsidiaries						15,397						(1,658)						12,164
						$	43,196					$	4,434					$	(60,100)

Components of the Company's Income Tax Provision (Benefit)

Components of the Company’s income tax provision are as follows:

						Year ended December 31,
(in thousands)						2021						2020						2019
Current taxes
Federal						$	18,439					$	5,979					$	5,450
State						4,122						1,620						1,537
Foreign						5,234						4,804						4,984
Total current taxes						27,795						12,403						11,971
Deferred taxes:
Federal						(9,271)						241						(2,471)
State						(1,725)						294						663
Foreign						1,538						(2,763)						(249)
Total deferred taxes						(9,458)						(2,228)						(2,057)
Total tax provision						$	18,337					$	10,175					$	9,914

Summary of Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that have resulted in the creation of deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 are as follows:

			December 31,
(in thousands)			2021						2020
Deferred tax assets:
Tax credits			$	7,501					$	4,431
Accounts receivable and allowances			1,769						1,964
Net operating loss carryforwards			29,979						32,271
Accrued expenses			8,061						5,431
Interest expense limitation carryforwards			2,651						2,079
Lease liabilities			28,906						21,310
Held-for-sale effect			8,601						—
Other			12,339						11,768
Total deferred tax assets			$	99,807					$	79,254
Valuation allowance (1)			(9,413)						(7,012)
Net deferred tax assets			$	90,394					$	72,242
Deferred tax liabilities:
Intangible assets			$	(123,946)					$	(102,748)
Property and equipment			(23,966)						(17,859)
Repatriation of foreign earnings			(38)						(37)
Right of use assets			(26,087)						(18,831)
Prepaid and other expenses			(701)						(603)
Total deferred tax liabilities			$	(174,738)					$	(140,078)
Total net deferred tax liability			$	(84,344)					$	(67,836)

(1)Primarily relates to the 5.11, Arnold and Ergo operating segments.

Reconciliation Between Federal Statutory Rate and Effective Income Tax Rate

The reconciliation between the Federal Statutory Rate and the effective income tax rate for 2021, 2020 and 2019 are as follows:

			Year ended December 31,
			2021						2020						2019
United States Federal Statutory Rate			21.0		%				21.0		%				(21.0)		%
State income taxes (net of Federal benefits)			4.8						34.8						3.2
Foreign income taxes			8.2						37.5						1.1
Expenses of Compass Group Diversified Holdings LLC representing a pass through to shareholders (1)			29.0						137.0						20.9
Impact of subsidiary employee stock options			(0.3)						7.2						0.1
Non-deductible acquisition costs			0.6						11.5						—
Impairment expense			—						—						9.4
Non-recognition of various carryforwards at subsidiaries			(2.3)						(24.5)						2.0
Utilization of tax credits			(5.2)						2.6						(2.6)
Foreign-derived intangible income (FDII) and GILTI tax			(2.4)						(5.0)						2.4
Effect of classification of assets held for sale			(16.8)						—						—
Other			5.9						7.4						1.0
Effective income tax rate			42.5		%				229.5		%				16.5		%

(1)The effective income tax rate for each of the years presented includes losses at the Company’s parent, which was taxed as a partnership through August 31, 2021. Beginning September 1, 2021, the Company's parent is taxed as a corporation.

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the amount of unrecognized tax benefits for 2021, 2020 and 2019 are as follows (in thousands):

Balance at January 1, 2019			$	894
Additions for current years’ tax positions			73
Additions for prior years’ tax positions			26
Reductions for prior years’ tax positions			—
Balance at December 31, 2019			$	993
Additions for current years’ tax positions			14
Additions for prior years’ tax positions			427
Reductions for prior years' tax positions			(73)
Reductions for expiration of statute of limitations			(27)
Balance at December 31, 2020			$	1,334
Additions for current years’ tax positions			31
Additions for prior years’ tax positions			15
Reductions for prior years' tax positions			(63)
Reductions for expiration of statute of limitations			(63)
Balance at December 31, 2021			$	1,254

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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