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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

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

						Year ended December 31,
(in thousands)						2022						2021						2020
Domestic (including U.S. exports)						$	50,231					$	52,733					$	28,830
Foreign subsidiaries						36,843						15,397						(1,658)
						$	87,074					$	68,130					$	27,172

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)						2022						2021						2020
Current taxes
Federal						$	30,167					$	21,659					$	8,305
State						7,421						4,792						2,187
Foreign						11,907						5,234						4,804
Total current taxes						49,495						31,685						15,296
Deferred taxes:
Federal						(4,647)						(9,648)						671
State						2,447						(1,819)						402
Foreign						(2,266)						1,538						(2,763)
Total deferred taxes						(4,466)						(9,929)						(1,690)
Total tax provision						$	45,029					$	21,756					$	13,606

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, 2022 and 2021 are as follows:

			December 31,
(in thousands)			2022						2021
Deferred tax assets:
Tax credits			$	10,030					$	7,645
Accounts receivable and allowances			2,118						1,834
Net operating loss carryforwards			27,095						29,979
Accrued expenses			8,470						8,191
Interest expense limitation carryforwards			7,419						2,651
Lease liabilities			40,535						30,717
Held-for-sale effect			—						8,601
Other			24,503						12,706
Total deferred tax assets			$	120,170					$	102,324
Valuation allowance (1)			(21,104)						(9,413)
Net deferred tax assets			$	99,066					$	92,911
Deferred tax liabilities:
Intangible assets			$	(193,408)					$	(135,922)
Property and equipment			(25,724)						(26,114)
Repatriation of foreign earnings			(38)						(38)
Right of use assets			(35,675)						(27,898)
Prepaid and other expenses			(863)						(702)
Total deferred tax liabilities			$	(255,708)					$	(190,674)
Total net deferred tax liability			$	(156,642)					$	(97,763)

(1)Primarily relates to the Trust and 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 2022, 2021 and 2020 are as follows:

			Year ended December 31,
			2022						2021						2020
United States Federal Statutory Rate			21.0		%				21.0		%				21.0		%
State income taxes (net of Federal benefits)			5.3						2.7						7.6
Foreign income taxes			2.7						5.3						6.1
Expenses of Compass Group Diversified Holdings LLC representing a pass through to shareholders (1)			—						18.9						17.6
Impact of subsidiary employee stock options			0.8						—						1.6
Non-deductible acquisition costs			0.6						0.4						1.9
Impairment expense			1.0						—						—
Non-recognition of various carryforwards at subsidiaries			13.4						(2.3)						(4.0)
United States tax on foreign income			0.6						(1.5)						(0.8)
Dividend (net of dividend received deduction)			3.6						—						—
Utilization of tax credits			(9.2)						(4.0)						(1.1)
Effect of classification of assets held for sale			9.9						(10.7)						—
Other			2.0						2.1						0.2
Effective income tax rate			51.7		%				31.9		%				50.1		%

(1)The effective income tax rate for each of the years 2021 and 2020 include 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 2022, 2021 and 2020 are as follows (in thousands):

Balance at January 1, 2020			$	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
Additions for current years’ tax positions			91
Additions for prior years’ tax positions			15
Reductions for prior years' tax positions			(71)
Reductions for expiration of statute of limitations			(73)
Balance at December 31, 2022			$	1,216

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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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Tabular disclosure of the change in unrecognized tax benefits.

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