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Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 15.  Income Taxes

The provision (benefit) for income tax expense consisted of the following:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
(In thousands)		2024			2023			2022
Current income taxes, Federal	​	$	4,304	​	$	5,045	​	$	1,838
Current income taxes, State	​	​	1,365	​	​	1,440	​	​	637
​	​	​	5,669	​	​	6,485	​	​	2,475
​	​	​	​	​	​	​	​	​	​
Deferred income taxes, Federal	​		702	​		(19,046)	​		(32)
Deferred income taxes, State	​	​	365	​	​	(332)	​	​	—
​	​	​	1,067	​	​	(19,378)	​	​	(32)
​	​	​	​	​	​	​	​	​	​
Unrecognized tax benefit, Federal	​		(207)	​		148	​		(50)
Unrecognized tax benefit, State	​	​	—	​	​	—	​	​	—
​	​	​	(207)	​	​	148	​	​	(50)
​	​	​	​	​	​	​	​	​	​
Total provision (benefit) for income taxes	​	$	6,529	​	$	(12,745)	​	$	2,393

​

The components of our deferred tax assets and liabilities were as follows:

​

​	​	​	​	​	​	​
​	​	At December 31,
(In thousands)		2024			2023
Deferred tax assets:	​	​	​	​	​	​
Operating lease liability	​	$	4,755	​	$	5,394
Net operating loss carryforwards	​	​	1	​	​	50
Accounts receivable and inventory reserves	​	​	5,406	​	​	7,065
Stock-based compensation	​	​	5,818	​	​	5,144
Accrued liabilities	​		1,766	​		2,056
Warranty reserves	​	​	752	​	​	1,025
Intangible assets	​	​	875	​	​	1,645
Business credits	​	​	761	​	​	630
R&D expenses	​	​	3,253	​	​	2,189
Other	​		342	​		309
Total deferred tax assets	​	​	23,729	​	​	25,507
​	​	​	​	​	​	​
Deferred tax liabilities:	​	​	​	​	​	​
Right of use operating lease assets	​		(4,177)	​		(4,799)
Fixed assets	​	​	(877)	​	​	(975)
Prepaid expenses	​	​	(209)	​	​	(232)
Other	​	​	(155)	​	​	(123)
Total deferred tax liabilities	​	​	(5,418)	​	​	(6,129)
​	​	​	​	​	​	​
Net deferred tax assets	​	$	18,311	​	$	19,378

​

A reconciliation of income tax expense (benefit) to the statutory federal tax rate is as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2024		​	2023		​	2022
Tax expense at statutory rate		21.0	%	​	21.0	%	​	21.0	%
State income taxes, net of federal benefit	​	4.7	​	​	5.2	​	​	4.1	​
Executive compensation	​	1.1	​	​	0.9	​	​	—	​
Meals and entertainment	​	1.7	​	​	2.1	​	​	—	​
Employee Stock Purchase Plan	​	0.4	​	​	0.9	​	​	(1.0)	​
Federal business credits	​	(1.5)	​	​	(1.5)	​	​	1.6	​
Valuation allowance	​	—	​	​	(113.3)	​	​	(37.4)	​
Return to provision	​	(0.5)	​	​	0.5	​	​	(0.2)	​
Deferred reprice - state		0.9		​	0.2		​	0.9	​
Unrecognized tax benefits	​	0.3	​	​	0.3	​	​	(0.3)	​
Excess benefit on non-qualified stock options and RSUs	​	0.7	​	​	2.3	​	​	(3.7)	​
Interest and penalties	​	—	​	​	0.1	​	​	—	​
162(m) write down	​	—	​	​	1.6	​	​	—	​
Other		(1.0)		​	(1.1)		​	(0.5)	​
Net effective rate		27.8	%	​	(80.8)	%	​	(15.5)	%

​

A reconciliation of unrecognized tax benefits (“UTB”) is as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	December 31,
(In thousands)		2024			2023			2022
Balance beginning of the year	​	$	702	​	$	612	​	$	522
Gross changes — tax positions in prior year	​	​	(272)	​	​	—	​	​	—
Gross changes — tax positions in current year	​	​	117	​	​	90	​	​	90
Balance end of the year	​	$	547	​	$	702	​	$	612

​

Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax purposes including depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable, and inventory reserves.

As of December 31, 2024, the Company had approximately $1 thousand of state net operating loss ("NOL") carryforwards. A portion of the state NOL carry forward amounts have begun to expire in the current year.

The Company is subject to income tax examinations in the U.S. federal jurisdiction as well as in various state jurisdictions. U.S. federal and state tax years prior to 2021 are closed to examination. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our Consolidated Statement of Operations. The Company is not under exam in any jurisdictions.

The effective tax rate for the twelve months ended December 31, 2024, was an expense of 27.8%, compared to a benefit of 80.8% for the twelve months ended December 31, 2023. The primary driver of the change in our effective tax rate was the fact that we did not have a release of a valuation allowance on our deferred tax assets for 2024, while in 2023 there was a release of a valuation allowance to recognize the full value of our deferred tax assets. We recorded an income tax expense of $6.5 million and an income tax benefit of $12.7 million for the twelve months ended December 31, 2024 and 2023, respectively.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest

benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. On the basis of this evaluation, all deferred tax assets are expected to be realizable. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.  

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