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INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

NOTE 16—INCOME TAXES

The components of income before income taxes for the years ended December 31, 2024 and 2023 consist of the following:

​

​	​	​	​	​	​	​	​
​	​	Years Ended December 31,					​
​		2024			2023
Domestic	​	$	5,438	​	$	5,008	​
Foreign	​		(211)	​		3,753	​
Total income before income taxes	​	$	5,227	​	$	8,761	​

​

The components of the 2024 and 2023 income tax provision are as follows:

​

​	​	​	​	​	​	​	​
​	​	Years Ended December 31,					​
​		2024			2023
Current:	​	​	​	​	​	​	​
Federal	​	$	944	​	$	1,939	​
State	​		412	​		421	​
Foreign	​		2,360	​		2,454	​
Total current provision	​		3,716	​		4,814	​
Deferred:	​	​	​	​	​	​	​
Federal	​		(489)	​		(1,860)	​
State	​		(49)	​		(243)	​
Foreign	​		(790)	​		(104)	​
Total deferred benefit	​		(1,328)	​		(2,207)	​
Total	​	$	2,388	​	$	2,607	​

​

The differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate of 21% for each of the years ended December 31, 2024 and 2023 were as follows:

​

​	​	​	​	​	​	​	​
​	​	Years Ended December 31,
​		2024			2023
Tax provision computed at 21%		$	1,098	​	$	1,840	​
Nondeductible expenses	​		575	​		468	​
State income taxes, net of federal benefit	​		292	​		229	​
Sale on business	​		(529)	​		—	​
Tax impact of foreign operations	​		665	​		—	​
Valuation allowances increase (release)	​		109	​		(95)	​
Excess tax benefit & other deferred adjustment	​		252	​		(130)	​
Other	​		(74)	​		295	​
Income tax provision	​	$	2,388	​	$	2,607	​
Effective income tax rates	​		45.7	%		29.8	%

​

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows:

​

​	​	​	​	​	​	​	​
​		December 31,
​	​	2024		​	2023		​
Noncurrent deferred tax asset	​	​	​	​	​	​	​
Compensation related expenses	​	$	2,893	​	$	2,636	​
Foreign currency translation	​		3,401	​		3,069	​
U.S. foreign tax credit carryovers	​		2,705	​		2,705	​
U.S. capital loss carryover	​	​	7,971	​	​	—	​
Foreign net operating loss carryovers	​		4,692	​		2,286	​
Accruals and reserves	​		1,254	​		1,307	​
Operating lease right-of-use assets	​	​	1,365	​	​	2,500	​
Other	​		509	​		771	​
Valuation allowance for deferred tax assets	​		(12,645)	​		(3,785)	​
Total noncurrent deferred tax asset	​		12,145	​		11,489	​
Noncurrent deferred tax liability	​	​	​	​	​	​	​
Depreciable assets	​		(124)	​		(433)	​
Prepaids	​		(89)	​		(82)	​
Intangible assets	​		(704)	​		(1,370)	​
Investment in foreign subsidiaries	​		(3,279)	​		(2,363)	​
Foreign earnings distribution taxes	​		(1,232)	​		(1,461)	​
Foreign intangibles and reserves	​		(178)	​		(967)	​
Operating lease liabilities	​	​	(1,292)	​	​	(2,422)	​
Total noncurrent deferred tax liability	​		(6,898)	​		(9,098)	​
Net noncurrent deferred tax assets	​		5,247	​		2,391	​
Net deferred tax assets	​	$	5,247	​	$	2,391	​

​

A valuation allowance was established at December 31, 2024 for the Company’s U.S. capital loss carryforward that was generated from the sale of the Company’s automation business in 2024. A valuation allowance was established at December 31, 2024 and 2023 due to estimates of future utilization of net operating loss carryovers in the U.S. and certain foreign jurisdictions, derived primarily from acquisitions and recorded through purchase accounting. The valuation allowance at December 31, 2024 and 2023 also includes a full valuation for the Company’s foreign tax credit carryovers and foreign taxes on certain controlled foreign corporations.

As of December 31, 2024, the Company had foreign net operating loss (NOL) carryforwards of approximately $26.5 million. If not utilized, these NOL carryforwards begin to expire in 2025. The Company also has a federal tax credit carryforward of approximately $2.7 million, which will begin to expire in 2027, if not utilized. As of December 31, 2024, the Company generated a tax capital loss carryforward of $8.0 million as a result of the sale of the automation business.  If not utilized, the carryforward will expire in 2029.

Uncertain tax positions

Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. It is the Company’s policy to accrue for interest and penalties related to its uncertain tax positions within income tax expense.

A tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows:

​

​	​	​	​	​	​	​	​	​
​	​	December 31,						​
​		2024			2023
Balance, beginning of year	​	$	1,751	​	$	1,715	​	​
Additions as a result of tax positions taken during the current period	​		26	​		36	​	​
Balance, end of year	​	$	1,777	​	$	1,751	​	​

​

We do not expect our unrecognized tax benefits to significantly change in the next twelve months.

The Company has recognized through income tax expense approximately $1.1 million of interest and penalties related to uncertain tax positions. The amount of unrecognized tax benefit, if recognized, that would impact the effective tax rate is $1.8 million. With few exceptions, the Company is no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years before 2017.

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