XML 41 R21.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Income (loss) from continuing operations before income taxes and income tax expense (benefit) from continuing operations are as follows:
(In thousands)202420232022
Income (loss) from continuing operations before income taxes:
Domestic$(523)$(151,488)$8,250 
Foreign1,403 1,023 1,314 
Total$880 $(150,465)$9,564 
Current income tax expense (benefit):
Federal$(106)$(39,929)$(346)
State704 (39)697 
Foreign123 241 351 
Total721 (39,727)702 
Deferred income tax expense (benefit):
Federal(470)(11,758)(3,256)
State(517)198 (513)
Foreign101 (13)46 
Total(886)(11,573)(3,723)
Total income tax expense (benefit) for continuing operations$(165)$(51,300)$(3,021)
The significant differences between the U.S. federal statutory rate and the effective income tax rate related to continuing operations are as follows:
202420232022
(In thousands, except percentages)Amount%Amount%Amount%
Income tax expense (benefit) at federal statutory rate$185 21.0 $(31,598)21.0 $1,992 21.0 
Stock-based compensation 409 46.5 136 (0.1)(103)(1.1)
Changes in estimates related to prior year tax provision326 37.0 559 (0.4)(812)(8.5)
Non-deductible other282 32.0 144 (0.1)608 6.4 
Foreign rate differences57 6.5 39 — 51 0.5 
State taxes, net of federal income tax benefit28 3.2 168 (0.1)38 0.4 
U.S. tax on foreign branch income— — 1,693 (1.1)(3,341)(35.1)
Stranded taxes released with termination of pension— — (21,913)14.6 — — 
Foreign derived intangible income deduction— — — — (259)(2.7)
Tax contingency accruals and tax settlements(1)(0.1)1 — 294 3.1 
Changes in federal valuation allowance(654)(74.3)237 (0.2)— — 
Research and development tax credit(797)(90.6)(766)0.5 (1,489)(15.6)
    Income tax expense (benefit) at effective income tax rate$(165)(18.8)$(51,300)34.1 $(3,021)(31.6)
Provision (benefit) for income taxes for the year ended December 31, 2024 was $(0.2) million compared to $(51.3) million for the year ended December 31, 2023. The effective tax rates for the years ended December 31, 2024 and 2023 were (18.8)% and 34.1%, respectively. The change in effective tax rate is primarily due to pre-tax income from continuing operations in 2024 versus a pre-tax loss from continuing operations in 2023. The tax rate in 2023 was significantly impacted by tax benefits previously recorded in other comprehensive income (loss) that were released in 2023 as a result of the pension plan termination. The stranded taxes released with the termination of the pension plan represent the effect of the change in federal and state tax rates on pension-related deferred tax items initially recorded in other comprehensive income. The related stranded taxes were released in full in 2023.
The effective tax rate in 2022 was impacted by a large discrete benefit recorded in the first quarter of 2022, resulting from the implementation of new U.S. tax regulations associated with foreign tax credits published by the U.S. Treasury and Internal Revenue Service (“IRS”) on January 4, 2022. These regulations overhauled various components of the foreign tax credit regime including the determination of creditable foreign taxes and limit the amount of foreign taxes that are creditable against U.S. income taxes. As the result of these regulations, future Brazilian income tax under Brazil tax law in place at that time
would have been deductible, but not creditable, in the U.S. The accounting rules require a reduction of the U.S. deferred tax liability previously established related to anticipated future income from Brazil. The IRS released guidance in 2023 that provides temporary relief for tax years after 2021 from the regulations published by the IRS on January 4, 2022. As a result of the IRS guidance released in 2023, the reduction in the first quarter of 2022 of the U.S. deferred tax liability previously established related to anticipated future income from Brazil was reversed in 2023.
Deferred income tax assets and deferred income tax liabilities for continuing operations at December 31, 2024 and 2023, are as follows:
(In thousands)20242023
Deferred income tax assets:
Pension and other postretirement obligations$— $528 
Employee benefits6,381 5,821 
Basis difference in capital assets430 1,150 
Inventory956 1,478 
Asset write-offs, divestitures and environmental accruals3,656 1,025 
U.S. federal and state NOL and credit carryforwards38,706 33,247 
Capitalized R&D expenditures8,169 6,543 
Other815 2,805 
Lease liabilities3,419 2,710 
Interest expense limitation471 2,592 
Foreign currency translation gain adjustment— 44 
Deferred income tax assets before valuation allowance63,003 57,943 
Less: Valuation allowance15,220 15,173 
Total deferred income tax assets47,783 42,770 
Deferred income tax liabilities:
Goodwill and identifiable intangibles$1,019 $3,138 
Property, plant and equipment9,086 11,386 
Foregone tax credits on foreign branch income— 1,880 
Right-of-use leased assets3,210 2,409 
Other2,020 802 
Total deferred income tax liabilities15,335 19,615 
Net deferred income tax assets (liabilities)$32,448 $23,155 
Amounts recognized in the consolidated balance sheets:
Deferred income tax assets (noncurrent)$32,517 $23,155 
Deferred income tax liabilities (noncurrent)69 — 
Net deferred income tax assets (liabilities)$32,448 $23,155 
Except as noted below, the Company believes that it is more likely than not that future taxable income will exceed future tax-deductible amounts thereby resulting in the realization of deferred income tax assets. The Company had U.S. federal and state tax credits of $25.2 million, net operating loss carryforwards of $13.5 million and a deferred interest limitation of $0.5 million at December 31, 2024. The Company had U.S. federal and state tax credits of $16.7 million and net operating loss carryforwards of $16.5 million and a deferred interest limitation of $2.6 million at December 31, 2023. The U.S. deferred interest limitation can be carried forward indefinitely. The U.S. federal foreign tax credits will expire between 2026-2034 and the U.S. federal research and development tax credits will expire by 2045. The U.S. state carryforwards expire at different points over the next 20 years.
Valuation allowances of $14.0 million, $12.1 million and $10.3 million at December 31, 2024, 2023 and 2022, respectively, are recorded against the tax benefit on U.S. federal and state tax credits and net operating loss carryforwards generated by domestic subsidiaries that may not be recoverable in the carryforward period. The Company had a valuation allowance of $0.8 million against U.S. federal tax credits at December 31, 2023. The valuation allowance for unrealized capital losses from investments and other related items was $0.2 million at December 31, 2024 and $0.7 million at December 31, 2022. As circumstances and events warrant, allowances will be reversed when it is more likely than not that future taxable income will exceed deductible amounts, thereby resulting in the realization of deferred income tax assets. Valuation allowances of
$1.1 million, $2.2 million and $2.8 million at December 31, 2024, 2023 and 2022, respectively, were recorded against certain deferred state tax assets.
A reconciliation of the Company’s unrecognized uncertain tax positions since January 1, 2022, is shown below:
 Years Ended December 31,
(In thousands)202420232022
Balance at beginning of period$659 $628 $648 
Increase (decrease) due to tax positions taken in:
Current period25 25 2 
Prior period158 23 44 
Reductions due to lapse of statute of limitations(2)(17)(66)
Balance at end of period$840 $659 $628 
The Company records interest expense related to uncertain tax positions in income tax expense on the Consolidated Statements of Income (Loss) with the balance of accrued interest in other noncurrent liabilities on the Consolidated Balance Sheet. The Company accrued immaterial interest expense related to uncertain tax positions during 2024, 2023 and 2022, respectively.
Tredegar, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and jurisdictions outside the U.S. With few exceptions, Tredegar is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2021. The Company anticipates that it is reasonably possible that Federal and state income tax audits or statutes may settle or close within the next 12 months and are not expected to result in a material change in unrecognized tax positions, including any payments that may be made.