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Note 9 - Income Tax Expense (Benefit) | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 9 – Income Tax Expense (Benefit): The components of income (loss) before income tax expense are as follows (in thousands):
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |
Domestic |  | $ | (6,585 | ) |  | $ | (59,407 | )
Foreign |  |  | 16,354 |  |  |  | 21,372 |
Income (loss) before income tax expense |  | $ | 9,769 |  |  | $ | (38,035 | )
In 2022, the Company generated a loss before income tax expense of $38.0 million primarily due to goodwill and indefinite-lived intangible assets impairment charges totaling $51.5 million, these impairment charges were nonrecurring in 2023. Aggregate income tax provisions consists of the following (in thousands):
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 455 |  |  | $ | 3,580 |
State and local |  |  | 401 |  |  |  | 1,314 |
Foreign |  |  | 1,776 |  |  |  | 1,399 |
|  |  | 2,632 |  |  |  | 6,293 |
Deferred Taxes: |  |  |  |  |  |  |  |
Deferred tax benefit |  |  | (1,635 | ) |  |  | (12,358 | )
Income tax expense (benefit) |  | $ | 997 |  |  | $ | (6,065 | )
The significant components of the deferred income tax asset (liability) are as follows (in thousands):
|  | December 31, |
|  | 2023 |  |  | 2022 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Pension accruals |  | $ | 3,578 |  |  | $ | 3,513 |
Operating reserves and other accruals |  |  | 6,613 |  |  |  | 7,962 |
Book carrying value in excess of tax basis of intangibles |  |  | 1,831 |  |  |  | 2,321 |
Capitalized research expenses |  |  | 2,547 |  |  |  | 1,704 |
Disallowed interest |  |  | 2,167 |  |  |  | - |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Book carrying value in excess of tax basis of property |  |  | (3,950 | ) |  |  | (4,183 | )
Deferred expenses |  |  | (430 | ) |  |  | (599 | )
Net deferred income tax asset (liability) |  | $ | 12,356 |  |  | $ | 10,718 |
The difference between the total statutory Federal income tax rate and the actual effective income tax rate is accounted for as follows:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |
Statutory federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | %
State and local income taxes, net of federal income tax benefit |  |  | 2.5 | % |  |  | 3.4 | %
Rate impacts due to foreign operations |  |  | (12.8 | %) |  |  | 4.3 | %
Compensation related |  |  | 2.1 | % |  |  | (0.8 | %)
Pension termination |  |  | - |  |  |  | (0.3 | %)
R&D tax credits |  |  | (2.7 | %) |  |  | 0.7 | %
Impairment charge |  |  | - |  |  |  | (11.7 | %)
Other |  |  | 0.1 | % |  |  | (0.7 | %)
Effective income tax rate |  |  | 10.2 | % |  |  | 15.9 | %
The effective tax rate is the result of a variety of factors, and is primarily dependent on our jurisdictional mix of earnings across the Company’s domestic and foreign operations as well as applicable statutory tax rates, the impact of goodwill and indefinite lived intangible impairments, and unrealized gains and losses associated with share-based compensation. The Tax Cuts and Jobs Act of 2017 (“TCJA”) included certain provisions that continue to affect our income taxes, which, among other things, include interest deduction limitations and global intangible low taxed income regulations (“GILTI”). The 2023 increase in the interest rates on our outstanding borrowings, along with the Company’s level of income resulted in a current year limitation of interest expense deductibility. The deferred tax assets associated with the disallowed interest expense have an indefinite life and do not expire. Management believes these deferred tax assets are more likely than not to be realized and therefore no valuation allowance has been recorded. The TCJA imposed a U.S. tax on GILTI that is earned by certain foreign affiliates owned by a U.S. shareholder. The computation of GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. In accordance with guidance issued by FASB, the Company made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred. Deferred income taxes are provided on undistributed earnings of foreign subsidiaries in the period in which the Company determines it no longer intends to permanently reinvest such earnings outside the United States. The Company expects to permanently reinvest the earnings from its wholly-owned Brazilian and UK subsidiaries, and accordingly, has not provided deferred taxes on the subsidiaries’ undistributed net earnings or basis differences. The Company believes that the tax liability that would be incurred upon repatriation of the earnings from its Brazilian and UK subsidiaries is immaterial at December 31, 2023. Only tax positions that meet the more-likely-than-not recognition threshold are recognized in the financial statements. As of December 31, 2023 and 2022, we had $0.8 million of unrecognized tax benefits, all of which, if recognized, would favorably affect the annual effective income tax rate. We do not expect any significant amount of this liability to be paid in the next twelve months. Accordingly, the balance of $0.8 million as of December 31, 2023 is included in other long-term liabilities. Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):
|  | December 31, |
|  | 2023 |  |  | 2022 |
Balance at the beginning of year |  | $ | 807 |  |  | $ | 801 |
Additions for tax positions of prior years |  |  | 105 |  |  |  | 129 |
Reductions due to lapse of statute of limitations |  |  | (116 | ) |  |  | (123 | )
Balance at the end of year |  | $ | 796 |  |  | $ | 807 |
We accrue interest and penalties related to unrecognized tax benefits in income tax expense, and the related liability is included in other long-term liabilities in our balance sheet. During the years ended December 31, 2023 and 2022 there was no significant reduction to the liability for interest and penalties due to any lapses in statute of limitations. At December 31, 2023 and 2022, we had $0.3 million and $0.2 million, respectively, accrued for interest and penalties, net of tax benefit. We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $0.1 million within the next twelve months due to the closure of tax years by expiration of the statute of limitations and audit settlements related to various state tax filing positions. As a global organization, we file a U.S. federal income tax return as well as income tax returns in various states, and in non U.S. jurisdictions. As of December 31, 2023, the statute of limitations for the U.S. federal tax years 2020 through 2022 remain open to examination. For U.S. state and local jurisdictions tax years 2017 through 2022 are open to examination. We are also subject to examination in various foreign jurisdictions for tax years 2017 through 2022.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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