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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

(4) Income Taxes

The provision for income taxes are:

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

(1,131

)

 

$

8,038

 

 

$

7,439

 

State

 

 

(271

)

 

 

1,211

 

 

 

2,173

 

Foreign

 

 

5,629

 

 

 

3,238

 

 

 

3,943

 

 

 

 

4,227

 

 

 

12,487

 

 

 

13,555

 

Deferred:

 

 

—

 

 

 

 

 

 

 

Federal

 

 

783

 

 

 

(6,263

)

 

 

(2,763

)

State

 

 

1,208

 

 

 

(1,029

)

 

 

(1,243

)

Foreign

 

 

(336

)

 

 

(2,417

)

 

 

(988

)

 

 

 

1,655

 

 

 

(9,709

)

 

 

(4,994

)

Total

 

$

5,882

 

 

$

2,778

 

 

$

8,561

 

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to income before income tax expense, as a result of the following:

 

 

2024

 

 

2023

 

 

2022

 

Computed tax expense at statutory federal rates

 

$

(25,296

)

 

$

2,162

 

 

$

7,553

 

Increase (decrease) in taxes resulting from:

 

 

 

 

 

 

 

 

 

State taxes, net of federal income tax benefit

 

 

(3,117

)

 

 

756

 

 

 

1,493

 

Unrecognized tax benefits

 

 

(191

)

 

 

(585

)

 

 

(1,441

)

Income tax credits

 

 

(288

)

 

 

(720

)

 

 

(1,342

)

Foreign tax rate differential

 

 

2,710

 

 

 

1,025

 

 

 

785

 

Stock based compensation

 

 

685

 

 

 

219

 

 

 

55

 

Global intangible low-taxed income

 

 

—

 

 

 

685

 

 

 

—

 

Change in valuation allowance

 

 

29,730

 

 

 

1,376

 

 

 

379

 

Return to provision

 

 

(1,189

)

 

 

158

 

 

 

(693

)

Nondeductible expenses / (tax deductions)

 

 

2,161

 

 

 

(327

)

 

 

989

 

Gross receipts taxes

 

 

398

 

 

 

425

 

 

 

602

 

IP migration

 

 

—

 

 

 

(2,455

)

 

 

—

 

Other

 

 

279

 

 

 

59

 

 

 

181

 

Total

 

$

5,882

 

 

$

2,778

 

 

$

8,561

 

(Loss) income before provision for income taxes and losses on equity investments are:

 

 

2024

 

 

2023

 

 

2022

 

Domestic

 

$

(103,918

)

 

$

6,672

 

 

$

28,739

 

International

 

 

(16,540

)

 

 

3,625

 

 

 

7,226

 

Total

 

$

(120,458

)

 

$

10,297

 

 

$

35,965

 

Temporary differences between the consolidated financial statements’ carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability at December 31, 2024 and 2023 relate to the following:

 

 

2024

 

 

2023

 

Deferred tax assets

 

 

 

 

 

 

Inventories

 

$

9,322

 

 

$

2,764

 

Program accrual

 

 

10,486

 

 

 

9,742

 

Vacation pay accrual

 

 

682

 

 

 

864

 

Accrued bonuses and severance

 

 

882

 

 

 

37

 

Bad debt expense

 

 

2,550

 

 

 

2,143

 

Stock compensation

 

 

1,047

 

 

 

1,536

 

Domestic NOL carryforward

 

 

4,604

 

 

 

543

 

Foreign NOL carryforward

 

 

6,297

 

 

 

6,322

 

Tax credits

 

 

1,794

 

 

 

1,582

 

Lease liability

 

 

5,078

 

 

 

5,812

 

Accrued expenses

 

 

678

 

 

 

696

 

Unrealized foreign exchange loss

 

 

2,521

 

 

 

(1,182

)

Capitalized R&D costs

 

 

7,587

 

 

 

7,140

 

Other

 

 

2,970

 

 

 

—

 

Deferred tax assets

 

 

56,498

 

 

 

37,999

 

Less valuation allowance

 

 

(33,855

)

 

 

(3,317

)

Deferred tax assets, net

 

$

22,643

 

 

$

34,682

 

Deferred tax liabilities

 

 

 

 

 

 

Plant and equipment

 

$

(22,686

)

 

$

(32,336

)

Lease assets

 

 

(4,895

)

 

 

(5,617

)

Prepaid expenses

 

 

(1,809

)

 

 

(1,406

)

Other

 

 

—

 

 

 

(366

)

Deferred tax liabilities

 

$

(29,390

)

 

$

(39,725

)

 

 

 

 

 

 

 

Total net deferred tax assets (liabilities)

 

$

(6,747

)

 

$

(5,043

)

 

As of December 31, 2024, the Company maintained a full valuation allowance against its net deferred income tax assets related to the Company’s operations in the United States, Brazil, Dominican Republic, Honduras, Hong Kong, Spain, and Ukraine totaling $33,855. The valuation allowance increased by $30,538 for the year ended December 31, 2024, of which $808 relates to unrealized foreign exchange gains and foreign currency translation included in other comprehensive income for 2024, and $29,730 included in the provision for income taxes for 2024. As of December 31, 2023, the Company maintained a full valuation allowance against the net deferred income tax assets related to the Company’s operations in Brazil, Spain, Singapore, and Ukraine totaling $3,317.

Gross foreign NOLs related to the Company's foreign operations were $19,577 and $19,699, for the years ended December 31, 2024 and 2023, respectively. Substantially all of the Company’s foreign NOLs can be carried forward indefinitely.

Gross domestic federal and state NOLs available across all jurisdictions in which we operate were $30,062 and $3,598 as of December 31, 2024 and 2023, respectively. The Company’s federal NOL can be carried forward indefinitely and is subject to annual limitations in accordance with IRC Section 382. The Company’s state NOLs expire over varying intervals in the future and are subject to annual limitations in accordance with IRC Section 382.

The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2024 and 2023 included in other liabilities on the Company’s consolidated balance sheets:

 

 

 

2024

 

 

2023

 

Balance at beginning of year

 

$

1,796

 

 

$

2,006

 

Additions for tax positions related to the current year

 

 

63

 

 

 

230

 

Additions for tax positions related to the prior years

 

 

—

 

 

 

302

 

Reduction for tax positions related to the prior years

 

 

(995

)

 

 

(799

)

Effect of exchange rate changes

 

 

39

 

 

 

57

 

Balance at end of year

 

$

903

 

 

$

1,796

 

 

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. As of December 31, 2024 and 2023, the Company incurred $138 and $1,342, respectively in interest and penalties related to unrecognized tax benefits on its consolidated balance sheets.

It is expected that the amount of unrecognized tax benefits will change and $290 of unrecognized tax benefits is expected to be released within the next twelve months due to expiration of the statute of limitations.

The Company believes it is more likely than not that the deferred assets detailed in the table above, exclusive of those in the United States, Brazil, Dominican Republic, Honduras, Hong Kong, Spain, and Ukraine with the previously mentioned full valuation allowances, will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries that amounted to $89,429 at December 31, 2024, are permanently reinvested. Determination of the unrecognized deferred tax liability is not practical due to the complexities of a hypothetical calculation.

The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to Internal Revenue Service (“IRS”) examination for the 2021 through 2023 tax years. State income tax returns are subject to examination for the 2020 through 2023 tax years. The Company has foreign income tax returns subject to examination.

Beginning in 2022, The Tax Cuts and Jobs Act of 2017 ("TCJA"), requires taxpayers to capitalize and amortize research and development expenditures pursuant to Internal Revenue Code, or IRC, Section 174, which resulted in increases in the Company’s deferred tax asset balance of $7,587 as of December 31, 2024. There was an increase in cash tax payments in the amount of $1,431 and $3,344 for the years ended December 31, 2024 and December 31, 2023, respectively.