XML 37 R20.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table summarizes income (loss) before benefit (provision) for income taxes and share of net income from joint venture.
 Years Ended December 31,
 202420232022
United States$(54,703)$(64,394)$(40,543)
Foreign9,269 10,723 9,474 
Loss before provision for income taxes and share of net income from joint venture$(45,434)$(53,671)$(31,069)
The following table summarizes total income tax expense (benefit) recognized in each year.
Years Ended December 31,
202420232022
Current taxes:
U.S. Federal$(583)$(580)$(545)
State(378)126 (625)
Foreign4,292 3,901 4,576 
Total current tax expense3,331 3,447 3,406 
Deferred taxes:
U.S. Federal$(10,421)$(9,057)$(6,245)
State(2,262)(1,833)70 
Foreign(1,138)(721)(986)
U.S. federal, state and foreign valuation allowance12,900 10,449 5,376 
Total deferred tax benefit(921)(1,162)(1,785)
Total income tax expense$2,410 $2,285 $1,621 

The following table presents a reconciliation of income taxes based on the U.S. federal statutory income tax rate.
Years Ended December 31,
202420232022
U.S federal statutory income tax rate21.0 %21.0 %21.0 %
Change in valuation allowance, exclusive of state(23.4)%(16.1)%(17.5)%
State taxes, net of federal taxes, exclusive of tax reform0.7 %(0.2)%1.6 %
Non-U.S. earnings taxed at different rates1.9 %1.1 %0.7 %
Global intangible low-taxed income(3.9)%(2.3)%(3.9)%
Deferred true-up(0.3)%(0.8)%(6.4)%
Research and development tax credit— %0.2 %0.3 %
Interest on CARES Act refund1.6 %1.1 %1.8 %
Return to provision0.4 %0.1 %1.3 %
Taxes on unremitted foreign earnings(3.8)%(2.4)%(3.9)%
Intercompany lending(0.5)%(1.3)%(2.7)%
Warrant revaluation— %(4.3)%3.6 %
Other adjustments, net1.0 %(0.4)%(1.1)%
Effective tax rate(5.3)%(4.3)%(5.2)%
Our effective tax rate was (5.3)% for the year ended December 31, 2024. The effective tax rate differed from the U.S. federal statutory tax rate of 21% primarily due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries, foreign tax rate differences and the limitation on the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized. Our effective tax rate was (4.3)% and (5.2)% for the years ended December 31, 2023 and 2022, respectively, which differed from the U.S. federal statutory tax rate of 21% primarily due to the impact of our valuation allowance changes during each year.
In 2021, we filed a refund claim with the IRS as a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). During the years ended December 31, 2024 and 2023, we accrued $0.7 million and $0.6 million, respectively, of interest on the CARES Act refund. Including interest accrued on the initial refund amount, we have a $12.3 million tax refund receivable at December 31, 2024, which is in the process of IRS review. The timing of the receipt of the refund is expected in the first half of 2025.
The following table summarizes the principal components of the deferred tax assets and liabilities.
As of December 31,
20242023
Deferred income tax liabilities:
Tax in excess of book depreciation$11,917 $21,497 
Intangible assets10,533 13,659 
Operating leases9,005 9,970 
Taxes on unremitted foreign earnings4,488 4,658 
Other deferred tax liabilities682 725 
Total deferred income tax liabilities36,625 50,509 
Deferred income tax assets:
Interest expense limitation18,571 14,920 
Goodwill18,393 20,419 
Inventories5,062 2,456 
Section 174 research and development costs3,123 2,400 
Pension and personnel accruals2,297 1,818 
Operating leases11,154 12,238 
Net operating loss carryforwards29,304 32,043 
Interest rate swap— 251 
Credit carryforwards3,099 3,235 
Accruals and reserves341 904 
Other deferred tax assets981 3,099 
Deferred income tax assets before valuation allowance92,325 93,783 
Valuation allowance on deferred tax assets(59,340)(47,528)
Total deferred income tax assets32,985 46,255 
Net deferred income tax liabilities$3,640 $4,254 
As of December 31, 2024, we had a $28.4 million U.S. federal net operating loss (“NOL”) carryover. The federal NOL has an indefinite life, but utilization within any tax year is limited to 80% of taxable income. Management has determined it is more likely than not this NOL will not be realized and has established a full valuation allowance against the deferred tax asset. As of December 31, 2024, we had $16.3 million of tax effected, state NOL carryovers, which begin to expire in 2030. Management has determined it is more likely than not these state NOL’s will not be realized and has established a full valuation allowance against these deferred tax assets. We also have $10.5 million, tax-effected, of foreign NOL carryovers at December 31, 2024.  The foreign NOLs have an indefinite life; however, management believes that benefit for certain of the foreign NOLs may not be realized. Therefore, we have established a valuation allowance of $7.7 million to reduce the carrying value of the asset related to foreign NOLs to the amount that has been determined to be more likely than not realized.
We have $0.4 million and $2.7 million of U.S. federal tax credits and tax credits in foreign jurisdictions, respectively, as of December 31, 2024. We have recognized a full valuation allowance against these tax credits. In addition, we have other federal and state deferred tax assets of $11.7 million that we believe it is more likely than not will not be realized for which we have established a full valuation allowance.
We have a U.S. federal and state deferred tax asset related to interest expense carryforwards. Management believes it is more likely than not that the benefit for this asset will not be realized. We have established a valuation allowance of $18.6 million to eliminate the carrying value of this asset.
Management assesses available positive and negative evidence to estimate whether it is more likely than not sufficient future taxable income will be generated to provide use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated is cumulative losses incurred over the three-year period ended December 31, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future earnings growth. On the basis of this
evaluation, as of December 31, 2024, a valuation allowance of $59.3 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized without consideration of future earnings growth.
Management believes all remaining tax assets will more likely than not be realized. However, the amount of the deferred tax asset realized will change based on future conditions, and the amount considered realizable will be adjusted if objective negative evidence in the form of cumulative losses is no longer present allowing additional weight to be given to subjective evidence such as our projections for growth.
During 2024, the valuation allowance increased by $11.8 million, primarily due to allowances recorded against U.S. federal net operating loss carryforwards, and carryforwards of disallowed interest expense which are subject to certain annual deduction limitations.
As a result of the deemed mandatory repatriation provisions in the U.S. Tax Cuts and Jobs Act of 2017 and subsequent recognition in income of GILTI, we do not have material basis differences related to cumulative unremitted earnings for U.S. income tax purposes. However, we continue to evaluate the impact that repatriation of foreign earnings would have on withholding and other taxes. As of December 31, 2024, we have recorded a liability of $4.5 million for the anticipated withholding taxes that would be due upon repatriation of the unremitted earnings of those subsidiaries for which management does not intend to permanently reinvest.
We are subject to U.S. federal income tax as well as tax in several foreign jurisdictions. We are also subject to tax by various state authorities.  The tax years subject to examination vary by jurisdiction.  We are no longer subject to U.S. federal examination for periods before 2021. We regularly assess the outcomes of both ongoing and future examinations for the current or prior years to ensure our provision for income taxes is sufficient.  We recognize liabilities based on estimates of whether additional taxes will be due, and we believe our reserves are adequate in relation to any potential assessments.  The outcome of any one examination, some of which may conclude during the next twelve months, is not expected to have a material impact on our financial position or results of operations.
Interest and penalties related to federal, state, and foreign income tax matters are recorded as a component of the provision for income taxes in our Consolidated Statements of Operations and Comprehensive Income (Loss). Accrued interest and penalties of $0.5 million and $0.5 million are included in other non-current liabilities as of December 31, 2024 and 2023, respectively.
The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties.
Years Ended December 31,
202420232022
Balance at beginning of year$121 $118 $125 
Additions for tax positions of prior years— 3 — 
Reductions for tax positions of prior years(4)— (7)
Balance at end of year$117 $121 $118 
The decrease to unrecognized tax benefits in 2024 is related to the foreign currency remeasurement of previously unrecognized tax benefits. As of December 31, 2024, the unrecognized tax benefits would, if recognized, impact our effective tax rate by $0.7 million, inclusive of the impact of interest and penalties.  Management believes that it is reasonably possible that the amount of unrecognized income tax benefits, including interest and penalties, may not decrease during the next twelve months as no statutes are expected to lapse within the period.