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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Consolidated Income Before Provision for Income Taxes

Consolidated income before provision for income taxes consists of the following for the years ended December 31, 2023, 2022 and 2021 (U.S. dollars in thousands):

	2023			2022		2021
U.S.	$	(37,152	)	$	24,411	$	45,371
Foreign		63,730			64,559		187,088
Total	$	26,578		$	88,970	$	232,459

Current and Deferred Taxes

The provision for current and deferred taxes for the years ended December 31, 2023, 2022 and 2021 consists of the following (U.S. dollars in thousands):

	2023			2022			2021
Current
Federal	$	—		$	—		$	—
State		3,903			1,515			1,458
Foreign		29,179			34,117			77,393
		33,082			35,632			78,851
Deferred
Federal		(18,039	)		(65,733	)		3,705
State		(1,440	)		(1,239	)		(38	)
Foreign		4,380			15,532			2,675
		(15,099	)		(51,440	)		6,342
Provision for income taxes	$	17,983		$	(15,808	)	$	85,193

Deferred Tax Assets and Liabilities

The principal components of deferred taxes are as follows (U.S. dollars in thousands):

	Year Ended December 31,
	2023			2022
Deferred tax assets:
Inventory differences	$	78,338		$	41,127
Foreign tax credit and other foreign benefits		37,369			51,273
Stock-based compensation		4,556			5,981
Accrued expenses not deductible until paid		33,066			37,181
Net operating losses		21,864			12,773
Capitalized research and development		27,750			26,406
R&D credit carryforward		2,294			1,795
Other		293			242
Gross deferred tax assets		205,530			176,778
Deferred tax liabilities:
Foreign currency exchange		3,596			3,225
Foreign withholding taxes		14,591			15,375
Intangibles step-up		3,787			4,446
Overhead allocation to inventory		106			3,504
Amortization of intangibles		25,020			21,211
Other		6,281			6,129
Gross deferred tax liabilities		53,381			53,890
Valuation allowance		(47,142	)		(33,557	)
Deferred taxes, net	$	105,007		$	89,331

Deferred Tax Asset Valuation Adjustments

The deferred tax asset valuation adjustments for the years ended December 31, 2023, 2022 and 2021 are as follows (U.S. dollars in thousands):

	Year Ended December 31,
	2023			2022			2021
Balance at the beginning of period	$	33,557		$	80,186		$	67,340
Additions charged to cost and expenses		13,183	⁽¹⁾		3,231	⁽⁴⁾		12,674	⁽⁶⁾
Decreases		(1,825	)⁽²⁾		(50,315	)⁽⁵⁾		—	⁽⁷⁾
Adjustments		2,227	⁽³⁾		455	⁽³⁾		172	⁽³⁾
Balance at the end of the period	$	47,142		$	33,557		$	80,186

(1)	Increase in valuation is due primarily to net operating losses in foreign markets and the $6.1 million that was recorded on the foreign tax credit carryforward.

(2)	The decrease was due to expiration of foreign net operating losses.

(3)	Represents the net currency effects of translating valuation allowances at current rates of exchange.

(4)	Increase in valuation is primarily due to net operating losses in foreign markets.

(5)	The decrease was due to utilization of $18.1 million of foreign tax credits and the valuation allowance release of $32.2 million foreign tax credits.

(6)	Increase in valuation is primarily due to $11.9 million that was recorded on the foreign tax credit carryforward due to the disposal of the Company’s Grow Tech segment. The additional amount is due to net operating losses in foreign markets.

(7)	No decreases in 2021.

Deferred Taxes, Net on a Jurisdiction Basis

The components of deferred taxes, net on a jurisdiction basis are as follows (U.S. dollars in thousands):

	Year Ended December 31,
	2023		2022
Net noncurrent deferred tax assets	$	105,529	$	89,770
Net noncurrent deferred tax liabilities		522		439
Deferred taxes, net	$	105,007	$	89,331

Reconciliation of Statutory to Effective Tax Rate

The actual tax rate for the years ended December 31, 2023, 2022 and 2021 compared to the statutory U.S. Federal tax rate is as follows:

	Year Ended December 31,
	2023			2022			2021
Income taxes at statutory rate		21.00	%		21.00	%		21.00	%
Excess tax benefit from equity award		5.04	%		(0.12	)%		(0.19	)%
Deferred compensation		(4.28	)%		2.18	%		(0.46	)%
Executive salary limitation		1.59	%		2.06	%		0.47	%
State taxes		7.34	%		0.25	%		0.50	%
Foreign exchange		(1.91	)%		0.68	%		(0.07	)%
Non-U.S. income taxed at different rates		12.70	%		4.78	%		6.06	%
Foreign withholding taxes		13.31	%		(0.73	)%		4.71	%
Change in reserve for uncertain tax positions		1.74	%		17.69	%		(0.06	)%
Valuation allowance recognized foreign tax credit & others		24.66	%		(56.17	)%		5.12	%
Foreign-Derived Intangible Income (FDII)		(14.11	)%		(8.14	)%		(0.87	)%
Other		0.58	%		(1.25	)%		0.44	%
		67.66	%		(17.77	)%		36.65	%