Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Pre-tax income (loss) consisted of the following for the years ended December 31:

	2023		2022		2021
Domestic	$	7,930	$	(30,401)	$	9,476
Foreign	28,244		29,334		22,649
Total	$	36,174	$	(1,067)	$	32,125

A reconciliation of income taxes computed at the statutory rates to the reported income tax provision for the years ended December 31 follows:

	2023		2022		2021
Federal (benefit) provision at statutory rate	$	7,597	$	(224)	$	6,746
U.S./Foreign tax rate differential	855		2,320		696
Foreign non-deductible expenses	(14)		(1,084)		515
Foreign tax provision	821		1,734		739
State taxes, net of federal benefit	312		(297)		315
State tax rate change, net of federal benefit	(201)		(33)		(432)
Change in uncertain tax positions	209		38		74
Change in valuation allowance	(21,750)		14,776		366
Tax credits	(2,284)		(1,244)		(1,341)
Share-based compensation	(31)		(91)		(857)
Executive compensation (IRC 162m)	226		871		1,128
Repatriation of foreign earnings	435		1,245		208
GILTI, net of related foreign tax credit	142		365		39
Pension settlement	—		3,394		—
Other	446		(866)		197
(Benefit) Provision for income taxes	$	(13,237)	$	20,904	$	8,393

The provision (benefit) for income taxes for the years ended December 31 follows:

	2023						2022						2021
	Current		Deferred		Total		Current		Deferred		Total		Current		Deferred		Total
Federal	$	(278)	$	(18,166)	$	(18,444)	$	(338)	$	16,831	$	16,493	$	46	$	2,377	$	2,423
State and local	747		(3,355)		(2,608)		276		4,039		4,315		152		(439)		(287)
Foreign	6,993		822		7,815		8,486		(8,390)		96		6,126		131		6,257
Total	$	7,462	$	(20,699)	$	(13,237)	$	8,424	$	12,480	$	20,904	$	6,324	$	2,069	$	8,393

A summary of deferred income tax assets and liabilities as of December 31 follows:

	2023		2022
Noncurrent deferred tax assets:
Amortization and fixed assets	$	11,070	$	9,653
Inventories	5,184		8,514
Pension obligations	2,467		2,182
Warranty obligations	264		242
Accrued benefits	1,035		465
Operating leases	9,858		7,595
Tax credit carryforwards	6,073		6,703
Net operating loss carryforwards	10,705		11,809
Other temporary differences	8,787		3,797
Total noncurrent deferred tax assets	$	55,443	$	50,960
Valuation allowance	(9,342)		(31,090)
Net noncurrent deferred tax assets	$	46,101	$	19,870
Noncurrent deferred tax liabilities:
Amortization and fixed assets	$	(1,309)	$	(827)
Inventories	(8)		127
Operating leases	(9,428)		(7,585)
Other temporary differences	(2,061)		(287)
Total noncurrent tax liabilities	(12,806)		(8,572)
Net noncurrent deferred tax liabilities	$	(12,806)	$	(8,572)
Total net deferred tax asset	$	33,295	$	11,298
Deferred taxes are reflected in the Consolidated Balance Sheet as follows:
Net non-current deferred tax assets	$	33,568	$	12,275
Non-current deferred tax liabilities (included in Other long-term liabilities)	$	(273)	$	(977)
Total net deferred tax asset	$	33,295	$	11,298

We assess whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with unused tax attributes expiring and tax planning alternatives. In making such judgments, significant weight is given to evidence that can be objectively verified. During 2022, (1) the Company established a valuation allowance on its U.S. deferred tax assets of $24.5 million due to significant negative evidence including severity of recent losses, and (2) reversed the valuation allowance on its U.K. deferred tax assets of $9.9 million based on the weight of positive evidence, including the cumulative income position in the three most recent years and forecasts for a sustained level of future taxable income. During 2023, the Company reversed the valuation allowance on its U.S. deferred tax assets of $22.0 million as it believes that the weight of the positive evidence, including the cumulative income position in the three most recent years and forecasts for a sustained level of future taxable income, was sufficient to overcome the weight of the negative evidence during the year ended December 31, 2023.

During 2023, we recorded an additional valuation allowance of $1.9 million primarily related to a $1.6 million increase in foreign tax credits. We expect to be able to realize the benefits of all of our deferred tax assets that are not currently offset by a valuation allowance, as discussed above. In the event that our actual results differ from our estimates or we adjust these estimates in future periods, the effects of these adjustments could materially impact our financial position and results of operations.

Activity for the years ended December 31 is as follows (in thousands):

	2023		2022		2021
Balance - Beginning of the year	$	31,090	$	18,371	$	16,441
Provisions	1,883		24,506		2,529
Utilizations and reversals	(23,631)		(11,787)		(599)
Balance - End of the year	$	9,342	$	31,090	$	18,371

As of December 31, 2023, the Company had net operating loss carryforwards of $78.5 million, of which $36.5 million related to foreign jurisdictions and $42.0 million related to U.S. state jurisdictions, $4.8 million of U.S. foreign tax credit carryforwards, and $1.4 million of research and development tax credit carryforwards. The carryforward periods for these net operating losses range from five years to indefinite, foreign tax credits begin to expire in 2027, and research and development tax credits begin to expire in 2036. Utilization of these carryforwards is subject to the tax laws of the applicable tax jurisdiction and may be limited by the ability of certain subsidiaries to generate taxable income in the associated tax jurisdiction. We have established valuation allowance for certain U.S. foreign tax credits, State NOLs, and Foreign NOLs that we believe are more likely than not to expire before they can be utilized.

As of December 31, 2023, cash of $37.8 million was held by foreign subsidiaries. During the year ended December 31, 2023, $7.0 million was repatriated from the Company's foreign subsidiaries. The Company had a $0.5 million deferred tax liability as of December 31, 2023 for the expected future income tax implications of repatriating cash from the foreign subsidiaries for which indefinite reinvestment is not expected.

We file federal income tax returns in the U.S. and income tax returns in various states and foreign jurisdictions. In the U.S., we are generally no longer subject to tax assessment for tax years prior to 2018. In our major non-U.S. jurisdictions including China, Czech Republic, Mexico and the United Kingdom, tax years are typically subject to examination for three to five years.

As of December 31, 2023, and 2022, we provided a liability of $1.3 million and $1.1 million, respectively, for unrecognized tax benefits associated with our U.S. federal and state, and foreign jurisdictions. The majority of these unrecognized tax benefits are netted against their related non-current deferred tax assets.

We accrue interest and penalties related to unrecognized tax benefits through income tax expense. We had $1.2 million and $0.9 million accrued for the payment of interest and penalties as of December 31, 2023 and December 31, 2022, respectively. Accrued interest and penalties are included in the $1.3 million of unrecognized tax benefits.

A reconciliation of the beginning and ending amount of unrecognized tax benefits (including interest and penalties) at December 31 follows:

	2023		2022		2021
Balance - Beginning of the year	$	1,089	$	1,093	$	1,006
Gross increase - tax positions in prior periods	60		426		75
Gross decreases - tax positions in prior periods	—		—		—
Gross increases - current period tax positions	149		—		—
Lapse of statute of limitations	—		(389)		—
Currency translation adjustment	40		(41)		12
Balance - End of the year	$	1,338	$	1,089	$	1,093