Income Taxes

12 Months Ended

Dec. 31, 2019


	Years Ended December 31,
	2019		2018		2017
Income (loss) before taxes
U.S.	$	53,231	$	85,596	$	144,499
Non-U.S.	117		172		133
	$	53,348	$	85,768	$	144,632

Income taxes

Income tax expense (benefit) consists of:


	Years Ended December 31,
	2019		2018		2017
Current Provision:
Federal	$	2,519	$	7,529	$	3,682
State	1,007		2,442		1,743
Non-U.S.	24		27		22
Total current provision	$	3,550	$	9,998	$	5,447
Deferred Provision:
Federal	$	7,536	$	8,081	$	(6,824)
State	907		1,435		(700)
Non-U.S.	8		10		10
Total deferred provision	8,451		9,526		(7,514)
Total income tax expense (benefit)	$	12,001	$	19,524	$	(2,067)

The U.S. federal statutory income tax rate is reconciled to the effective income tax rate as follows:


	Years Ended December 31,
	2019		2018		2017
U.S. federal statutory income tax rate	21.0	%	21.0	%	35.0	%
2017 Act	—	%	(1.9)	%	(37.6)	%
U.S. state income taxes	2.8	%	3.5	%	2.6	%
U.S. state income tax rate change	—	%	—	%	(1.7)	%
Manufacturing incentives	—	%	—	%	(0.3)	%

Executive compensation limitations	1.5	%	1.2	%	0.7	%
Tax credits	(3.0)	%	(0.5)	%	—	%
Other, net	0.2	%	(0.5)	%	(0.1)	%
	22.5	%	22.8	%	(1.4)	%

On December 22, 2017 the U.S. government enacted significant changes to federal tax law following the passage of the Tax Cuts and Jobs Act (the “2017 Act”). In 2017, the Company reasonably estimated the accounting for the effects of the 2017 Act. In 2018, under Staff Accounting Bulletin No. 118 (“SAB 118”), we finalized the accounting for the 2017 Act and our financial statements for the year ended December 31, 2018 and 2017 reflect certain effects of the 2017 Act including a reduction in the corporate tax rate to 21% from 35% and changes made to executive compensation rules. As a result of changes to tax laws and tax rates under the 2017 Act, the Company recorded a reduction in income tax expense of $1,651 and $53,424 primarily related to the reduction in the federal corporate tax rate to 21% during the years ended December 31, 2018 and 2017, respectively.

The Company's effective income tax rate for 2019 was slightly higher compared to the U.S. Federal statutory rate of 21% due primarily to state taxes and executive compensation deduction limitations, partially offset by the vesting of restricted stock units as well as current year research tax credits and additional credits claimed on the Company's 2018 U.S. federal income tax return.

The Company's effective income tax rate for 2018 was higher compared to the U.S. Federal statutory rate of 21% due primarily to state taxes and executive compensation deduction limitations resulting from the 2017 Act, partially offset by income tax benefits associated with the filing of the 2017 U.S. Federal income tax return and the related completion of the accounting for the impacts of the 2017 Act.

The Company’s effective income tax rate for 2017 was lower compared to the U.S. Federal statutory rate of 35% due primarily to the enactment of the 2017 Act and the related remeasurement of deferred tax assets and liabilities. Additionally, the Company made certain state tax apportionment elections in 2017 which resulted in a state income tax rate change and related income tax benefit.

For 2019, 2018 and 2017, there were no unrecognized tax benefits recorded by the Company. Although there are no unrecognized income tax benefits, when applicable, the Company’s policy is to report interest expense and penalties related to unrecognized income tax benefits in the income tax provision.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2019, tax years 2016, 2017 and 2018 are subject to examination by the tax authorities.

Deferred tax assets (liabilities)

The tax effects of temporary differences which give rise to future income tax benefits and expenses are as follows:


	December 31,
	2019		2018
Deferred tax assets:
Net Operating Loss	$	8,167	$	27
Accruals and Reserves	2,859		4,158
Interest Expense Limitation	2,655		—
Pension Obligation	7,318		4,804
Equity Compensation	1,695		1,979
Other	1,314		289
Total gross deferred tax assets	24,008		11,257
Less: Valuation Allowance	—		—
Total deferred tax assets	$	24,008	$	11,257

Deferred tax liabilities:
Property, plant & equipment	$	(123,915)	$	(102,783)
Intangibles	(3,713)		(3,280)
Inventory	(5,503)		(8,252)
Other	(931)		(698)
Total deferred tax liabilities	(134,062)		(115,013)
Net deferred taxes	$	(110,054)	$	(103,756)

The net deferred taxes are primarily related to U.S. operations. As of December 31, 2019, we recognized a federal net operating loss ("NOL") carryforward of $38,301 which can be carried forward indefinitely. We also recognized state NOL carryforwards in multiple jurisdictions for $2,139 which generally begin to expire in 2039. The Company has a foreign NOL of $70 and $111, respectively, at December 31, 2019 and 2018 which is not subject to expiration. We recognized a research tax credit carryforward of $758 at December 31, 2019 which will expire in 2039. We believe that the federal, foreign and state NOL carryforwards, tax credit carryforwards and other deferred tax assets are more likely than not to be realized and we have not recorded a valuation allowance against the deferred tax assets.

As a result of the early adoption of ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, during the three months ended March 31, 2018, the Company elected to reclassify $0.4 million from Accumulated other comprehensive income to Retained earnings. The reclassification results from the remeasurement of deferred taxes pursuant to the Tax Cuts and Jobs Act related to the Company’s pension plan that was recognized as a component of Income taxes related to continuing operations for the year ended December 31, 2017 which was originally recognized in Other comprehensive income. The Company elected the optional transition method and recorded the adjustment at the beginning of the period of adoption of ASU 2018-02. The Company’s current accounting policy related to stranded tax effects in Accumulated other comprehensive income is to review and reclassify on an item by item basis.

The Company's accounting policy is to record the tax impacts of Global intangible low-taxed income as a period cost.

As of December 31, 2019 and 2018, there were no material undistributed earnings of the Company's non-U.S. subsidiaries and, as such, we have not provided a deferred tax liability for undistributed earnings.