XML 44 R19.htm IDEA: XBRL DOCUMENT v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
For the year ended December 31, 2023, our income tax provision resulted in an effective tax rate of 6.4%. For the year ended December 31, 2022, our income tax provision resulted in an effective tax rate of 2.3%. Our income tax provision for the year ended December 31, 2023 was $4.6 million, our income tax provision for December 31, 2022 was $3.3 million and includes federal, state and foreign taxes.
The components of our tax provision and benefit on continuing operations were as follows (in thousands):
 
CurrentDeferredTotal
Twelve months ended December 31, 2023:
U.S. Federal$(145)$304 $159 
State & local338 — 338 
Foreign jurisdictions3,110 971 4,081 
Tax provision$3,303 $1,275 $4,578 
Twelve months ended December 31, 2022:
U.S. Federal$(211)$— $(211)
State & local513 — 513 
Foreign jurisdictions1,319 1,685 3,004 
Tax provision$1,621 $1,685 $3,306 
The components of pre-tax income (loss) from continuing operations for the years ended December 31, 2023 and 2022 were as follows (in thousands):
 Twelve Months Ended
December 31,
 20232022
Domestic$(86,077)$(156,001)
Foreign14,933 9,220 
Pre-tax loss from continuing operations
$(71,144)$(146,781)

The income tax provision in 2023 and 2022 attributable to the loss from continuing operations, respectively, differed from the amounts computed by applying the U.S. federal income tax rate 21% in 2023 and 2022, to pre-tax loss from continuing operations as a result of the following (in thousands):
 Twelve Months Ended
December 31,
 20232022
Pre-tax loss from continuing operations$(71,144)$(146,781)
Computed income taxes at statutory rate(14,940)(30,824)
State income taxes, net of federal benefit(200)395 
Foreign tax rate differential1,229 701 
Non-cash compensation108 228 
Deferred taxes on investment in foreign subsidiaries305 — 
Non-deductible expenses246 118 
Foreign withholding 641 693 
Prior year tax adjustments(299)7 
Valuation allowance16,512 31,430 
Other976 558 
Total expense for income tax on continuing operations
$4,578 $3,306 
        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands): 
 December 31,
 20232022
Deferred tax assets:
Accrued compensation and benefits$4,710 $7,630 
Receivables262 552 
Inventory311 296 
Share based compensation525 258 
Other accrued liabilities1,974 2,940 
Tax credit carry forward3,038 2,314 
Interest expense limitation41,477 28,137 
Goodwill and intangible costs9,110 10,143 
Debt transactions
4,174 1,780 
Net operating loss carry forwards45,351 38,860 
Other611 1,770 
Deferred tax assets111,543 94,680 
Less: Valuation allowance(93,677)(73,483)
Deferred tax assets, net$17,866 $21,197 
Deferred tax liabilities:
Property, plant and equipment(15,947)(17,642)
Unremitted earnings of foreign subsidiaries(2,960)(3,581)
Other(3,476)(3,260)
Deferred tax liabilities(22,383)(24,483)
Net deferred tax liability
$(4,517)$(3,286)
We successfully negotiated amendments to existing debt instruments and entered into new agreements with lenders. These actions removed the substantial doubt about the Company's ability to continue as a going concern that previously existed and disclosed in prior periods. As of December 31, 2023, a valuation allowance of $93.7 million was recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized, primarily attributable to the domestic operations. However, on the basis of the Company's ability to continue as a going concern, we evaluated all available evidence, both positive and negative and determined that sufficient future taxable income will be generated to allow for the realization of the existing deferred tax assets in certain foreign jurisdictions in which the we operate. As a result, we were able to release $2.9 million of valuation allowance in the current year, primarily attributable to our UK and Australia subsidiaries. These benefits were offset by an increase in valuation allowance of $23.1 million on the expected realizability of our deferred tax assets for federal and state tax net operating loss carryforwards. A significant factor of negative evidence evaluated for the domestic jurisdiction was the cumulative pre-tax loss incurred over the three-year period ended December 31, 2023.
As of December 31, 2023, we had net operating loss carryforwards for U.S. federal income tax purposes of $137.8 million, all of which have an indefinite carryforward period. These carryforwards are available, subject to certain limitations such as mentioned above, to offset future taxable income. Further, we have state net operating loss carryforwards of $210.8 million with $177.2 million expiring on various dates through 2043 and $33.5 million with an indefinite carryforward period.
As of December 31, 2023, we had interest expense carryforward for U.S. income tax purposes of $174.9 million. The entire $174.9 million has an indefinite carryforward period. These carryforwards are available, subject to certain limitations, to offset future taxable income.
As of December 31, 2023, we had $2.9 million of tax credits that will expire on various dates through 2037 if not utilized.
As of December 31, 2023, we had foreign net operating loss carryforwards totaling $16.7 million. Of this amount, $0.2 million will expire in various dates through 2033 and $16.5 million has an unlimited carryforward period.
As of December 31, 2023, none of our undistributed earnings of foreign operations were considered to be permanently reinvested overseas. As of December 31, 2023, the deferred tax liability related to undistributed earnings of foreign subsidiaries was $2.9 million.
As of December 31, 2023, $2.3 million of unrecognized tax benefits would affect our effective tax rate. We estimate the uncertain tax benefits that may be recognized within the next twelve months will not be material. Our policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense.
We file income tax returns in the U.S. federal and state jurisdictions as well as various foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years prior to 2016. We are currently under audit in one of the states in which we do substantial business. As of December 31, 2023, we recorded a $0.9 million tax liability in our uncertain positions related to this audit due to retroactive changes included in final regulations issued by the state. Certain Dutch entities were also under audit. We did not anticipate any material adjustments related to these examinations.
Periodic examinations of our tax filings occur by the taxing authorities for the jurisdictions in which we conduct business. These examinations review the significant positions taken on our returns, including the timing and amount of income and deductions reported, as well as the allocation of income among multiple taxing jurisdictions. We do not expect any material adjustments to result from positions taken on our income tax returns.
The following table summarizes reconciliation of gross unrecognized tax benefits, excluding penalties and interest, for the year ended December 31, 2023 and 2022 (in thousands):
 Twelve Months Ended
December 31,
 20232022
Unrecognized tax benefits - January 1$1,097 $1,285 
Additions based on tax positions related to prior years399 350 
Disposition of uncertain tax positions of discontinued operations— (426)
Reductions resulting from a lapse of the applicable statute of limitations(44)(112)
Unrecognized tax benefits - December 31$1,452 $1,097 
We have recorded the unrecognized tax benefits in other long-term liabilities in the consolidated balance sheets. As of December 31, 2023 and 2022, the total amount of accrued interest and penalties related to unrecognized tax benefits was $0.8 million and $0.6 million, respectively. There was approximately $0.2 million and $0.0 million, respectively, of interest and penalties related to unrecognized tax benefits that was recorded in income tax expense for the period ended December 31, 2023 and 2022