Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income before income taxes by geographic area was, for the years ended December 31:

(in thousands)	2022		2021		2020
Federal	$	104,185	$	106,956	$	77,195
Foreign	10,019		9,350		4,190
	$	114,204	$	116,306	$	81,385

Income tax expense consisted of the following for the years ended December 31:

(in thousands)	2022		2021		2020
Current
Federal	$	13,948	$	16,512	$	19,014
Foreign	2,148		1,947		—
State	5,154		6,560		6,363
	21,250		25,019		25,377
Deferred
Federal	7,739		5,061		(2,519)
Foreign	465		287		963
State	1,369		933		(1,195)
	9,573		6,281		(2,751)
Income tax expense	$	30,823	$	31,300	$	22,626

The differences between the U.S. federal statutory tax rate and the Company’s effective tax rate for operations were as follows for the years ended December 31:

	2022		2021		2020
U.S federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of U.S. federal income tax expense	4.5		4.7		5.0
Change in valuation allowance	—		—		0.1
Tax differential on foreign earnings	0.6		0.5		0.3
Non-deductible meals and entertainment	0.2		0.1		0.4
Stock compensation excess tax benefits	(2.4)		(0.8)		(0.6)
Uncertain tax positions	0.1		—		0.3
Provision to return adjustments, net	0.7		0.4		0.4
Global intangible low tax income	—		—		0.9
Section 162(m) limitation	2.4		1.1		0.5
Other income, net	(0.1)		(0.1)		(0.5)
Effective rate	27.0	%	26.9	%	27.8	%

The net deferred tax assets and (liabilities) arising from temporary differences was as follows at December 31:

(in thousands)	2022		2021
Deferred income tax assets:
Self-insurance reserves	$	2,979	$	2,138
Contract loss reserves	842		541
Stock-based awards	2,071		1,633
Bonus	8,656		8,373
Accrued vacation	2,227		1,977
Accrued profit sharing	2,030		2,665
Operating lease liabilities	6,691		5,404
Non-U.S. operating loss	2,402		2,520
Other	1,112		2,628
Total deferred income tax assets before valuation allowances	29,010		27,879
Less: valuation allowances	(2,402)		(2,593)
Total deferred income tax assets	26,608		25,286
Deferred income tax liabilities:
Property and equipment — tax over book depreciation	(42,413)		(36,856)
Non-U.S. intangible assets — tax over book amortization	(11,086)		—
Intangible assets — tax over book amortization	(3,331)		(2,913)
Right-of-use operating lease assets	(6,688)		(5,398)
Non-U.S. deferred income tax liabilities	(4,709)		—
Contract revenue adjustment	(4,023)		(4,526)
Other	(133)		(213)
Total deferred income tax liabilities	(72,383)		(49,906)
Net deferred income taxes	$	(45,775)	$	(24,620)

The Company determined that it is more-likely-than-not that it will not realize certain deferred tax assets related to net operating loss carryforwards on certain Canadian subsidiaries and therefore recorded a valuation allowance against the deferred tax assets for those entities.

As of December 31, 2022, the Company had no undistributed earnings of our Canadian subsidiaries. We expect future earnings to be reinvested. Accordingly, as of December 31, 2022, no expense for U.S. income taxes or foreign withholding taxes was recorded.

The Company is subject to taxation in various jurisdictions. The Company’s 2019 through 2021 tax returns are subject to examination by U. S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years 2018 through 2021.

The Company has recorded a liability for unrecognized tax benefits related to tax positions taken on its various income tax returns. If recognized, the entire amount of unrecognized tax benefits would favorably impact the effective tax rate that is reported in future periods. The decrease in the unrecognized tax benefits as of December 31, 2022 was primarily due to the lapses in the applicable statutes of limitations. The total unrecognized tax benefits is expected to be reduced by less than $0.2 million within the next 12 months. Interest and penalties related to uncertain income tax positions are included as a component of income tax expense in the Financial Statements.

The following is a reconciliation of the beginning and ending liability for unrecognized tax benefits at December 31:

(in thousands)	2022		2021
Balance at beginning of period	$	328	$	353
Gross increases in current period tax positions	83		45
Reductions in tax positions due to lapse of statutory limitations	(21)		(70)
Balance at end of period	390		328
Accrued interest and penalties at end of period	99		72
Total liability for unrecognized tax benefits	$	489	$	400

The liability for unrecognized tax benefits, including accrued interest and penalties, was included in other liabilities on the accompanying consolidated balance sheets. The amount of interest and penalties charged or credited to income tax expense as a result of the unrecognized tax benefits was not significant in the years ended December 31, 2022, 2021 and 2020.