Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

(in thousands)	2023		2022		2021
Federal	$	102,014	$	104,185	$	106,956
Foreign	22,990		10,019		9,350
	$	125,004	$	114,204	$	116,306

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

(in thousands)	2023		2022		2021
Current
Federal	$	21,337	$	13,948	$	16,512
Foreign	1,821		2,148		1,947
State	7,348		5,154		6,560
	30,506		21,250		25,019
Deferred
Federal	(159)		7,739		5,061
Foreign	3,984		465		287
State	(317)		1,369		933
	3,508		9,573		6,281
Income tax expense	$	34,014	$	30,823	$	31,300

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:

	2023		2022		2021
U.S federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of U.S. federal income tax expense	4.4		4.5		4.7
Tax differential on foreign earnings	0.7		0.6		0.5
Non-deductible meals and entertainment	0.5		0.2		0.1
Stock compensation excess tax benefits	(2.6)		(2.4)		(0.8)
Uncertain tax positions	—		0.1		—
Provision to return adjustments, net	0.7		0.7		0.4
Section 162(m) limitation	2.5		2.4		1.1
Other income, net	—		(0.1)		(0.1)
Effective rate	27.2	%	27.0	%	26.9	%

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

(in thousands)	2023		2022
Deferred income tax assets:
Self-insurance reserves	$	3,850	$	2,979
Contract loss reserves	2,273		842
Stock-based awards	3,336		2,071
Bonus	11,137		8,656
Accrued vacation	2,295		2,227
Accrued profit sharing	1,707		2,030
Operating lease liabilities	8,115		6,691
Non-U.S. operating loss	2,411		2,402
Other	1,090		1,112
Total deferred income tax assets before valuation allowances	36,214		29,010
Less: valuation allowances	(2,412)		(2,402)
Total deferred income tax assets	33,802		26,608
Deferred income tax liabilities:
Property and equipment — tax over book depreciation	(45,332)		(42,413)
Non-U.S. intangible assets — tax over book amortization	(10,363)		(11,086)
Intangible assets — tax over book amortization	(4,013)		(3,331)
Right-of-use operating lease assets	(8,115)		(6,688)
Non-U.S. deferred income tax liabilities	(8,819)		(4,709)
Contract revenue adjustment	(4,790)		(4,023)
Other	(600)		(133)
Total deferred income tax liabilities	(82,032)		(72,383)
Net deferred income taxes	$	(48,230)	$	(45,775)

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.

Earnings from the Company’s Canadian subsidiaries are indefinitely reinvested in Canada, therefore as of December 31, 2023, the Company had no undistributed earnings or withholding deferral associated with its Canadian subsidiaries.

The Company is subject to taxation in various jurisdictions. The Company’s 2020 through 2022 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 2019 through 2022.

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, 2023 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)	2023		2022
Balance at beginning of period	$	390	$	328
Gross increases in current period tax positions	54		83
Reductions in tax positions due to lapse of statutory limitations	(27)		(21)
Balance at end of period	417		390
Accrued interest and penalties at end of period	107		99
Total liability for unrecognized tax benefits	$	524	$	489

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, 2023, 2022 and 2021.