Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 — Income Taxes  

Provision for Income Taxes

Income (loss) from continuing operations before provision for income taxes was as follows (in thousands):

	Years Ended
	2022			2021			2020
Domestic	$	(25,366	)	$	(15,565	)	$	(16,245	)
Foreign		70,918			46,869			24,512
Income before income taxes	$	45,552		$	31,304		$	8,267

The provision (benefit) for income taxes consisted of the following (in thousands):

	Years Ended
	2022			2021		2020
Current tax provision:
U.S. federal	$	—		$	—	$	2
State		—			—		15
Foreign		8,141			5,308		3,186
Total current provision		8,141			5,308		3,203
Deferred tax provision (benefit):
U.S. federal		(867	)		739		(573	)
State		38			106		78
Foreign		(515	)		650		(354	)
Total deferred provision (benefit)		(1,344	)		1,495		(849	)
Provision for income taxes	$	6,797		$	6,803	$	2,354

A reconciliation of the statutory U.S. federal tax rate to the Company’s effective tax rate was as follows (dollars in thousands):

	Years Ended
	2022			2021			2020
	Amount			Amount			Amount
Income before income taxes	$	45,552		$	31,304		$	8,267
Income tax expense:
Taxes at federal statutory tax rate		9,566			6,574			1,736
State taxes, net of federal income tax benefit		3,673			(448	)		(1,129	)
Equity compensation		1,336			(4,613	)		(5,203	)
Foreign rate differential		(7,022	)		(3,890	)		(2,304	)
GILTI inclusion		14,583			171			4,461
Valuation allowance		(15,785	)		9,302			4,899
Other		446			(293	)		(106	)
Total income tax expense	$	6,797		$	6,803		$	2,354
Effective tax rate		14.9	%		21.7	%		28.5	%

The Company has elected to recognize U.S. taxes on GILTI as a period expense in the year the tax is incurred.  

The Company utilized the high-tax exception to exclude income from foreign jurisdictions with foreign taxes at an effective rate that is higher than 90 percent of the applicable highest U.S. corporate tax rate.

Note 10 — Income Taxes (Continued)

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company’s deferred tax assets (liabilities) were as follows (in thousands):

	2022			2021
Deferred tax assets:
Accrued expenses	$	2,021		$	2,450
Stock-based compensation		2,851			2,146
Operating lease liability		6,071			6,894
Net operating loss and other credit carryforwards		36,567			51,323
Other deferred tax assets		1,621			2,682
Gross deferred tax assets		49,131			65,495
Valuation allowance		(36,009	)		(51,794	)
Total deferred tax assets	$	13,122		$	13,701
Deferred tax liabilities:
Property, plant, equipment and intangibles	$	(2,169	)	$	(1,651	)
Operating lease ROU assets		(5,979	)		(6,862	)
Foreign taxes		(1,639	)		(2,186	)
Total deferred tax liabilities		(9,787	)		(10,699	)
Total net deferred tax assets	$	3,335		$	3,002

The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the projected future income and tax planning strategies in making this assessment.  In addition, management considers all other available positive and negative evidence in its analysis. This includes existing profits in foreign jurisdiction as well as projected future profits. Under the incremental cash tax savings approach, the total net deferred assets represent the Company’s net cash tax savings and benefit at December 30, 2022

Under the incremental cash tax savings approach, the deferred tax asset valuation allowance activity was as follows (in thousands):  

	Years Ended
	2022			2021			2020
Balance at beginning of period	$	(51,794	)	$	(42,502	)	$	(37,007	)
Release (recapture) due to incremental cash tax savings		829			(845	)		495
Current year change due to deferred tax asset realization		14,956			(8,447	)		(5,990	)
Balance at end of period	$	(36,009	)	$	(51,794	)	$	(42,502	)

Note 10 — Income Taxes (Continued)

Deferred Tax Assets and Liabilities (Continued)

As of December 30, 2022, the Company had U.S. net operating loss (“NOL”) carryforwards consisting of the following (in thousands):

	2022		Expiration Date
Pre-2018 federal NOL carryforwards	$	77,085	will begin to expire in 2023
Post-2018 federal NOL carryforwards		64,456	indefinite
State NOL carryforwards		56,314	will begin to expire in 2023

As of December 30, 2022, the Company had U.S. tax credit carryforwards consisting of the following (in thousands):

	2022		Expiration Date
Federal research tax credit carryforwards	$	380	will begin to expire in 2030
State research tax credit carryforwards		785	indefinite
Federal foreign tax credit carryforwards		2,013	will begin to expire in 2028

The Company files income tax returns in the U.S. various states and foreign jurisdictions.  In the normal course of business, the Company is subject to examination by taxing authorities throughout the world.  The following tax years remain subject to examination:

Significant jurisdictions	Open Years
U.S. Federal	2019 – 2021
U.S. States	2018 – 2021
Foreign	2018 – 2021

In various jurisdictions, years prior to 2019 remain open solely for the purposes of examination of the Company’s NOL and credit carryforwards.

Tax Holiday

The Company operates under a tax holiday in Switzerland, which is effective through 2024, and it may be extended through 2029 if certain additional requirements are satisfied. The tax holiday is conditional upon our meeting certain employment and investment thresholds. The impact of these tax holidays is as follows (in thousands, except per share amounts):

	Years Ended
	2022		2021		2020
Tax impact related to tax holidays	$	7,394	$	4,887	$	2,637
Impact of tax holidays on diluted earnings per share	$	0.14	$	0.10	$	0.05

Uncertain Tax Benefits

The Company does not have any uncertain tax positions as of December 30, 2022.  The Company does not expect any significant changes in its uncertain tax positions within the next twelve months.