Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company provides for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

The components of income (loss) before income tax provision (benefit) and the income tax provision (benefit) for the years ended December 31 are as follows:

	2021		2020
Income (loss) before income tax provision (benefit)
Domestic	$	57,019	$	13,990
Foreign	(169)		268
	$	56,850	$	14,258
Income tax provision (benefit)
Current income tax provision (benefit):
Federal	$	10,870	$	(7,859)
State	1,443		(408)
Foreign	(35)		215
Total current	12,278		(8,052)
Deferred income tax (benefit) provision:
Federal	(4,449)		7,847
State	896		(330)
Total deferred	(3,553)		7,517
	$	8,725	$	(535)

The Company made income tax payments of $11.5 million and $0.4 million during 2021 and 2020, respectively. During the same periods, income tax refunds totaled $2.6 million and $4.2 million, respectively.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before the provision for income taxes. A reconciliation of the federal statutory and effective income tax rate for the years ended December 31 is as follows:

	2021			2020
Income before income tax provision	$	56,850		$	14,258
Statutory taxes at 21.0%	$	11,939		$	2,994
State and local income taxes	1,890			(626)
Non-deductible expenses	725			426
Percentage depletion	(6,245)			(3,744)
R&D and other federal credits	(363)			(367)
Settlements and uncertain tax positions	166			6,286
Coronavirus Aid, Relief, and Economic Security ("CARES") Act - carryback rate differential	—			(4,741)
Other, net	613			(763)
Income tax provision	$	8,725		$	(535)
Effective income tax rate	15.3		%	(3.8)		%

The Company recorded an income tax expense of $8.7 million for the year ended December 31, 2021 on income before income tax of $56.9 million, or 15.3%, compared to income tax benefit of $0.5 million on income before income tax of $14.3 million, or (3.8%), for the year ended December 31, 2020. The year ended December 31, 2020 includes $7.3 million of discrete tax charges primarily related to settlement of tax examinations, reserves for uncertain tax positions and return to provision adjustments partially offset by a benefit of $4.7 million, primarily due to the rate differential related to carrying back losses under the provisions of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act allows net operating tax losses incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company generated a net tax operating loss in 2020 primarily due to the realization of certain deferred tax assets. There were no material discrete items affecting income tax expense in 2021.

The effective income tax rate for 2021 reflects the impact of higher pre-tax income in 2021 compared with 2020, including the termination fee associated with the Bisti contract termination. The effective income tax rate varies based upon the mix and timing of earnings between entities that benefit from percentage depletion and those that do not benefit from percentage depletion. The benefit from percentage depletion is not directly related to the amount of pre-tax income recorded in a period.

A detailed summary of the total deferred tax assets and liabilities in the Company's Consolidated Balance Sheets resulting from differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes is as follows:

	December 31
	2021		2020
Deferred tax assets
Lease liabilities	$	24,500	$	27,800
Tax carryforwards	13,837		17,756
Inventories	4,522		3,742
Accrued liabilities	9,243		10,160
Employee benefits	3,496		2,747
Land valuation adjustment	5,988		5,536
Other	6,527		5,401
Total deferred tax assets	68,113		73,142
Less: Valuation allowance	11,695		11,549
	56,418		61,593
Deferred tax liabilities
Lease right-of-use assets	24,500		27,800
Depreciation and depletion	25,851		31,972
Partnership investment - development costs	9,840		11,686
Accrued pension benefits	10,941		7,685
Total deferred tax liabilities	71,132		79,143
Net deferred liability	$	(14,714)	$	(17,550)

The following table summarizes the tax carryforwards and associated carryforward periods and related valuation allowances where the Company has determined that realization is uncertain:

	December 31, 2021
	Net deferred tax asset		Valuation allowance		Carryforwards expire during:
State net operating loss	$	17,516	$	14,694	2022-2041

	December 31, 2020
	Net deferred tax asset		Valuation allowance		Carryforwards expire during:
State net operating loss	$	18,708	$	14,478	2021-2040
Federal research credit	2,648		—		2034-2040
Total	$	21,356	$	14,478

The Company has a valuation allowance for certain state and foreign deferred tax assets. Based upon the review of historical earnings and the relevant expiration of carryforwards, including utilization limitations in the various state taxing jurisdictions, the Company believes the valuation allowances are appropriate and does not expect to release valuation allowances within the next twelve months that would have a significant effect on the Company's financial position or results of operations.

The tax returns of the Company and certain of its subsidiaries are under routine examination by various taxing authorities. The Company has not been informed of any material assessment for which an accrual has not been previously provided and the Company would vigorously contest any material assessment. Management believes any potential adjustment would not materially affect the Company's financial condition or results of operations.

In general, the Company operates in taxing jurisdictions that provide a statute of limitations period ranging from three to five years for the taxing authorities to review the applicable tax filings. The examination of the 2013-2016 U.S. federal tax returns is ongoing. The Company has extended the statute of limitations to allow the U.S. taxing authorities to complete their examination.

The following is a reconciliation of the Company's total gross unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the financial statements for the years ended December 31, 2021 and 2020. The increase in the gross unrecognized tax benefits in 2020 was primarily due to tax positions related to worthlessness losses for which the timing of deductibility is uncertain. Approximately $6.4 million and $6.3 million of the gross unrecognized tax benefits as of December 31, 2021 and 2020, respectively, relate to permanent items that, if recognized, would impact the effective income tax rate. This amount differs from the gross unrecognized tax benefits presented in the table below due to (1) the deferred tax asset which would be available if the position were not sustained upon audit and (2) the decrease in U.S. federal income taxes which would occur upon the recognition of the state tax benefits included herein.

	2021		2020
Balance at January 1	$	10,459	$	2,860
Additions based on tax positions related to prior years	95		2,774
Decreases based on settlements with tax authorities	—		(803)
Additions based on tax positions related to the current year	—		5,628
Balance at December 31	$	10,554	$	10,459

The Company records interest and penalties on uncertain tax positions as a component of the income tax provision. The Company recognized net expense of less than $0.1 million and net benefit of less than $0.1 million in interest and penalties related to uncertain tax positions during 2021 and 2020, respectively. The total amount of interest and penalties accrued was $0.2 million and $0.1 million as of December 31, 2021 and 2020, respectively.

The Company expects the amount of unrecognized tax benefits will change within the next 12 months; however, the change in unrecognized tax benefits, which is reasonably possible within the next 12 months, is not expected to have a significant effect on the Company's financial position, results of operations or cash flows.