Note 13 - Income Taxes

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13. Income Taxes

The Company recorded an income tax benefit of $0.4 million and $1.2 million for the three- and six-month periods ended  June 30, 2022, resulting in effective tax rates of 13.5% and 17.4%, respectively. The Company recorded income tax expense of $2.6 million and $1.0 million for the three- and six-month periods ended  June 30, 2021, based on effective tax rates of 28.5% and 9.4%, respectively.

The decrease in the effective tax rate for the three-month period ended  June 30, 2022, as compared to the same period in 2021, was primarily due to $0.7 million recorded as tax expense for the change in the fair value of contingent consideration, recognized as a discrete charge in the second quarter of 2021 and a discrete charge of $0.6 million during second quarter of 2022 related to non-deductible stock compensation. The increase in the effective tax rate for the six-month period ended  June 30, 2022, as compared to the same period in 2021, was primarily due to the year-to-date net tax benefit in 2021 on the change in the fair value of contingent consideration, in the amount of $1.1 million resulting in a net decrease in the effective tax rate for the six-month period ended June 30, 2021.

The Company files income tax returns in the United States on a federal basis, in certain U.S. states, and in certain foreign jurisdictions. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate, which varies by jurisdiction.

In connection with the preparation of the financial statements, the Company assessed whether it is more likely than not that it will be able to utilize, in future periods, the Company’s deferred income tax assets to offset future taxable income and tax liabilities. The Company concluded that it is more likely than not that its deferred tax assets will be realized, after evaluation and consideration of both the positive and negative evidence. On December 31, 2021, the Company released a valuation allowance that had been previously recorded related to its net deferred tax assets in Italy in the amount of $0.9 million. The Company did not record a valuation allowance on its deferred tax balances as of June 30, 2022.