Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 8 Income Taxes

The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related deferred tax assets and liabilities.

Details of earnings before income taxes are as follows:

	2022		2021		2020
	(In thousands)
Domestic	$	83,680	$	74,509	$	65,908
Foreign		4,037		4,114		(927	)
Total	$	87,717	$	78,623	$	64,981

The provision (benefit) for income taxes is as follows:

	2022			2021			2020
	(In thousands)
Current:
Federal	$	20,089		$	15,299		$	14,482
State		4,720			3,556			3,419
Foreign		2,031			1,939			819
Deferred:
Federal		(4,289	)		(1,774	)		(2,495	)
State		(955	)		(600	)		(644	)
Foreign		(375	)		(681	)		57
Total	$	21,221		$	17,739		$	15,638

The provision for income tax differs from the amount that would be provided by applying the statutory U.S. corporate income tax rate in each year due to the following items:

	2022			2021			2020
	(In thousands)
Provision at statutory rate	$	18,421		$	16,511		$	13,646
State income taxes, net of federal tax benefit		2,938			2,288			2,196
Valuation allowance		571			168			1,302
Foreign - tax rate differential and other		388			606			(267	)
Federal tax credits		(1,016	)		(770	)		(517	)
Compensation subject to section 162(m)		693			685			110
Stock based compensation		(523	)		(1,510	)		(682	)
Other		(251	)		(239	)		(150	)
Actual provision	$	21,221		$	17,739		$	15,638

The components of deferred income taxes as of December 31 are as follows:

	2022			2021
	(In thousands)
Deferred tax assets:
Reserve for receivables and inventory	$	2,972		$	2,532
Accrued compensation		2,209			2,641
Reserves and payables		2,340			3,101
Accrued post-retirement medical benefits		1,054			1,381
Net operating loss and credit carryforwards		2,827			2,260
Deferred compensation		1,139			1,041
Accrued qualified plan benefits		1,193			1,034
Accrued stock-based compensation		1,120			1,212
Deferred revenue		4,793			2,530
Operating lease liabilities		1,262			959
Research and development costs		2,625			—
Other		987			967
Total gross deferred tax assets		24,521			19,658
Less: valuation allowance		(2,690	)		(2,169	)
Total net deferred tax assets		21,831			17,489
Deferred tax liabilities:
Property, plant and equipment		4,454			5,056
Intangible assets		7,247			8,475
Prepaids		238			413
Operating lease assets		1,258			949
Other		525			452
Total deferred tax liabilities		13,722			15,345
Net deferred tax assets	$	8,109		$	2,144

As of December 31, 2022, the Company had foreign net operating loss carryforwards of approximately $7.5 million, of which $7.4 million have an unlimited carryforward period. The Company also has $0.6 million in domestic tax credit carryforwards primarily related to state specific tax credits that the Company expects to fully utilize in future tax periods. The Company has recorded a full valuation allowance against certain deferred tax assets which are not likely to be realized. The valuation allowance relates primarily to foreign net operating loss carryforwards.

As a result of a law change included in the Tax Cuts and Jobs Act of 2017, the Company has capitalized certain research and development costs for tax purposes starting in 2022. Such capitalized costs are amortized over 5 years for costs incurred in the U.S. and 15 years for costs incurred outside the U.S. This law change had an immaterial impact on the Company's 2022 provision for income taxes related to costs incurred outside the U.S.

In general, it is the Company's practice and intention to reinvest earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2022, the Company has not made a provision for incremental U.S. income taxes or additional foreign withholding taxes on approximately $15.6 million of such undistributed earnings, $13.8 million of which was previously subject to U.S. tax that is deemed indefinitely reinvested.

Changes in the Company's gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows:

	2022			2021
	(In thousands)
Balance at beginning of year	$	1,172		$	1,123
(Reductions) Increases in unrecognized tax benefits as a result of positions taken during the prior year		(89	)		52
Increases in unrecognized tax benefits as a result of positions taken during the    current year		231			230
Reductions to unrecognized tax benefits as a result of a lapse of the applicable    statute of limitations		(275	)		(233	)
Balance at end of year	$	1,039		$	1,172

The Company does not expect a significant increase or decrease to the total amount of unrecognized tax benefits during the fiscal year ending December 31, 2022. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the effective tax rate. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to 2019, and, with few exceptions, state and local income tax examinations by tax authorities for years prior to 2018. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. Accrued interest was approximately $0.1 million at both December 31, 2022 and 2021 and there were no penalties accrued in either year.