Income Taxes

12 Months Ended

Dec. 31, 2023

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:

	2023		2022		2021
	(In thousands)
Domestic	$	120,384	$	83,680	$	74,509
Foreign		1,582		4,037		4,114
Total	$	121,966	$	87,717	$	78,623

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

	2023			2022			2021
	(In thousands)
Current:
Federal	$	29,629		$	20,089		$	15,299
State		8,147			4,720			3,556
Foreign		1,242			2,031			1,939
Deferred:
Federal		(7,376	)		(4,289	)		(1,774	)
State		(1,332	)		(955	)		(600	)
Foreign		(942	)		(375	)		(681	)
Total	$	29,368		$	21,221		$	17,739

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:

	2023			2022			2021
	(In thousands)
Provision at statutory rate	$	25,613		$	18,421		$	16,511
State income taxes, net of federal tax benefit		5,236			2,938			2,288
Valuation allowance		(78	)		571			168
Foreign - tax rate differential and other		340			388			606
Federal tax credits		(1,548	)		(1,016	)		(770	)
Compensation subject to section 162(m)		930			693			685
Stock based compensation		(967	)		(523	)		(1,510	)
Other		(158	)		(251	)		(239	)
Actual provision	$	29,368		$	21,221		$	17,739

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

	2023			2022
	(In thousands)
Deferred tax assets:
Reserve for receivables and inventory	$	2,959		$	2,972
Accrued compensation		4,069			2,209
Reserves and payables		2,509			2,340
Accrued post-retirement medical benefits		971			1,054
Net operating loss and credit carryforwards		4,948			2,827
Deferred compensation		1,269			1,139
Accrued qualified plan benefits		988			1,193
Accrued stock-based compensation		1,166			1,120
Deferred revenue		8,128			4,793
Operating lease liabilities		1,071			1,262
Research and development costs		5,744			2,625
Other		1,359			987
Total gross deferred tax assets		35,181			24,521
Less: valuation allowance		(2,683	)		(2,690	)
Total net deferred tax assets		32,498			21,831
Deferred tax liabilities:
Property, plant and equipment		4,323			4,454
Intangible assets		8,361			7,247
Prepaids		394			238
Operating lease assets		1,020			1,258
Other		746			525
Total deferred tax liabilities		14,844			13,722
Net deferred tax assets	$	17,654		$	8,109

As of December 31, 2023, the Company had U.S. federal net operating loss carryforwards of approximately $2.8 million, U.S. state net operating loss carryforwards of approximately $2.0 million, and foreign net operating loss carryforwards of approximately $13.7 million, of which $13.5 million have an unlimited carryforward period. The Company's tax credit carryforward of $0.6 million relates 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.

In 2021, the Organization for Economic Cooperation and Development ("OEDC") released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt these rules, which are expected to be effective for accounting periods beginning on or after December 31, 2023. The United States has not yet enacted legislation implementing Pillar Two. The Company is continuing to evaluate the Pillar Two rules and their potential impact on future periods. Based on existing proposed rules, the Company does not meet the revenue requirements for the Pillar Two rules to apply. As a result, the Company does not expect the rules to have a material impact on its effective tax rate.

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, 2023, the Company has not made a provision for incremental U.S. income taxes or additional foreign withholding taxes on approximately $15.8 million of such undistributed earnings, $14.4 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:

	2023			2022
	(In thousands)
Balance at beginning of year	$	1,039		$	1,172
Increases (reductions) in unrecognized tax benefits as a result of positions taken    during the prior year		84			(89	)
Increases in unrecognized tax benefits as a result of positions taken during the    current year		485			231
Reductions to unrecognized tax benefits as a result of a lapse of the applicable    statute of limitations		(213	)		(275	)
Balance at end of year	$	1,395		$	1,039

The Company does not expect a significant increase or decrease to the total amount of unrecognized tax benefits during the next twelve months. 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 2020, and, with few exceptions, state and local income tax examinations by tax authorities for years prior to 2019. 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, 2023 and 2022 and there were no penalties accrued in either year.