INCOME TAXES |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Notes to Financial Statements | |
| INCOME TAXES | NOTE 8 — INCOME TAXES The Company records income taxes for interim periods based on an estimated annual effective tax rate. The estimated annual effective rate is recomputed on a quarterly basis and may fluctuate due to changes in forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets and changes to actual or forecasted permanent book to tax differences. The Company’s effective tax rate for three and six months ended June 30, 2025 was 10.2% and 12.0%, respectively. The Company’s effective tax rate for the three and six months ended June 30, 2024 was 23.1% and 11.8%, respectively. These effective tax rates differ from the federal statutory rate primarily due to the impact of nondeductible compensation and adjustments to the Company’s valuation allowance. As of June 30, 2025 and December 31, 2024, the Company had a valuation allowance of $32.7 million and $29.2 million, respectively, primarily related to state net operating losses and the disallowed interest expense limitation carryover. At each reporting date, the Company considers all available positive and negative evidence to evaluate whether its deferred tax assets are more likely than not to be realized. Based upon the Company’s analysis of the available evidence as of June 30, 2025, the Company’s valuation allowance assertion has not changed. The Company does not believe that the deferred tax assets which are offset by the valuation allowance will be realized on a more-likely-than-not basis as of June 30, 2025. On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law which, among other things, modified tax legislation affecting bonus depreciation rules and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation for property acquired and placed in service after January 19, 2025, and the use of earnings before income taxes, depreciation and amortization, rather than earnings before income taxes, with no phase-out for purposes of calculating the interest limitation for taxable years beginning after 2024. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently evaluating the effects of these changes and other provisions of this legislation on its condensed consolidated financial statements, and the Company expects that the OBBBA will have a favorable impact its current tax expense and valuation allowance positions due to the increased depreciation and interest expense deductions allowed under the OBBBA. |