v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes 13. Income Taxes
Income before income taxes, as shown in the accompanying Consolidated Statements of Operations, includes the following components for the years ended December 31, 2025 and 2024:
Year Ended December 31,
2025
2024
Domestic
$
32,916 
$
21,200 
Foreign
(15,500)
(6,755)
Income before income taxes
$
17,416 
$
14,445 

Significant components of the provision for income taxes for the years ended December 31, 2025 and 2024 were as follows:

Year Ended December 31,
2025
2024
Current:
Federal
$
438 
$
— 
State
199 
2 
Foreign
991 
745 
Total current
1,628 
747 
Deferred:
Federal
7,188 
(21,441)
State
1,421 
(7,691)
Foreign
(240)
(13)
Total deferred
8,369 
(29,145)
Total income tax (benefit) expense
$
9,997 
$
(28,398)
The reconciliation of income tax computed at statutory rates to income tax expense for the years ended December 31, 2025 and 2024 is as follows:

Year Ended December 31,
2025
2024
Amount
Percent
Amount
Percent
U.S. federal statutory tax rate
$
3,657 
21.0 
%
$
3,033 
21.0 
%
State and local income taxes, net of federal income tax effect*
1,418 
8.1 
(6,022)
(41.7)
Foreign tax effects
  Canada
Federal statutory tax rate difference between Canada and United States
(146)
(0.8)
(135)
(0.9)
Provincial income taxes
264 
1.5 
231 
1.6 
Tax on unremitted earnings
88 
0.5 
148 
1.0 
     Other
(57)
(0.3)
(66)
(0.5)
  United Kingdom
Federal statutory tax rate difference between United Kingdom and United States
(682)
(3.9)
(349)
(2.4)
Changes in valuation allowances
4,443 
25.5 
2,185 
15.1 
     Other
(21)
(0.1)
33 
0.2 
Other foreign jurisdictions
24 
0.1 
56 
0.4 
Effect of cross-border tax laws
47 
0.3 
1 
— 
Tax credits
(20)
(0.1)
(51)
(0.3)
Changes in valuation allowances
— 
— 
(27,645)
(191.4)
Nontaxable or nondeductible items
Nondeductible executive compensation
942 
5.4 
400 
2.8 
Share-based payment awards
(351)
(2.0)
(446)
(3.1)
Meals and entertainment
185 
1.0 
186 
1.3 
  Other
32 
0.2 
20 
0.2 
Changes in unrecognized tax benefits
(175)
(1.0)
(66)
(0.5)
Other adjustments
349 
2.0 
89 
0.6 
Effective tax rate
$
9,997 
57.4 
%
$
(28,398)
(196.6)
%

* The states that contribute to the majority (greater than 50 percent) of the tax effect in this category include Alabama, California, Idaho, Michigan, New Jersey, New York, New York City, Pennsylvania and Tennessee for 2025 and Connecticut, New Jersey, New York, Pennsylvania and Tennessee for 2024.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes various tax provisions such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The impacts of the tax provisions included in the OBBBA are reflected in our results for the year ended December 31, 2025, and did not have a material impact on the Company's Consolidated Financial Statements. The Company will continue to monitor any developments and guidance related to the OBBBA.

Cash paid for income taxes, net of refunds, for the years ended December 31, 2025 and 2024 were as follows:
December 31,
2025
2024
U.S. federal
$
290 
$
525 
U.S. state and local
345 
294 
Foreign:
Canada
996 
840 
Other foreign
— 
(31)
Total foreign
996 
809 
Income taxes paid (net of refunds received)
$
1,631 
$
1,628 

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:

December 31,
2025
2024
Deferred tax assets:
Goodwill and other intangibles
$
679 
$
1,224 
Deferred compensation
3,046 
3,885 
Contingent liabilities
364 
448 
Net operating loss / tax credit carryforwards
35,070 
35,431 
Inventories
1,451 
1,082 
Warranty reserve
173 
138 
Accounts receivable
384 
265 
Interest deduction carryforward
— 
1,444 
Capitalized research expenditures
— 
1,882 
Other
334 
453 
Total deferred tax assets
41,501 
46,252 
Less: valuation allowance
(12,736)
(8,223)
Net deferred tax assets
28,765 
38,029 
Deferred tax liabilities:
Goodwill and other intangibles
(1,118)
(1,472)
Depreciation
(7,677)
(7,845)
Pension and post-retirement liability
(132)
(410)
Unrealized income on interest rate swap contracts
(10)
(110)
Unremitted earnings of foreign subsidiaries
(155)
(195)
Other
(222)
(247)
Total deferred tax liabilities
(9,314)
(10,279)
Net deferred tax (liabilities) assets
$
19,451 
$
27,750 

A valuation allowance is required to be established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company has considered all available evidence, both positive and negative, in assessing the need for a valuation allowance in each jurisdiction.

During 2024, the Company reversed $34,210 of its valuation allowance previously recorded against certain U.S. federal and state deferred tax assets. The positive evidence considered in evaluating U.S. federal and state deferred tax assets included the Company's cumulative financial income position over the previous three years, as well as the composition and reversal patterns of existing taxable and deductible temporary differences between financial reporting and tax. Based on our evaluation, the Company believed it was appropriate to rely on forecasted future taxable income to support its U.S. federal and state deferred tax assets. The amount of deferred tax assets considered realizable, however, could be adjusted if negative evidence outweighs additional subjective evidence such as the Company's projections for growth.
As of December 31, 2025, the Company had a federal Net Operating Loss (“NOL”) carryforward of $76,546, which is limited to 80% of taxable income annually, but may be carried forward indefinitely. The Company also has federal research tax credit carryforwards in the amount of $724 that will expire at various times from 2040 through 2045. Based on information available as of December 31, 2025, the Company believes it is more likely than not that the tax benefits from the federal loss carryforwards and research tax credit carryforwards will be realized.

As of December 31, 2025 and 2024, the tax benefit of NOL carryforwards available for state income tax purposes was $9,121 and $9,802, respectively. Many state NOL carryforwards will expire in various years through 2045, while some may be carried forward indefinitely. Based on information available as of December 31, 2025, the Company believes it is more likely than not that a portion of the tax benefit from state operating loss carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $1,997 against deferred tax assets related to state operating loss carryforwards as of December 31, 2025.

As of December 31, 2025, the Company has NOL carryforwards in certain foreign jurisdictions of $42,976, which may be carried forward indefinitely. The foreign jurisdictions have incurred cumulative financial losses over the three-year period ended December 31, 2025. Based on information available as of December 31, 2025, the Company believes it is more likely than not that the tax benefit from these loss carryforwards will not be realized. In recognition of this risk, it has provided a valuation allowance of $10,739, collectively, against deferred tax assets in foreign jurisdictions as of December 31, 2025.

The determination to record or not record a valuation allowance involves management's judgment, based on the consideration of positive and negative evidence available at the time of the assessment. Management will continue to assess the realization of its deferred tax assets based upon future evidence, and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income.

Each quarter, management reviews operations and liquidity needs in each jurisdiction to assess the Company’s intent to reinvest foreign earnings outside of the United States. As of December 31, 2025, management determined that a portion of the Company’s outside basis differences in its foreign subsidiaries would not be indefinitely reinvested outside of the United States. The Company has accrued foreign withholding taxes of $155 related to $3,100 of outside basis differences in its foreign subsidiaries that are not indefinitely reinvested as of December 31, 2025. It is management’s intent and practice to indefinitely reinvest all other undistributed earnings outside of the United States. Determination of the amount of any unrecognized deferred income tax liability associated with these undistributed earnings is not practicable because of the complexities of the hypothetical calculation.

The following table provides a reconciliation of unrecognized tax benefits as of December 31, 2025 and 2024:

December 31,
2025
2024
Unrecognized tax benefits at beginning of period:
$
265 
$
307 
Decreases based on tax positions for prior periods
(92)
(42)
Balance at end of period
$
173 
$
265 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $173 as of December 31, 2025. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 31, 2025 and 2024, the Company had accrued interest and penalties related to unrecognized tax benefits of $166 and $294, respectively. Ultimate realization of these tax benefits is dependent upon the occurrence of certain events, including the completion of audits by tax authorities and expiration of statutes of limitations.

The Company files income tax returns in the US and in various state, local, and foreign jurisdictions. The Company is subject to federal income tax examinations for the 2022 period and thereafter. With respect to the state, local, and foreign filings, certain entities of the Company are subject to income tax examinations for the 2021 period and thereafter.