v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax provision (benefit) are as follows:
Year Ended December 31,
In thousands20252024
Current
Federal$— $— 
State and local288 428 
Foreign443 1,214 
Total current$731 $1,642 
Deferred
Federal$(254)$(7,729)
State and local(703)(1,446)
Foreign29 (104)
Total deferred$(928)$(9,279)
Total income tax benefit$(197)$(7,637)
The U.S. and foreign components of loss before income taxes were as follows:
Year Ended December 31,
In thousands20252024
United States$(4,629)$(43,860)
Foreign3,621 5,926 
Total loss before income taxes$(1,008)$(37,934)
The provision (benefit) for income taxes is based on the various rates set by federal, foreign and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements. The principal reasons for the difference between the statutory rate and the annual effective rate for 2025 were the state taxes, change in valuation allowance, federal and foreign income tax credits and the shortfall expense related to vested restricted stock.
As further described in Note B - Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASC 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures or ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09.
Year Ended December 31,
In thousands, except percentages2025
Loss before income taxes$(1,008)
Provision for income taxes at U.S. federal statutory rate(212)21.0 %
State and local income taxes, net of federal benefit (1)
(481)47.6 %
Foreign tax effects
Belgium
Statutory Tax Rate Difference48 (4.7)%
Other(20)2.0 %
France
Statutory Tax Rate Difference17 (1.7)%
Differences with statutory accounting policies(124)12.3 %
Valuation Allowance41 (4.1)%
Netherlands
Statutory Tax Rate Difference(4)0.4 %
Valuation Allowance22 (2.1)%
Philippines
Statutory Tax Rate Difference(258)25.5 %
Other1 (0.1)%
Other foreign Jurisdictions(11)1.1 %
Effect of cross-border tax laws:
Global Intangible Low-Taxed Income569 (56.5)%
Section 78 Gross-up95 (9.4)%
Tax Credits(50)5.0 %
Changes in valuation allowances14 (1.4)%
Non-taxable or non-deductible items:
Equity compensation132 (13.1)%
Meals and Entertainment15 (1.5)%
Work Opportunity Tax Credit11 (1.1)%
Other3 (0.3)%
Other Reconciling Items(5)0.5 %
Effective income tax rate$(197)19.6 %
(a) TX made up the majority (greater than 50%) of the tax effect in this category.
The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective rate for the years ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09:
In thousandsYear Ended December 31, 2024
Computed expected income tax benefit$(7,966)
Net effect of state income taxes(1,885)
Foreign subsidiary dividend inclusions666 
Foreign tax rate differential42 
Change in valuation allowance991 
Return to Provision599 
Change in Rate(125)
Credits(346)
Adjustments to State Attributes565 
Other Adjustments, net(178)
Income tax benefit$(7,637)
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:
December 31,
In thousands20252024
Deferred tax assets
Accrued expenses not deductible until paid$58 $173 
Lease liability5,713 6,201 
Investment in foreign subsidiaries, outside basis difference1,969 1,930 
Interest Expense limitations1,495 1,167 
Other, net1,625 1,979 
Foreign net operating loss carryforwards1,535 1,325 
State net operating loss carryforwards7,845 7,709 
Federal net operating loss carryforwards9,692 9,585 
Foreign tax credit carryforwards3,740 3,726 
General Business Credit Carryovers641 591 
Total gross deferred tax assets$34,313 $34,386 
Less valuation allowances(7,757)(8,082)
Net deferred tax assets$26,556 $26,304 
Deferred tax liabilities
Property, plant and equipment$(890)$(1,143)
Deferred compensation and retirement plan(3,706)(3,394)
Right-of-use asset(5,041)(5,624)
Other, net(879)(966)
Total gross deferred tax liabilities$(10,516)$(11,127)
Net deferred tax assets $16,040 $15,177 
During the year ended December 31, 2025, the Company paid $455 thousand in state income taxes, net of refunds, and $1.3 million in foreign taxes.
The amount of cash income taxes paid by the Company were as follows:
Year ended December 31, 2025
In thousands
State and Local
Florida$90 
Texas215 
Other150 
Foreign
United Kingdom538 
Philippines412 
Romania82 
Belgium292 
Income taxes, net of amounts refunded$1,779 
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. After considering the weight of available evidence, both positive and negative, the Company concluded that it is more-likely-than-not that it will realize the majority of its U.S. deferred tax assets. Certain foreign tax credits as well as certain state net operating loss carryovers will continue to have a valuation allowance until there is substantial evidence that enough future taxable income exists at a more likely than not level in order to utilize those deferred tax assets. The valuation allowance for deferred tax assets was $7.8 million and $8.1 million as of December 31, 2025 and 2024, respectively. The change in the valuation allowance was $0.3 million for the year ended December 31, 2025.
We or one of our subsidiaries file income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state, federal and foreign returns, we are no longer subject to tax examinations for years prior to 2020.
There is no balance of unrecognized tax benefits as of December 31, 2025 and 2024. Any adjustments to this liability as a result of the finalization of audits or potential settlements would not be material.
We have elected to classify any interest and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive (Loss) Income. There are no interest and penalties related to income taxes for the year ended December 31, 2025 and 2024.
For U.S. tax return purposes, net operating losses and tax credits are normally available to be carried forward to future years, subject to limitations as discussed below.
As of December 31, 2025, the Company has federal NOL carryforwards of $46.2 million. The entire amount was generated in 2024 and will be carried over indefinitely, but will generally limit the net operating deduction to the lesser of the net operating loss carryforward or 80% of a corporation's taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended).
The Company also has state NOL carryforward of $158.1 million and foreign NOL carryforwards of $5.0 million. The state NOL carryforwards will begin to expire in 2029, The federal foreign tax carryforward credits of $3.7 million will expire on various dates from 2027 to 2036. General business credit carryforwards of $0.6 million will begin to expire on various dates from 2037 to 2046. Under Section 163(j) of the Internal Revenue Code, the deduction for business interest expense is limited to the sum of business interest income, 30% of adjusted taxable income, and floor plan financing interest. Any business interest expense that is disallowed due to the limitation can be carried forward indefinitely to future years. As of December 31, 2025 and 2024, the Company has disallowed business interest expense carryforwards of $5.7 million and $3.8 million, respectively.
Deferred income taxes have not been provided on the undistributed earnings of our foreign subsidiaries as these earnings have been, and under current plans will continue to be, permanently reinvested in these subsidiaries. It is not practicable to estimate the amount of additional taxes which may be payable upon the distribution of these earnings. However, because of the provisions in the Tax Reform Act, the tax cost of repatriation is immaterial and limited to foreign withholding taxes, currency translation and state taxes.
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) became law. The legislation includes several changes to federal tax law that generally allow more favorable deductibility of certain business expenses beginning in 2025, including the reinstatement of 100% of bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also includes certain changes to the US taxation of foreign activity, including changes to foreign tax credits, global intangible low-taxed income, and base erosion and anti-abuse tax, amongst other changes. These changes are generally effective for tax years beginning after December 31, 2025, and therefore do not impact the current year's tax provision. While these changes are not yet effective, the Company has begun assessing the potential impact on its future effective tax rate, deferred tax assets and liabilities, and global tax planning strategies. Based on preliminary modeling, the Company anticipates that the elimination of the Net Deemed Tangible Income Return (NDTIR) may slightly increase future U.S. tax liability on foreign earnings, partially offset by the increased foreign tax credit. The Company will continue to monitor regulatory guidance and assess the impact of these changes in future reporting periods. No adjustments to current or deferred taxes have been recorded in the second half of 2025 related to the Act.