v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes (As Restated)
Our pre-tax (loss) income attributable to foreign operations were not material. The components of provision for income tax (benefit) expense consisted of the following:
(In thousands)
Years Ended December 31,
202520242023
(As Restated)(As Restated)
Current tax expense
Federal$830 $10,624 $8,796 
State336 1,603 1,095 
Foreign575 633 390 
1,741 12,860 10,281 
Deferred tax benefit
Federal(10,518)(6,389)(7,857)
State(1,116)(1,232)(1,973)
(11,634)(7,621)(9,830)
Income tax (benefit) expense$(9,893)$5,239 $451 
We recognized net income tax benefits from deductions of share-based payments in excess of compensation cost recognized for financial reporting purposes of $0.2 million, less than $0.1 million, and $0.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Deferred tax assets (liabilities) were comprised of the following:
(In thousands)
December 31,
20252024
(As Restated)(As Restated)
Deferred tax assets:
Accrued expenses$1,629 $547 
Allowance for credit losses438 642 
Forward loss reserves1,679 1,145 
Deferred compensation829 694 
Employment-related accruals4,498 4,883 
Environmental reserves497 496 
Federal tax credit carryforwards3,964 — 
Inventory reserves3,180 3,907 
Interest expense carryforwards638 — 
Operating lease liabilities9,798 6,983 
Pension obligation230 143 
Federal and state net operating loss carryforwards19,727 1,764 
Research expenses16,426 29,956 
State tax credit carryforwards8,834 7,992 
Stock-based compensation2,527 1,817 
Other1,627 1,917 
Total gross deferred tax assets76,521 62,886 
Valuation allowance(7,826)(7,216)
Total gross deferred tax assets, net of valuation allowance68,695 55,670 
Deferred tax liabilities:
Deferred revenue(1,013)(2,374)
Depreciation(11,163)(11,533)
Goodwill(15,442)(13,149)
Intangibles(12,255)(14,167)
Interest rate hedge(2,674)(4,129)
Operating lease right-of-use assets(9,341)(6,702)
Prepaid insurance(890)(755)
Other(417)(455)
Total gross deferred tax liabilities(53,195)(53,264)
Net deferred income taxes$15,500 $2,406 
We have federal and state tax net operating losses of $86.4 million and $27.3 million, respectively, as of December 31, 2025. The pre-tax loss in 2025 resulted in the recognition of federal and state deferred tax assets for the benefits of net operating loss carryforwards to be recognized in future years. Based on our expectation of future taxable income, we expect to realize the deferred tax assets and did not record valuation allowances against them. The federal net operating losses acquired from the acquisition of Nobles Worldwide, Inc. are subject to an annual limitation under Internal Revenue Code Section 382; however, we expect to fully realize them under ASC Subtopic 740-10 before they begin to expire in 2038. The state net operating loss carryforwards include $2.1 million that is not expected to be realized due to various limitations and has been reduced by a valuation allowance. If not realized, the state net operating loss carryforwards, depending on the tax jurisdiction, will begin to expire between 2027 and 2045.
We have federal and state tax credit carryforwards of $4.5 million and $13.9 million, respectively, as of December 31, 2025. Of these amounts, federal tax carryforwards of $0.5 million offset federal uncertain tax positions resulting in a federal deferred tax asset of $4.0 million and state tax credit carryforwards of $2.7 million offset state uncertain tax positions resulting in a state deferred tax asset of $11.2 million ($8.8 million, net of federal tax effect). A valuation allowance of $9.8 million ($7.8 million, net of federal tax effect) has been provided on state tax credit carryforwards that are not expected to be realized under ASC
Subtopic 740-10. Most of the state tax credit carryforwards do not expire. If not realized, the remaining state tax credit carryforwards, depending on the tax jurisdiction, will begin to expire between 2028 and 2040.
We believe it is more likely than not that we will generate sufficient taxable income to realize the benefit of the remaining deferred tax assets.
As described in Note 1, we adopted ASU 2023-09 on a retrospective basis. The following table reconciles the U.S. federal statutory tax amount and rate to our effective tax amount and rate for all years presented:
(Dollars in thousands, except percentages)
Years Ended December 31,
2025Percentage2024Percentage2023Percentage
(As Restated)(As Restated)(As Restated)(As Restated)
U.S. federal statutory tax rate$(9,921)21.0 %$5,652 21.0 %$3,440 21.0 %
State and local income taxes, net of federal income tax effect (a)
(617)1.3 %296 1.1 %(702)(4.3)%
Foreign tax effects:
Mexico575 (1.2)%606 2.3 %260 1.6 %
Other31 (0.1)%(21)(0.1)%248 1.5 %
Effect of cross-border tax laws:
Foreign-derived intangible income deduction(160)0.3 %(1,143)(4.2)%(634)(3.9)%
Other(121)0.2 %(127)(0.5)%(55)(0.3)%
Tax credits:
Research and development tax credits(4,620)9.8 %(5,055)(18.8)%(4,471)(27.3)%
Other— — %(12)— %(4)— %
Changes in valuation allowances— — %— — %— — %
Nontaxable or nondeductible items:
Book compensation expenses5,333 (11.3)%5,540 20.6 %2,865 17.5 %
Other(88)0.2 %117 0.4 %11 0.1 %
Changes in unrecognized tax benefits(315)0.7 %(730)(2.7)%(550)(3.4)%
Effect of changes in tax laws or rates enacted in current period— — %— — %— — %
Other10 — %116 0.4 %43 0.3 %
Effective tax rate$(9,893)20.9 %$5,239 19.5 %$451 2.8 %
(a) Majority (greater than 50%) of the tax effect in this category related to Wisconsin for 2025, Kansas for 2024, and Wisconsin for 2023.
Our total amount of unrecognized tax benefits was $5.0 million, $4.5 million, and $4.5 million at December 31, 2025, 2024, and 2023, respectively. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of December 31, 2025, 2024, and 2023 were not significant. If recognized, $2.8 million would affect the effective income tax rate.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
(In thousands)
Years Ended December 31,
202520242023
Balance at January 1,$4,533 $4,493 $4,944 
Additions for tax positions related to the current year685 748 646 
Additions for tax positions related to prior years207 142 220 
Reductions for tax positions related to prior years— — (600)
Reductions for lapse of statute of limitations(452)(850)(717)
Balance at December 31,$4,973 $4,533 $4,493 
We file U.S. Federal and state income tax returns. We are subject to examination by the Internal Revenue Service (“IRS”) for tax years after 2021 and by state taxing authorities for tax years after 2020. While we are no longer subject to examination prior to those periods, carryforwards generated prior to those periods may still be adjusted upon examination by the IRS or state taxing authorities if they either have been or will be used in a subsequent period. We believe we have adequately accrued for tax deficiencies or reductions in tax benefits, if any, that could result from the examination and all open audit years.
As required under ASU 2023-09, the following table presents income taxes paid, net of refunds received, disaggregated by jurisdiction for all years presented:
(In thousands)
Years Ended December 31,
202520242023
Federal$550 $11,107 $20,525 
State:
Arkansas212 
                         *
                         *
Minnesota159 
                         *
                         *
Rhode Island140 
                         *
                         *
Oklahoma121 
                         *
                         *
Other532 1,153 1,975 
Foreign:
Mexico616 
                         *
                         *
Other
                         *
621 450 
Income taxes paid, net of refunds received$2,330 $12,881 $22,950 
* The amount of income taxes paid during the year does not meet the five percent disaggregation threshold.
One July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”). Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements for the year ended December 31, 2025. The enactment of the OBBBA did not have a material impact to our effective tax rate for the year ended December 31, 2025. However, the OBBBA decreased our cash tax liability for 2025. We will continue to evaluate the full impact of the OBBBA corporate tax provision changes as additional guidance becomes available.