v3.26.3
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
(4) Income Taxes
The provision for income taxes are:
 
     2025      2024      2023  
Current:
         
Federal
    $ (367 )     $ (1,131 )     $ 8,038  
State
      6        (271 )       1,211  
Foreign
      4,445        5,629        3,238  
  
 
 
     
 
 
     
 
 
  
     4,084        4,227        12,487  
Deferred:
         
Federal
      (352 )       783        (6,263 ) 
State
      99        1,208        (1,029 ) 
Foreign
      (1,152 )       (336 )       (2,417 ) 
  
 
 
     
 
 
     
 
 
  
     (1,405 )       1,655        (9,709 ) 
  
 
 
     
 
 
     
 
 
  
Total
    $ 2,679      $ 5,882      $ 2,778  
  
 
 
     
 
 
     
 
 
  
 
 
The table below provides the updated requirements of ASU
2023-09
for 2025. Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to income before income tax expense, as a result of the following:
 
    
2025
  
    
Amount
     
Percentage
  
Computed tax expense at statutory federal rates
      (9,912 )       21.0 % 
Increase (decrease) in taxes resulting from:
      
State taxes, net of federal income tax benefit (1)
      115        -0.2 % 
Foreign tax effects:
      
Panama
      
Other
      (518 )       1.1 % 
Nicaragua
      
Change in Valuation Allowance
      845        -1.8 % 
Other
      181        -0.4 % 
Brazil
      
Foreign Rate Differential
      (1,139 )       2.4 % 
Goodwill Impairment
      2,882        -6.1 % 
Other
      142        -0.3 % 
Australia
      
Goodwill Impairment
      700        -1.5 % 
Other
      (59 )       0.1 % 
Costa Rica
      
Foreign Rate Differential
      (858 )       1.8 % 
Goodwill Impairment
      2,809        -6.0 % 
Other
      88        -0.2 % 
Other foreign jurisdictions
      512        -1.1 % 
Effect of cross-border tax laws:
      
Subpart F Income
      648        -1.4 % 
Tax credits
      
Research and development (“R&D”) credits
      (171 )       0.4 % 
Changes in valuation allowance
      5,463        -11.6 % 
Nontaxable or nondeductible items:
      
Equity compensation
      573        -1.2 % 
Other
      362        -0.8 % 
Changes in unrecognized tax benefits
      (115 )       0.2 % 
Other adjustments:
      
Return to provision
      (159 )       0.3 % 
Other
      290        -0.6 % 
  
 
 
     
 
 
  
Total
      2,679        -5.9 % 
  
 
 
     
 
 
  
 
(1)
State taxes in Illinois, Alabama, Florida, Minnesota, Pennsylvania, Louisiana, California, and North Carolina made up the majority (greater than 50%) of the tax effect in this category.
 
 
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU
2023-09,
the total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to income before income tax expense, as a result of the following:
 
    
2024
     
2023
  
Computed tax expense at statutory
federal rates
    $ (25,296 )     $ 2,162  
Increase (decrease) in taxes resulting from:
      
State taxes, net of federal income tax benefit
      (3,117 )       756  
Unrecognized tax benefits
      (191 )       (585 ) 
Income tax credits
      (288 )       (720 ) 
Foreign tax rate differential
      (2,599 )       1,025  
Stock based compensation
      685        219  
Global intangible
low-taxed
income
      —         685  
Change in valuation allowance
      29,730        1,376  
Return to provision
      (1,189 )       158  
Nondeductible expenses / (tax deductions)
      2,161        (327 ) 
Gross receipts taxes
      398        425  
Goodwill impairment
      6,471     
IP migration
      —         (2,455 ) 
Other
      (883 )       59  
  
 
 
     
 
 
  
Total
    $ 5,882      $ 2,778  
  
 
 
     
 
 
  
(Loss) income before provision for income taxes is as follows:
 
     2025      2024      2023  
Domestic
    $ (36,290 )     $ (103,918 )     $ 6,672  
International
      (10,913 )       (16,540 )       3,625  
  
 
 
     
 
 
     
 
 
  
Total
    $ (47,203 )     $ (120,458 )     $ 10,297  
  
 
 
     
 
 
     
 
 
  
 
 
Temporary differences between the consolidated financial statements’ carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability at December 31, 2025 and 2024 relate to the following:
 
     2025      2024  
Deferred tax assets
      
Inventories
    $ 6,083      $ 9,322  
Program accrual
      8,790        10,486  
Vacation pay accrual
      685        682  
Accrued bonuses and severance
      860        882  
Bad debt expense
      3,323        2,550  
Stock compensation
      620        1,047  
Domestic NOL carryforward
      9,319        4,604  
Foreign NOL carryforward
      7,180        6,297  
Tax credits
      1,892        1,794  
Lease liability
      3,578        5,078  
Accrued expenses
      527        678  
Accrued product liability
      1,858        —   
Unrealized foreign exchange loss
      1,152        2,521  
Capitalized R&D costs
      5,384        7,587  
Disallowed interest expense
      7,964        3,670  
Other
      1,298        —   
  
 
 
     
 
 
  
Deferred tax assets
      60,513        57,198  
Less valuation allowance
      (41,386 )       (33,855 ) 
  
 
 
     
 
 
  
Deferred tax assets, net
    $ 19,127      $ 23,343  
  
 
 
     
 
 
  
Deferred tax liabilities
      
Plant and equipment
    $ (19,346 )     $ (22,686 ) 
Lease assets
      (3,414 )       (4,895 ) 
Prepaid expenses
      (1,881 )       (1,809 ) 
Other
      —         (700 ) 
  
 
 
     
 
 
  
Deferred tax liabilities
    $ (24,641 )     $ (30,090 ) 
  
 
 
     
 
 
  
Total net deferred tax liabilities
    $ (5,514 )     $ (6,747 ) 
  
 
 
     
 
 
  
Certain 2024 balances were reclassified to conform with the 2025 presentation.
As of December 31, 2025, the Company maintained a full valuation allowance against its net deferred income tax assets related to the Company’s operations in the United States, Brazil, Dominican Republic, Honduras, Nicaragua, Hong Kong, Spain, and Ukraine totaling $41,386. The valuation allowance increased by $7,531 for the year ended December 31, 2025, of which $308 relates to unrealized foreign exchange gains and foreign currency translation included in other comprehensive (loss) income for 2025, and $7,839 included in the provision for income taxes for 2025. As of December 31, 2024, the Company maintained a full valuation allowance against the net deferred income tax assets related to the Company’s operations in the United States, Brazil, Dominican Republic, Honduras, Hong Kong, Spain, and Ukraine totaling $33,855.
Gross foreign NOLs related to the Company’s foreign operations were $22,231 and $19,577, for the years ended December 31, 2025 and 2024, respectively. Substantially all of the Company’s foreign NOLs can be carried forward indefinitely.
Gross domestic federal and state NOLs available across all jurisdictions in which we operate were $76,166 and $30,062 as of December 31, 2025 and 2024, respectively. The Company’s federal NOL can be carried forward indefinitely and is subject to annual limitations in accordance with IRC Section 382. The Company’s state NOLs expire over varying intervals in the future and are subject to annual limitations in accordance with IRC Section 382.
 
 
The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2025 and 2024 included in other liabilities on the Company’s consolidated balance sheets:
 
     2025      2024  
Balance at beginning of year
    $ 903      $ 1,796  
Additions for tax positions related to the current year
      97        63  
Additions for tax positions related to the prior years
      48        —   
Reduction for tax positions related to the prior years
      (235 )       (995 ) 
Effect of exchange rate changes
      —         39  
  
 
 
     
 
 
  
Balance at end of year
    $ 813      $ 903  
  
 
 
     
 
 
  
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. As of December 31, 2025 and 2024, the Company incurred $138 in both years in interest and penalties related to unrecognized tax benefits on its consolidated balance sheets.
The Company believes it is more likely than not that the deferred assets detailed in the table above, exclusive of those in the United States, Brazil, Dominican Republic, Honduras, Nicaragua, Hong Kong, Spain, and Ukraine with the previously mentioned full valuation allowances, will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries that amounted to $102,873 at December 31, 2025, are permanently reinvested. Determination of the unrecognized deferred tax liability is not practical due to the complexities of a hypothetical calculation.
The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to Internal Revenue Service (“IRS”) examination for the 2022 through 2024 tax years. State income tax returns are subject to examination for the 2021 through 2024 tax years. The Company has foreign income tax returns subject to examination.
On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”) which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. The Company has accounted for the impact of the new legislation during the year ended December 31, 2025 and the impact is not material to the results of operations.
Beginning in 2022, The Tax Cuts and Jobs Act of 2017 (“TCJA”), requires taxpayers to capitalize and amortize research and development expenditures pursuant to Internal Revenue Code, or IRC, Section 174. The enactment of the OBBBA repealed IRC Section 174 for tax years beginning after December 31, 2024. As of December 31, 2024, IRC Section 174 resulted in increases in the Company’s deferred tax asset balance of $7,587. There was an increase in cash tax payments in the amount of $1,431 for the year ended December 31, 2024.