Quarterly report [Sections 13 or 15(d)]

INCOME TAXES

v3.25.1
INCOME TAXES
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
INCOME TAXES

NOTE 7 — 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 the three months ended March 31, 2025 and 2024 was 13.1% and (10.0)%, 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 March 31, 2025 and December 31, 2024, the Company had a valuation allowance of $30.9 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.