Concrete Pumping Holdings, Inc. Income Taxes Disclosure

Note 12. Income Taxes

 

The sources of income before income taxes for the fiscal years ended  October 31, 2025 and 2024 are as follows:

 

(in thousands)		Year Ended October 31, 2025				Year Ended October 31, 2024
United States		$	6,722			$	18,264
Foreign			3,330				6,047
Total		$	10,052			$	24,311

 

The components of the provision for income taxes for the fiscal years ended  October 31, 2025 and 2024 are as follows:

 

(in thousands)		Year Ended October 31, 2025				Year Ended October 31, 2024
Current tax provision:
Federal		$	751			$	1,924
State and local			395				723
Total current tax provision		$	1,146			$	2,647
Deferred tax provision:
Federal		$	1,326			$	3,012
Foreign			881				1,893
State and local			326				552
Total deferred tax provision		$	2,533			$	5,457
Net provision for income taxes		$	3,679			$	8,104

 

For the fiscal years ended October 31, 2025 and 2024, the income tax provision differs from the expected tax provision computed by applying the U.S. federal statutory rate to income before taxes as a result of the following:

 

(in thousands)		Year Ended October 31, 2025				Year Ended October 31, 2024
Income tax expense per federal statutory rate of 21% for each period		$	2,109			$	5,105
State income taxes, net of federal deduction			456				1,003
Change in deferred tax rate			346				(31	)
Stock compensation shortfall (benefit)			(37	)			1,023
Foreign income inclusion			-				103
Foreign rate differential			131				266
Non-deductible (non-taxable) items			282				194
Taxes related to prior year filings			382				215
Executive compensation limitation			12				251
Other			(2	)			(25	)
Income tax provision		$	3,679			$	8,104

 

The tax effects of the temporary differences giving rise to the Company’s net deferred tax assets and liabilities for fiscal years ending  October 31, 2025 and 2024 are summarized as follows:

 

(in thousands)		Year Ended October 31, 2025				Year Ended October 31, 2024
Deferred tax assets:
Accrued insurance reserve		$	2,450			$	2,579
Accrued sales and use tax			495				72
Accrued bonuses and vacation			1,452				1,591
Accrued payroll tax			248				200
Foreign tax credit carryforward			80				80
State tax credit carryforward			-				21
Interest expense carryforward			4,846				1,396
Stock-based compensation			613				443
Operating lease liability			5,697				6,406
Other			143				156
Net operating loss carryforward			6,093				10,982
Total deferred tax assets		$	22,117			$	23,926
Valuation allowance			(80	)			(123	)
Net deferred tax assets		$	22,037			$	23,803
Deferred tax liabilities:
Intangible assets			(13,569	)			(14,598	)
Prepaid expenses			(774	)			(200	)
Property and equipment			(91,562	)			(89,329	)
Right-of-use operating lease asset			(5,563	)			(6,323	)
Total net deferred tax liabilities			(111,468	)			(110,450	)
Net deferred tax liabilities		$	(89,431	)		$	(86,647	)

 

As of October 31, 2025, the Company has the following tax carryforwards:

 

(in millions)		Year Ended October 31, 2025			Year that Carryforwards Begin to Expire
Federal net operating loss carryforwards		$	11.9		Indefinite carryforward
State net operating loss carryforwards			21.5		FY29
Foreign net operating loss carryforwards			11.0		Indefinite carryforward
Foreign tax carryforwards			0.1		FY26
Federal interest expense carryforwards		20.5			Indefinite carryforward
State interest expense carryforwards			15.9		Indefinite carryforward
Total tax carryforwards		$	80.9

 

The Company does not consider that earnings from non-U.S. affiliates will be permanently reinvested. As such, the Company has provided U.S. deferred taxes on cumulative earnings of all of its non-U.S. affiliates.

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback opportunities, and tax planning strategies in making the assessment. The Company believes it is more likely than not that it will realize the benefits of these deductible differences, net of the valuation allowance provided. The valuation allowance provided by the Company relates to foreign tax credit carryforwards.

 

The Company files income tax returns with the U.S., various state governments and the U.K. With few immaterial exceptions, the Company is no longer subject to U.S. federal, foreign and state income tax examinations by tax authorities for tax years before October 31, 2021.

 

Pursuant to Internal Revenue Code Section 382, annual use of the Company’s net operating loss ("NOL") carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has determined that no such change in ownership happened during the fiscal years ended October 31, 2025 and 2024.

 

The following table summarizes the changes in the Company's unrecognized tax benefits during the fiscal years ended October 31, 2025 and 2024. The Company expects no material changes to unrecognized tax positions within the next twelve months. If recognized, none of these benefits would favorably impact the Company's income tax expense, before consideration of any related valuation allowance:

 

(in thousands)		Year Ended October 31, 2025				Year Ended October 31, 2024
Balance, beginning of year		$	1,077			$	1,203
Decrease in prior year position			(117	)			(126	)
Balance, end of year		$	960			$	1,077

 

As of October 31, 2025 and 2024, the Company has recognized no interest or penalties.

 

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, the reinstatement of bonus depreciation on qualified property and modifications to the calculation for excess business interest expense limitation under §163(j). The Company has evaluated the provisions effective for the current year and incorporated the related deferred tax impacts into its year end tax provision. The impacts of these changes were not material.