CORE MOLDING TECHNOLOGIES INCCMT

CORE MOLDING TECHNOLOGIES INC Income Taxes Disclosure

10-KFiled Mar 10, 20264 min read
Income Taxes
Provision for income taxes consisted of the following (in thousands):
202520242023
Current tax expense (benefit)
US Federal$1,708 $1,829 $26 
US State and local(7)75 88 
Foreign2,611 1,805 2,835 
Total current tax expense 4,312 3,709 2,949 
Deferred tax expense (benefit)
US Federal$(575)$812 $2,844 
US State and local(90)67 80 
Foreign(165)(406)(451)
Total deferred tax expense (benefit)(830)473 2,473 
Total income tax expense (benefit)
US Federal$1,133 $2,641 $2,870 
US State and local(97)142 168 
Foreign2,446 1,399 2,384 
Total income tax expense 3,482 4,182 5,422 
A reconciliation of the U.S. Federal statutory rate to the 2025 annual tax rate is as follows (in thousands):

2025
AmountPercent
US federal statutory income tax rate$3,082 21.0 %
State income tax, net of U.S. federal tax benefit$(115)(0.8)%
Domestic federal
Tax Credits$64 0.4 %
Cross Border Tax Laws
Foreign derived intangible income$(310)(2.1)%
Nontaxable and nondeductible items, net
Permanent compensation differences$273 1.9 %
Other$151 1.0 %
Other Reconciling Items$(29)(0.2)%
Foreign tax effects
Canada
Statutory income tax rate differential$225 1.5 %
Other$29 0.2 %
Mexico
Statutory income tax rate differential$157 1.1 %
Other$(45)(0.3)%
Provision for Income taxes$3,482 23.7 %
A reconciliation of the U.S. Federal statutory rate to our 2024 and 2023 annual tax rate is as follows (in thousands):
20242023
US federal statutory income tax expense$3,671 $5,407 
State and local tax expense (a)126 (6)
Effect of foreign taxes534 143 
Foreign direct investment(451)(153)
Permanent compensation differences429 (94)
Other(127)125 
Provision for Income taxes4,182 5,422 
(a) State taxes in Texas make up the majority (greater than 50%) of the tax effect in this category.

A summary of income taxes paid in 2025 is as follows (in thousands):
2025
US federal$1,500 
US state and local (a)94 
Canada1,341 
Mexico736 
Total3,671 
(a) No single state or local jurisdiction accounts for more than 5% of the total income taxes paid
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax reform provisions, was signed into law in the United States. The OBBBA did not have a material impact on our annual effective tax rate in 2025 and we do not expect to have a material impact on our effective rate in 2026.
At December 31, 2024, a provision has not been made for U.S. taxes on accumulated undistributed earnings of approximately $34,148,000 and $20,553,000 of the Company's Canadian and Mexican subsidiaries, respectively, that would become payable upon repatriation to the United States. It is the intention of the Company to reinvest all such earnings in operations and facilities outside of the United States. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.
The Company evaluates the balance of deferred tax assets that will be realized based on the premise that the Company is more likely than not to realize deferred tax benefits through the generation of future taxable income. Management makes assumptions, judgments, and estimates to determine our current and deferred tax provision and also the deferred tax assets and liabilities. The Company evaluates provisions and deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available evidence.
As of December 31, 2025 the Company had a net deferred tax asset of $1,402,000 and $221,000 related to tax positions in Mexico and Canada and deferred tax liabilities of $1,035,000 related to tax positions in the United States. Deferred tax assets are included in "Other non-current assets" on the Consolidated Balance Sheets and deferred tax liabilities are included in "Other non-current liabilities" on the Consolidated Balance Sheets. As of December 31, 2025, the Company had a valuation allowance of $1,327,000 against the deferred tax asset related to local (city) jurisdiction tax positions, due to cumulative losses over the last three years in the local jurisdiction and uncertainty related to the Company’s ability to realize the deferred assets. The Company believes that the net deferred tax assets associated with the Mexican and Canada tax jurisdictions are more-likely-than-not to be realizable based on estimates of future taxable income.
Deferred tax assets (liabilities) consist of the following at December 31 (in thousands):
20252024
U.S. local operating loss carryforwards1,333 1,273 
Accrued liabilities641 586 
Accounts receivable95 53 
Inventory249 220 
Property, plant, and equipment(3,870)(5,303)
Post retirement benefits931 1,034 
Goodwill and finite-lived assets, net1,951 2,112 
Other, net585 1,708 
Total deferred tax asset1,915 1,683 
Valuation allowance for deferred tax assets(1,327)(1,265)
Total deferred tax asset, net$588 $418 
At December 31, 2025 and 2024 the Company had no net operating loss carryforwards in United States, Canada or Mexico federal tax jurisdictions.
At December 31, 2025 and 2024 the Company had no liability for unrecognized tax benefits under guidance relating to tax uncertainties. The Company does not anticipate that the unrecognized tax benefits will significantly change within the next twelve months.
The Company files income tax returns in the United States, Mexico, Canada and various state and local jurisdictions. The Company is not subject to United States federal income tax examinations for years before 2022. The Company is not subject to state examinations for years before 2022. The Company is not subject to Mexican income tax examinations for the years before 2020 and is not subject to Canadian income tax examinations for the years before 2021.
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Historical Timeline

Fiscal YearFiled
2025Mar 10, 2026Showing above
2024Mar 11, 2025
2023Mar 12, 2024
2022Mar 14, 2023
2021Mar 11, 2022
2020Mar 11, 2021
2019Mar 13, 2020
2018Mar 18, 2019
2017Mar 7, 2018
2016Mar 9, 2017
2015Mar 11, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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