TRIMAS CORPTRS

TRIMAS CORP Income Taxes Disclosure

10-KFiled Mar 2, 20266 min read
The Company's income (loss) before income taxes and income tax (benefit) expense, each by tax jurisdiction, consists of the following (dollars in thousands):
 Year ended December 31,
 202520242023
Income (loss) before income taxes:   
Domestic$(7,590)$(31,200)$3,890 
Foreign31,850 27,020 31,960 
  Total income (loss) before income taxes$24,260 $(4,180)$35,850 
Current income tax (benefit) expense:
Federal$(10,530)$(6,260)$1,280 
State and local(1,230)250 580 
Foreign5,510 8,010 8,810 
  Total current income tax (benefit) expense(6,250)2,000 10,670 
Deferred income tax (benefit) expense:
Federal(44,850)(1,100)(220)
State and local1,510 (670)(430)
Foreign1,540 (2,460)(3,710)
  Total deferred income tax (benefit) expense (41,800)(4,230)(4,360)
Income tax (benefit) expense$(48,050)$(2,230)$6,310 
The components of deferred taxes are as follows (dollars in thousands):
 December 31, 2025December 31, 2024
Deferred tax assets:  
Accounts receivable$740 $900 
Inventories1,040 1,790 
Accrued liabilities and other long-term liabilities16,210 18,460 
Operating lease liability7,970 8,220 
Research and experimentation costs— 5,000 
Tax loss and credit carryforwards26,410 27,520 
Outside basis difference on held for sale assets (Aerospace Group)53,900 — 
Other(740)(290)
Gross deferred tax asset105,530 61,600 
Valuation allowances(14,940)(15,500)
Net deferred tax asset90,590 46,100 
Deferred tax liabilities:
Property and equipment(19,740)(20,810)
Right of use asset(7,280)(7,670)
Goodwill and other intangible assets(26,950)(24,050)
Investment in foreign affiliates, including withholding tax(660)(390)
Gross deferred tax liability(54,630)(52,920)
Net deferred tax asset (liability)$35,960 $(6,820)
During the fourth quarter of 2025, the Company entered into an agreement to sell Aerospace, with the transaction expected to close in 2026. As a result of this planned divestiture, the Company concluded that the outside basis difference in its Aerospace investment is expected to reverse in the foreseeable future. Accordingly, the Company recognized a deferred tax asset of $53.9 million for the excess of the tax basis over the book basis of the Aerospace investment, in accordance with ASC 740‑30‑25‑9 and 25‑10.
The Company has recorded deferred tax assets on $45.0 million of various state operating loss carryforwards and $86.3 million of various foreign operating loss carryforwards. The majority of the state tax loss carryforwards expire between 2026 and 2032 and the majority of the foreign losses have indefinite carryforward periods.
The Company recognizes a valuation allowance for the deferred tax asset associated with its foreign tax credits due to the uncertainty in the ability to utilize these credits in future years.
The Company has not made a provision for U.S. or additional foreign withholding taxes related to investments in foreign subsidiaries that are indefinitely reinvested since any excess of the amount for financial reporting over the tax basis in these investments is not significant as of December 31, 2025.
As of December 31, 2025, the Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements To Income Tax Disclosures” on a prospective basis. As required by ASU 2023-09, the following table presents the differences between income taxes from continuing operations for financial reporting purposes and the U.S. statutory rate of 21% for the year ended December 31, 2025 (dollars in thousands):
Year ended December 31, 2025
AmountPercent
U.S. federal statutory tax rate$5,100 21.0 %
State and local income taxes, net of federal income tax effect240 1.0 %
Foreign tax effects
Brazil
Statutory tax rate difference between foreign jurisdictions and United States870 3.6 %
Other10 — %
China
Statutory tax rate difference between foreign jurisdictions and United States320 1.3 %
Other150 0.6 %
Germany
Net operating losses utilization from German Profit and Loss Sharing Agreement(1,030)(4.2)%
Other(210)(0.9)%
Italy
Italy regional tax (IRAP)390 1.6 %
Tax effect of special depreciation incentives (Hyper/Super Depreciation)(420)(1.7)%
Other30 0.1 %
Netherlands
Deduction of loss from liquidation of foreign subsidiary(1,180)(4.9)%
Global Minimum Tax (Pillar Two)840 3.5 %
Other(310)(1.3)%
United Kingdom
Statutory tax rate difference between foreign jurisdictions and United States540 2.2 %
Other(590)(2.4)%
Other foreign jurisdictions350 1.4 %
Effect of cross-border tax laws(70)(0.3)%
Tax credits
Research and development tax credits(350)(1.4)%
Nontaxable or nondeductible items
Share-based compensation590 2.4 %
Interest expense1,330 5.5 %
Other90 0.4 %
Changes in unrecognized tax(150)(0.6)%
Other adjustments
Outside basis difference on held for sale assets (Aerospace Group)(53,900)(222.2)%
Realized outside basis difference on sale of Arrow Engine(650)(2.7)%
Other(40)(0.2)%
Total tax benefit / Effective tax rate$(48,050)(198.1)%
For 2025, the effect of the state and local income tax category was primarily attributable to California, and the effect of the foreign tax category was primarily attributable to the Netherlands.
The following is a reconciliation of income tax expense computed at the U.S. federal statutory rate to income tax expense allocated to income before income taxes (dollars in thousands) for years ended December 31, 2024 and 2023:
Year ended December 31,
 20242023
U.S. federal statutory rate21 %21 %
Tax at U.S. federal statutory rate$(870)$7,520 
State and local taxes, net of federal tax benefit(560)160 
Differences in statutory foreign tax rates2,080 3,080 
Change in recognized tax benefits(420)(120)
Share-based compensation330 430 
Tax credits and incentives(1,230)(1,330)
Net change in valuation allowance(1,280)(2,920)
Nondeductible compensation(430)560 
Other, net150 (1,070)
Income tax (benefit) expense$(2,230)$6,310 
Unrecognized Tax Benefits
The Company had $0.5 million and $0.6 million of unrecognized tax benefits ("UTBs") as of December 31, 2025 and 2024, respectively. If the UTBs were recognized, the impact to the Company's effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2025 and 2024 by $0.5 million and $0.6 million, respectively.
A reconciliation of the change in the UTBs for the years ended December 31, 2025 and 2024 is as follows (dollars in thousands):
 Unrecognized
Tax Benefits
Balance at December 31, 2023$830 
Tax positions related to current year: 
Additions120 
Tax positions related to prior years:
Additions— 
Reductions(20)
Settlements— 
Lapses in the statutes of limitations(340)
Balance at December 31, 2024$590 
Tax positions related to current year: 
Additions110 
Tax positions related to prior years:
Additions— 
Reductions(10)
Settlements— 
Lapses in the statutes of limitations(210)
Balance at December 31, 2025$480 
In addition to the UTBs summarized above, the Company has recorded $0.2 million and $0.3 million in potential interest and penalties associated with uncertain tax positions as of December 31, 2025 and 2024, respectively.
The Company is subject to U.S. federal, state and local, and certain non-U.S. income tax examinations for tax years 2015 through 2025. In addition, there are currently several state and foreign income tax examinations in process. The Company does not believe that the results of these examinations will have a significant impact on the Company's tax position or its effective tax rate.
Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to UTBs and is not aware of, nor does it anticipate, any subsequent events that could have a significant impact on the Company's financial position during the next twelve months.
As required by ASU 2023-09, income taxes paid (refunded) are as follows (dollars in thousands):
Year ended December 31, 2025
Federal$2,330 
State(690)
California(820)
Other130 
Foreign8,990 
Brazil2,240 
China2,080 
Germany970 
Italy1,470 
United Kingdom1,230 
Other1,000 
Total paid (refunded), net$10,630 
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Historical Timeline

Fiscal YearFiled
2025Mar 2, 2026Showing above
2024Feb 27, 2025
2023Feb 29, 2024
2022Feb 23, 2023
2021Mar 1, 2022
2020Feb 25, 2021
2019Feb 27, 2020
2018Feb 28, 2019
2017Feb 27, 2018
2016Feb 28, 2017
2015Feb 26, 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.

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