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INCOME TAXES
 12 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 8 INCOME TAXES
Income Tax Provision and Rate
The components of the provision for income taxes are as follows:
Year Ended September 30,
(in thousands)202520242023
Current:
Federal$114,973 $136,110 $150,273 
Foreign35,588 7,756 12,883 
State13,935 16,180 16,523 
164,496 160,046 179,679 
Deferred:
Federal(44,564)(18,785)(20,337)
Foreign(30,174)(2,102)(1,254)
State(3,923)(2,304)1,191 
(78,661)(23,191)(20,400)
Total provision
$85,835 $136,855 $159,279 
The amounts of domestic and foreign income (loss) before income taxes are as follows:
Year Ended September 30,
(in thousands)202520242023
Domestic$339,966 $433,553 $584,891 
Foreign(414,079)47,467 8,488 
$(74,113)$481,020 $593,379 
The reconciliation of our effective income tax rates to the U.S. Federal income tax rate is as follows:
Year Ended September 30,
202520242023
U.S. Federal income tax rate21.0 %21.0 %21.0 %
Effect of foreign taxes(54.6)1.3 2.1 
State income taxes, net of federal tax benefit(9.6)2.2 2.4 
Other impact of foreign operations(15.8)1.7 0.2 
Non-deductible meals and entertainment(5.6)0.9 0.6 
Equity compensation(0.6)(0.1)(0.1)
Excess officer's compensation(4.8)0.8 0.4 
Goodwill impairment
(54.6)— — 
Other8.8 0.7 0.2 
Effective income tax rate(115.8)%28.5 %26.8 %
Deferred Taxes
Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. Recoverability of any tax assets are evaluated and necessary valuation allowances are provided. The carrying value of the net deferred tax assets is based on management’s judgments using certain estimates and assumptions that we will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the benefits of such assets. If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future.
The components of our net deferred tax liabilities are as follows:
September 30,
(in thousands)20252024
Deferred tax liabilities:
Property, plant and equipment$590,133 $534,161 
Marketable securities— 18,877 
Lease assets
26,606 — 
Other22,888 29,044 
Total deferred tax liabilities639,627 582,082 
Deferred tax assets:
Pension reserves11,889 1,477 
Marketable securities
8,517 — 
Self-insurance reserves4,909 4,619 
Net operating loss and other tax carryforwards
301,813 11,296 
Accrued liabilities
42,389 47,838 
Lease liability
29,443 — 
Other35,307 33,126 
Total deferred tax assets434,267 98,356 
Valuation allowance(418,640)(11,755)
Net deferred tax assets15,627 86,601 
Net deferred tax liabilities$624,000 $495,481 
The change in our net deferred tax assets and liabilities is impacted by foreign currency remeasurement.
As of September 30, 2025, we had state and foreign tax net operating loss carryforwards of approximately $18.7 million and $429.6 million, respectively, foreign interest expense carryforward of $194.4 million, and federal research and development tax credits of approximately $0.3 million, which will expire in fiscal 2026 through 2044 and some of which can be carried forward indefinitely. Certain of these carryforwards are subject to various rules which impose limitations on their utilization. The valuation allowance is primarily attributable to a foreign interest expense limitation carryforward of $194.4 million, unrecognized foreign deferred net tax assets of $129.6 million, foreign net operating loss carryforwards of $88.9 million and equity compensation of $5.7 million which more likely than not will not be recognized.
Unrecognized Tax Benefits
We recognize accrued interest related to unrecognized tax benefits in interest expense, and penalties in other expense in the Consolidated Statements of Operations. As of September 30, 2025, 2024 and 2023, we had accrued interest and penalties of $3.4 million, $0.6 million and $2.9 million, respectively. A reconciliation of the change in our gross unrecognized tax benefits are as follows:
(in thousands)202520242023
Unrecognized tax benefits at October 1,$156 $247 $960 
Gross decreases - current period effect of tax positions(1)(14)(534)
Gross increases - current period effect of tax positions1
20,485 — 6 
Expiration of statute of limitations for assessments(121)(77)(185)
Unrecognized tax benefits at September 30, $20,519 $156 $247 
(1)Gross increases - current period effect of tax positions for the year ended September 30, 2025 are related to the acquisition of KCA Deutag.
As of September 30, 2025, we have recorded approximately $23.9 million of unrecognized tax benefits, interest, and penalties. We believe approximately $6.9 million of the unrecognized tax benefits, interest, and penalties will be recognized as of December 31, 2025, as the result of payment of an assessed amount. We cannot predict with certainty if we will achieve ultimate resolution of any additional uncertain tax positions associated with our U.S. and international operations resulting in any additional material increases or decreases of our unrecognized tax benefits for the next twelve months.
Tax Returns
We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. The tax years that remain open to examination by U.S. federal and state jurisdictions include fiscal years 2020 through 2024 with exception of certain state jurisdictions currently under audit. The tax years remaining open to examination by foreign jurisdictions include 2014 through 2024.