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INCOME TAXES | 6 Months Ended
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Jun. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Effective tax rate The Company determines the tax provision for interim periods using an estimate of our annual effective tax rate ("ETR") adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual ETR, and if our estimated annual ETR changes, we make a cumulative adjustment. If a reliable estimate of the annual ETR cannot be made, the actual ETR for the year to date may be the best estimate of the annual ETR. Our estimated annual ETR, including discrete items, for the three months ended June 30, 2025, was (269.6)% compared to 30.3% for the three months ended June 30, 2024. The primary contributing factors to the difference between the estimated annual ETR for the three months ended June 30, 2025 of (269.6)% and the statutory tax rate of 21%, are changes in the estimated annual ETR due to revised forecasted pre-tax income and the change in valuation allowance. The revised forecasted pre-tax income resulted in a decrease to the estimated annual ETR from 106.23% as of March 31, 2025 to 63.35% as of June 30, 2025, causing a tax benefit of $2.1 million to be recognized in the quarter due to the change. The Company recognized $(1.9) million and $2.6 million of income tax (benefit) expense for the three and six months ended June 30, 2025, respectively, primarily driven by its expected current taxable income and the valuation allowance against deferred tax assets. Our estimated annual ETR, including discrete items, for the six months ended June 30, 2025, was 45.9% compared to 34.6% for the six months ended June 30, 2024. The primary contributing factors to the difference between the estimated annual ETR for the six months ended June 30, 2025 of 45.9% and the statutory tax rate of 21%, are the increase in the federal and state valuation allowance on deferred tax assets and the decrease related to the windfall tax benefit from the RSAs vested during the first quarter of 2025. Valuation allowance Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ending June 30, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are adjusted, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for future growth. One Big Beautiful Bill Act On July 4, 2025, H.R. 1, or the “One Big Beautiful Bill Act,” was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The Company is currently evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position.

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