XML 54 R32.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The U.S. and foreign components of income before income taxes were as follows:
Years Ended December 31,
(in millions)202320222021
U.S.$199.5 $11.8 $25.3 
Foreign15.1 (2.0)(4.8)
Income before income taxes$214.6 $9.8 $20.5 
Income tax expense consists of the following: 
Years Ended December 31,
(in millions)202320222021
Current:
U.S. State$3.7 $1.3 $0.5 
Foreign4.1 4.8 2.0 
Total current tax expense
7.8 6.1 2.5 
Deferred:
U.S. Federal0.1 — — 
Foreign0.4 (0.9)1.2 
Total deferred tax expense (benefit)
0.5 (0.9)1.2 
Total income tax expense$8.3 $5.2 $3.7 
Reconciliations of the U.S. federal statutory rate to the Company’s effective tax rate are as follows:
 Years Ended December 31,
 202320222021
U.S. statutory rate21.0 %21.0 %21.0 %
Foreign rate differential0.6 13.2 4.8 
State taxes, net of federal benefit2.4 (5.0)(9.5)
Federal and state R&D credits
(5.9)(49.4)(26.2)
Stock-based compensation(3.2)(94.8)(117.0)
Extinguishment of debt— — (57.5)
Capital loss carryforward expirations— — 52.1 
Non-deductible officers’ compensation1.3 52.4 45.7 
Permanent items0.7 6.3 1.9 
Foreign income taxed in the U.S.0.7 14.5 — 
Change in valuation allowance(10.8)124.4 97.9 
Tax rate changes0.5 (30.9)— 
Change to prior year R&D credit
(2.8)— — 
Intercompany transfer of intellectual property— — 4.6 
Other(0.6)1.7 0.4 
Effective tax rate3.9 %53.4 %18.2 %
For all periods presented, no provision for income taxes has been provided on undistributed earnings of the Company’s foreign subsidiaries, except for Canada, because such earnings are indefinitely reinvested in the foreign operations. The Company has recorded a deferred tax liability for withholding tax that could be incurred upon repatriation of earnings from its Canadian subsidiary, the amount of which is not significant. A deferred tax liability related to the repatriation of approximately $32.7 million indefinitely reinvested earnings would not be material to the Company’s consolidated financial statements, primarily due to treaty-based withholding tax rates in the jurisdictions in which the Company operates.
During 2023 the Company commenced a multi-year research and development (“R&D”) credit study that resulted in an increase to U.S. federal and state R&D credit carryforwards related to the 2022 tax year. This has been reported as a favorable adjustment to prior year taxes in the effective tax rate and a corresponding increase to the valuation allowance.
The Company files federal, state, and foreign tax returns, which are subject to examination by the relevant tax authorities. The Company’s U.S. federal and state tax returns are currently open to examination for tax years 2020 through 2022. In addition, the Company’s U.S. net operating loss carryforwards from 2003 and forward may be subject to examination if the losses are utilized in future years.
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
(in millions)
Unrecognized tax benefits at December 31, 2022$— 
Additions related to current period tax positions
2.6 
Additions related to prior period tax positions
2.4 
Unrecognized tax benefits at December 31, 2023
$5.0 
As of December 31, 2023, the balance of unrecognized tax benefits, if recognized, would not impact the effective tax rate due to a full valuation allowance against the Company's U.S. deferred tax assets. As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits that would impact the effective tax rates. The Company does not anticipate that the amount of existing unrecognized tax benefits will materially increase or decrease within the next 12 months. No interest and penalties were recognized related to uncertain tax positions for the years ended December 31, 2023, 2022 and 2021 and no interest and penalties were accrued for as of December 31, 2023 and 2022.
The components of the net deferred tax asset at the end of each year consist of the following:
 As of December 31,
(in millions)20232022
Deferred tax assets:
Net operating loss carryforwards$91.4 $143.5 
Tax credits54.1 33.6 
Capitalized research and development expenditures53.3 30.4 
Warranty2.2 14.6 
Accrued expenses22.9 10.2 
Amortization of debt discount7.8 11.0 
Inventory capitalization6.5 4.1 
Intangible assets8.0 12.9 
Interest limitation carryforwards— 1.7 
Incentive compensation13.5 9.4 
Stock-based compensation8.0 6.4 
Other5.4 4.5 
Total deferred tax assets273.1 282.3 
Deferred tax liabilities:
Prepaid assets(7.7)(5.3)
Property, plant and equipment(38.1)(31.5)
Capitalized contract acquisition costs(10.4)(10.4)
Unrealized gains on cash flow hedges(5.1)(8.8)
Other(7.7)(1.9)
Total deferred tax liabilities(69.0)(57.9)
Net deferred tax asset before valuation allowance204.1 224.4 
Valuation allowance(202.9)(222.8)
Net deferred tax asset$1.2 $1.6 
The Company maintained a valuation allowance of $202.9 million and $222.8 million at December 31, 2023 and 2022, respectively, against U.S. federal, state, and certain foreign deferred tax assets, as management has determined that it is more-likely-than-not that these net deferred tax assets will not be realized. These valuation allowances are based on the weighting of positive and negative evidence, including a history of cumulative tax losses in prior years. The $19.9 million decrease in the Company’s valuation allowance during the year ended December 31, 2023 was primarily due to the utilization of net operating losses and changes in temporary differences in the United States.
As of December 31, 2023, the Company’s net operating loss carryforwards were as follows:
(in millions)
Expiration Period
Net Operating Loss Carryforwards
U.S. federal
Indefinite
$192.0 
U.S. federal
2032 - 2037
$150.2 
State
2024 - 2042
$238.3 
Foreign
Indefinite
$23.2 
As of December 31, 2023, the Company’s tax credit carryforwards were as follows:
(in millions)
Expiration Period
Tax Credit Carryforwards
U.S. federal
2024 - 2043$40.1 
State2024 - 2043$23.6 
These loss and credit carryforwards, which may be utilized in a future period, may be subject to limitations based on changes in the ownership of the Company ordinary shares.