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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
11.
Income Taxes

The components of income before taxes are as follows:

 

 

2024

 

 

2023

 

 

2022

 

Domestic

 

$

666.5

 

 

$

872.4

 

 

$

447.1

 

Foreign

 

 

89.8

 

 

 

95.0

 

 

 

76.2

 

Total

 

$

756.3

 

 

$

967.4

 

 

$

523.3

 

 

 

The following table summarizes the provision for U.S. federal, state and foreign income taxes:

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

180.9

 

 

$

159.1

 

 

$

162.0

 

State

 

 

45.2

 

 

 

40.9

 

 

 

44.8

 

Foreign

 

 

26.9

 

 

 

25.6

 

 

 

20.3

 

 

 

 

253.0

 

 

 

225.6

 

 

 

227.1

 

Deferred:

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

(64.5

)

 

 

(11.3

)

 

 

(78.8

)

State

 

 

(15.7

)

 

 

(2.8

)

 

 

(38.3

)

Foreign

 

 

(1.8

)

 

 

0.3

 

 

 

(0.6

)

 

 

 

(82.0

)

 

 

(13.8

)

 

 

(117.7

)

Total provision

 

$

171.0

 

 

$

211.8

 

 

$

109.4

 

 

Deferred tax assets (liabilities) consist of the following at December 31, 2024 and 2023:

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Accounts receivable

 

$

7.4

 

 

$

10.1

 

Deferred compensation

 

 

51.7

 

 

 

50.7

 

Pension, postretirement and postemployment benefits

 

 

2.9

 

 

 

4.8

 

Inventory reserve

 

 

8.6

 

 

 

9.0

 

Sec 174 R&D Capitalization

 

 

59.4

 

 

 

41.9

 

Tax credit carryforwards/other tax attributes

 

 

5.1

 

 

 

2.6

 

International operating loss carryforwards

 

 

8.4

 

 

 

9.0

 

Other

 

 

8.8

 

 

 

9.9

 

Total gross deferred tax assets

 

 

152.3

 

 

 

138.0

 

Valuation allowances

 

 

(14.3

)

 

 

(9.8

)

Total deferred tax assets

 

 

138.0

 

 

 

128.2

 

Deferred tax liabilities:

 

 

 

 

 

 

Goodwill

 

 

(298.7

)

 

 

(285.7

)

Trade names and other intangibles

 

 

(415.0

)

 

 

(496.3

)

Property, plant and equipment

 

 

(85.2

)

 

 

(81.1

)

Interest rate swaps

 

 

(3.7

)

 

 

(4.1

)

Total deferred tax liabilities

 

 

(802.6

)

 

 

(867.2

)

Net deferred tax liability

 

$

(664.6

)

 

$

(739.0

)

Long term net deferred tax asset

 

 

4.6

 

 

 

4.1

 

Long term net deferred tax liability

 

 

(669.2

)

 

 

(743.1

)

Net deferred tax liability

 

$

(664.6

)

 

$

(739.0

)

 

The difference between tax expense and the tax that would result from the application of the federal statutory rate is as follows:

 

 

2024

 

 

2023

 

 

2022

 

Statutory rate

 

 

21

%

 

 

21

%

 

 

21

%

Tax that would result from use of the federal statutory rate

 

$

158.8

 

 

$

203.1

 

 

$

109.9

 

State and local income tax, net of federal effect

 

 

23.3

 

 

 

30.1

 

 

 

5.2

 

Varying tax rates of foreign affiliates

 

 

6.9

 

 

 

6.8

 

 

 

2.9

 

Valuation Allowances

 

 

2.1

 

 

0.0

 

 

 

(4.1

)

Stock Options Exercised

 

 

(23.0

)

 

 

(21.8

)

 

 

(5.2

)

Reserve for Uncertain Tax Position

 

 

0.3

 

 

 

(0.3

)

 

 

(0.9

)

Other

 

 

2.6

 

 

 

(6.1

)

 

 

1.6

 

Recorded tax expense

 

$

171.0

 

 

$

211.8

 

 

$

109.4

 

Effective tax rate

 

 

22.6

%

 

 

21.9

%

 

 

20.9

%

At December 31, 2024 and 2023, respectively, certain foreign subsidiaries of the Company had net operating loss carryforwards of approximately $8.3 and $9.0, which are not subject to expiration. The Company believes that it is more likely than not that the benefit from these net operating loss carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $8.3 and $9.0 at December 31, 2024 and 2023, respectively, on the deferred tax asset relating to these net operating loss carryforwards.

The Company also believes that it is more likely than not that the benefit from certain additional deferred tax assets of a foreign subsidiary will not be realized. In recognition of this risk, the Company maintains a valuation allowance of $0.7 and $0.8 at December 31, 2024 and 2023, respectively, on these deferred tax assets.

The Company has foreign tax credit carryforwards of approximately $5.2 and $2.1 as of December 31, 2024 and 2023, respectively. The Company believes that it is more likely than not that the benefit from the foreign tax credit carryforwards as of December 31, 2024 will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $5.2 and $0.0 at December 31, 2024 and 2023, respectively, on the deferred tax asset relating to these foreign tax credit carryforwards. The Company does not have any undistributed earnings of foreign subsidiaries that are considered to be indefinitely reinvested outside of the U.S.

The Company has recorded liabilities in connection with uncertain tax positions, which, although supportable by the Company, may be challenged by tax authorities.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

 

2024

 

 

2023

 

 

2022

 

Unrecognized tax benefits at January 1

 

$

5.1

 

 

$

5.8

 

 

$

4.7

 

Gross increases - tax positions in current period

 

 

0.9

 

 

0.0

 

 

 

2.4

 

Gross increases - tax positions in prior period

 

 

0.0

 

 

0.0

 

 

0.0

 

Gross decreases - tax positions in prior period

 

 

0.0

 

 

0.0

 

 

 

(0.1

)

Decreases due to settlements and payments

 

 

0.0

 

 

0.0

 

 

0.0

 

Lapse of statute of limitations

 

 

(0.6

)

 

 

(0.7

)

 

 

(1.2

)

Unrecognized tax benefits at December 31

 

$

5.4

 

 

$

5.1

 

 

$

5.8

 

Included in the balance of unrecognized tax benefits at December 31, 2024, 2023 and 2022 are $4.5, $4.2 and $4.8, respectively, of tax benefits that, if recognized, would affect the effective tax rate. Also included in the balance of unrecognized tax benefits at December 31, 2024, 2023 and 2022 are $0.9, $0.9 and $1.0, respectively, of tax benefits that, if recognized, would result in adjustments to deferred taxes.

The Company is subject to U.S. federal income tax as well as income tax in multiple state and international jurisdictions. The Company’s U.S. federal income tax returns are closed for tax years through 2020. The Company is currently under audit by several state taxing authorities for the years 2017 through 2022. It is reasonably possible that a decrease of approximately $0.3 in the unrecognized tax benefits may occur within the next twelve months related to the settlement of these audits or the lapse of applicable statutes of limitations.

The Company’s policy for recording interest associated with income tax examinations is to record interest as a component of Income before Income Taxes. During the twelve months ended December 31, 2024, 2023, and 2022, the Company recognized interest expense

associated with uncertain tax positions of approximately $0.4, $0.3 and $0.1, respectively. As of December 31, 2024, 2023, and 2022, the Company had accrued interest expense related to unrecognized tax benefits of $1.3, $0.9 and $0.7, respectively.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Act”), which contains provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks. The law did not have any material impacts on the Company's consolidated financial position, results of operations or cash flows during the year ended December 31, 2024.