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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 12. INCOME TAXES 2017 Tax Cuts and Jobs A ct In conjunction with the enactment of the 2017 Tax Cuts and Jobs Act (the Tax Act), the Corporation recorded provisional income tax expense of $18.2 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings. The finalized transition tax of $23.6 million was to be paid over 8 years pursuant to the Tax Act. The transition tax liability, which is expected to be paid in 2025, was $6.1 million and $7.8 million as of December 31, 2024 and December 31, 2023, respectively. As of December 31, 2024, the Corporation reassessed its assertion around whether foreign undistributed earnings should continue to no longer be considered permanently reinvested. The Corporation remains no longer permanently reinvested with the exception of three foreign subsidiaries. The Corporation has recorded a liability for withholding taxes that would arise upon distribution of the Corporation’s foreign undistributed earnings. Except as noted above, the Corporation remains permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings, as it is not practicable to determine the provision impact, if any, due to the complexities associated with this calculation. Earnings before income taxes for the years ended December 31 consist of:
(In thousands) |  | 2024 |  | 2023 |  | 2022
Domestic |  | $ | 323,898 |  |  | $ | 300,200 |  |  | $ | 239,356 |
Foreign(1) |  | 198,158 |  |  | 162,870 |  |  | 149,839 |
|  | $ | 522,056 |  |  | $ | 463,070 |  |  | $ | 389,195 |
(1) The Corporation recognized a pre-tax loss of $5 million during the first quarter of 2022 pertaining to the sale of its industrial valve business in Germany. The provision for income taxes for the years ended December 31 consists of:
(In thousands) |  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
Federal |  | $ | 62,165 |  |  | $ | 58,629 |  |  | $ | 65,047 |
State |  | 18,272 |  |  | 13,098 |  |  | 12,717 |
Foreign |  | 43,200 |  |  | 36,791 |  |  | 34,520 |
Total current |  | 123,637 |  |  | 108,518 |  |  | 112,284 |
Deferred: |  |  |  |  |  |
Federal |  | (5,507) |  |  | (180) |  |  | (11,413) |
State |  | 950 |  |  | 507 |  |  | (4,442) |
Foreign |  | (2,002) |  |  | (284) |  |  | (1,582) |
Total deferred |  | (6,559) |  |  | 43 |  |  | (17,437) |
Provision for income taxes |  | $ | 117,078 |  |  | $ | 108,561 |  |  | $ | 94,847 |
The effective tax rate varies from the U.S. federal statutory tax rate for the years ended December 31, principally:
|  | 2024 |  | 2023 |  | 2022
U.S. federal statutory tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Add (deduct): |  |  |  |  |  |
State and local taxes, net of federal benefit |  | 3.0 |  |  | 2.3 |  |  | 1.7 |
Foreign earnings(1) |  | 1.1 |  |  | 1.3 |  |  | 0.7 |
Foreign loss on sale |  | — |  |  | — |  |  | 0.2 |
Financing arrangement(2) |  | (1.0) |  |  | — |  |  | — |
R&D tax credits |  | (1.3) |  |  | (1.1) |  |  | (1.1) |
Foreign-derived intangible income |  | (1.4) |  |  | (1.2) |  |  | (1.2) |
All other, net |  | 1.0 |  |  | 1.1 |  |  | 3.1 |
Effective tax rate |  | 22.4 | % |  | 23.4 | % |  | 24.4 | %
(1) Foreign earnings primarily include the net impact of differences between local statutory rates and the U.S. Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances. (2) In an effort to simplify its organizational structure and facilitate repatriation, the Corporation underwent a substantial internal reorganization of its foreign ownership structure in 2024 that included the establishment of financing arrangements. The components of the Corporation’s deferred tax assets and liabilities as of December 31 are as follows:
(In thousands) |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Capitalized R&D expenses |  | $ | 60,818 |  |  | $ | 39,463 |
Operating lease liabilities |  | 40,840 |  |  | 32,041 |
Inventories, net |  | 23,926 |  |  | 24,282 |
Incentive compensation |  | 11,011 |  |  | 9,314 |
Environmental reserves |  | 9,324 |  |  | 8,949 |
Net operating loss |  | 6,431 |  |  | 8,348 |
Other |  | 34,264 |  |  | 30,417 |
Total deferred tax assets |  | 186,614 |  |  | 152,814 |
Deferred tax liabilities: |  |  |  |
Goodwill amortization |  | 117,340 |  |  | 110,543 |
Other intangible amortization |  | 62,277 |  |  | 53,551 |
Pension and other postretirement assets |  | 46,828 |  |  | 37,870 |
Operating lease right-of-use assets, net |  | 38,741 |  |  | 30,327 |
Withholding taxes |  | 13,017 |  |  | 16,120 |
Depreciation |  | 14,880 |  |  | 15,339 |
Contract revenue recognition |  | 15,256 |  |  | 5,297 |
Other |  | 3,776 |  |  | 2,863 |
Total deferred tax liabilities |  | 312,115 |  |  | 271,910 |
Valuation allowance |  | 4,988 |  |  | 4,892 |
Net deferred tax liabilities |  | $ | 130,489 |  |  | $ | 123,988 |
Deferred tax assets and liabilities are reflected on the Corporation’s Consolidated Balance Sheets as of December 31 as follows:
(In thousands) |  | 2024 |  | 2023
Net noncurrent deferred tax assets(1) |  | $ | 10,170 |  |  | $ | 8,331 |
Net noncurrent deferred tax liabilities |  | 140,659 |  |  | 132,319 |
Net deferred tax liabilities |  | $ | 130,489 |  |  | $ | 123,988 |
(1)Amount is classified within the "Other Assets" caption in the Corporation's Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023, respectively. The Corporation has income tax net operating loss carryforwards related to international operations of $21.0 million, of which $17.9 million have an indefinite life and $3.1 million which expire through 2029. The Corporation has federal and state income tax net loss carryforwards of $18.5 million, all of which are net operating losses that expire through 2041. The Corporation has recorded a deferred tax asset of $6.4 million, reflecting the benefit of the loss carryforwards related to international and domestic operations. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. As of December 31, 2024, the Corporation decreased its valuation allowance to $5.0 million, in order to measure only the portion of deferred tax assets that more likely than not will be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth. Income tax payments, net of refunds, of $135.7 million, $136.4 million, and $61.1 million were made in 2024, 2023, and 2022, respectively. The Corporation has recorded a liability in Other liabilities for interest of $4.9 million and penalties of $2.5 million as of December 31, 2024. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In thousands) |  | 2024 |  | 2023 |  | 2022
Balance as of January 1, |  | $ | 17,888 |  |  | $ | 17,371 |  |  | $ | 17,018 |
Additions for tax positions of prior periods |  | 1,805 |  |  | 2,387 |  |  | 3,004 |
Reductions for tax positions of prior periods |  | (2,213) |  |  | (2,419) |  |  | (1,732) |
Additions for tax positions related to the current year |  | 1,747 |  |  | 1,744 |  |  | 1,068 |
Settlements |  | (215) |  |  | (1,195) |  |  | (1,987) |
Balance as of December 31, |  | $ | 19,012 |  |  | $ | 17,888 |  |  | $ | 17,371 |
In many cases, the Corporation’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2024:
United States (Federal) | 2020 | - | present
United States (Various states) | 2013 | - | present
United Kingdom | 2023 | - | present
Canada | 2020 | - | present
The Corporation does not expect any significant changes to the estimated amount of liability associated with its uncertain tax positions through the next twelve months. Included in total unrecognized tax benefits as of December 31, 2024, 2023, and 2022 is $16.2 million, $15.3 million, and $15.1 million, respectively, which if recognized, would favorably impact the effective income tax rate.

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