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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income from Continuing Operations Before Income Taxes Income from continuing operations before income taxes consists of the following:
| For the Year Ended December 31,
| 2023 |  | 2022 |  | 2021
United States | $ | (100.9) |  |  | $ | 31.1 |  |  | $ | 25.9 |
Foreign | 158.9 |  |  | 67.8 |  |  | 48.2 |
Income from continuing operations before income taxes | $ | 58.0 |  |  | $ | 98.9 |  |  | $ | 74.1 |
Provision Significant components of income tax expense (benefit), net are as follows:
| For the Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | (15.5) |  |  | $ | (1.3) |  |  | $ | 1.7 |
State and local | 6.6 |  |  | 3.5 |  |  | 3.2 |
Foreign | 91.2 |  |  | 15.4 |  |  | 16.5 |
Total current | 82.3 |  |  | 17.6 |  |  | 21.4 |
Deferred: |  |  |  |  |
Federal | 1.5 |  |  | (5.6) |  |  | (5.8) |
State and local | (1.8) |  |  | 1.9 |  |  | 1.1 |
Foreign | (79.0) |  |  | 2.0 |  |  | (3.2) |
Total deferred | (79.3) |  |  | (1.7) |  |  | (7.9) |
Total income tax expense, net | $ | 3.0 |  |  | $ | 15.9 |  |  | $ | 13.5 |
See Note 3, “Discontinued Operations and Other Businesses Sold” for the income (loss) from discontinued operations and related income taxes. Effective Tax Rate Reconciliation The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Income tax expense at U.S. statutory rate | $ | 12.2 |  |  | $ | 20.8 |  |  | $ | 15.6 |
State income taxes, net of federal tax benefit | 3.1 |  |  | 1.5 |  |  | 3.1 |
Foreign withholding taxes | 6.3 |  |  | 0.2 |  |  | 1.6 |
U.S. taxation of international operations | 18.7 |  |  | 1.4 |  |  | (0.3) |
Effective tax rate differential of earnings outside of United States | 2.8 |  |  | 1.7 |  |  | 1.8 |
Change in valuation allowance | (2.0) |  |  | (11.6) |  |  | (5.9) |
Research & experimentation | (2.0) |  |  | (2.9) |  |  | (1.0) |
Provision to return | 0.8 |  |  | 5.0 |  |  | 0.3 |
Non-deductible items | 0.1 |  |  | 0.4 |  |  | 2.4 |
Change in uncertain tax positions | 2.0 |  |  | (0.3) |  |  | (0.2) |
Share-based compensation | 0.1 |  |  | (1.1) |  |  | (4.1) |
Capital (loss) | (40.5) |  |  | — |  |  | — |
Unremitted earnings not permanently reinvested | 0.9 |  |  | — |  |  | — |
Other items | 0.5 |  |  | 0.8 |  |  | 0.2 |
Income tax expense | $ | 3.0 |  |  | $ | 15.9 |  |  | $ | 13.5 |
We reclassified certain line items of the effective tax rate reconciliation for year ended December 31, 2021 and December 31, 2022 to correspond with the year ended December 31, 2023. Deferred Taxes Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Significant components of our deferred tax assets and liabilities are as follows:
| December 31,
| 2023 |  | 2022
Deferred tax assets (“DTA”): |  |  |
Accruals and reserves | $ | 48.2 |  |  | $ | 5.1 |
Loss contingency | 0.5 |  |  | 70.3 |
Pensions | — |  |  | 0.2 |
Inventory | 127.0 |  |  | 78.1 |
Share-based compensation | 2.6 |  |  | 2.3 |
R&D Amortization | 18.1 |  |  | 7.4 |
Tax credit carryforwards | 2.6 |  |  | 8.2 |
Interest limitation carryover | 126.8 |  |  | 5.5 |
Foreign net operating loss carryforwards | 36.0 |  |  | 8.7 |
State net operating loss carryforwards | 4.2 |  |  | 2.1 |
Convertible notes | 2.2 |  |  | 4.3 |
Property, plant and equipment – net DTA | 4.4 |  |  | 5.2 |
Other – net DTA | 2.2 |  |  | 2.9 |
Total deferred tax assets before valuation allowances | 374.8 |  |  | 200.3 |
Valuation allowances | (90.3) |  |  | (5.4) |
Total deferred tax assets, net of valuation allowances | $ | 284.5 |  |  | $ | 194.9 |
Deferred tax liabilities (“DTL”): |  |  |
Property, plant and equipment – net DTL | $ | 58.6 |  |  | $ | 26.0 |
Goodwill and intangible assets | 629.0 |  |  | 77.0 |
Pensions | 6.4 |  |  | — |
Insurance receivable | — |  |  | 53.5 |
Unremitted earnings (APB23) | 19.7 |  |  | — |
Other – net DTL | 0.6 |  |  | 3.1 |
Investments | 2.3 |  |  | 4.5 |
Deferred revenue | 123.5 |  |  | 72.0 |
Total deferred tax liabilities | $ | 840.1 |  |  | $ | 236.1 |
Net deferred tax liabilities | $ | 555.6 |  |  | $ | 41.2 |
The net deferred tax liability is classified as follows: |  |  |
Other assets | $ | (12.6) |  |  | $ | (4.9) |
Long-term deferred tax liabilities | 568.2 |  |  | 46.1 |
Net deferred tax liabilities | $ | 555.6 |  |  | $ | 41.2 |
We evaluate the recoverability of our deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis. To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded. As of December 31, 2023, we have valuation allowances totaling $90.3 consisting primarily of our operations in the United Kingdom, France, and Belgium. We have U.S. state net operating loss carryforwards of $138.7 that may be carried forward indefinitely. As of December 31, 2023, we had $145.6 fo reign net operating loss carryforwards primarily in Belgium, France, and India subject to local tax limitations. The foreign net operating losses can be carried forward indefinitely, except in applicable jurisdictions that make up less than 12% of available net operating losses. We have tax credit carryforwards of $2.6. Other Tax Information We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. As a result of the Howden Acquisition during 2023, we have reevaluated our indefinite reinvestment assertion and have determined that we are partially reinvested. We are not permanently reinvested on $247.9 of the undistributed earnings of our foreign subsidiaries. The remaining earnings continue to be indefinitely reinvested outside the United States. We have assessed a total deferred tax liability of $19.7 as of December 31, 2023 on such earnings that have not been indefinitely reinvested. This is an increase of $19.7 as compared to the deferred tax liability as of December 31, 2022. We have made no provision for U.S. income taxes or additional non-U.S. taxes on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional tax if we were to dividend those earnings or sell our interest in the non-U.S. subsidiary. We cannot practically determine the amount of additional taxes that might be payable on those earnings. The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024, and other aspects effective January 1, 2025. While it is uncertain whether the United States will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. We do not expect Pillar 2 to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows. Cash paid for income taxes during the years ended December 31, 2023, 2022, and 2021 was $49.7, $27.0, and $57.2, respectively. Unrecognized Income Tax Benefits We record a liability for unrecognized income tax benefits for the amount of benefit included in our previously filed income tax returns and in our financial results expected to be included in income tax returns to be filed for periods through the date of our Consolidated financial statements for income tax positions for which it is not more likely than not to be sustained upon examination by the respective tax authority. The reconciliation of beginning to ending gross unrecognized tax benefits is as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Unrecognized tax benefits at beginning of the year | $ | 0.7 |  |  | $ | 1.7 |  |  | $ | 1.9 |
Additions for tax positions acquired during the current period | 34.4 |  |  | — |  |  | — |
Additions (reductions) for tax positions taken during the prior period | 3.7 |  |  | — |  |  | 0.4 |
Reductions relating to settlements with taxing authorities | (1.6) |  |  | (0.3) |  |  | — |
Lapse of statutes of limitation | (0.2) |  |  | (0.7) |  |  | (0.6) |
Unrecognized tax benefits at end of the year | $ | 37.0 |  |  | $ | 0.7 |  |  | $ | 1.7 |
We are routinely examined by tax authorities around the world. Tax examinations remain in process in multiple countries including but not limited to Denmark, France, Germany and India. We file numerous group and separate returns in U.S. federal and state jurisdictions as well as international jurisdictions. We are subject to income taxes in the U.S federal jurisdiction and various state and foreign jurisdictions. In the United States, tax years dating back to 2020 remain subject to examination. With some exceptions, other major tax jurisdictions generally are not subject to examinations for years beginning before 2009. Included in the balance of unrecognized tax benefits at December 31, 2023 and 2022 was $35.8 and $0.5, respectively of income tax (benefit)/expenses, which, if ultimately recognized, would impact our annual effective tax rate. We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. We accrue d approximately $0.9 and $0.1 of interest and penalties at December 31, 2023 and 2022, respectively We recognized a liability related to interest and penalties on unrecognized tax benefits of $7.0 as of December 31, 2023, primarily related to tax positions acquired in the Howden Acquisition. The amount of interest and penalties related to years prior to 2023 is immaterial. Due to the expiration of various statutes of limitation and anticipated payments, it is reasonably possible our unrecognized tax benefits at December 31, 2023 may decrease within the next twelve months by $1.7.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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