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Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 15. INCOME TAXES On July 4, 2025, the U.S. federal government enacted the “One Big Beautiful Bill Act” (“OBBBA”), resulting in significant changes to the federal tax code, most notably the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 and the restoration of favorable tax treatment for certain business provisions. Our federal income tax expense for the year ended December 31, 2025 reflects the impact of the OBBBA, which resulted in an immaterial impact to our effective tax rate and a reduction in our federal cash taxes paid. The tax effects of principal temporary differences between the carrying amounts of assets and liabilities and their tax basis are summarized below. Management believes it is more likely than not that the results of future operations will generate sufficient taxable income in the appropriate jurisdiction to realize deferred tax assets, net of valuation allowances. In arriving at this conclusion, we considered the profit before tax generated for the years 2023 through 2025, future reversals of existing taxable temporary differences, and projections of future profit before tax. We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. The need to establish valuation allowances for deferred tax assets is assessed quarterly. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard for all periods, we consider all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses and forecasts of future profitability, the duration of statutory carryforward periods, and our experience with operating loss and tax credit carryforward expirations. A history of cumulative losses is a significant piece of negative evidence used in our assessment. If a history of cumulative losses is incurred for a tax jurisdiction, forecasts of future profitability are not used as positive evidence related to the realization of the deferred tax assets in the assessment. As of December 31, 2025 and 2024, we had $337.2 million and $622.9 million, respectively, of gross state net operating loss (“NOL”) carryforwards expiring between 2026 and 2044. As of December 31, 2025 and 2024, we had capital loss carryforwards of $0.3 million and $5.6 million, respectively, that expire between 2026 and 2036. As of December 31, 2025 and 2024, we had valuation allowances of $16.6 million and $36.3 million, respectively. As of December 31, 2025, our valuation allowance consisted of $13.3 million for state deferred tax assets related to net operating loss carryforwards, $3.0 million for state deferred tax assets related to state tax credits and $0.3 million for federal and state deferred tax assets related to capital loss carryforwards. We estimate we will need to generate future taxable income of approximately $106.5 million for state income tax purposes during the respective realization periods (ranging from 2026 to 2044) to be able to fully realize the net deferred income tax assets discussed above. We estimate we will need to generate capital gain income of $0.4 million to fully realize our federal capital loss carryforwards before they expire in 2026. We estimate we will need to generate capital gain income of $157.9 million to fully realize our state capital loss carryforwards before they expire between 2026 and 2036. Our ability to utilize deferred tax assets may be impacted by certain future events, such as changes in tax legislation or insufficient future taxable income prior to expiration of certain deferred tax assets. The following table presents the components of deferred tax assets and liabilities:
|  | December 31, 2025 |  |  | December 31, 2024 |
Deferred income tax assets (liabilities) |  |  |  |  |  |
Net operating losses |  | $ | 14.7 |  |  | $ | 30.0 |
Postretirement benefits |  |  | 10.2 |  |  |  | 11.0 |
Pension benefit liabilities |  |  | 7.0 |  |  |  | 7.3 |
Deferred compensation |  |  | 4.3 |  |  |  | 4.5 |
State tax credit carryforwards |  |  | 3.3 |  |  |  | 3.7 |
Capital loss carryforwards |  |  | 0.3 |  |  |  | 5.6 |
Capitalized research expenses |  |  | 2.3 |  |  |  | 20.5 |
Lease liabilities |  |  | 17.0 |  |  |  | 14.3 |
Other |  |  | 10.4 |  |  |  | 9.9 |
Total deferred income tax assets |  |  | 69.5 |  |  |  | 106.8 |
Valuation allowances |  |  | (16.6 | ) |  |  | (36.3 | )
Net deferred income tax assets |  |  | 52.9 |  |  |  | 70.5 |
Intangibles |  |  | (83.9 | ) |  |  | (83.9 | )
Partnerships and investments |  |  | (21.9 | ) |  |  | (23.7 | )
Accumulated depreciation |  |  | (93.7 | ) |  |  | (87.1 | )
Prepaid pension costs |  |  | (25.1 | ) |  |  | (22.5 | )
Inventories |  |  | (2.9 | ) |  |  | (3.6 | )
Lease assets |  |  | (16.0 | ) |  |  | (15.1 | )
Other |  |  | (2.2 | ) |  |  | (1.7 | )
Total deferred income tax liabilities |  |  | (245.7 | ) |  |  | (237.6 | )
Net deferred income tax liabilities |  | $ | (192.8 | ) |  | $ | (167.1 | )
The following table presents the components of earnings before income taxes and income tax expense for the years ended December 31, 2025, 2024 and 2023:
|  | 2025 |  |  | 2024 |  |  | 2023 |
Earnings before income taxes: |  |  |  |  |  |  |  |  |
Domestic |  | $ | 392.7 |  |  | $ | 342.0 |  |  | $ | 291.9 |
Foreign |  |  | 7.6 |  |  |  | 5.1 |  |  |  | 6.4 |
Total |  | $ | 400.3 |  |  | $ | 347.1 |  |  | $ | 298.3 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |
Current tax expense |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 48.3 |  |  | $ | 64.0 |  |  | $ | 59.8 |
U.S. state and local |  |  | 16.5 |  |  |  | 16.3 |  |  |  | 13.9 |
Foreign |  |  | 2.8 |  |  |  | 1.2 |  |  |  | 1.7 |
Total current tax expense |  |  | 67.6 |  |  |  | 81.5 |  |  |  | 75.4 |
Deferred tax expense (benefit): |  |  |  |  |  |  |  |  |
U.S. federal |  |  | 21.8 |  |  |  | (0.9 | ) |  |  | (3.2 | )
U.S. state and local |  |  | 2.9 |  |  |  | 1.7 |  |  |  | 2.5 |
Foreign |  |  | (0.7 | ) |  |  | (0.1 | ) |  |  | (0.2 | )
Total deferred tax expense (benefit) |  |  | 24.0 |  |  |  | 0.7 |  |  |  | (0.9 | )
Total income tax expense: |  |  |  |  |  |  |  |  |
U.S. federal |  |  | 70.1 |  |  |  | 63.1 |  |  |  | 56.6 |
U.S. state and local |  |  | 19.4 |  |  |  | 18.0 |  |  |  | 16.4 |
Foreign |  |  | 2.1 |  |  |  | 1.1 |  |  |  | 1.5 |
Total income tax expense |  | $ | 91.6 |  |  | $ | 82.2 |  |  | $ | 74.5 |
The following table presents net income tax payments for the years ended December 31, 2025, 2024 and 2023:
|  | 2025 |  |  | 2024 |  |  | 2023 |
U.S. federal |  | $ | 51.9 |  |  | $ | 68.3 |  |  | $ | 58.2 |
U.S. state and local |  |  | 15.6 |  |  |  | 17.8 |  |  |  | 12.1 |
Foreign |  |  | 1.8 |  |  |  | 1.5 |  |  |  | 1.8 |
Total income tax payments, net |  | $ | 69.3 |  |  | $ | 87.6 |  |  | $ | 72.1 |
The unremitted earnings of our foreign subsidiaries are not permanently reinvested. Accordingly, as of December 31, 2025 and 2024, we have recorded deferred income taxes for foreign withholding taxes of $1.2 million and $0.9 million on approximately $23.6 million and $18.2 million of net undistributed earnings of foreign subsidiaries, respectively. The following table presents a U.S. federal statutory-to-effective tax rate reconciliation for the years ended December 31, 2025, 2024 and 2023:
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |
U.S. federal statutory tax |  | $ | 84.1 |  |  |  | 21.0 | % |  | $ | 72.9 |  |  |  | 21.0 | % |  | $ | 62.6 |  |  |  | 21.0 | %
State and local income taxes, net of federal benefit (1) |  |  | 15.9 |  |  |  | 4.0 |  |  |  | 14.5 |  |  |  | 4.2 |  |  |  | 13.4 |  |  |  | 4.5 |
Foreign tax effects |  |  | 0.8 |  |  |  | 0.2 |  |  |  | 0.6 |  |  |  | 0.2 |  |  |  | 0.2 |  |  |  | 0.1 |
Effect of cross-border tax laws |  |  | (1.1 | ) |  |  | (0.3 | ) |  |  | (1.3 | ) |  |  | (0.4 | ) |  |  | (1.1 | ) |  |  | (0.4 | )
Tax credits |  |  | (4.6 | ) |  |  | (1.1 | ) |  |  | (2.0 | ) |  |  | (0.6 | ) |  |  | (1.9 | ) |  |  | (0.6 | )
Changes in valuation allowances |  |  | (4.7 | ) |  |  | (1.2 | ) |  |  | (8.5 | ) |  |  | (2.4 | ) |  |  | 0.4 |  |  |  | 0.1 |
Expiration of deferred income tax assets |  |  | 5.7 |  |  |  | 1.4 |  |  |  | 5.8 |  |  |  | 1.7 |  |  |  | - |  |  |  | - |
Non-deductible or non-taxable items |  |  | 3.2 |  |  |  | 0.8 |  |  |  | 3.0 |  |  |  | 0.9 |  |  |  | 0.3 |  |  |  | 0.1 |
Changes in unrecognized tax benefits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Releases due to statute expirations |  |  | (6.1 | ) |  |  | (1.5 | ) |  |  | (1.9 | ) |  |  | (0.6 | ) |  |  | - |  |  |  | - |
Other |  |  | 0.1 |  |  |  | - |  |  |  | 0.6 |  |  |  | 0.2 |  |  |  | 0.6 |  |  |  | 0.2 |
Excess tax benefits recognized on share-based compensation |  |  | (1.3 | ) |  |  | (0.3 | ) |  |  | (1.0 | ) |  |  | (0.3 | ) |  |  | (0.1 | ) |  |  | - |
Other |  |  | (0.4 | ) |  |  | (0.1 | ) |  |  | (0.5 | ) |  |  | (0.2 | ) |  |  | 0.1 |  |  |  | - |
Effective taxes |  | $ | 91.6 |  |  |  | 22.9 | % |  | $ | 82.2 |  |  |  | 23.7 | % |  | $ | 74.5 |  |  |  | 25.0 | %
(1) State taxes in California, Florida, Illinois, New Jersey, New York and Pennsylvania and local taxes in New York City made up the majority (greater than 50 percent) of the tax effect in this category. We recognize the tax benefits of an uncertain tax position only if those benefits are more likely than not to be sustained based on existing tax law. Additionally, we establish a reserve for tax positions that are more likely than not to be sustained based on existing tax law, but for which we are uncertain in the ultimate benefit to be sustained upon examination by the relevant taxing authorities. Unrecognized tax benefits are subsequently recognized at the time the more likely than not recognition threshold is met, the tax matter is effectively settled, or the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired, whichever is earlier. We had $12.8 million of Unrecognized Tax Benefits (“UTB”) as of December 31, 2025; $5.7 million ($4.9 million, net of federal benefit) of this amount, if recognized in future periods, would impact the reported effective tax rate. It is reasonably possible that certain UTB’s may increase or decrease within the next twelve months due to tax examination changes, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities. Over the next twelve months we estimate that UTB’s may decrease by $0.9 million related to state statutes expiring. We account for all interest and penalties on uncertain income tax positions as income tax expense. We have $0.5 million and $2.8 million of interest and penalties accrued in non-current income tax payable on the Consolidated Balance Sheets as of December 31, 2025 and 2024, respectively. We had the following activity for UTB’s for the years ended December 31, 2025, 2024 and 2023:
|  | 2025 |  |  | 2024 |  |  | 2023 |
Unrecognized tax benefits balance as of January 1, |  | $ | 24.5 |  |  | $ | 26.9 |  |  | $ | 27.3 |
Gross change for current-year positions |  |  | (0.5 | ) |  |  | 0.5 |  |  |  | 0.4 |
Increase for prior period positions |  |  | - |  |  |  | 0.2 |  |  |  | 0.2 |
Decrease for prior period positions |  |  | (0.2 | ) |  |  | (0.2 | ) |  |  | (0.5 | )
Decrease due to statute expirations |  |  | (11.0 | ) |  |  | (2.9 | ) |  |  | (0.5 | )
Unrecognized tax benefits balance as of December 31, |  | $ | 12.8 |  |  | $ | 24.5 |  |  | $ | 26.9 |
We file income tax returns in the U.S. and various states and international jurisdictions. In the normal course of business, we are subject to examination by taxing authorities in Canada and the U.S. Generally, we have open tax years subject to tax audit on average of between three years and six years. The statute of limitations is no longer open for U.S. federal returns before 2022. With few exceptions, the statute of limitations is no longer open for state or non-U.S. income tax examinations for years before 2021. We have not significantly extended any open statutes of limitation for any major jurisdiction and have reviewed and accrued for, where necessary, tax liabilities for open periods. The following table presents details of non-income tax expenses for the years ended December 31, 2025, 2024 and 2023:
|  | 2025 |  |  | 2024 |  |  | 2023 |
Payroll taxes |  | $ | 28.2 |  |  | $ | 23.9 |  |  | $ | 20.8 |
Property, franchise and capital stock taxes |  |  | 5.2 |  |  |  | 4.8 |  |  |  | 5.4 |

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