XML 36 R24.htm IDEA: XBRL DOCUMENT v3.25.2
Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
For the three months ended June 30, 2025, we earned $103.9 million before taxes and recorded a provision for income taxes of $15.6 million resulting in an effective tax rate of 15.1%. For the six months ended June 30, 2025, we earned $201.1 million before taxes and recorded a provision for income taxes of $33.4 million resulting in an effective tax rate of 16.6%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, 2025 primarily due to the net impact of foreign operations. The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, 2025 primarily due to the net impact of foreign operations and U.S. discrete items, partially offset by state income taxes.
For the three months ended June 30, 2024, we earned $100.3 million before taxes and recorded a provision for income taxes of $23.8 million resulting in an effective tax rate of 23.8%. For the six months ended June 30, 2024, we earned $198.4 million before taxes and recorded a provision for income taxes of $44.0 million resulting in an effective tax rate of 22.2%. The effective tax rate varied from the U.S. federal statutory rate for the three months ended June 30, 2024 primarily due to the net impact of foreign divestiture. The effective tax rate varied from the U.S. federal statutory rate for the six months ended June 30, 2024 primarily due to the net impact of foreign divestiture.
The Company maintains a full valuation allowance against the net deferred tax assets in certain foreign tax jurisdictions as of June 30, 2025. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of net deferred tax assets. We assess our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets in determining the sufficiency of our valuation allowances. Failure to achieve forecasted taxable income in the applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in our effective tax rate on future earnings. It is possible there may be sufficient positive evidence to release a portion of the remaining valuation allowance in those foreign jurisdictions. Release of the valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net earnings. The timing and amount of the potential valuation allowance release are subject to significant management judgment and the level of profitability achieved.
On December 20, 2021, the Organisation for Economic Co-operation and Development (“OECD”) released the Model GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. Many countries
continue to consider changes in their tax laws and regulations based on the Pillar Two proposals. We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available. Some of these legislative changes could result in double taxation of our non-U.S. earnings, a reduction in the tax benefit received from our tax incentives, or other impacts to our effective tax rate and tax liabilities. As of June 30, 2025, the company is not expecting material impacts under currently enacted legislation.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The OBBBA also provides for changes to the global intangible low-taxed income (“GILTI”) provision, the base-erosion and anti-abuse tax (“BEAT”) provision and the foreign derived intangible income (“FDII”) provision. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, as of the date of enactment, and during the three months ended September 30, 2025, the Company will evaluate its deferred tax balances, including future realization of its net deferred tax assets, under the newly enacted tax law and identify any other changes required to its financial statements as a result of the OBBBA. The Company is still evaluating the impact of the OBBBA and the results of such evaluations will be reflected in the Company's Financial Statements for the quarterly period ended September 30, 2025.