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

15. Income Taxes

The domestic and foreign components of income before income taxes were as follows (in millions):

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Domestic

 

$

413

 

 

$

249

 

 

$

113

 

Foreign

 

 

418

 

 

 

363

 

 

 

125

 

 

$

831

 

 

$

612

 

 

$

238

 

The components of the provision (benefit) for income taxes consisted of (in millions):

 

Year Ended December 31,

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

9

 

 

$

(4

)

 

$

(1

)

State

 

 

5

 

 

 

2

 

 

 

—

 

Foreign

 

 

133

 

 

 

118

 

 

 

86

 

Total current income tax provision

 

 

147

 

 

 

116

 

 

 

85

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

41

 

 

 

(252

)

 

 

3

 

State

 

 

4

 

 

 

(47

)

 

 

—

 

Foreign

 

 

4

 

 

 

(190

)

 

 

(5

)

Total deferred income tax provision (benefit)

 

 

49

 

 

 

(489

)

 

 

(2

)

Total income tax provision (benefit)

 

$

196

 

 

$

(373

)

 

$

83

 

 

The difference between the effective tax rate reflected in the provision (benefit) for income taxes and the U.S. federal statutory rate was as follows (in millions):

 

Year Ended December 31,

 

 

2024

 

 

2023

 

 

2022

 

Federal income tax at U.S. statutory rate

 

$

175

 

 

$

129

 

 

$

50

 

Foreign income tax rate differential

 

 

—

 

 

 

3

 

 

 

1

 

Change in deferred tax valuation allowance

 

 

(64

)

 

 

(564

)

 

 

24

 

Nondeductible expenses

 

 

47

 

 

 

18

 

 

 

18

 

Foreign inclusions and FDII, net of foreign tax credits

 

 

(36

)

 

 

5

 

 

 

(4

)

Change in uncertain tax positions

 

 

3

 

 

 

12

 

 

 

4

 

Withholding taxes

 

 

47

 

 

 

30

 

 

 

31

 

Income tax credits

 

 

(6

)

 

 

(8

)

 

 

(5

)

Other

 

 

30

 

 

 

2

 

 

 

(36

)

Total income tax provision (benefit)

 

$

196

 

 

$

(373

)

 

$

83

 

The effective tax rate for the year ended December 31, 2024 was 23.6%, compared to (60.9%) for 2023. For the year ended 2024, the effective tax rate was negatively impacted by increased withholding taxes, nondeductible expenses, and losses in certain jurisdiction with no tax benefit, partially offset by a lower rate of U.S. tax on global intangible low-taxed income (GILTI) and the deduction of foreign-derived intangible income (FDII) and the release of valuation allowances in certain jurisdictions as a result of improving forecasted taxable income and availability of net operating losses. During 2023, the Company determined it was more likely than not that the Company would be able to realize the benefit of a substantial portion of the deferred tax assets in the United States and the majority of its other international jurisdictions. In reaching this determination, the Company considered the growing trend of profitability over the preceding three years, particularly in the United States, as well as expectations regarding the generation of future taxable income and the sources of future taxable income. As a result of this analysis, the Company recognized a discrete tax benefit related to the release of valuation allowances of $299 million in the United States and $186 million outside the United States. The effective tax rate was also favorably impacted by adjustments related to utilization of losses and tax credits for current and prior year tax returns, partially offset by current year losses in certain jurisdictions with no tax benefit.

As of December 31, 2024, the Company continues to maintain a valuation allowance of $266 million primarily related to foreign tax credit carryforwards in the United States and deferred tax assets in certain other jurisdictions due to several factors, including specific jurisdictions in which the Company does not project to generate sufficient future taxable income to realize all or a portion of its deferred tax assets specific to that jurisdiction; the specific nature and timing of future taxable income required to realize certain tax credit carryforwards, most notably U.S. foreign tax credits; and the timing of expiration of certain tax credit carryforwards.

Significant components of our deferred tax assets and liabilities were as follows (in millions):

December 31,

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Allowances and operating liabilities

 

$

235

 

 

$

264

 

Net operating loss carryforwards

 

 

186

 

 

 

249

 

Stock Compensation

 

 

38

 

 

 

48

 

Tax credit carryforwards

 

 

257

 

 

 

301

 

Other

 

 

113

 

 

 

121

 

Valuation allowance

 

 

(266

)

 

 

(346

)

Total deferred tax assets

 

 

563

 

 

 

637

 

Deferred tax liabilities:

 

 

 

 

 

 

Tax over book depreciation

 

 

31

 

 

 

43

 

Capital leases

 

 

68

 

 

 

67

 

Intangible assets

 

 

44

 

 

 

39

 

Deferred income

 

 

22

 

 

 

24

 

Accrued tax on unremitted earnings

 

 

41

 

 

 

38

 

Other

 

 

—

 

 

 

8

 

Total deferred tax liabilities

 

 

206

 

 

 

219

 

Net deferred tax asset

 

$

357

 

 

$

418

 

 

The valuation allowance decreased by $80 million during 2024. This decrease is comprised of $40 million due to the Company’s evaluation of the realizability of deferred tax assets based on future projections of taxable income, $24 million related to current year utilization of deferred tax assets, $11 million related to the expiration or forfeiture of deferred tax assets, and $5 million related to foreign currency exchange rate changes.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

 

 

2024

 

 

2023

 

 

2022

 

Unrecognized tax benefit at beginning of year

 

$

67

 

 

$

62

 

 

$

60

 

Gross increase for tax position in current year

 

 

—

 

 

 

18

 

 

 

—

 

Gross increase for tax positions in prior years

 

 

4

 

 

 

1

 

 

 

9

 

Gross decrease for tax positions in prior years

 

 

—

 

 

 

(3

)

 

 

(1

)

Cash Settlements

 

 

—

 

 

 

(4

)

 

 

(1

)

Lapse of statute of limitations

 

 

(3

)

 

 

(7

)

 

 

(5

)

Unrecognized tax benefit at end of year

 

$

68

 

 

$

67

 

 

$

62

 

The balance of unrecognized tax benefits at December 31, 2024, 2023 and 2022 was $68 million, $67 million and $62 million, respectively. Accruals related to prior year domestic and foreign jurisdiction issues resulted in uncertain tax position increases of $4 million in 2024.

Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a reduction to income tax expense in the period realized. The Company does not anticipate any material change within the next twelve months due to settlements and conclusions of tax examinations. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements consistent with the Company’s policy. For the years ended December 31, 2024, 2023 and 2022, we recorded income tax expense of $4 million, $5 million and $8 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2024 and 2023, the Company had accrued $24 million and $20 million, respectively, of interest and penalty relating to unrecognized tax benefits.

The Company is subject to taxation in the United States as well as various states and foreign jurisdictions. The Company has significant operations in the United States, Norway, Saudi Arabia, Brazil, China, the United Kingdom, the Netherlands, Denmark, and Mexico. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for tax years ending after 2013 and outside the U.S. for tax years ending after 2018.

Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2024 were as follows (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

State

 

 

Foreign

 

 

Total

 

2025 - 2029 Expiration

 

$

—

 

 

$

101

 

 

$

44

 

 

$

145

 

2030 - 2040 Expiration

 

 

13

 

 

 

191

 

 

 

92

 

 

 

296

 

Unlimited Expiration

 

 

54

 

 

 

—

 

 

 

443

 

 

 

497

 

Total Net Operating Loss (NOL)

 

$

67

 

 

$

292

 

 

$

579

 

 

$

938

 

Tax Effected NOL

 

$

14

 

 

$

20

 

 

$

152

 

 

$

186

 

The Company has $239 million of excess foreign tax credits in the United States as of December 31, 2024, of which $116 million, $92 million, $10 million, $10 million, $8 million and $3 million will expire in 2027, 2028, 2030, 2031, 2032 and 2033 respectively.