v3.25.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | 15. Income Taxes The domestic and foreign components of income (loss) before income taxes were as follows (in millions):
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
Domestic |  | $ | (123 | ) |  | $ | 413 |  |  | $ | 249 |
Foreign |  |  | 498 |  |  |  | 418 |  |  |  | 363 |
|  | $ | 375 |  |  | $ | 831 |  |  | $ | 612 |
The components of the provision (benefit) for income taxes consisted of (in millions):
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | (30 | ) |  | $ | 9 |  |  | $ | (4 | )
State |  |  | 10 |  |  |  | 5 |  |  |  | 2 |
Foreign |  |  | 151 |  |  |  | 133 |  |  |  | 118 |
Total current income tax provision |  |  | 131 |  |  |  | 147 |  |  |  | 116 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | 23 |  |  |  | 41 |  |  |  | (252 | )
State |  |  | 22 |  |  |  | 4 |  |  |  | (47 | )
Foreign |  |  | 48 |  |  |  | 4 |  |  |  | (190 | )
Total deferred income tax provision (benefit) |  |  | 93 |  |  |  | 49 |  |  |  | (489 | )
Total income tax provision (benefit) |  | $ | 224 |  |  | $ | 196 |  |  | $ | (373 | )
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) for the year ended December 31, 2025:
|  | Year Ended December 31, 2025 |
|  | Amount |  |  | Rate |
U.S federal statutory income tax rate |  | $ | 79 |  |  |  | 21.0 | %
U.S. state and local income taxes, net of federal income tax effect (1) |  |  | 26 |  |  |  | 6.9 | %
Foreign tax effects |  |  |  |  |  |
Austria |  |  | 20 |  |  |  | 5.3 | %
Brazil |  |  |  |  |  |
State and local taxes |  |  | 8 |  |  |  | 2.1 | %
Withholding taxes |  |  | 7 |  |  |  | 1.9 | %
Other |  |  | 6 |  |  |  | 1.6 | %
Canada |  |  | 5 |  |  |  | 1.3 | %
Mexico |  |  |  |  |  |
Changes in valuation allowances |  |  | 4 |  |  |  | 1.1 | %
Other |  |  | 1 |  |  |  | 0.3 | %
Netherlands |  |  |  |  |  |
Nondeductible expense |  |  | 6 |  |  |  | 1.6 | %
Adjustment to prior year taxes |  |  | 7 |  |  |  | 1.9 | %
Changes in valuation allowances |  |  | 8 |  |  |  | 2.1 | %
Other |  |  | 3 |  |  |  | 0.8 | %
Norway |  |  |  |  |  |
Foreign currency gain |  |  | 5 |  |  |  | 1.3 | %
Refund of withholding taxes |  |  | (5 | ) |  |  | (1.3 | )%
Saudi Arabia |  |  |  |  |  |
Withholding taxes |  |  | 7 |  |  |  | 1.9 | %
Other |  |  | 5 |  |  |  | 1.3 | %
United Kingdom |  |  |  |  |  |
Adjustment to prior year taxes |  |  | (7 | ) |  |  | (1.9 | )%
Other |  |  | (2 | ) |  |  | (0.5 | )%
Other foreign jurisdictions |  |  | 26 |  |  |  | 6.9 | %
Effect of cross-border tax laws |  |  |  |  |  |
Foreign income inclusions, net of foreign tax credits |  |  | (42 | ) |  |  | (11.2 | )%
Impact of BEAT provisions |  |  | 14 |  |  |  | 3.7 | %
FDII deduction |  |  | (7 | ) |  |  | (1.9 | )%
Income tax credits |  |  | (3 | ) |  |  | (0.8 | )%
Changes in deferred tax valuation allowance |  |  | 82 |  |  |  | 21.9 | %
Nondeductible expenses |  |  |  |  |  |
Impairment of nondeductible goodwill |  |  | 8 |  |  |  | 2.1 | %
Tax expense on stock compensation |  |  | 14 |  |  |  | 3.7 | %
Other |  |  | 4 |  |  |  | 1.1 | %
Change in uncertain tax benefits |  |  | (47 | ) |  |  | (12.5 | )%
Other |  |  | (8 | ) |  |  | (2.1 | )%
Total income tax provision |  | $ | 224 |  |  |  | 59.7 | %
(1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in the category include Texas and Louisiana. The effective tax rate for the year ended December 31, 2025 was 59.7%, compared to 23.6% for 2024. For 2025, the effective tax rate was negatively impacted by the establishment of additional valuation allowances for foreign tax credit carryforwards and losses in certain jurisdictions with no tax benefit, an unfavorable earnings mix including withholding taxes in higher tax rate jurisdictions, and the impairment of nondeductible goodwill, partially offset by the release of reserves for unrecognized tax benefits. The difference between the effective tax rate reflected in the provision (benefit) for income taxes and the U.S. federal statutory rate disclosed as follows (in million) for the years ended December 31, 2024 and 2023:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Federal income tax at U.S. statutory rate |  | $ | 175 |  |  | $ | 129 |
Foreign income tax rate differential |  |  | — |  |  |  | 3 |
Change in deferred tax valuation allowance |  |  | (64 | ) |  |  | (564 | )
Nondeductible expenses |  |  | 47 |  |  |  | 18 |
Foreign inclusions and FDII, net of foreign tax credits |  |  | (36 | ) |  |  | 5 |
Change in uncertain tax benefits |  |  | 3 |  |  |  | 12 |
Withholding taxes |  |  | 47 |  |  |  | 30 |
Income tax credits |  |  | (6 | ) |  |  | (8 | )
Other |  |  | 30 |  |  |  | 2 |
Total income tax provision (benefit) |  | $ | 196 |  |  | $ | (373 | )
The effective tax rate for the year ended December 31, 2024 was 23.6%, compared to (60.9)% for 2023. For 2024, the effective tax rate was negatively impacted by increased withholding taxes, nondeductible expenses, and losses in certain jurisdictions 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. Significant components of our deferred tax assets and liabilities were as follows (in millions):
|  | December 31, |
|  | 2025 |  |  | 2024 |
Deferred tax assets: |  |  |  |  |  |
Allowances and operating liabilities |  | $ | 246 |  |  | $ | 235 |
Net operating loss carryforwards |  |  | 138 |  |  |  | 186 |
Stock compensation |  |  | 29 |  |  |  | 38 |
Tax credit carryforwards |  |  | 303 |  |  |  | 257 |
Other |  |  | 123 |  |  |  | 113 |
Valuation allowance |  |  | (352 | ) |  |  | (266 | )
Total deferred tax assets |  |  | 487 |  |  |  | 563 |
Deferred tax liabilities: |  |  |  |  |  |
Tax over book depreciation |  |  | 26 |  |  |  | 31 |
Capital leases |  |  | 58 |  |  |  | 68 |
Intangible assets |  |  | 41 |  |  |  | 44 |
Deferred income |  |  | 43 |  |  |  | 22 |
Accrued tax on unremitted earnings |  |  | 43 |  |  |  | 41 |
Other |  |  | 11 |  |  |  | — |
Total deferred tax liabilities |  |  | 222 |  |  |  | 206 |
Net deferred tax asset |  | $ | 265 |  |  | $ | 357 |
The valuation allowance increased by $86 million during 2025 to $352 million as of December 31, 2025. The valuation allowance 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. This increase in valuation allowance was comprised of $82 million due to the Company’s evaluation of the realizability of deferred tax assets based on future projections of taxable income and $4 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):
|  | 2025 |  |  | 2024 |  |  | 2023 |
Unrecognized tax benefit at beginning of year |  | $ | 68 |  |  | $ | 67 |  |  | $ | 62 |
Gross increase for tax position in current year |  |  | 6 |  |  |  | — |  |  |  | 18 |
Gross increase for tax positions in prior years |  |  | 30 |  |  |  | 4 |  |  |  | 1 |
Gross decrease for tax positions in prior years |  |  | (37 | ) |  |  | — |  |  |  | (3 | )
Cash settlements |  |  | (4 | ) |  |  | — |  |  |  | (4 | )
Lapse of statute of limitations |  |  | (7 | ) |  |  | (3 | ) |  |  | (7 | )
Unrecognized tax benefit at end of year |  | $ | 56 |  |  | $ | 68 |  |  | $ | 67 |
Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a reduction to income tax expense in the period realized. To the extent penalties and interest would be assessed on any underpayment of income tax, or interest would be received on tax payments made in connection with tax disputes, 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, 2025, 2024 and 2023, we recorded income tax expense (benefit) of $(27) million, $4 million and $5 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2025 and 2024, the Company had accrued a receivable (payable) of $7 million and $(24) 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, Canada, and Mexico. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are open in the U.S. for tax years 2017, 2018, and tax years ending after 2021 and outside the U.S. for tax years generally ending after 2018. Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2025 were as follows (in millions):
|  | Federal |  |  | State |  |  | Foreign |  |  | Total |
2026 - 2030 expiration |  | $ | — |  |  | $ | 6 |  |  | $ | 44 |  |  | $ | 50 |
2031 - 2041 expiration |  |  | 13 |  |  |  | 118 |  |  |  | 52 |  |  |  | 183 |
Unlimited expiration |  |  | 50 |  |  |  | 109 |  |  |  | 346 |  |  |  | 505 |
Total net operating loss (NOL) |  | $ | 63 |  |  | $ | 233 |  |  | $ | 442 |  |  | $ | 738 |
Tax effected NOL |  | $ | 13 |  |  | $ | 11 |  |  | $ | 114 |  |  | $ | 138 |
The Company has $285 million of excess foreign tax credits in the United States as of December 31, 2025, of which $116 million and $92 million will expire in 2027 and 2028, respectively. The remaining foreign tax credits of $77 million generally expire between 2030 and 2035. Cash paid (received) for income taxes for the year ended December 31, 2025, is as follows (in millions):
U.S. federal income taxes |  | $ | (93 | )
U.S. state income taxes |  |  | 9 |
Austria |  |  | 28 |
Brazil |  |  | 26 |
Canada |  |  | 32 |
China |  |  | 7 |
Indonesia |  |  | 7 |
Saudi Arabia |  |  | 17 |
Other |  |  | 73 |
Total income taxes paid (received) |  | $ | 106 |

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