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