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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 9 — Income Taxes Income before income taxes and the provision for income taxes, for the three years ended December 31, 2023, were as follows:
(In millions) |  | 2023 |  |  | 2022 |  |  | 2021 |
Income before income taxes: |  |  |  |  |  |  |  |  |
U.S. |  | $ | 128.5 |  |  | $ | 110.6 |  |  | $ | 21.7 |
International |  |  | (18.8 | ) |  |  | 39.2 |  |  |  | 0.3 |
Total income before income taxes |  | $ | 109.7 |  |  | $ | 149.8 |  |  | $ | 22.0 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |
U.S. |  | $ | 38.3 |  |  | $ | 28.3 |  |  | $ | 5.4 |
International |  |  | 6.5 |  |  |  | 6.4 |  |  |  | 3.1 |
Current income tax expense |  |  | 44.8 |  |  |  | 34.7 |  |  |  | 8.5 |
Deferred: |  |  |  |  |  |  |  |  |
U.S. |  |  | (17.0 | ) |  |  | (8.9 | ) |  |  | (2.3 | )
International |  |  | (15.7 | ) |  |  | 5.8 |  |  |  | (0.3 | )
Deferred income tax benefit |  |  | (32.7 | ) |  |  | (3.1 | ) |  |  | (2.6 | )
Total income tax expense |  | $ | 12.1 |  |  | $ | 31.6 |  |  | $ | 5.9 |
A reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate of 21.0% to the effective income tax rate, for the year ended December 31, 2023, 2022 and 2021 is as follows:
(In millions) |  | 2023 |  |  | 2022 |  |  | 2021 |
Provision (benefit) for taxes at U.S. federal statutory rate |  | $ | 23.0 |  |  | $ | 31.5 |  |  | $ | 4.6 |
State and local taxes, net of federal benefit |  |  | (1.3 | ) |  |  | 0.6 |  |  |  | (0.1 | )
Foreign effective rate differential |  |  | 2.0 |  |  |  | 1.5 |  |  |  | 0.7 |
R&D tax credits |  |  | (5.1 | ) |  |  | (3.4 | ) |  |  | (3.5 | )
Change in valuation allowance |  |  | 1.1 |  |  |  | 0.7 |  |  |  | 0.7 |
Remeasurement of deferred taxes |  |  | (1.1 | ) |  |  | 0.7 |  |  |  | 1.4 |
Employee benefits and related |  |  | 1.7 |  |  |  | 1.5 |  |  |  | 1.7 |
Other |  |  | 4.2 |  |  |  | 1.1 |  |  |  | 0.6 |
(Decrease) increase in reserves for uncertain tax positions |  |  | (0.1 | ) |  |  | (0.5 | ) |  |  | (0.3 | )
Pension Plan Settlement |  |  | (4.4 | ) |  |  | — |  |  |  | — |
U.S. foreign derived intangible income tax benefit |  |  | (3.9 | ) |  |  | (2.1 | ) |  |  | — |
Tax Incentives |  |  | (4.0 | ) |  |  | — |  |  |  | — |
Total income tax expense |  | $ | 12.1 |  |  | $ | 31.6 |  |  | $ | 5.9 |
We do no t provide for additional income or withholding taxes for any undistributed foreign earnings as we do not currently have any specific plans to repatriate funds from our international subsidiaries; however, we may do so in the future if a dividend can be remitted with no material tax impact. As of December 31, 2023, we ha ve approximately $868.5 million o f unremitted foreign earnings that we intend to keep indefinitely reinvested. Additionally, due to withholding tax, basis computations and other tax related considerations, it is not practicable to estimate any taxes to be provided on outside basis differences at this time. The Organization for Economic Cooperation and Development (“OECD”) Pillar Two global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024. Under Pillar Two, a top-up tax will be required for any jurisdiction whose effective tax rate falls below the 15% minimum rate. The Council of the European Union adopted this initiative for enactment by European Union member states by December 31, 2022, with implementation into the domestic laws of those states by the end of 2023. Many countries are also actively considering changes to existing tax laws or have proposed or enacted new laws to align with the recommendations and guidelines under Pillar Two. On February 1, 2023, the FASB staff noted that they believe that the Pillar Two tax would be an alternative minimum tax and therefore deferred tax assets would not need to be recognized related to Pillar Two taxes. Additionally, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Under the safe harbor, companies would be excluded from Pillar Two requirements provided certain criteria are met. The Company is closely monitoring developments and evaluating the impacts these new rules will have on our tax rate, including eligibility to qualify for these safe harbor rules. Based upon preliminary analysis, the Company anticipates it will meet the safe harbors in most jurisdictions, and any remaining Pillar Two top-up tax should be immaterial. Deferred Income Taxes Deferred income taxes result from tax attributes including foreign tax credits, net operating loss carryforwards and temporary differences between the recognition of items for income tax purposes and financial reporting purposes. Principal components of deferred income taxes as of December 31, 2023 and 2022 are:
(In millions) |  | 2023 |  |  | 2022 |
Assets |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 89.8 |  |  | $ | 89.7 |
Tax credit carryforwards |  |  | 9.4 |  |  |  | 9.2 |
Stock-based compensation |  |  | 9.4 |  |  |  | 9.6 |
Other comprehensive income |  |  | — |  |  |  | 21.4 |
Inventory reserves |  |  | 9.2 |  |  |  | 10.5 |
Right of use liability |  |  | 6.9 |  |  |  | 11.7 |
Capitalized research and development expenditures |  |  | 24.8 |  |  |  | 10.4 |
Reserves and other |  |  | 12.0 |  |  |  | 7.5 |
Subtotal |  |  | 161.5 |  |  |  | 170.0 |
Valuation allowance |  |  | (7.5 | ) |  |  | (8.3 | )
Total assets |  | $ | 154.0 |  |  | $ | 161.7 |
Liabilities |  |  |  |  |  |
Accelerated depreciation |  |  | (177.2 | ) |  |  | (179.3 | )
Accelerated amortization |  |  | (19.3 | ) |  |  | (18.3 | )
Right of use asset |  |  | (6.9 | ) |  |  | (11.7 | )
Post-retirement obligations |  |  | — |  |  |  | (12.7 | )
Other |  |  | (9.9 | ) |  |  | (8.2 | )
Total liabilities |  |  | (213.3 | ) |  | $ | (230.2 | )
Net deferred tax liabilities |  | $ | (59.3 | ) |  | $ | (68.5 | )
Deferred tax assets and deferred tax liabilities as presented in the Consolidated Balance Sheets as of December 31, 2023 and 2022 are as follows and are recorded in other assets and deferred income taxes in the Consolidated Balance Sheets:
(In millions) |  | 2023 |  |  | 2022 |
Long-term deferred tax assets, net |  | $ | 51.3 |  |  | $ | 57.9 |
Long-term deferred tax liability, net |  |  | (110.6 | ) |  |  | (126.4 | )
Net deferred tax liabilities |  | $ | (59.3 | ) |  | $ | (68.5 | )
The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more likely than not, be realized in the future. The valuation allowance as of December 31, 2023 relates to certain U.S. and foreign tax attributes for which we have determined, based upon historical results and projected future book and taxable income levels, that a valuation allowance should continue to be maintained. The valuation allowance decreased by $0.8 million in 2023 primarily based on the current year movement of U.S. and foreign tax attributes. The valuation allowance as of December 31, 2023 related primarily to certain U.S. tax attributes for which we have determined, based upon historical results and projected future book and taxable income levels, that a valuation allowance should continue to be maintained. The net change in the total valuation allowance for the years ended December 31, 2023 and 2022, was a decrease of $0.8 million and an increase of $0.7 million, respectively. Although realization is not assured, we have concluded that it is more likely than not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if actual future income or income tax rates are lower than estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences. Net Operating Loss & Tax Credit Carryforwards At December 31, 2023, we had tax credit carryforwards for U.S. state tax purposes of $9.4 million available to offset future income taxes. These credits will begin to expire if not utilized in 2025. We also had net operating loss carryforwards for U.S. state and foreign income tax purposes of $7.6 million and $353.2 million, respectively, for which there were foreign valuation allowances of $4.3 million as of December 31, 2023. Our foreign net operating losses can be carried forward without limitation in Belgium, France, Luxembourg, and the U.K. We have a valuation allowance against certain foreign net operating losses for which the Company believes it is not more likely than not that the net operating losses will be utilized. Uncertain Tax Positions Our unrecognized tax benefits at December 31, 2023 relate to U.S. federal and various state jurisdictions. The following table summarizes the activity related to our unrecognized tax benefits.
|  | Unrecognized Tax Benefits |
(In millions) |  | 2023 |  |  | 2022 |  |  | 2021 |
Balance as of January 1, |  | $ | 2.5 |  |  | $ | 9.7 |  |  | $ | 10.5 |
Additions based on tax positions related to the current year |  |  | 0.4 |  |  |  | 0.2 |  |  |  | 0.2 |
Reductions for tax positions of prior years |  |  | — |  |  |  | — |  |  |  | — |
Expiration of the statute of limitations for the assessment of taxes |  |  | (0.5 | ) |  |  | (7.4 | ) |  |  | (1.0 | )
Balance as of December 31, |  | $ | 2.4 |  |  | $ | 2.5 |  |  | $ | 9.7 |
We had unrecognized tax benefits of $2.4 million at December 31, 2023, of which $2.4 million, if recognized, would impact our annual effective tax rate. In addition, we recognize interest accrued related to unrecognized tax benefits as a component of interest expense and penalties as a component of income tax expense in the Consolidated Statements of Operations. The Company did no t recognize any interest expense or penalties related to the above unrecognized tax benefits in 2023 and 2022. The Company had no accrued interest as of December 31, 2023 and 2022. We are subject to taxation in the U.S. and various states and foreign jurisdictions. The U.S. federal tax returns have been audited through 2016. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. Years in major jurisdictions that remain open to examination are the U.S. (2020 onward for Federal purposes and 2019 onward for state purposes), Austria (2019 onward), Belgium (2016 onward), France (2020 onward), Spain (2018 onward), Germany (2018 onward) and the U.K. (2019 onward). We are currently under examination in certain foreign tax jurisdictions. As of December 31, 2023, we had uncertain tax positions for which it is reasonably possible that amounts of unrecognized tax benefits could significantly change over the next year. These uncertain tax positions relate to our tax returns from 2014 onward. We believe it is reasonably possible that the total amount of unrecognized tax benefits disclosed as of December 31, 2023 may decrease by approximately $1.0 to $1.5 million in the fiscal year ending December 31, 2024 due to the expiration of statutes of limitation.

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