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INCOME TAXES | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense and effective tax rates were:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
| (in thousands, except effective tax rate)
Income (loss) before income taxes | $ | 189,428 |  |  | $ | 244,897 |  |  | $ | (54,240) |  |  | $ | 735,351 |
Income tax expense | 43,612 |  |  | 45,096 |  |  | 132,123 |  |  | 154,189 |
Effective tax rate | 23.0 | % |  | 18.4 | % |  | (243.6) | % |  | 21.0 | %
During the three months ended September 30, 2025, income tax expense decreased $1.5 million compared to the same period in 2024. The effective tax rate for the three months ended September 30, 2025, was 23.0% compared to an effective tax rate of 18.4% for the same period in 2024, a 4.6% increase. This increase in the effective tax rate was primarily driven by a shift in the mix of our domestic and foreign earnings. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate due to differences in income tax rates between U.S. and foreign jurisdictions. During the nine months ended September 30, 2025, income tax expense decreased $22.1 million compared to the same period in 2024. The effective tax rate for the nine months ended September 30, 2025, was (243.6)% compared to an effective tax rate of 21.0% for the same period in 2024, a 264.6% decrease. The effective tax rate was impacted by the impairments of the indefinite-lived HEYDUDE trademark and HEYDUDE Brand reporting unit goodwill in the nine months ended September 30, 2025, which are not deductible for tax purposes. As a result of a prior year intra-entity transaction, the value of the intellectual property for tax purposes is subject to revaluation and therefore there are not similar impacts for tax as a result of the intellectual property impairment. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate due to differences in income tax rates between U.S. and foreign jurisdictions. Pillar Two Global Minimum Tax The Organization for Economic Co-operation and Development (“OECD”) has released Pillar Two model rules introducing a 15% global minimum tax rate applied on a country-by-country basis for large multinational corporations. Various jurisdictions we operate in have enacted the legislation. There remains uncertainty as to the final Pillar Two rules as the OECD continues to release guidance and modifications to the rules. In June 2025, the U.S. Treasury Secretary and G7 countries announced their intent to work towards an agreement to exclude U.S. parented companies from the scope of Pillar Two taxes, specifically the Income Inclusion Rule and Under taxed Profits Rule. The details of the new agreement have not been finalized, but the announced change would significantly reduce the scope of Pillar Two rules. We are monitoring continuing development of these laws and the potential impact they will have on our Company. We do not anticipate the Pillar Two rules will have a significant impact on our 2025 consolidated financial statements. H.R.1 Tax Act Bill On July 4, 2025, H.R.1. was signed into law, amending and extending several provisions of the 2017 Tax Cuts and Jobs Act. Key changes relevant to the Company include the reinstatement of 100% bonus depreciation, the deductibility of domestic R&D expenses, and modifications to international provisions. The Company applied the provisions of the new tax law this quarter and it did not have a significant impact on our 2025 consolidated financial statements.

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