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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Provision for Income Taxes Our income before taxes is as follows:
(in millions) For year ended December 31, |  | 2024 |  | 2023 |  | 2022
U.S. operations |  | $ | 78.2 |  |  | $ | 97.4 |  |  | $ | 163.9 |
Non-U.S. operations |  | 148.2 |  |  | 142.4 |  |  | 84.4 |
Total |  | $ | 226.4 |  |  | $ | 239.8 |  |  | $ | 248.3 |
Our provision (benefit) for income taxes consists of:
(in millions) For the year ended December 31, |  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
U.S. federal tax |  | $ | 29.2 |  |  | $ | 31.3 |  |  | $ | 52.2 |
U.S. state and local tax |  | (0.1) |  |  | 1.7 |  |  | 6.0 |
Non-U.S. tax |  | 28.1 |  |  | 20.6 |  |  | 13.6 |
Total current |  | 57.2 |  |  | 53.6 |  |  | 71.8 |
Deferred: |  |  |  |  |  |
U.S. federal tax |  | (13.4) |  |  | (2.8) |  |  | (13.8) |
U.S. state and local tax |  | 1.3 |  |  | (0.4) |  |  | (2.3) |
Non-U.S. tax |  | (2.8) |  |  | 1.1 |  |  | (12.3) |
Total deferred |  | (14.9) |  |  | (2.1) |  |  | (28.4) |
Total provision for income taxes (a) |  | $ | 42.3 |  |  | $ | 51.5 |  |  | $ | 43.4 |
(a) Included in the above amounts are excess tax benefits from share-based compensation of $1.2 million, $0.9 million and $0.8 million in 2024, 2023 and 2022, respectively, which were reflected as reductions in our provision for income taxes in 2024, 2023 and 2022. A reconciliation of the statutory U.S. federal tax rate to our effective tax rate is as follows:
For the year ended December 31, |  | 2024 |  | 2023 |  | 2022
Statutory U.S. federal tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (reduction) from: |  |  |  |  |  |
Income taxed at non-U.S. rates |  | (1.4) | % |  | (2.0) | % |  | (6.6) | %
Non-U.S. income inclusion, net of tax credits |  | 0.5 | % |  | 2.0 | % |  | 4.3 | %
State and local taxes, net of federal benefit |  | 0.2 | % |  | 1.0 | % |  | 1.2 | %
Changes in reserves for uncertain tax positions |  | (2.7) | % |  | (1.3) | % |  | (1.1) | %
U.S. deduction for foreign - derived intangible income |  | (1.0) | % |  | (0.8) | % |  | (1.0) | %
Other |  | 2.1 | % |  | 1.6 | % |  | (0.3) | %
Effective tax rate |  | 18.7 | % |  | 21.5 | % |  | 17.5 | %
The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% of reported profits (“Pillar 2”) that has been agreed upon by over 140 member jurisdictions including the United States. Pillar 2 addresses the risks associated with profit shifting to entities in low tax jurisdictions. The impact of the adoption of Pillar 2 in 2024 was approximately $2.8 million. As of December 31, 2024, we have made the following determinations regarding our non-U.S. earnings:
(in millions) |  | Permanently reinvested |  | Not permanently reinvested
Amount of earnings |  | $ | 307.7 |  |  | $ | 110.4 |
Associated tax |  | N/A (a) |  | $ | 0.6 |
(a) Determination of U.S. income taxes and non-U.S. withholding taxes due upon repatriation of this $307.7 million of earnings is not practicable because the amount of such taxes depends upon circumstances existing in numerous taxing jurisdictions at the time the remittance occurs. Tax Related to Comprehensive Income During 2024, 2023 and 2022, tax provisions of $0.5 million, $0.5 million and $2.8 million, respectively, related to changes in pension and post-retirement plan assets and benefit obligations, were recorded to accumulated other comprehensive loss. Deferred Taxes and Valuation Allowances The components of deferred tax assets and liabilities included in our Consolidated Balance Sheets are as follows:
(in millions) December 31, |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Tax loss and credit carryforwards |  | $ | 46.1 |  |  | $ | 48.4 |
Inventories |  | 7.6 |  |  | 8.5 |
Capitalized Research and Development |  | 16.1 |  |  | 9.0 |
Accruals and Reserves |  | 9.5 |  |  | 8.3 |
Pension and Post Retirement Benefits |  | 3.3 |  |  | 2.4 |
Other |  | 5.8 |  |  | 5.3 |
Total |  | $ | 88.4 |  |  | $ | 81.9 |
Less: valuation allowance |  | 43.6 |  |  | 46.4 |
Total deferred tax assets, net of valuation allowance |  | $ | 44.8 |  |  | $ | 35.5 |
Deferred tax liabilities: |  |  |  |
Basis difference in intangible assets |  | $ | (131.1) |  |  | $ | (108.8) |
Basis difference in fixed assets |  | (29.7) |  |  | (28.2) |
Other |  | (0.8) |  |  | (0.3) |
Total deferred tax liabilities |  | $ | (161.6) |  |  | $ | (137.3) |
Net deferred tax liability |  | $ | (116.8) |  |  | $ | (101.8) |
Balance sheet classification: |  |  |  |
Long-term deferred tax assets |  | $ | 2.2 |  |  | $ | 2.7 |
Long-term deferred tax liability |  | (119.0) |  |  | (104.5) |
Net deferred tax liability |  | $ | (116.8) |  |  | $ | (101.8) |
As of December 31, 2024, we had U.S. federal, U.S. state and non-U.S. tax loss and credit carryforwards that will expire, if unused, as follows:
(in millions) Year of expiration |  | U.S. Federal Tax Credits |  | U.S. Federal Tax Losses |  | U.S. State Tax Credits |  | U.S. State Tax Losses |  | Non-U.S. Tax Credits |  | Non- U.S. Tax Losses |  | Total
2025-2029 |  | $ | — |  |  | $ | — |  |  | $ | 1.1 |  |  | $ | 113.2 |  |  | $ | — |  |  | $ | 0.3 |  |  |
After 2029 |  | 9.9 |  |  | 0.8 |  |  | 0.6 |  |  | 415.8 |  |  | — |  |  | 0.3 |  |  |
Indefinite |  | — |  |  | — |  |  | 0.2 |  |  | 4.5 |  |  | — |  |  | 17.6 |  |  |
Total tax carryforwards |  | $ | 9.9 |  |  | $ | 0.8 |  |  | $ | 1.9 |  |  | $ | 533.5 |  |  | $ | — |  |  | $ | 18.2 |  |  |
Deferred tax asset on tax carryforwards |  | $ | 9.9 |  |  | $ | 0.2 |  |  | $ | 1.5 |  |  | $ | 29.4 |  |  | $ | 0.8 |  |  | $ | 4.3 |  |  | $ | 46.1 |
Valuation allowance on tax carryforwards |  | (9.9) |  |  | (0.1) |  |  | (0.7) |  |  | (28.8) |  |  | — |  |  | (4.1) |  |  | (43.6) |
Net deferred tax asset on tax carryforwards |  | $ | — |  |  | $ | 0.1 |  |  | $ | 0.8 |  |  | $ | 0.6 |  |  | $ | 0.8 |  |  | $ | 0.2 |  |  | $ | 2.5 |
As of December 31, 2024, and 2023, we determined that it was more likely than not that $43.6 million and $46.4 million, respectively, of our deferred tax assets related to tax loss and credit carryforwards will not be realized. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of our gross unrecognized tax benefits, excluding interest and penalties, is as follows:
(in millions) |  | 2024 |  | 2023 |  | 2022
Balance of liability as of January 1, |  | $ | 16.5 |  |  | $ | 7.6 |  |  | $ | 10.3 |
Increase (decrease) as a result of: |  |  |  |  |  |
Tax positions taken during a prior year |  | (1.0) |  |  | (0.2) |  |  | — |
Tax positions taken during the current year |  | 0.4 |  |  | 0.5 |  |  | 0.4 |
Settlements with taxing authorities |  | — |  |  | (0.1) |  |  | — |
Lapse of the statute of limitations |  | (7.8) |  |  | (5.2) |  |  | (3.1) |
Other |  | — |  |  | 13.9 |  |  | — |
Balance of liability as of December 31, |  | $ | 8.1 |  |  | $ | 16.5 |  |  | $ | 7.6 |
As of December 31, 2024, 2023 and 2022, the amount of our unrecognized tax benefits that, if recognized, would affect our effective tax rate was $8.6 million, $18.4 million and $7.8 million, respectively. The difference between these amounts and those reflected in the table above relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes. As of December 31, 2024, and 2023, we had gross unrecognized benefits, including interest and penalties of $9.4 million, and $19.3 million, respectively, included in “Other liabilities” in our Consolidated Balance Sheets. As of December 31, 2023, the Company has recorded a gross unrecognized tax benefit of $13.9 million due to the Separation from SpinCo which is included in the above table as “Other.” As of December 31, 2024, and 2023, the Company had an indemnification receivable of $3.1 million, and $7.1 million, respectively, from SpinCo per the terms of the Tax Matters Agreement described below. The Tax Matters Agreement specifies the rights, responsibilities, and obligations after the Separation with respect to tax liabilities and benefits. The agreement specifies the portion, if any, of this tax liability for which we and SpinCo will bear responsibility, and we and SpinCo agreed to indemnify each other against any amounts for which they are not responsible. We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax expense. During the years ended December 31, 2024, 2023 and 2022, we recognized interest and penalty income of $1.0 million, $0.1 million and $0.4 million, respectively, in our Consolidated and Combined Statements of Operations. As of December 31, 2024, and 2023, we had accrued $1.3 million and $2.8 million, respectively, of interest and penalties related to unrecognized tax benefits on our Consolidated Balance Sheets. During the next twelve months, it is reasonably possible that our unrecognized tax benefits could change by $3.7 million due to settlements of income tax examinations, the expiration of statutes of limitations or other resolution of uncertainties. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled. Income Tax Examinations Our income tax returns are subject to examination by the U.S. federal, U.S. state and local, and non-U.S. tax authorities. With few exceptions, the years open to examinations are as follows:
Jurisdiction |  | Year
U.S. federal |  | 2021 - 2023
U.S. state and local |  | 2018 - 2023
Non-U.S. |  | 2017 - 2023
Currently, we and our subsidiaries are under examination in various jurisdictions.

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