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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes  
Income Taxes


The sources of income before income taxes for the years ended December 31, 2024, 2023 and 2022 are presented as follows:


Year Ended December 31,

(in millions)


2024


2023


2022

Income before taxes:







United States


$

(29.7

 )


$

7.0


$

(12.5

 )

Foreign


478.6


393.4


335.1

Total income before income taxes


$

448.9



$

400.4



$

322.6



The Company's income tax expense for the years ended December 31, 2024, 2023 and 2022 consisted of the following:


Year Ended December 31,

(in millions)


2024


2023


2022

Current tax expense (benefit):







U.S.


$

4.3


$

5.1


$

3.9

Foreign


118.6



102.9



80.3


Total current


122.9



108.0



84.2


Deferred tax expense (benefit):










U.S.


6.1


12.2


(7.3

 )

Foreign


13.6


0.7


15.0

Total deferred


19.7



12.9


7.7

Total tax expense


$

142.6



$

120.9



$

91.9


The following is a reconciliation of the federal statutory income tax rates of 21% to the effective income tax rate for the years ended December 31, 2024, 2023 and 2022:


Year Ended December 31,

(dollar amounts in millions)


2024


2023


2022

U.S. federal income tax expense at applicable statutory rate


$

94.3



$

84.1



$

67.7


Tax effect of:










State income tax expense at statutory rates, net of U.S. federal income tax


3.5



3.7



3.7


Non-deductible expenses


4.1



2.9



1.7


Share-based compensation


3.9


4.0



1.9


Other permanent differences


8.0


0.9


(0.2

 )

Difference between U.S. federal and foreign tax rates


21.8



16.7



13.9

Provision in excess of statutory rates


(0.5

 )


8.3



3.6

Change in federal and foreign valuation allowance


1.2


2.7


(7.7

 )

GILTI, net of tax credits


12.9



5.9



9.8


Tax credits


(6.0

 )


(9.2

 )


(0.7

 )

Other


(0.6

 )


0.9


(1.8

 )

Total income tax expense


$

142.6



$

120.9



$

91.9


Effective tax rate


31.77

%


30.19

%


28.47

%


We calculate our provision for federal, state and foreign income taxes based on current tax law.


The tax effect of temporary differences and carryforwards that give rise to deferred tax assets and liabilities from continuing operations are as follows:


As of December 31,

(in millions)


2024


2023

Deferred tax assets:





Tax loss carryforwards


$

44.8



$

59.3


Share-based compensation


15.0



15.8


Accrued expenses


19.3



20.1


Property and equipment


6.8



8.1


Goodwill and intangible amortization


9.3



11.2


Contract costs
0.7

3.5

Intercompany notes


6.6



16.7


Accrued revenue


0.7



4.0


Tax credits


61.6



58.1


Lease accounting


34.3



49.2


Foreign exchange
8.8

2.4
Capitalized research and development
10.8

6.2

Other


6.3



6.0


Total deferred tax assets


225.0



260.6


Valuation allowance


(75.0 )


(90.7

)

Total deferred tax assets, net of valuation allowance


150.0



169.9


Deferred tax liabilities:







Intangible assets related to purchase accounting


(28.2

 )


(15.0

)

Goodwill and intangible amortization


(31.8

 )


(31.9

)

Accrued expenses


(15.3

 )


(25.7

)

Intercompany notes


(5.8

 )


(12.9

)

Accrued interest


(42.6

 )


(34.4

)

Capitalized research and development


—


(0.3

)

Property and equipment


(6.9

 )


(6.8

)

Accrued revenue


(1.7

 )


(2.8

)

Lease accounting


(34.3

 )


(49.2

)

Foreign exchange
(14.7 )
(4.0 )
Partnership Investment
(7.6 )
(3.1 )

Other


(7.6

 )


(2.5

)

Total deferred tax liabilities


(196.5

 )


(188.6

)

Net deferred tax liabilities


$

(46.5

 )


$

(18.7

)


Net deferred tax assets of $25.3 million and $28.3 million as of December 31, 2024 and 2023, respectively, are recorded within "Other assets" on the Consolidated Balance Sheet.


Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2024 are expected to be allocated to income taxes in the Consolidated Statements of Operations. As of December 31, 2024, and 2023, the Company's foreign tax loss carryforwards were $183.3 million and $247.4 million, respectively, and U.S. state tax loss carryforwards were $81.0 million and $68.4 million, respectively.


As of December 31, 2024 and 2023, the Company has U.S. foreign tax credit carryforwards of $57.1 million and $53.6 million respectively, which are largely not expected to be utilized in future periods.


In assessing the Company's ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as of December 31, 2024.


As of December 31, 2024, the Company had foreign tax net operating loss carryforwards of $183.3 million, which will expire as follows:


(in millions)


Gross


Tax Effected

Year ending December 31,





2025


$

3.7



$

0.9


2026


7.8



1.9


2027


3.1



0.8


2028


4.6



1.1


2029


5.2



1.2


Thereafter


14.5



3.5


Unlimited


144.4



31.7


Total


$

183.3



$

41.1



In addition, the Company's state tax net operating loss carryforwards of $81.0 million will expire periodically from 2025 through 2044, U.S. foreign tax credit carryforwards of $57.1 million will expire periodically from 2027 through 2034 and U.S. federal research and expenditure credit carryforwards of $3.8 million will expire periodically from 2034 through 2043.


The Company has not provided additional deferred taxes with respect to items such as certain foreign exchange gains or losses, foreign withholding taxes or additional state taxes, if any, on undistributed earnings attributable to foreign subsidiaries and it is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. Gross undistributed earnings reinvested indefinitely in foreign subsidiaries aggregated approximately $2,749.5 million as of December 31, 2024.


Based upon the current OECD rules and administrative guidance, as well as the related legislation of those countries which has been enacted to date, the Company does not anticipate being subject to material minimum foreign taxes. The Company is continuing to monitor the potential impact of the Pillar Two proposals and developments on our Consolidated Financial Statements and related disclosures, including eligibility for any transitional safe harbor rules.


Accounting for uncertainty in income taxes


A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2024 and 2023 is as follows:




Year Ended December 31,

(in millions)


2024


2023

Beginning balance


$

51.8



$

42.8


Additions based on tax positions related to the current year


6.2



7.2


Additions for tax positions of prior years


1.4



2.6


Reductions for tax positions of prior years


(4.0

 )


(0.1

)

Settlements
(0.2 )
-

Statute of limitations expiration


(6.6

 )


(0.7

)

Ending balance


$

48.6



$

51.8



As of December 31, 2024 and 2023, approximately $36.4 million and $38.2 million, respectively, of the unrecognized tax benefits would impact the Company's provision for income taxes and effective income tax rate, if recognized. Total estimated accrued interest and penalties related to the underpayment of income taxes was $7.1 million and $10.0 million as of December 31, 2024 and 2023, respectively. The following income tax years remain open in the Company's major jurisdictions as of December 31, 2024:


Jurisdictions

Periods

U.S. (Federal)

2014 through 2024

Germany

2016 through 2024

Greece

2019 through 2024

Spain

2016 through 2024

U.K.

2019 through 2024


It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change within the next twelve months as a result of the resolution of audit examinations and expirations of certain statutes of limitations and, accordingly, materially affect the Company's operating results. At this time, it is not possible to estimate the range of change due to the uncertainty of potential outcomes.