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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 15. Income Taxes The United States and foreign components of income before income taxes and equity in earnings in affiliates are as follows:
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (In thousands) |
Income before income taxes and equity in earnings in affiliates |  |  |  |  |  |  |  |  |
United States |  | $ | 22,723 |  |  | $ | 125,495 |  |  | $ | 205,360 |
Foreign |  |  | 15,871 |  |  |  | 12,553 |  |  |  | 24,460 |
Income before income taxes and equity in earnings in affiliates |  | $ | 38,594 |  |  | $ | 138,048 |  |  | $ | 229,820 |
The provision for income taxes consists of the following components:
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (In thousands) |
Federal income taxes (benefit): |  |  |  |  |  |  |  |  |
Current |  | $ | (2,253 | ) |  | $ | 23,107 |  |  | $ | 25,699 |
Deferred |  |  | 3,913 |  |  |  | 1,256 |  |  |  | 17,328 |
|  |  | 1,660 |  |  |  | 24,363 |  |  |  | 43,027 |
State income taxes (benefit): |  |  |  |  |  |  |  |  |
Current |  |  | 3,952 |  |  |  | 6,139 |  |  |  | 10,422 |
Deferred |  |  | (1,406 | ) |  |  | 766 |  |  |  | 3,960 |
|  |  | 2,546 |  |  |  | 6,905 |  |  |  | 14,382 |
Foreign income taxes (benefit): |  |  |  |  |  |  |  |  |
Current |  |  | 6,165 |  |  |  | 4,677 |  |  |  | 39,904 |
Deferred |  |  | (970 | ) |  |  | (546 | ) |  |  | (34,414 | )
|  |  | 5,195 |  |  |  | 4,131 |  |  |  | 5,490 |
Total U.S. and foreign provision for income taxes |  | $ | 9,401 |  |  | $ | 35,399 |  |  | $ | 62,899 |
A reconciliation of the statutory U.S. federal tax rate of 21% and the effective income tax rate is as follows:
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (In thousands) |
Provisions using statutory federal income tax rate |  | $ | 8,105 |  |  | $ | 28,990 |  |  | $ | 48,262 |
State income taxes, net of federal tax benefit |  |  | 2,291 |  |  |  | 8,221 |  |  |  | 12,738 |
Change in valuation allowance |  |  | (24 | ) |  |  | (3,292 | ) |  |  | (242 | )
Federal tax credits |  |  | (1,507 | ) |  |  | (1,733 | ) |  |  | (1,742 | )
Effect of tax rate differential in foreign jurisdictions |  |  | 1,412 |  |  |  | 1,137 |  |  |  | 1,932 |
Tax impact of vested equity compensation |  |  | 192 |  |  |  | 2,879 |  |  |  | 5,839 |
Asset divestiture |  |  | (921 | ) |  |  | (1,529 | ) |  |  | (5,596 | )
Interest deduction on equity issued (convertible debt) |  |  | (3,503 | ) |  |  | — |  |  |  | — |
Political contributions |  |  | 1,090 |  |  |  | 629 |  |  |  | 713 |
Change in cash surrender value - COLI |  |  | (1,300 | ) |  |  | (1,158 | ) |  |  | 1,188 |
Disallowed executive compensation - non-equity |  |  | 1,174 |  |  |  | 1,444 |  |  |  | 711 |
Other, net |  |  | 2,392 |  |  |  | (189 | ) |  |  | (904 | )
Total provision for income taxes |  | $ | 9,401 |  |  | $ | 35,399 |  |  | $ | 62,899 |
The Company's effective tax rate differs from the U.S. statutory rate of 21% primarily due to the net tax benefit of $3.5 million ($42.5 million tax benefit of the tax deduction less $39.0 million tax expense of the related uncertain tax position as further detailed in the unrecognized tax benefits section below) related to the $174.4 million tax deduction for GEO shares issued to holders of our 6.50% Exchangeable Senior Notes due 2026 that participated in private exchange transactions during 2024 as reflected in shareholders' equity, the tax benefit from the release of a valuation allowance of $3.3 million on certain state net operating losses used in 2023, and lower taxes on asset divestitures in 2024, 2023 and 2022 of $0.9 million, $1.5 million and $5.6 million, respectively. Additionally, taxes differ due to state income taxes and foreign income taxes in excess of the US statutory rate in the presented periods. State income taxes, net of federal tax benefits of $2.3 million, $8.2 million, and $12.7 million were incurred in 2024, 2023, and 2022, respectively. The following table presents the breakdown between non-current net deferred tax assets as classified on the balance sheets as of December 31, 2024 and 2023:
|  | 2024 |  |  | 2023 |
|  | (In thousands) |
Deferred tax assets - non-current |  | $ | 9,522 |  |  | $ | 8,551 |
Deferred tax liabilities - non-current |  |  | (78,198 | ) |  |  | (77,369 | )
Total net deferred tax liabilities |  | $ | (68,676 | ) |  | $ | (68,818 | )
The significant components of the Company's deferred tax assets and liabilities consisted of the following as of December 31, 2024 and 2023:
|  | 2024 |  |  | 2023 |
Deferred tax assets: |  | (In thousands) |
Net operating losses |  | $ | 18,750 |  |  | $ | 16,492 |
Accrued liabilities |  |  | 12,907 |  |  |  | 20,408 |
Deferred compensation |  |  | 17,974 |  |  |  | 16,812 |
Accrued compensation |  |  | 8,595 |  |  |  | 9,485 |
Deferred revenue |  |  | 1,071 |  |  |  | 1,446 |
Tax credits |  |  | 2,264 |  |  |  | 3,376 |
Equity awards |  |  | 3,797 |  |  |  | 3,537 |
Operating lease liability |  |  | 24,809 |  |  |  | 26,627 |
Other, net |  |  | 5,579 |  |  |  | 884 |
Valuation allowance |  |  | (19,331 | ) |  |  | (19,105 | )
Total deferred tax assets |  | $ | 76,415 |  |  | $ | 79,962 |
Deferred tax liabilities: |  |  |  |  |  |
Depreciation |  | $ | (79,352 | ) |  | $ | (81,949 | )
Intangible assets |  |  | (41,838 | ) |  |  | (41,329 | )
Other, net |  |  | (17 | ) |  |  | (16 | )
Lease right-of-use assets |  |  | (23,884 | ) |  |  | (25,486 | )
Total deferred tax liabilities |  | $ | (145,091 | ) |  | $ | (148,780 | )
Total net deferred tax assets (liabilities) |  | $ | (68,676 | ) |  | $ | (68,818 | )
Deferred income taxes should be reduced by a valuation allowance if it is not more likely than not that some portion or all of the deferred tax assets will be realized. On a periodic basis, management evaluates and determines the amount of the valuation allowance required and adjusts such valuation allowance accordingly. At year end 2024 and 2023, the Company has a valuation allowance of $19.3 million and $19.1 million, respectively related to deferred tax assets for foreign net operating losses and foreign tax credits, state net operating losses and state tax credits. The valuation allowance increased by $0.2 million during the year ended December 31, 2024 related to certain deferred tax assets that were determined to not be more likely than not to be realized. The Company provides income taxes on the undistributed earnings of non-U.S. subsidiaries except to the extent that such earnings are permanently invested outside the United States. At December 31, 2024, $7.2 million of accumulated undistributed earnings of non-U.S. subsidiaries were permanently invested outside the United States. At the existing U.S. federal income and applicable foreign withholding tax rates, additional taxes (net of foreign tax credits) of $0.4 million, consisting solely of withholding taxes, would have to be provided if such earnings were remitted currently. At December 31, 2024, the Company had $138.4 million of Federal net operating loss carryforwards and $383.5 million of combined net operating loss carryforwards in various states which will begin to expire in 2025. The Company has recorded a partial valuation allowance against the deferred tax assets related to the state operating losses. Related to the 6.50% Exchangeable Senior Notes exchange transaction, the Company also has uncertain tax positions of $138.4 million and $155.1 million offsetting the above federal and state net operating losses, respectively. Also, as of the year ended December 31, 2024, the Company had $20.1 million of foreign net operating losses and $0.2 million foreign capital losses which carry forward indefinitely and $0.3 million of state tax credits which will begin to expire in 2025. The Company has recorded a partial valuation allowance against the deferred tax assets related to the foreign operating losses and state tax credits. The Company recognizes the cost of employee services received in exchange for awards of equity instruments based upon the grant date fair value of those awards. The exercise of non-qualified stock options and vesting of restricted stock awards which have been granted under the Company’s equity award plans give rise to compensation income which is includable in the taxable income of the applicable employees and the majority of which is deductible by the Company for federal and state income tax purposes. In the case of non-qualified stock options, the compensation income results from increases in the fair market value of the Company's common stock subsequent to the date of grant. At December 31, 2024, the deferred tax asset related to unexercised stock options and restricted stock grants for which the Company has recorded a book expense was $3.8 million. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (In thousands) |
Balance at Beginning of Period |  | $ | 1,538 |  |  | $ | 1,520 |  |  | $ | 1,105 |
Additions based on tax positions related to the current year |  |  | 40,707 |  |  |  | — |  |  |  | 581 |
Additions for tax positions of prior years |  |  | 459 |  |  |  | 75 |  |  |  | 57 |
Reductions as a result of a lapse of applicable statutes of limitations |  |  | (101 | ) |  |  | (57 | ) |  |  | (223 | )
Balance at End of Period |  | $ | 42,603 |  |  | $ | 1,538 |  |  | $ | 1,520 |
All tax figures in the above reconciliation are reported on a gross basis and do not reflect a federal tax benefit on state income taxes. The Company has accrued $5.3 million of uncertain tax benefits as of December 31, 2024 which is inclusive of the federal tax benefit on state income taxes. This accrual includes $3.5 million related to the tax deduction on shares provided related to the 6.50% Exchangeable Senior Notes exchange transactions. This accrual does not include an uncertain tax position of $35.5 million related to the tax deduction on provided shares, as it has been netted in accordance with ASC 740-10 against the related deferred tax assets for generated federal and state net operating losses. The Company believes that it is reasonably possible that a decrease may be necessary in the unrecognized tax benefits within twelve months of the reporting date of approximately $0.2 million, related to tax exposures, due to a lapse of the statute of limitation. Included in the balance of uncertain tax positions as of December 31, 2024 are $40.8 million of unrecognized tax benefits which, if ultimately recognized, will reduce the Company’s annual effective tax rate. The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company is no longer subject to tax examination of its 2020 U.S. federal return. Additionally, with few exceptions, it is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for the years before 2020. The calculation of the Company’s provision (benefit) for income taxes requires the use of significant judgment and involves dealing with uncertainties in the application of complex tax laws and regulations. In determining the adequacy of the Company’s provision (benefit) for income taxes, potential settlement outcomes resulting from income tax examinations are regularly assessed. As such, the final outcome of tax examinations, including the total amount payable or the timing of any such payments upon resolution of these issues, cannot be estimated with certainty. During the year ended December 31, 2024, the Company recognized a net increase in interest of $0.1 million related to the unrecognized tax benefits noted in the table above. There was no potential penalty recorded during the years ended December 31, 2024 or 2023. The net decrease in interest during the year ended December 31, 2022 was not significant. During the year ended December 31, 2022, the Company recorded a potential penalty of $0.1 million. The Company has approximately $0.5 million accrued for the payment of interest and penalties at December 31, 2024. The Company had approximately $0.4 million accrued for the payment of interest and penalties at December 31, 2023. The Company had approximately $0.1 million accrued for the payment of interest and penalties at December 31, 2022. The Company classifies interest and penalties as interest expense and operating expense, respectively.

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