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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For purposes of interim reporting, our annual effective income tax rate is estimated in accordance with ASC 740-270, "Interim Reporting." This rate is applied to income before income taxes, including income from equity method investments of the entities expected to be benefited during the year. Discrete items that impact the tax provision are recorded in the period incurred. On July 4, 2025, Public Law 119-21, commonly referred to as One Big Beautiful Bill Act, or OBBBA, was enacted in the United States. The OBBBA includes a broad range of tax provisions that impact the timing and the magnitude of certain key tax deductions. The most significant provisions to us are the permanent reinstatement of the full and immediate deduction for domestic research and development expenditures in the year such costs are incurred and the 100% first-year bonus depreciation deduction, with both provisions reducing our associated deferred tax assets. We currently anticipate these provisions will significantly reduce our current federal income tax cash outlays over the next several years. Certain other international tax provisions may also be favorable to us beginning in 2026. We will continue to analyze the OBBBA tax provisions, including any additional guidance that is issued, to assess their potential impact on our financial position, results of operations and cash flows. For the three and nine months ended September 30, 2025, we recorded a provision for income taxes of $15.2 million and $28.0 million, respectively, resulting in an effective income tax rate of 30.2% and 22.4% for those periods. For the three and nine months ended September 30, 2024, we recorded a provision for income taxes of $6.7 million and $10.3 million, respectively, resulting in an effective income tax rate of 15.6% and 10.1% for those periods. For the three months ended September 30, 2025, our effective tax rate was above the 21.0% statutory rate primarily due to the impact of state taxes, foreign withholding taxes, a reduced foreign derived intangible income deduction and other nondeductible expenses, partially offset by the impact of 2025 research and development tax credits claimed. For the nine months ended September 30, 2025, our effective tax rate was above the 21.0% statutory rate primarily due to the impact of state taxes, foreign withholding taxes and other nondeductible expenses, partially offset by the impact of 2025 research and development tax credits claimed and a favorable true-up adjustment of our 2024 income tax provision estimate associated with research and development tax credits. For the three months ended September 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to 2024 research and development tax credits claimed, the foreign derived intangible income deduction and a favorable true-up adjustment of our 2023 income tax provision estimate and amended prior year state income tax returns, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses. For the nine months ended September 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to a favorable true-up adjustment of our 2023 income tax provision estimate, the foreign derived intangible income deduction, 2024 research and development tax credits claimed, the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, federal estimated tax payment interest expense and other nondeductible expenses. We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized. Our valuation allowance for state research and development tax credit carryforwards, net deferred tax assets of our EBS subsidiary and an unrealized U.S. federal capital loss was $5.0 million as of December 31, 2024 and increased to $5.6 million as of September 30, 2025. We apply guidance for uncertainty in income taxes that requires the application of a more likely than not threshold to the recognition and de-recognition of uncertain tax positions. If the recognition threshold is met, this guidance permits us to recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is more likely than not to be realized upon settlement. We recorded a net increase to the unrecognized tax benefits liability of $0.7 million primarily due to a liability for research and development tax credits claimed during the nine months ended September 30, 2025. We recorded a net increase to the unrecognized tax benefits liability of less than $0.1 million primarily due to a liability for research and development tax credits claimed, partially offset by the closure of the 2018 and 2019 Internal Revenue Service federal income tax return examination and the release of a state unrecognized tax benefit liability due to the statute of limitations expiration during the nine months ended September 30, 2024. Our condensed consolidated balance sheets included an accrual for total interest expense related to unrecognized tax benefits of $1.3 million and $0.9 million as of September 30, 2025 and December 31, 2024, respectively. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. Our tax returns are subject to on-going review and examination by various tax authorities. Tax authorities may not agree with the treatment of items reported in our tax returns, and therefore the outcome of tax reviews and examinations can be unpredictable. On October 13, 2021, the Internal Revenue Service commenced an examination of our federal income tax return for 2018 and on August 12, 2022, the Internal Revenue Service expanded the examination to include our federal income tax return for 2019. On January 25, 2024, the Internal Revenue Service notified us that the income tax examination of our 2018 and 2019 federal income tax returns has been closed. As a result, we paid $0.6 million in additional federal taxes, including interest, during the three months ended June 30, 2024, and recognized a net income tax benefit of $1.7 million during the three months ended March 31, 2024. As of September 30, 2025, we did not have material undistributed foreign earnings. We have not recorded a deferred tax liability on the undistributed earnings from our foreign subsidiaries, as such earnings are considered to be indefinitely reinvested. During the three months ended September 30, 2025, we changed this assertion with respect to the current earnings of our Canadian business to begin providing deferred taxes on such earnings, the tax impact of which was not material.

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