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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

10. INCOME TAXES

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our provision for income taxes and effective tax rate:

 

 

For the Quarter Ended September 30,

 

 

For the Year to Date Ended September 30,

 

(Dollars in Thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Pretax income

 

$

56,021

 

 

$

52,362

 

 

$

168,764

 

 

$

158,227

 

Provision for income taxes

 

$

16,171

 

 

$

14,107

 

 

$

44,198

 

 

$

42,101

 

Effective rate

 

 

28.9

%

 

 

26.9

%

 

 

26.2

%

 

 

26.6

%

The effective tax rate for the quarter and year to date ended September 30, 2025 was impacted by the tax effect of stock-based compensation, which decreased the effective tax rate for the quarter and year to date by 0.2% and 2.0%, respectively. The effective tax rate for the quarter and year to date ended September 30, 2025 also includes the effect of a state income tax assessment, which increased the effective tax rate for the quarter and year to date by 0.4% and 0.1%, respectively. The effective tax rate for the quarter and year to date ended September 30, 2024 reflects federal tax credits claimed for the 2023 tax return, which decreased the effective tax rate for the quarter and year to date by 0.4% and 0.1%, respectively. Additionally, the tax effect of stock-based compensation

reduced the effective tax rate for the quarter and year to date ended September 30, 2024 by 0.2% and 0.5%, respectively. As of September 30, 2025, a valuation allowance of $12.0 million was maintained with respect to our affiliate equity investment noted above and state net operating losses.

The income tax rate for the quarter and year to date ended September 30, 2025 does not take into account the possible future reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of September 30, 2025, we had accrued $5.4 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state and local tax authorities and these audits are at various stages of completion at any given time. The Company’s federal income tax filings are open to examinations for the tax years ended December 31, 2022 and forward.

While the One Big Beautiful Bill Act is not expected to have a material impact on the tax provision, the allowing of 100% bonus depreciation and the immediate expensing of domestic research expenditures will reduce the cash taxes paid in the current year.