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INCOME TAXES
 12 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense (benefit) was calculated based upon the following components of income (loss) from continuing operations before income taxes for the years ended September 30, 2025, 2024 and 2023.
(in millions)202520242023
United States$(53.1)$8.0 $(399.8)
Outside the United States140.3 155.6 109.6 
Income (loss) from operations before income taxes$87.2 $163.6 $(290.2)
The components of income tax expense (benefit) for the years ended September 30, 2025, 2024 and 2023 are as follows.
(in millions)202520242023
Current tax expense
U.S. Federal$10.9 $27.4 $81.8 
Foreign34.2 31.9 44.9 
State and local1.1 1.3 (0.4)
Total current tax expense46.2 60.6 126.3 
Deferred tax (benefit) expense
U.S. Federal(20.5)6.2 (197.7)
Foreign(26.4)1.2 5.0 
State and local(12.3)(3.7)9.9 
Total deferred tax (benefit) expense(59.2)3.7 (182.8)
Income tax (benefit) expense$(13.0)$64.3 $(56.5)

The following reconciles the total income tax (benefit) expense, based on the U.S. Federal statutory income tax rate of 21% with the Company’s recognized income tax (benefit) expense.
(in millions)202520242023
U.S. Statutory federal income tax expense (benefit)$18.3 $34.4 $(60.9)
Permanent items4.9 8.1 5.0 
Goodwill impairment— — 2.8 
Foreign statutory rate vs. U.S. statutory rate(1.9)(3.7)(1.6)
State income taxes, net of federal effect(4.5)(3.2)(14.5)
State and Foreign effective rate change(6.4)1.0 (4.0)
GILTI0.6 5.0 2.1 
Residual tax on foreign earnings1.8 1.9 1.5 
Change in valuation allowance(13.2)1.9 0.2 
Unrecognized tax expense4.1 7.3 3.8 
Share based compensation adjustments(0.8)0.3 0.3 
Research and development tax credits(2.0)(2.3)(1.8)
Partnership outside basis adjustment(9.5)7.7 7.0 
Return to provision adjustments(3.8)4.0 (0.9)
Other(0.6)$1.9 $4.5 
Income tax (benefit) expense$(13.0)$64.3 $(56.5)
NOTE 15 - INCOME TAXES (continued)
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of September 30, 2025 and 2024 are as follows.
(in millions)20252024
Deferred tax assets
Employee benefits$22.2 $27.4 
Inventories and receivables22.9 28.0 
Marketing and promotional accruals8.0 5.1 
Property, plant and equipment1.7 2.3 
Unrealized losses13.2 22.2 
Intangibles14.9 9.6 
Operating lease liabilities19.8 27.7 
Net operating loss and credit carry forwards347.6 322.2 
Other10.9 21.1 
Total deferred tax assets461.2 465.6 
Deferred tax liabilities
Property, plant and equipment1.2 4.4 
Unrealized gains2.7 6.8 
Intangibles164.7 171.8 
Operating lease assets16.9 23.4 
Investment in partnership64.5 78.3 
Taxes on unremitted foreign earnings2.4 1.7 
Other15.1 13.7 
Total deferred tax liabilities267.5 300.1 
Net deferred tax liabilities193.7 165.5 
Valuation allowance(296.4)(321.4)
Net deferred tax liabilities, net valuation allowance$(102.7)$(155.9)
Reported as:
Deferred charges and other$33.9 $14.9 
Deferred taxes (noncurrent liability)136.6 170.8 
During the tax year ended September 30, 2025, the Company recognized a $13.0 million tax benefit related to reducing the outside basis deferred tax liability related to its U.S. partnership. The benefit resulted from the Company’s adoption of a plan during Fiscal 2025 to restructure its US operations in Fiscal 2026 in a tax-free manner that reversed $13.0 million of the outside basis difference.
During Fiscal 2022, the Company became aware of ongoing legal challenges to the validity of the IRC Section 245A temporary regulations (“June 2019 Regulations”) adopted by the Treasury Department in June of 2019. During the year ended September 30, 2022, the Company filed a protective amended U.S. income tax return consistent with the June 2019 Regulations being invalid. The Company has determined that this position is not more likely than not to be upheld and therefore has not recorded a tax benefit for this amended return and for the tax effects on each of its open Fiscal Years. Should the June 2019 Regulations ultimately be found invalid, the Company estimates that, as of September 30, 2025, it would recognize a tax benefit of approximately $56.6 million.
The Organization for Economic Co-operations and Development has introduced a framework to implement a global minimum corporate income tax of 15% referred to as "Pillar Two." Certain countries have adopted legislation to implement Pillar Two, and other countries are in the process of introducing legislation to implement Pillar Two. Many aspects of Pillar Two are effective for tax years beginning after January 1, 2024 with certain remaining aspects to be effective for tax years beginning January 1, 2025 or later. The impact of the Pillar Two legislation currently in effect for the Company's Fiscal 2025 does not have a material effect on the Fiscal 2025 tax provision.
On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was enacted into law in the U.S. The Act includes numerous provisions related to corporate income taxes with various effective dates. While the Company is still evaluating the changes contained in the Act, it does not expect them to have a material effect on its ongoing effective tax rate.
NOTE 15 - INCOME TAXES (continued)
The Tax Reform Act of December 22, 2017, included a tax on deemed repatriated accumulated earnings of foreign subsidiaries. The Company’s mandatory repatriation tax is payable over 8 years. The first payment was due January 2019. As of September 30, 2025, the remainder of the $5.5 million of the mandatory repatriation liability is due and payable in the next 12 months.
To the extent necessary, the Company intends to utilize free cash flow from foreign subsidiaries in order to support management's plans to voluntarily accelerate pay down of U.S. debt, fund distributions to shareholders, fund U.S. acquisitions and satisfy ongoing U.S. operational cash flow requirements. The Company annually estimates the available earnings, permanent reinvestment classification and the availability of and management’s intent to use alternative mechanisms for repatriation for each jurisdiction in which the Company does business. Accordingly, the Company is providing residual U.S. and foreign deferred taxes on these earnings to the extent they cannot be repatriated in a tax-free manner.
As of September 30, 2025 and 2024, the Company provided $2.4 million and $1.7 million, respectively, of residual foreign taxes on undistributed foreign earnings.
As a result of the June 2019 Regulations and the deemed mandatory repatriation, the Company does not have significant prior year untaxed, undistributed earnings from its foreign operations at September 30, 2025. There were $500.6 million of the Company’s undistributed earnings taxed in the U.S. as a result of the mandatory deemed repatriation that was part of the Tax Reform Act, and the remaining earnings were taxed as a result of the June 2019 Regulations. The Company recorded GILTI inclusions for the tax year ended September 30, 2025 of $2.8 million. The Company estimates it generated untaxed, undistributed foreign earnings due to high-tax exceptions to GILTI inclusions under the Tax Reform Act for the year ended September 30, 2025 of $49.8 million and has cumulative untaxed, undistributed foreign earnings due to high-tax exceptions as of September 30, 2025 of $229.9 million.
As of September 30, 2025, the Company has U.S. federal net operating carryforwards (“NOLs”) of $601.8 million with a federal tax benefit of $126.4 million and tax benefits related to state NOLs of $44.1 million. Certain of the U.S. federal and state NOLs have indefinite carryforward periods while certain state NOLs expire through years ending in 2045. As of September 30, 2025, the Company has foreign NOLs of $515.1 million and tax benefits of $124.2 million, which will expire beginning in the Company's fiscal year ending September 30, 2026. Certain of the foreign NOLs have indefinite carryforward periods.
A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability of the Company to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions.
During the year ended September 30, 2025, the Company initiated refinancing of certain intercompany loans, which will allow the Company to utilize certain Luxembourg NOLs that previously had a full valuation allowance. The Company recorded a tax benefit of $16.0 million due to the release of the valuation allowance against these NOLs in the year ended September 30, 2025.
The Company has had multiple changes of ownership, as defined under Section 382 of the Internal Revenue Code of 1986, as amended, that subject the Company’s U.S. federal and state NOLs and other tax attributes to certain limitations. The annual limitation is based on a number of factors including the value of the Company’s stock (as defined for tax purposes) on the date of the ownership change, its net unrealized gain position on that date, the occurrence of realized gains in years subsequent to the ownership change and the effects of subsequent ownership changes (as defined for tax purposes), if any. Due to these limitations, the Company estimates, as of September 30, 2025, that $521.0 million of the total U.S. federal NOLs with a federal tax benefit of $109.4 million and $13.8 million of the tax benefit related to state NOLs will expire unused even if the Company generates sufficient income to otherwise use all of its NOLs. The Company also projects, as of September 30, 2025, that $98.1 million of tax benefits related to foreign NOLs will not be used. The Company has provided a full valuation allowance against these deferred tax assets.
As of September 30, 2025, the valuation allowance is $296.4 million, of which $193.4 million is related to U.S. net deferred tax assets and $103.0 million is related to foreign net deferred tax assets. As of September 30, 2024, the valuation allowance was $321.4 million, of which $203.6 million was related to U.S. net deferred tax assets and 117.8 is related to foreign net deferred tax assets. As of September 30, 2023, the valuation allowance was $333.4 million, of which $244.7 million is related to U.S. net deferred tax assets and $88.7 million is related to foreign net deferred tax assets. During the year ended September 30, 2025, the Company decreased its valuation allowance for deferred tax assets by $25.0 million of which $10.2 million is related to the decrease in valuation allowance against U.S. net deferred tax assets and $14.8 million related to the decrease in the valuation allowance against foreign net deferred tax assets. During the year ended September 30, 2024, the Company decreased its valuation allowance for deferred tax assets by $12.0 million, of which $41.1 million was related to the decrease in valuation allowance against U.S. net deferred tax assets and $29.1 million related to the increase in the valuation allowance against foreign net deferred tax assets.
During the year ended September 30, 2025, $40.2 million of U.S. federal NOLs with a tax benefit of $8.4 million expired unused. The expiring NOLs had a full valuation allowance recorded.
As of September 30, 2025, the Company has recorded $40.9 million of valuation allowance against its U.S. state net operating losses.
NOTE 15 - INCOME TAXES (continued)
The total amount of unrecognized tax benefits at September 30, 2025 and 2024 are $186.3 million and $190.2 million, respectively. If recognized in the future, $112.5 million of the unrecognized tax benefits as of September 30, 2025 will impact the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of September 30, 2025, and 2024 the Company had $22.0 million and $9.8 million of accrued interest and penalties related to uncertain tax positions. The impact on income tax expense related to interest and penalties for the year ended September 30, 2025 was a net increase of $12.2 million, a net increase of $8.1 million for the year ended September 30, 2024, and a net increase of $0.3 million for the year ended September 30, 2023. The following table summarizes the changes to the amount of unrecognized tax benefits for the years ended September 30, 2025, 2024 and 2023:
(in millions)202520242023
Unrecognized tax benefits, beginning of year$190.2 $121.1 $100.9 
Gross increase – tax positions in prior period3.2 77.5 21.5 
Gross decrease – tax positions in prior period(6.7)(9.2)(34.4)
Gross increase – tax positions in current period1.4 1.7 33.4 
Settlements— (0.6)— 
Lapse of statutes of limitations(1.8)(0.3)(0.3)
Unrecognized tax benefits, end of year$186.3 $190.2 $121.1 
For the year ended September 30, 2025, the Company recorded a decrease to the June 2019 Regulations position of $2.6 million for the impact of Fiscal 2025 on the position. For the year ended September 30, 2024, the Company recorded a decrease to the June 2019 Regulations position of $2.3 million for the impact of Fiscal 2024 on the position. In addition, during the year ended September 30, 2024, the Company recorded an increase to the June 2019 regulations position of $17.9 million for the adjustments related to the Fiscal 2023 U.S. federal tax return filed during Fiscal 2024. For the year ended September 30, 2023, the Company recorded a decrease to the June 2019 Regulations position of $33.0 million, which is included in the $34.4 million decrease for unrecognized tax positions in prior periods, and represents the impact of Fiscal 2023 activity on the position. The Company also recorded $27.3 million during the year ended September 30, 2023 for uncertain tax positions related to the state tax on the sale of HHI, which was increased by an additional $50.1 million during the year ended September 30, 2024 for the Fiscal 2023 state tax returns filed during Fiscal 2024.
The Company files income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions and is subject to ongoing examination by the various taxing authorities. The Company’s major taxing jurisdictions are the U.S., United Kingdom and Germany. In the U.S., federal tax filings for years prior to and including the Company’s fiscal year ended September 30, 2017 are closed. However, the federal NOLs from the Company’s fiscal years ended September 30, 2012 through December 31, 2015 are subject to Internal Revenue Service examination until the year that such net operating loss carryforwards are utilized, and those years are closed for audit. In addition, certain losses from 2002 to 2010 of entities acquired by the Company were able to be used in Fiscal 2019 and are subject to Internal Revenue Service examination until Fiscal 2019 is closed to audit. Fiscal years 2018, 2019, and 2021 are currently under examination and remain open. Filings in various U.S. state and local jurisdictions are also subject to audit and to date no significant audit matters have arisen. As of September 30, 2025, certain of the Company’s legal entities are undergoing income tax audits. The Company cannot predict the ultimate outcome of the examinations; however, it is reasonably possible that during the next twelve months some portion of previously unrecognized tax benefits could be recognized.