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Income Tax Provision
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Tax Provision

Note 6 - Income Tax Provision

Income (loss) from operations before income taxes, based on geographic location of the operations to which such earnings are attributable, is provided below.

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

United States

 

$

4.5

 

 

$

103.2

 

 

$

108.5

 

Non-United States

 

 

0.1

 

 

 

(6.8

)

 

 

(11.4

)

Income (loss) from operations before income taxes

 

$

4.6

 

 

$

96.4

 

 

$

97.1

 

 

The provision (benefit) for income taxes consisted of the following:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

2.6

 

 

$

30.4

 

 

$

0.6

 

State and local

 

 

(0.1

)

 

 

6.1

 

 

 

5.7

 

Foreign

 

 

0.3

 

 

 

0.2

 

 

 

0.8

 

Total current tax expense (benefit)

 

$

2.8

 

 

$

36.7

 

 

$

7.1

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

$

0.4

 

 

$

(9.2

)

 

$

24.2

 

State and local

 

 

0.1

 

 

 

(0.5

)

 

 

0.7

 

Foreign

 

 

—

 

 

 

—

 

 

 

—

 

Total deferred tax expense (benefit)

 

 

0.5

 

 

 

(9.7

)

 

 

24.9

 

Provision (benefit) for incomes taxes

 

$

3.3

 

 

$

27.0

 

 

$

32.0

 

For the year ended December 31, 2024, Metallus made $21.5 million in U.S. federal payments, $6.1 million in state and local tax payments and $0.3 million in foreign tax payments. For the year ended December 31, 2023, the Company made $19.0 million in U.S. federal payments, $4.9 million in state and local tax payments, $1.4 million in foreign tax payments, and had refundable overpayments of $0.3 million related to U.S. federal, state, and local income taxes.

The reconciliation between Metallus' effective tax rate on income (loss) from continuing operations and the statutory tax rate is as follows:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S. federal income tax provision (benefit) at statutory rate

 

$

1.0

 

 

$

20.2

 

 

$

20.4

 

Adjustments:

 

 

 

 

 

 

 

 

 

State and local income taxes, net of federal tax benefit

 

 

—

 

 

 

4.2

 

 

 

8.4

 

Permanent differences

 

 

1.9

 

 

 

1.2

 

 

 

8.9

 

Foreign earnings taxed at different rates

 

 

0.1

 

 

 

—

 

 

 

(3.6

)

Valuation allowance

 

 

(0.5

)

 

 

1.8

 

 

 

(2.5

)

U.S. research tax credit

 

 

(0.1

)

 

 

(0.3

)

 

 

(0.6

)

Other items, net

 

 

1.0

 

 

 

(0.1

)

 

 

1.0

 

Provision (benefit) for income taxes

 

$

3.3

 

 

$

27.0

 

 

$

32.0

 

Effective tax rate

 

 

72.2

%

 

 

28.0

%

 

 

32.9

%

Income tax expense includes U.S. and international income taxes. Except as required under U.S. tax law, U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the U.S. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary.

The permanent differences for the year ended December 31, 2024 are primarily due to the non-deductible loss on extinguishment of Convertible Senior Notes due 2025 and non-deductible compensation.

The effect of temporary differences giving rise to deferred tax assets and liabilities at December 31, 2024 and 2023 was as follows:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

Deferred tax liabilities:

 

 

 

 

 

 

Depreciation

 

$

(69.5

)

 

$

(75.0

)

Inventory

 

 

—

 

 

 

—

 

Prepaid insurance

 

 

(1.3

)

 

 

(1.9

)

Leases - right-of-use asset

 

 

(2.8

)

 

 

(2.8

)

Deferred tax liabilities

 

$

(73.6

)

 

$

(79.7

)

Deferred tax assets:

 

 

 

 

 

 

Tax loss carryforwards

 

$

15.6

 

 

$

16.0

 

Pension and postretirement benefits

 

 

41.2

 

 

 

46.8

 

Other employee benefit accruals

 

 

8.4

 

 

 

8.0

 

Lease liability

 

 

2.8

 

 

 

2.8

 

State decoupling

 

 

1.2

 

 

 

1.2

 

Capital loss carryforward

 

 

0.8

 

 

 

0.8

 

Intangible assets

 

 

0.1

 

 

 

0.1

 

Inventory

 

 

0.8

 

 

 

0.8

 

Allowance for doubtful accounts

 

 

0.4

 

 

 

0.5

 

Capitalized R&D

 

 

3.0

 

 

 

3.2

 

Other, net

 

 

—

 

 

 

—

 

Deferred tax assets subtotal

 

$

74.3

 

 

$

80.2

 

Valuation allowances

 

 

(15.0

)

 

 

(15.5

)

Deferred tax assets

 

 

59.3

 

 

 

64.7

 

Net deferred tax assets (liabilities)

 

$

(14.3

)

 

$

(15.0

)

As of December 31, 2024 and 2023, the Company had a net deferred tax liability of $14.3 million and $15.0 million, respectively, on the Consolidated Balance Sheets. As of December 31, 2024, the Company had loss carryforwards in the UK totaling $58.6 million having various expiration dates. There are no federal loss carryforwards in the U.S.; however, there are $15.8 million in state and certain local loss carryforwards with various expiration dates.

During 2016, operating losses generated in the U.S. resulted in a decrease in the carrying value of the Company’s U.S. deferred tax liability to the point that would result in a net U.S. deferred tax asset at December 31, 2016. In light of the Company's operating performance in the U.S. and current industry conditions, the Company assessed, based upon all available evidence at the time, and concluded that it was more likely than not that it would not realize a portion of its U.S. deferred tax assets. As such, the Company recorded a valuation allowance in 2016.

Each reporting period we assess available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize the Company’s deferred tax assets. Due to Metallus' historical operating performance in the U.S., we have historically been limited in our ability to rely on other subjective evidence such as projections of our future profitability. However, as of December 31, 2022, based on consecutive years of profitability, utilization of the majority of previously generated loss carryforwards in the U.S., and forecasted future profitability, the Company released a portion of its U.S. valuation allowance. The Company maintained a domestic partial valuation allowance on a capital loss carryforward and certain state loss carryforwards that are expected to expire unused. Metallus has provided a valuation allowance on the aforementioned UK loss carryforward.

The need to maintain valuation allowances against deferred tax assets in the U.S. and other affected countries may cause variability in the Company’s effective tax rate. The majority of Metallus' income taxes are derived from federal, domestic state and local taxes.

As of December 31, 2024 and 2023, the Company had no total gross unrecognized tax benefits, and no amounts which represented unrecognized tax benefits that would favorably impact Metallus' effective income tax rate in any future periods if such benefits were recognized. As of December 31, 2024, Metallus does not anticipate a change in its unrecognized tax positions during the next 12 months. Metallus had no accrued interest and penalties related to uncertain tax positions as of December 31, 2024 and 2023.

As of December 31, 2024, the tax years 2021 to the present remain open to examination by the IRS.