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Income Taxes | 3 Months Ended
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Mar. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes We compute and apply to ordinary income or loss an estimated annual effective tax rate on a quarterly basis based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws. The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts. Ordinary income or loss refers to income or loss before income taxes excluding significant, unusual or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of tax. The following table summarizes the income tax benefit:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
|  |  |  |  | (Dollars in thousands)
Income tax benefit |  |  |  |  | $ | (7,212) |  |  | $ | (4,201) |
Loss before income taxes |  |  |  |  | (46,563) |  |  | (35,070) |
Effective tax rate |  |  |  |  | 15.5 | % |  | 12.0 | %
The effective tax rate for the first quarter of 2025 and 2024 was different than the U.S. statutory tax rate of 21% primarily due to the mix of U.S. and foreign earnings, tax incentives and provisions of the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”). We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. All U.S. federal tax years prior to 2021 are generally closed by statute or have been audited and settled with the applicable domestic tax authorities. Other jurisdictions are generally closed for years prior to 2019. At each reporting period, the Company assesses the need for valuation allowances against deferred tax assets and whether it is more likely than not that deferred tax benefits will be realized in each jurisdiction. Consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Examples of positive evidence include a strong earnings history, an event or events that would increase the Company's taxable income or reduce expenses, or tax planning strategies that would create the ability to realize deferred tax assets. Examples of negative evidence include cumulative losses in recent years or a history of tax attributes expiring unused. In circumstances where the negative evidence outweighs the positive evidence, the Company has established or maintained valuation allowances on the jurisdiction’s net deferred tax assets. However, the recognition of the valuation allowance does not limit the Company's ability to utilize these tax assets on a tax return in the future should taxable income be realized in sufficient amount to realize the assets. Our losses in certain tax jurisdictions in recent periods represented sufficient negative evidence to require a full valuation allowance. As of March 31, 2025, we had a valuation allowance of $19.3 million against certain deferred tax assets (“DTAs”). We also have a partial valuation allowance related to certain U.S. state net operating and capital losses where realizability is unlikely due to discontinued operations or the ability of our U.S. subsidiaries to generate capital gains. Until we determine that we will generate sufficient jurisdictional taxable income to realize our net operating losses and DTAs, we will continue to maintain a valuation allowance. Our losses in the U.S. and Switzerland from recent periods and the potential for respective losses throughout 2025 may lead to a cumulative loss and may represent sufficient negative evidence to require a full valuation allowance on U.S. and Switzerland DTAs, which would materially increase our expenses in the period the allowance is recognized and materially increase our reported net loss. The Company will continue to evaluate additional evidence such as projections for growth and market recovery to determine if adjustments to valuation allowances are required. There were no material changes to our valuation allowances in the first three months of 2025.

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