INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following is a geographical breakdown of income before the provision for income taxes:

	Year ended December 31
	2024		2023		2022
Domestic (Canada) income (loss)	$	42.7	$	7.4	$	(6.2)
Foreign income	489.5		298.6		245.3
Income before income taxes	$	532.2	$	306.0	$	239.1

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

	Year ended December 31
	2024			2023			2022
Current income taxes (recoveries)
Domestic (Canada)	$	1.5		$	1.4		$	1.0
Foreign	134.6			63.8			85.9
Total current income taxes (i) (ii)	136.1			65.2			86.9
Deferred income taxes (recoveries)
Domestic (Canada)	—			—			—
Foreign	(31.9)			(3.6)			(27.9)
Total deferred income taxes recoveries (i)	(31.9)			(3.6)			(27.9)
Income tax expense	$	104.2	—	$	61.6	—	$	59.0

A reconciliation of the expected income tax expense calculated using combined Canadian federal and provincial income tax rate with our income tax expense is as follows:

	Year ended December 31
	2024			2023			2022
Expected statutory rate	26.5		%	26.5		%	26.5		%
Expected income tax expense calculated using expected statutory rate	$	141.0		$	81.1		$	63.4
Effect of foreign tax rate differences	(73.9)			(45.7)			(34.9)
Effect of foreign exchange	(10.7)			4.3			1.2
Effect of other, including non-taxable/non-deductible items and changes to net provisions related to tax uncertainties (i) (ii)	26.6			(3.3)			5.0
Change in valuation allowance (ii)	21.2			25.2			24.3
Income tax expense	$	104.2		$	61.6		$	59.0

(i)    These line items in the two tables above include: (i) for 2024, a $22.3 withholding tax expense incurred to minimize the impact of the enactment of Pillar Two (global minimum tax) legislation in Canada, and a $3.9 tax expense arising from taxable temporary differences associated with the anticipated repatriation of undistributed earnings (Repatriation Expense) from certain of our Asian subsidiaries (ii) for 2023, a $11.3 tax expense arising from both the repatriation of undistributed earnings and taxable temporary differences associated with the anticipated repatriation of undistributed earnings from certain of our Asian subsidiaries; and (iii) for 2022, a $3.3 Repatriation Expense related to certain of our Chinese subsidiaries ($3.3 of which was paid in 2023 and realized as a current tax expense in 2023).

(ii)    These line items for 2022, 2023 and 2024 in the two tables above include tax benefits related to return-to-provision adjustments for changes in estimates related to prior years based on changes in facts or circumstances (RTP Adjustments), and net adjustments for tax liabilities and uncertainties (discussed below).

Our effective income tax rate can vary significantly period-to-period for various reasons, including as a result of the mix and volume of business in various tax jurisdictions within the Americas, Europe and Asia, in jurisdictions with tax holidays and tax incentives, and in jurisdictions for which no net deferred income tax assets have been recognized because

management believes it is not probable that future taxable profit will be available against which tax losses and deductible temporary differences could be utilized. Our effective income tax rate can also vary due to the impact of restructuring charges, foreign exchange fluctuations, operating losses, cash repatriations, and changes in our provisions related to tax uncertainties.

During 2024, we recorded net income tax expense of $104.2, which included a $22.3 withholding tax expense incurred to minimize the impact of the enactment of Pillar Two (global minimum tax) legislation in Canada, $14.0 tax expense for tax uncertainties relating to one of our Asian subsidiaries, and a $3.9 Repatriation Expense related to certain of our Asian subsidiaries, offset in part by the recognition of $23.8 of previously unrecognized deferred tax arising from both our NCS acquisition in our U.S. group of subsidiaries and deductible temporary differences in one of our Asian subsidiaries (DTA Recognition), and $11.8 of reversals of tax uncertainties (Reversals) relating to certain of our Asian subsidiaries. Taxable foreign exchange impacts were not significant in 2024.

During 2023, we recorded net income tax expense of $61.6, which included a $11.3 tax expense arising from both the repatriation of undistributed earnings and taxable temporary differences associated with the anticipated repatriation of undistributed earnings from certain of our Asian subsidiaries, and a $4.8 tax expense for tax uncertainties relating to one of our Asian subsidiaries, partially offset by the favorable impact of $5.5 in reversals of previously-recorded tax uncertainties in another of our Asian subsidiaries. Taxable foreign exchange impacts were not significant in 2023. Withholding tax of $5.8 associated with the repatriation of undistributed earnings from certain of our Asian subsidiaries in 2023 (realized as current tax) was fully offset by the reversal of previously accrued deferred taxes from the then-anticipated repatriation of such undistributed earnings.

During 2022, we recorded net income tax expense of $59.0, which was favorably impacted by $4.9 in reversals of tax uncertainties in one of our Asian subsidiaries, which was more than offset by an adverse $3.5 taxable foreign exchange impact arising primarily from the weakening of the Chinese renminbi relative to the U.S. dollar, our functional currency, and a $3.3 Repatriation Expense related to certain of our Chinese subsidiaries. Withholding tax of $10.3 associated with the repatriation of undistributed earnings from certain of our Chinese subsidiaries in 2022 (realized as current tax) was fully offset by the reversal of previously accrued deferred taxes from the then-anticipated repatriation of such undistributed earnings.

The components of the deferred income taxes are as follows:

	December 31
	2024		2023
Deferred tax assets
Accounting provisions not currently deductible	$	65.1	$	30.4
Pensions and non-pension post-retirement benefits	7.6		5.1
Tax loss carryforwards	357.2		361.0
Other	60.8		77.9
Total gross deferred tax assets	490.7		474.4
Less: valuation allowance	(386.0)		(381.1)
Total net deferred tax assets	104.7		93.3
Deferred tax liabilities
Unrealized foreign exchange gains	16.4		23.1
Property, plant and equipment and intangibles	50.0		55.4
Total deferred tax liabilities	66.4		78.5
Net deferred tax assets/(liabilities)	$	38.3	$	14.8
Comprised of:
Non-current assets	87.7		57.0
Non-current liabilities	49.4		42.2
	$	38.3	$	14.8

The amount of tax loss carryforwards on hand at December 31, 2024 is $1,632.9 (December 31, 2023 — $1,658.3). We have applied a valuation allowance against these tax loss carryforwards to reflect management’s best estimate of future taxable profit that will be available against which we can utilize these tax loss carryforwards. $605.0 of these tax loss carryforwards expire between 2025 and 2044, and the remainder of the tax loss carryforwards have no expiry date.

At December 31, 2024, the aggregate amount of taxable temporary differences associated with investments in subsidiaries for which we have not recognized deferred tax liabilities is $42.2 (December 31, 2023 — $28.4). At December 31, 2024, we recorded aggregate deferred tax assets net of valuation allowance of nil relating to subsidiaries which realized losses. At December 31, 2023, we recorded aggregate deferred tax assets net of valuation allowance of $0.7 for one of our Asian subsidiaries which realized losses in 2021 — 2023. At December 31, 2022, we recorded aggregate deferred tax assets net of valuation allowance of $5.0 for one of our Asian subsidiaries and for our U.S. group of subsidiaries, each of which realized losses in 2021 and 2022. We recognize a valuation allowance against aggregate gross deferred tax assets based on our estimate of the future taxable profit we expect these subsidiaries to achieve based on our review of financial projections.

Certain countries in which we do business grant tax incentives to attract or retain our business. Our tax expense could increase if certain tax incentives from which we benefit are retracted or exhausted. A retraction could occur if we fail to satisfy the conditions on which these tax incentives are based, or if they are not renewed or replaced upon expiration. Our tax expense could also increase if tax rates applicable to us in such jurisdictions are otherwise increased, or due to changes in legislation or administrative practices. Changes in our outlook in any particular country could impact our ability to meet the required conditions.

Our tax incentives currently consist of tax exemptions for the profits of our Thailand and Laos subsidiaries. These tax exemptions are subject to certain conditions with which we intend to comply, and expire as described below.

We have four income tax incentives in Thailand. One of these incentives allows for a 50% income tax exemption until its expiration in 2027. The second incentive allows for a 100% income tax and distribution tax exemption for eight years, and expires in 2028. The third incentive allows for a 100% income tax and distribution tax exemption for six years, and expires in 2028. The fourth incentive, a new incentive obtained in 2023 and expected to commence in 2024, allows for a

100% income tax and distribution tax exemption for six years. Our tax incentive in Laos allows for a 100% income tax exemption until 2025, and a reduced income tax rate of 8% thereafter. Upon full expiry of each of the incentives, taxable profits associated with such incentives become fully taxable. The aggregate tax benefit arising from all of our tax incentives was approximately $44 for 2024 (2023 — $40; 2022 — $21).

See note 21 for contingencies regarding Romanian and Thai income and value-added tax matters.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Year ended December 31
	2024		2023
Balance, beginning of year	$	46.1	$	44.4
Additions, based on current year tax positions	0.2		1.4
Additions, for prior years' tax positions (i)	23.0		9.2
Reductions for prior years' tax positions	(2.7)		(2.9)
Reductions for lapse of statute of limitations	(11.5)		(6.7)
Reductions due to settlements (ii)	(2.4)		(0.2)
Impact of foreign exchange fluctuation	(2.7)		0.9
Balance, end of fiscal year	$	50.0	$	46.1

(i)    This line item in the table above include: (i) for 2024, a $14.0 tax expense for tax uncertainties relating to one of our Asian subsidiaries, and a $5.5 tax expense for tax uncertainties relating to one of our Mexican subsidiaries; and (ii) for 2023, a $4.3 tax expense for tax uncertainties relating to one of our Mexican subsidiaries, and a $3.8 tax expense relating to one of our Asian subsidiaries.

(ii)    This line item for 2024 includes a $2.4 tax recovery relating to the settlement of a tax audit for one of our Asian subsidiaries.

We recognize interest and penalties accrued related to unrecognized tax benefits within our tax expense. During 2024, we recognized interest and penalties of approximately $4.1 (2023 and 2022 — de minimis). We had approximately $8.5 accrued for the payment of interest and penalties at December 31, 2024 (December 31, 2023 —$4.5)