Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company calculates its interim income tax provision in accordance with ASC Topics 270, Interim Reporting, and 740, Income Taxes. At the end of each interim period, the Company makes an estimate of the annual U.S. domestic and foreign jurisdictions’ expected effective tax rates and applies these rates to its respective year to date taxable income or loss. The computation of the estimated effective tax rates at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the fiscal year, projections of the proportion of income (or loss) earned and taxed in the U.S. and foreign tax jurisdictions, along with permanent differences, and the likelihood of deferred tax asset utilization. The Company’s estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. Should facts and circumstances change during a period causing a material change to the estimated effective income tax rate, a cumulative adjustment will be recorded.

The income tax provisions for the three months ended March 31, 2022 and 2021 were based on the estimated annual effective income tax rates adjusted for discrete items occurring during the periods presented. For the three months ended March 31, 2022 and 2021, the Company recognized an aggregate consolidated income tax expense of $3,231 and $10,358, respectively, for U.S. domestic and foreign income taxes. For the three months ended March 31, 2022 and 2021, the Company recorded discrete tax benefits of $12,728 and $7,485, respectively, primarily associated with significant windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions. The effective income tax rate of 5.4% on Income before income taxes of $60,191 for the three months ended March 31, 2022 was lower than the effective income tax rate of 15.3% on Income before income taxes of $67,810 for the three months ended March 31, 2021 primarily due to an increase in discrete tax benefits as discussed above.

During the three months ended March 31, 2022, the Company repatriated $100,000 of undistributed previously taxed earnings generated by its foreign subsidiaries to the U.S. Subsequent to March 31, 2022, the Company repatriated $50,000 of accumulated undistributed previously taxed earnings generated by its foreign subsidiaries as of March 31, 2022 to the U.S. The repatriation was used to fund a portion of the acquisition of Power Line Systems (see Note 4). The cash repatriations did not have a material impact on Provision for income taxes for the three months ended March 31, 2022.