Income Taxes

6 Months Ended

Jun. 30, 2024

Income Taxes

Income Taxes

Note 9 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods.

Income before income taxes and income tax expense for the three and six months ended June 30, 2024 and 2023 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(in thousands, except percentages)
Income (loss) before income taxes	$	17,071	$	(84,035)	$	39,821	$	(75,031)
Income tax expense	$	2,127	$	1,285	$	3,023	$	1,548
Effective tax rate		12.46%		(1.53)%		7.59%		(2.06)%

The Company’s income tax expense for the three and six months ended June 30, 2024 was $2.1 million and $3.0 million respectively, compared to $1.3 million and $1.5 million, respectively for the comparable prior period. For the three and six months ended June 30, 2024, the effective tax rate was favorably impacted by the tax benefits related to Foreign-Derived Intangible Income and research and development tax credits. Additionally, the effective tax rate was also lower than the U.S. statutory tax rate primarily relating to a discrete income tax benefit for share-based compensation windfall. For the three and six months ended June 30, 2023, the Company’s income tax expense primarily related to pre-tax income from operations excluding the loss on extinguishment of the 2025 and 2027 Notes. Pursuant to the limitation on losses from extinguishment of convertible notes under Section 249 of the Internal Revenue Code of 1986, as amended (Section 249), the Company recognized a benefit of $0.9 million associated with this loss for the three and six months ended June 30, 2023. Additionally, the income tax expense for the three and six months ended June 30, 2023 was favorably impacted by the tax benefits related to Foreign-Derived Intangible Income and research and development tax credits, as well as discrete income tax benefit for share-based compensation windfall.