Income Taxes

9 Months Ended

Sep. 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 nine months ended September 30, 2024 and 2023 were as follows:

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
	(in thousands, except percentages)
Income (loss) before income taxes	$	24,658	$	22,510	$	64,479	$	(52,521)
Income tax expense (benefit)	$	2,707	$	(2,064)	$	5,730	$	(516)
Effective tax rate		10.98%		(9.17)%		8.89%		0.98%

The Company’s income tax expense for the three and nine months ended September 30, 2024 was $2.7 million and $5.7 million respectively, compared to income tax benefit of $2.1 million and $0.5 million, respectively for the comparable prior period.

For the three and nine months ended September 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 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 nine months ended September 30, 2023, the Company’s income tax benefits primarily related to previously unrecognized research and development tax credits recognized upon completion of the Company’s study, as well as tax benefits related to Foreign-Derived Intangible Income and research and development tax credits. Additionally, for the nine months ended September 30, 2023, the Company had a $0.9 million tax benefit associated with the loss on extinguishment of the 2025 and 2027 Notes, as well as a discrete tax benefit for share-based compensation windfall. These tax benefits were partially offset by tax expenses attributed to pre-tax income from operations excluding the loss on extinguishment of the 2025 and 2027 Notes.