Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense was $3.0 million and $0.9 million for the three months ended June 30, 2020 and 2019, respectively, and $3.4 million and $1.2 million for the six months ended June 30, 2020 and 2019, respectively. The increase in income tax expense and the decrease in the effective tax rate to 22.5% from 29.8% for the three months ended June 30, 2020 and 2019, respectively, were primarily attributable to increased earnings and the geographic mix of earnings between the U.S. and Germany. The increases in income tax expense and the effective tax rate to 29.8%, from 25.6% for the six months ended June 30, 2020 and 2019, respectively, were primarily attributable to increased earnings, certain non-deductible transaction costs incurred in connection with the Merger Agreement and the geographic mix of earnings between the U.S. and Germany.

As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets, primarily U.S. federal and state net operating loss carryforwards (“NOLs”). As of June 30, 2020 and December 31, 2019, the Company had a partial valuation allowance related to certain acquired state NOLs that it believes are more-likely-than-not to remain unutilized.

During each of the three and six months ended June 30, 2020 and 2019, the Company had no material changes in its uncertain tax positions.

The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act made significant changes to U.S. federal tax law, including a five-year carryback of NOLs for the 2018, 2019 and 2020 tax years, and a temporary increase in the limitation of interest deductibility for the 2019 and 2020 tax years. Due to the Company's historical NOLs and limited interest deductibility, the provisions of the CARES Act are not expected to have a material impact to its financial position, results of operations or cash flows.