Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Tax Disclosure

Income Taxes

The income tax provision includes U.S. federal, state and local, and foreign income taxes and is based on the application of a forecasted annual income tax rate applied to the current quarter's year-to-date pre-tax income or loss. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company's annual earnings, taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the Company's ability to use tax credits and net operating loss carryforwards and capital loss carryforwards, and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates and certain circumstances with respect to valuation allowances or the tax effect of other unusual or nonrecurring transactions or adjustments are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than included in the estimated annual effective income tax rate. Additionally, the Company's interim effective income tax rate is computed and applied without regard to pre-tax losses where such losses are not expected to generate a current-year tax benefit.

The Tax Cuts and Jobs Act ("Tax Reform Act") includes anti-deferral and anti-base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions require the Company to include non-U.S. earnings in excess of an allowable return on the Company’s non-U.S. subsidiary’s tangible assets in its U.S. income tax return. The Company has elected to account for GILTI tax in the period in which it is incurred. The BEAT provisions in the Tax Reform Act created a minimum tax where a lower tax rate is applied to pre-tax income determined without the benefit of certain base-erosion payments made to related non-U.S. corporations. The Company is taxed under this regime if such minimum tax exceeds the regular U.S. corporate income tax. The GILTI and BEAT provisions are included in permanent adjustments in the table below.

A reconciliation of the consolidated federal statutory rate to the reported income tax rate is as follows:

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30						SEPTEMBER 30
	2020			2019			2020			2019
Income before income taxes	$	6.4		$	18.0		$	27.8		$	44.0
Statutory taxes (21%)	$	1.3		$	3.8		$	5.8		$	9.2
Interim adjustment	3.4			(0.6)			0.8			(0.2)
Permanent adjustments	(3.1)			1.6			2.2			1.3
Discrete items	(0.9)			0.1			(6.3)			0.5
Income tax provision	$	0.7		$	4.9		$	2.5		$	10.8
Reported income tax rate	10.9		%	27.2		%	9.0		%	24.5		%

During the third quarter of 2020, the Company recognized a discrete tax benefit of $1.0 million, related to domestic provision-to-return items, which was primarily related to BEAT.

During the second quarter of 2020, the Company recognized a discrete tax benefit of $4.3 million related to the expiration of the statute of limitations for uncertain tax positions related to acquisitions for which an offsetting pre-tax indemnity receivable was also recorded. The expense for the release of the indemnity receivable was recorded in pre-tax earnings on the line “Other, net” in the unaudited condensed consolidated statements of operations.

During the third quarter of 2019, the Company recognized a discrete tax charge of $0.8 million related to foreign law changes and settlements including the tax impact of the pretax Brazilian court settlement contingency. See Note 12 for additional information. This was mostly offset by discrete tax benefits recognized of $0.3 million and $0.4 million related to tax contingencies and return to provision items, respectively.