Income Taxes

12 Months Ended

Dec. 31, 2019

The Company’s income tax provision consists of the following (in millions):



	Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	17.4		$	10.6		$	(2.2	)
State	4.4			3.7			0.9
Foreign	1.8			—			—
Total current tax provision (benefit)	23.6			14.3			(1.3		)

Deferred:
Federal	(3.1		)	(0.5		)	(5.3		)
State	(0.9		)	0.1			1.4
Foreign	0.1			0.5			0.1
Total deferred tax (benefit) provision	(3.9		)	0.1			(3.8		)

Total income tax provision (benefit)	$	19.7		$	14.4		$	(5.1	)

A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate and income tax provision is as follows (in millions, except percentages):



	Year Ended December 31,
	2019					2018					2017
Federal income tax provision at the statutory rate	$	16.2		21.0	%	$	12.6		21.0	%	$	9.9		35.0	%
Increase (decrease) resulting from:
State income taxes, net of federal benefit	2.7			3.5		2.6			4.3		1.6			5.7
Reduction in federal statutory rate⁽¹⁾	—			—		—			—		(14.6		)	(51.6	)
Decrease in unrecognized tax benefits (inclusive of
related interest and penalty)	—			—		—			—		(0.3		)	(1.0	)
Effect of foreign operations	0.1			0.1		0.5			0.8		0.1			0.4
Excess tax benefits from stock-based award payments⁽²⁾	0.1			0.1		0.2			0.3		(1.5		)	(5.3	)
Change in valuation allowance	1.7			2.2		—			—		—			—
Tax credits	(1.1		)	(1.4	)	(0.7		)	(1.2	)	(0.4		)	(1.4	)
Adjustments of prior years’ estimates	(0.7		)	(0.9	)	(0.5		)	(0.8	)	(0.4		)	(1.4	)
Other, net	0.7			0.9		(0.3		)	(0.4	)	0.5			1.6
Income tax provision (benefit)	$	19.7		25.5	%	$	14.4		24.0	%	$	(5.1	)	(18.0	)%

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(1)	As a result of the enactment of the TCJA, a $14.6 million net income tax benefit was recorded in the fourth quarter of 2017 due to a one-time revaluation of the Company’s net deferred tax liability.


(2)	As a result of the adoption of ASU 2016-09, the Company recognized excess tax deficiencies of $0.1 million and $0.2 million in 2019 and 2018, respectively, and an excess tax benefit of $1.5 million in 2017.

A federal alternative minimum tax (“AMT”) of $6.9 million was payable upon the filing of the corporate income tax return for the 2017 tax year. The Company recovered the AMT payable against its current taxes payable in 2018.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The tax effects of significant temporary differences which comprise deferred tax assets and liabilities are as follows (in millions):



	December 31,
	2019			2018
Deferred tax assets:
Employee benefits, including post-retirement benefits	$	11.8		$	10.3
Trade and other receivables	3.7			2.1
Self-insurance reserves	2.6			1.9
Rent expense	—			3.4
ROU assets	70.0			—
Other	3.0			0.9
Subtotal	91.1			18.6
Less: valuation allowance	(1.7		)	—
Total deferred tax assets	$	89.4		$	18.6
Deferred tax liabilities:
Inventories	$	13.1		$	12.4
Property and equipment	29.1			29.5
ROU liabilities	65.3			—
Goodwill and intangibles	2.8			2.6
Other	1.7			1.2
Total deferred tax liabilities	$	112.0		$	45.7

Net deferred tax liabilities	$	(22.6	)	$	(27.1	)

Tax jurisdiction:
Net deferred liability (Canada)	$	(0.5	)	$	(0.4	)
Net deferred liability (U.S.)	$	(22.1	)	$	(26.7	)

At each balance sheet date, management assesses whether it is more likely than not that these deferred tax assets would not be realized. As of December 31, 2019, the Company had a valuation allowance of $1.7 million which consisted of $1.0 million of foreign tax credits, which will expire in 2029, and $0.7 million of net operating loss carry-forwards for certain states. The Company had no valuation allowance at December 31, 2018.

The Company had no unrecognized tax benefits related to federal, state and foreign taxes at December 31, 2019, 2018, and 2017.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2019, 2018 and 2017 is as follows (in millions):



	Year Ended December 31,
	2019		2018		2017
Balance at beginning of year	$	—	$	—	$	0.2
Lapse of statute of limitations	—		—		(0.2		)
Balance at end of year	$	—	$	—	$	—

The Company files U.S. federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2016 to 2019 tax years remain subject to examination by federal and state tax authorities. The 2014 tax year is still open for certain state tax authorities. The 2012 to 2019 tax years remain subject to examination by the tax authorities in Canada.