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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Tax Disclosure Income Taxes
Income Before Income Taxes: The sources of income before income taxes are:

202420232022
U.S. $(1,581.3)$(329.7)$(467.2)
International(560.3)(263.6)(72.2)
Total (before equity earnings)$(2,141.6)$(593.3)$(539.4)
Income taxes are accounted for in accordance with FASB authoritative guidance on accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts for existing assets and liabilities and their respective tax bases. Tax rate changes impacting these assets and liabilities are recognized in the period during which the rate change occurs.

The Company records an income tax expense or benefit based on the income earned or loss incurred in each tax jurisdiction and the tax rate applicable to that income or loss. In the ordinary course of business, there are transactions for which the ultimate tax outcome is uncertain. These uncertainties are accounted for in accordance with FASB authoritative guidance on accounting for the uncertainty in income taxes. The final tax outcome for these matters may be different than management’s original estimates made in determining the income tax provision. A change to these estimates could impact the effective tax rate and net income or loss in subsequent periods. The Company uses the flow-through accounting method for tax credits. Under this method, tax credits reduce income tax expense.

Provision for Income Tax Taxes: The income tax (benefit) expense contains the following components:

202420232022
Current   
Federal$0.1 $1.4 $(4.5)
State(11.0)— (0.7)
Foreign4.2 2.7 1.7 
Total current$(6.7)$4.1 $(3.5)
Deferred 
Federal$2.0 $11.1 $10.2 
State(1.5)3.2 2.5 
Foreign3.8 4.1 (4.0)
Total deferred4.3 18.4 8.7 
Total income tax provision (benefit)$(2.4)$22.5 $5.2 

Reconciliation of Effective Income Tax Rate: The income tax provision from operations differs from the tax provision computed at the U.S. federal statutory income tax rate due to the following:

202420232022
Tax at U.S. Federal statutory rate$(449.7)21.0 %$(124.6)21.0 %$(113.3)21.0 %
State income taxes, net of Federal benefit(51.1)2.4 (6.4)1.1 (9.6)1.8 
State income tax credits, net of Federal benefit(1.4)— (8.6)1.4 (15.6)2.9 
Foreign rate differences(25.5)1.2 (12.1)2.0 (3.5)0.6 
Research and experimentation(4.8)0.2 (4.2)0.7 (5.2)1.0 
Excess tax benefits— — 0.9 (0.2)0.4 (0.1)
Non-deductible expenses10.2 (0.5)17.2 (2.9)4.2 (0.8)
Re-measurement of Deferred Taxes0.8 — (9.0)1.5 (7.1)1.3 
Global Intangible Low-Taxed Income (GILTI) Tax— — — — (1.8)0.3 
Valuation Allowance514.3 (24.0)154.5 (26.0)170.6 (31.6)
Previously unrecognized tax benefit2.1 (0.1)(0.3)0.1 (10.6)2.0 
Other2.7 (0.1)15.1 (2.5)(3.3)0.6 
Total income tax provision (benefit)$(2.4)0.1 %$22.5 (3.8)%$5.2 (1.0)%
The income tax provision (benefit) for the twelve months ended December 31, 2024, was ($2.4) compared to $22.5 for the prior year. The 2024 effective tax rate was 0.1% as compared to (3.8%) for 2023.

The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income (“GILTI”), states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI cost in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a period cost in the year the tax is incurred. As of December 31, 2024, there was $0.0 of GILTI tax. As of December 31, 2023, there was $0.0 of GILTI tax. As of December 31, 2022, there was ($1.8) of GILTI tax benefit primarily due to the refundable U.K. research credits being credited against prior years’ GILTI tax expense.

The CARES Act allows net operating losses from 2018, 2019 and 2020 to be carried back to the previous five years, when the federal tax rate was 35%. As of December 31, 2020 the Company reported a net operating loss when it filed its fiscal year 2020 tax return. A preliminary net operating loss carryback claim was filed in March 2021 requesting a refund of $305 which was received in 2021. A second net operating loss carryback claim using the finalized 2020 U.S. Net Operating Loss was filed in December 2021 requesting an additional $11.6 federal refund, which was received in 2022. The Company had $6.6 and $5.3 of income tax receivable as of December 31, 2024 and December 31, 2023, respectively, which is reflected within Other current assets on the Consolidated Balance Sheets as well as $0.8 and $0.0 of income tax payable as of December 31, 2024 and December 31, 2023, respectively, which is reflected within Other current liabilities on the Consolidated Balance Sheets. The Company had $1.5 and $1.5 of non-current income tax payable as of December 31, 2024 and December 31, 2023, respectively, which is reflected within Other non-current liabilities on the Consolidated Balance Sheets.

Additionally, as allowed by the CARES Act, the Company had deferred $33.0 of employer payroll taxes as of December 31, 2020, of which 50% was deposited by December 2021 and the remaining 50% was credited against the outstanding pre-tax employee retention credit refund claim in 2022. The Company filed a claim for a pre-tax employee retention credit of $18.8 for 2020 and $1.0 for 2021. The outstanding pre-tax employee retention credit refund claim as of December 31, 2024 and December 31, 2023 was $0.0 and $3.1, respectively.

Deferred Income Taxes: Significant tax effected temporary differences comprising the net deferred tax asset, prior to valuation allowance, are as follows:

20242023
Depreciation and amortization$(45.4)$(87.7)
Long-term contracts(39.0)125.3 
State income tax credits143.6 154.1 
Net operating loss carryforward1,084.0 489.7 
Accruals and reserves59.3 47.3 
Employee compensation accruals36.3 26.9 
Pension and other employee benefit plans(27.5)(15.9)
Interest expense limitation116.4 89.9 
Post-retirement benefits other than pensions
7.4 8.9 
Other37.3 19.7 
Inventory0.6 0.9 
Interest swap contracts(0.2)(0.7)
Net deferred tax asset before valuation allowance1,372.8 858.4 
Valuation allowance(1,380.5)(867.4)
Net deferred tax asset (liability)
(7.7)(9.0)
Deferred tax detail above is included in the balance sheet and supplemental information as follows:

20242023
Non-current deferred tax assets0.1 0.1 
Non-current deferred tax liabilities(7.8)(9.1)
Net non-current deferred tax asset (liability)$(7.7)$(9.0)
Total deferred tax asset (liability)
$(7.7)$(9.0)

The following is a roll forward of the deferred tax valuation allowance at December 31, 2024, 2023, and 2022:

202420232022
Balance at January 1$867.4 $714.7 $536.8 
Corporate rate remeasurement(0.3)0.5 (0.2)
State income tax credits(10.0)7.8 18.3 
Net operating losses547.1 141.5 155.3 
Depreciation and amortization0.1 0.2 0.2 
Assets held for sale (1)
3.0 — — 
Other(25.7)4.6 (3.0)
Other comprehensive income adjustment(1.1)(1.9)7.3 
Balance at December 31$1,380.5 $867.4 $714.7 

(1)Deferred income taxes for FMI. See Note 30 Acquisitions and Dispositions.

Deferred tax assets are periodically evaluated to determine their recoverability and whether or not a valuation allowance is necessary. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company’s prior earnings history including the forward losses previously recognized in the U.S., Management determined that it was necessary to establish a valuation allowance against nearly all of its net U.S. deferred tax assets at December 31, 2024, 2023, and 2022. This determination was made as the Company entered into a U.S. cumulative loss position during 2021. Once a company enters a cumulative three year loss position, there is a presumption that a company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. As of December 31, 2024, the total net U.S. deferred tax asset, prior to valuation allowance, was $876.5. The net U.S. deferred tax liability after recording valuation allowances is $0.1. Valuation allowances recorded against the consolidated net U.S. deferred tax asset in the current year were $368.5 for a total valuation allowance of $876.6 for the U.S.

The Company has determined a valuation allowance on certain U.K. deferred tax assets is needed based upon historic cumulative losses and current year losses generated in the U.K. The Company recorded a portion of the increase in the valuation allowance to income tax expense in continuing operations of $145.9, and a portion to OCI of ($1.1). Valuation allowances recorded against U.K. deferred tax assets in the current year were $144.8 for a total valuation allowance of $504.0 for the U.K.

Included in the deferred tax assets at December 31, 2024 are $125.4 in Kansas High Performance Incentive Program (“HPIP”) Credit, $13.7 in Kansas Research & Development (“R&D”) Credit and $1.5 in Kansas Qualified Vendor (“QV”) Credit, totaling $140.6 in gross Kansas state income tax credit carryforwards, net of federal benefit. The HPIP Credit provides a 10% investment tax credit for qualified business facilities located in Kansas. This credit can be carried forward 16 years. The
Kansas R&D Credit provides a credit for qualified research and development expenditures conducted within Kansas. This credit can be carried forward indefinitely. The QV Credit is equal to 15% of the amount for approved expenditures of goods and services purchased from a qualified vendor, not to exceed $0.5 per qualified vendor per tax year. The QV Credit can be carried forward 4 years.

Also included in the deferred tax assets at December 31, 2024 are $6.1 in Oklahoma Investment Tax Credits. The Oklahoma Investment Tax Credit is designed to encourage manufacturing in Oklahoma. An annual credit can be claimed for up to five years and is based on either investment in new depreciable property or the addition of employees. The credit is calculated as the greater of 1% of the investment in depreciable property or $500.00 per new job created. The credit is doubled to the greater of 2% of the investment or $1,000.00 per new job if the business is located in an Enterprise Zone.

The one-time transition tax and GILTI provisions within the TCJA effectively transitioned the U.S. to a territorial system and eliminated the deferral of U.S. taxation for certain amounts of income which is not taxed at a minimum level. To the extent a dividend is declared, the tax impact of repatriating earnings would not be significant as substantially all of the net prior unrepatriated earnings have been subject to U.S. tax. Additionally, any foreign tax withholding would not be significant.

During 2023, the Company made a one-time distribution from Singapore to the U.S. resulting in no taxable income inclusion and no U.S. income tax recorded to the financial statements. During 2024, the Company entered into a merger agreement with The Boeing Company and a Term Sheet with Airbus SE (the “Airbus Term Sheet”). In the Airbus Term Sheet, select assets have been identified for potential divestiture. Due to this agreement, the Company cannot assert that the remaining earnings of certain foreign operating subsidiaries are indefinitely invested outside the U.S. Analysis has been done on these foreign subsidiaries for the potential deferred taxes to be recorded on these investments. The analysis has resulted in no additional taxes that need to be recorded in the December 31, 2024 financial statements. Additionally, the analysis concluded no deferred taxes are required to be recorded for withholding taxes on the foreign earnings. See also Note 2 Basis of Presentation.

Unrecognized Tax Benefits: The beginning and ending unrecognized tax benefits reconciliation is as follows:

202420232022
Beginning balance at January 1$7.1 $8.1 $18.3 
Gross increases (decreases) related to current period tax positions
0.4 (0.4)0.4 
Gross increases related to prior period tax positions2.3 — — 
Statute of limitations’ expiration
— (0.6)(10.6)
Ending balance at December 31$9.8 $7.1 $8.1 

Included in the December 31, 2024 balance was $9.8 in unrecognized tax benefits of which $8.1 would reduce the Company’s effective tax rate if ultimately recognized.

The Company reports interest and penalties, if any, related to unrecognized tax benefits in the income tax provision. As of December 31, 2024, 2023, and 2022, there was no accrued interest on the unrecognized tax benefit liability included in the balance sheets and income statements during 2024, 2023, and 2022.

The Company files income tax returns in all jurisdictions in which it operates.

The Company’s federal audit is conducted under the Internal Revenue Service Compliance Assurance Process (“CAP”) program. The Company will continue to participate in the CAP program for 2021 through 2024. The CAP program’s objective is to resolve issues in a timely, contemporaneous manner and eliminate the need for a lengthy post-filing examination. The Company has an open tax audit in the Kingdom of Morocco for tax years ending prior to the Company’s ownership of the Moroccan legal entity. There are ongoing audits in other jurisdictions that are not material to the financial statements and the Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and years.

The Company operated under a tax holiday in Malaysia which was effective through September 30, 2024. The tax holiday was conditional upon remaining in good standing with the Malaysia taxing authorities, having at least 20% value-add, and having at least 30% of employees with a diploma/degree in science/technical discipline. The tax impact of this tax holiday was $2.8, $3.4, and $3.0 for the twelve months ended December 31, 2024, 2023, and 2022, respectively.
The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. As currently designed, Pillar Two will ultimately apply to worldwide operations. Considering the Company does not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules are not expected to materially increase our global tax costs. There remains uncertainty as to the final Pillar Two model rules. The U.S. and global legislative action will be monitored for potential Pillar Two impacts.