Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company is subject to income tax in multiple jurisdictions and the use of estimates is required to determine the provision for income taxes. For the three months ended March 31, 2024 and 2023, the Company recorded an income tax provision of $2.5 million and $2.4 million, respectively. The income tax provision is based on the estimated annual effective tax rate for the year applied to pre-tax income. The effective income tax rate for the three months ended March 31, 2024 was 31.8 percent compared to 47.2 percent in the same period of the prior year. The effective tax rate decreased by 15.4 percent for the three months ended March 31, 2024 when compared to the same period in 2023, primarily due to a decrease in tax expense from the vesting of restricted stock, the cancellation of performance stock units and the exercise of stock options, as well as a decrease in losses in jurisdictions that are not eligible for tax benefits due to valuation allowances.

The effective income tax rate for the three months ended March 31, 2024 differs from the U.S. federal statutory rate of 21.0 percent due to various factors, including operating in multiple state and foreign jurisdictions and tax credits for which the Company qualifies.

The Company had unrecognized tax benefits totaling $3.4 million as of March 31, 2024 and $3.6 million as of December 31, 2023, respectively, that if recognized would result in a reduction of the Company’s effective tax rate. The liabilities are classified as other long-term liabilities in the accompanying consolidated balance sheets. The Company recognizes interest and penalties related to income tax matters in income tax expense and reports the liability in current or long-term income taxes payable as appropriate.