Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

4. Income Taxes

At the end of each interim period, we make our best estimate of the annual effective tax rate and the impact of discrete items, if any, and adjust the rate as necessary.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Dollars in millions)
Income before income tax expense	$	41.5		$	23.1		$	98.6		$	77.9
Income tax expense	8.2			14.6			20.9			29.7
Effective tax rate	19.8		%	63.2		%	21.2		%	38.1		%

Income taxes recorded for all periods presented reflect discrete items recorded. During the three and nine months ended September 30, 2024 the Company recorded a federal return to provision tax benefit of $0.7 million. Additionally, the Company released valuation allowances established on certain foreign tax credits (“FTCs”) carryforward from prior periods during the three and nine months ended September 30, 2024 as a result of projected utilization of the FTCs of $0.7 million. Income taxes for the nine months ended September 30, 2024, reflects the release of a valuation allowance established on the deferred tax assets attributable to existing state net operating losses carryforwards, (“NOLs”) resulting in a deferred tax benefit of $2.2 million. The release was a result of tax planning conducted by the Company, as the state NOLs carried forward from prior years are now expected to be utilized. Income tax expense also reflects the revaluation of certain deferred tax liabilities due to changes in apportioned state tax rates, which resulted in income tax expense of $1.9 million for the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, the Company established an $8.5 million valuation allowance, which was a portion of an $11.3 million valuation allowance that was released during the third quarter of 2022 on deferred tax assets attributable to existing foreign tax credit carryforwards. The establishment of the valuation allowance during the three and nine months ended September 30, 2023 was the result of changes in tax regulation.

Before the impact of discrete items described above, the Company's effective tax rate was 23.3 percent and 22.9 percent for the three and nine months ended September 30, 2024, respectively, and 26.1 percent and 27.2 percent for the three and nine months ended September 30, 2023, respectively. The difference between the Company's effective tax rates and federal statutory rate of 21.0 percent during all periods presented reflect the impact of state taxes, earnings attributable to its noncontrolling ownership interests in a partnership and compensation deduction limitations under Section 162(m) of the Internal Revenue Code. The three and nine months ended September 30, 2024 also reflects the impact of a valuation allowance established for a portion of FTCs projected for the current period as a result of tax legislation enacted in Brazil during the third quarter of 2023 as well as a valuation allowance released for a portion of state NOLs’ utilization projected for the current period as a result of tax planning. The three and nine months ended September 30, 2023 also reflects the impact of foreign taxes as a result of regulations impacting foreign tax credit utilization published by the U.S. Treasury.