Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income before income taxes for the periods indicated were as follows (in millions):

	For the Years Ended December 31,
	2022		2021		2020
Domestic	$	66.7	$	414.1	$	435.9
Foreign	(23.6)		16.0		(10.7)
Total	$	43.1	$	430.1	$	425.2

The provision for income taxes for the periods indicated were as follows (in millions):

	For the Years Ended December 31,
	2022		2021		2020
Current:
Federal	$	(9.8)	$	36.9	$	70.6
Foreign	3.6		1.5		2.1
State and local	5.8		9.0		22.6
	$	(0.4)	$	47.4	$	95.3
Deferred:
Federal	$	5.9	$	37.0	$	14.8
Foreign	0.6		(0.1)		(9.8)
State and local	3.1		15.0		2.2
	$	9.6	$	51.9	$	7.2
Provision for income taxes	$	9.2	$	99.3	$	102.5

The tax effects of significant items comprising the Company’s net deferred tax liability as of the dates indicated were as follows (in millions):

	December 31,
	2022		2021
Deferred tax assets:
Accrued insurance	$	40.9	$	42.2
Operating loss carryforwards and tax credits	115.4		80.7
Compensation and benefits	36.9		36.1
Bad debt	2.0		1.6
Other	36.4		15.4
Capitalized expenses	110.3		—
Valuation allowance	(87.6)		(54.2)
Total deferred tax assets	$	254.3	$	121.8
Deferred tax liabilities:
Property and equipment	$	375.7	$	310.1
Goodwill	91.3		77.9
Other intangible assets	131.4		58.7
Gain on remeasurement of equity investee	7.3		7.2
Revenue recognition	84.6		1.6
Investments in unconsolidated entities	109.3		99.7
Other	26.1		17.0
Total deferred tax liabilities	$	825.7	$	572.2
Net deferred tax liabilities	$	(571.4)	$	(450.4)

In assessing the ability to realize the Company’s deferred tax assets, management considers whether it is more likely than not that some portion, or all, of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. Management considers the Company’s projected future

taxable income and prudent and feasible tax planning strategies in making this assessment. The Company’s valuation allowances as of December 31, 2022 and 2021 are related primarily to foreign net operating losses and deferred tax assets.

The Company’s deferred tax assets for its state net operating loss carryforwards, which may be carried forward from 5 years to indefinitely, depending on the jurisdiction, totaled approximately $21.4 million and $18.6 million as of December 31, 2022 and 2021, respectively. The Company’s deferred tax assets for its foreign net operating loss carryforwards, which are primarily related to the Company’s Canadian operations, totaled approximately $87.9 million and $57.7 million as of December 31, 2022 and 2021, respectively. The Canadian net operating loss carryforwards, which make up the majority of the foreign net operating loss carryforwards, begin to expire in 2034. The Company’s deferred tax assets for its federal net operating loss carryforwards, which carryforward indefinitely, totaled $2.5 million and $2.9 million as of December 31, 2022 and 2021, respectively.

The Company is generally free of additional U.S. federal tax consequences on distributed foreign subsidiary earnings due to a dividends received deduction implemented as part of the move to a territorial tax system in connection with the Tax Cuts and Jobs Act of 2017. The Company has generally not made a provision for income taxes on unremitted foreign earnings because such earnings are insignificant and are intended to be indefinitely reinvested outside the United States. The Company expects that domestic cash resources will be sufficient to fund its domestic operations and cash commitments in the future.

A reconciliation of the U.S. statutory federal income tax rate related to pretax income to the effective tax rate for the periods indicated is as follows:

	For the Years Ended December 31,
	2022		2021		2020
U.S. statutory federal rate applied to pretax income	21.0	%	21.0	%	21.0	%
State and local income taxes, net of federal benefit	8.8		4.3		4.3
Foreign tax rate differential	1.3		0.1		(0.2)
Non-deductible expenses	(1.6)		0.3		1.5
Goodwill and intangible assets	(0.7)		0.4		(0.2)
Change in tax rate	12.7		1.6		0.6
Other	(1.3)		0.8		(0.6)
Tax credits	(37.9)		(4.8)		(1.2)
Stock basis adjustment	0.0		(0.9)		0.0
Valuation allowance for deferred tax assets	19.0		0.3		(1.1)
Effective income tax rate	21.3	%	23.1	%	24.1	%

A reconciliation of the beginning and ending amount of uncertain tax positions including interest and penalties is as follows (in millions):

	For the Years Ended December 31,
	2022		2021		2020
Beginning balance	$	23.7	$	18.4	$	13.5
Additions based on tax positions related to the current year	8.0		4.4		1.5
Additions for tax positions of prior years	17.6		6.8		3.4
Settlements	—		(5.1)		—
Lapse of statute of limitations	(6.9)		(0.8)		—
Ending balance	$	42.4	$	23.7	$	18.4

The Company classifies interest, penalties and recoveries related to uncertain tax positions as a component of income tax expense in the consolidated statements of operations. Accrued interest and penalties related to uncertain tax positions were $3.1 million and $2.3 million as of December 31, 2022 and 2021, respectively. The effect on the Company’s tax rate if it were to recognize its gross unrecognized tax benefits as of December 31, 2022 approximates $42.4 million, including interest and penalties.

The IRS has examined the Company’s federal income tax returns through 2017. Certain foreign and state taxing authorities are examining various years. The final outcome of these examinations is not yet determinable. With few exceptions, as of December 31, 2022, the Company is no longer subject to state examinations by taxing authorities for years before 2015.