Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	For the Years Ended December 31,
	2023		2022		2021
Domestic	$	(84.9)	$	66.7	$	414.1
Foreign	2.2		(23.6)		16.0
Total	$	(82.7)	$	43.1	$	430.1

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

	For the Years Ended December 31,
	2023		2022		2021
Current:
Federal	$	90.2	$	(9.8)	$	36.9
Foreign	1.8		3.6		1.5
State and local	13.5		5.8		9.0
	$	105.5	$	(0.4)	$	47.4
Deferred:
Federal	$	(119.7)	$	5.9	$	37.0
Foreign	(0.1)		0.6		(0.1)
State and local	(21.1)		3.1		15.0
	$	(140.9)	$	9.6	$	51.9
(Benefit from) provision for income taxes	$	(35.4)	$	9.2	$	99.3

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,
	2023		2022
Deferred tax assets:
Accrued insurance	$	51.2	$	40.9
Operating loss carryforwards and tax credits	87.5		115.4
Compensation and benefits	34.9		36.9
Bad debt	3.8		2.0
Other	24.4		36.4
Capitalized expenses	243.7		110.3
Valuation allowance	(60.4)		(87.6)
Total deferred tax assets	$	385.1	$	254.3
Deferred tax liabilities:
Property and equipment	$	345.9	$	375.7
Goodwill	95.0		91.3
Other intangible assets	96.7		131.4
Gain on remeasurement of equity investee	7.3		7.3
Revenue recognition	81.3		84.6
Investments in unconsolidated entities	113.3		109.3
Other	36.0		26.1
Total deferred tax liabilities	$	775.5	$	825.7
Net deferred tax liabilities	$	(390.4)	$	(571.4)

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, 2023 and 2022 are related primarily to foreign and state 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 $24.7 million and $21.4 million as of December 31, 2023 and 2022, 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 $59.2 million and $87.9 million as of December 31, 2023 and 2022, respectively. The Canadian net operating loss carryforwards, which make up the majority of the foreign net operating loss carryforwards, begin to expire in 2034. As of December 31, 2023, the Company had no deferred tax assets for its federal net operating loss carryforwards. As of December 31, 2022, deferred tax assets for its federal net operating loss carryforwards totaled approximately $2.5 million.

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,
	2023		2022		2021
U.S. statutory federal rate applied to pretax income	21.0	%	21.0	%	21.0	%
State and local income taxes, net of federal benefit	4.3		8.8		4.3
Foreign tax rate differential	(1.8)		1.3		0.1
Non-deductible expenses	(14.6)		(1.6)		0.3
Goodwill and intangible assets	1.8		(0.7)		0.4
Change in tax rate	(5.6)		12.7		1.6
Compensation and benefits	6.2		6.7		(0.2)
Other	1.4		(8.0)		1.0
Tax credits	24.7		(37.9)		(4.8)
Stock basis adjustment	4.9		0.0		(0.9)
Valuation allowance for deferred tax assets	0.5		19.0		0.3
Effective income tax rate	42.8	%	21.3	%	23.1	%

A reconciliation of the beginning and ending amount of uncertain tax positions, excluding interest and penalties, follows in the table below (in millions). Previously, the reconciliation for uncertain tax positions included interest and penalties. Management believes that the current presentation is a better representation of this activity. Prior period information has been updated to conform with the current year presentation.

	For the Years Ended December 31,
	2023		2022		2021
Beginning balance	$	39.3	$	21.4	$	15.8
Additions based on tax positions related to the current year	16.6		8.0		4.4
Additions for tax positions of prior years	9.5		15.9		4.8
Settlements	—		—		(2.8)
Lapse of statute of limitations	(4.5)		(6.0)		(0.8)
Ending balance	$	60.9	$	39.3	$	21.4

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. For the years ended December 31, 2023, 2022 and 2021, interest and penalties totaled approximately $2.6 million, $0.7 million and $0.1 million, respectively. Accrued interest and penalties related to uncertain tax positions were $5.9 million and $3.1 million as of December 31, 2023 and 2022, respectively. The effect on the Company’s tax rate if it were to recognize its gross unrecognized tax benefits as of December 31, 2023 approximates $66.8 million, including interest and penalties. While it is possible that there could be audit settlements and/or lapses in certain statutes of limitation relating to uncertain tax positions, management has determined that it is too difficult to predict the outcome of such matters.

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, 2023, the Company is no longer subject to state examinations by taxing authorities for years before 2015.