Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The provision for income taxes is comprised of the following (in millions):

	Years ended December 31,
	2023		2022		2021
Current:
Federal	$	66.2	$	55.5	$	27.0
State and local	22.6		17.3		10.1
	88.8		72.8		37.1
Deferred:
Federal	0.5		5.6		(0.4)
State and local	0.1		1.5		—
	0.6		7.1		(0.4)
Total tax expense	$	89.4	$	79.9	$	36.7

The reconciliation between our effective tax rate on net income and the federal statutory rate is as follows (in millions):

	Years ended December 31,
	2023				2022				2021
Income tax at federal statutory rate	$	70.0	21.0	%	$	63.7	21.0	%	$	32.7	21.0	%
Stock compensation	(0.5)		(0.2)	%	0.3		0.1	%	(1.6)		(1.0)	%
Other permanent items	1.8		0.5	%	1.3		0.4	%	1.3		0.8	%
Change in valuation allowance	—		—	%	(0.1)		(0.1)	%	(0.9)		(0.6)	%
Change in uncertain tax positions	0.2		0.1	%	(0.5)		(0.1)	%	(2.9)		(1.8)	%
State and local income taxes, net of federal benefit	17.9		5.4	%	15.2		5.0	%	8.1		5.2	%
Total tax expense	$	89.4	26.8	%	$	79.9	26.3	%	$	36.7	23.6	%

Components of the net deferred tax asset or liability are as follows (in millions):

	As of December 31,
	2023		2022
Deferred Tax Assets
Long-term
Accrued liabilities and allowances	$	13.2	$	13.0
Allowance for doubtful accounts	1.5		1.3
Inventories	1.1		1.2
Property and equipment	0.4		0.5
Intangibles	9.4		7.7
Net operating loss carryforwards	0.2		0.7
Other	0.1		0.1
Long-term deferred tax assets	25.9		24.5
Less: Valuation allowance	(0.1)		(0.1)
Net deferred tax assets	25.8		24.4
Deferred Tax Liabilities
Long-term
Accrued liabilities and allowances	(2.7)		(0.6)
Property and equipment	(9.4)		(8.5)
Intangibles	(12.5)		(10.7)
Investment in partnership	(23.6)		(31.1)
Other	(1.7)		(1.1)
Long-term deferred tax liabilities	(49.9)		(52.0)
Net deferred tax liabilities	$	(24.1)	$	(27.6)
The above amounts are included in our Consolidated Balance Sheets as follows:
Other non-current assets	0.4		0.8
Long-term deferred income tax liabilities	(24.5)		(28.4)
Net deferred tax liabilities	$	(24.1)	$	(27.6)

As of December 31, 2023, we had a deferred tax asset balance of $0.2 million reflecting the benefit of $0.7 million in federal and state income tax net operating loss (NOL) carryforwards, the earliest of which expires in 2034.

Valuation Allowance

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets on a jurisdiction and by tax filing entity basis. A significant piece of objective negative evidence

evaluated is cumulative losses incurred over the most recent three-year period. Such objective evidence limits our ability to consider other subjective positive evidence such as our projections for future growth.

Based on this evaluation, a valuation allowance has been recorded as of December 31, 2023 and 2022 for the net deferred tax assets recorded on certain of our wholly owned subsidiaries. Such deferred tax assets relate primarily to net operating losses that are not more likely than not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if our estimate of future taxable income during the carryforward period changes, or if objective negative evidence in the form of cumulative losses is no longer present. Additional weight may be given to subjective evidence such as our projections for growth in this situation.

Uncertain Tax Positions

We are subject to taxation in the United States and various state jurisdictions. As of December 31, 2023, our tax years for 2018 and 2020 through 2022 are subject to examination by the tax authorities. A rollforward of the gross unrecognized tax benefits is as follows (in millions):

Unrecognized tax benefit, December 31, 2020	$	6.7
Increase as a result of tax positions taken during the period	4.5
Decrease as a result of tax positions taken during the period	(4.0)
Decrease as a result of expiring statutes	(2.9)
Unrecognized tax benefit, December 31, 2021	$	4.3
Increase as a result of tax positions taken during the period	5.4
Decrease as a result of tax positions taken during the period	(4.8)
Increase as a result of expiring statutes	—
Unrecognized tax benefit, December 31, 2022	$	4.9
Increase as a result of tax positions taken during the period	7.5
Decrease as a result of tax positions taken during the period	(5.5)
Increase as a result of expiring statutes	0.1
Unrecognized tax benefit, December 31, 2023	$	7.0

Unrecognized tax benefits of $0.3 million at December 31, 2023 would affect the effective tax rate. Interest expense and penalties accrued related to uncertain tax positions as of December 31, 2023 are $0.6 million.

We expect a decrease to the amount of unrecognized tax benefits (exclusive of penalties and interest) within the next twelve months of zero to $3.8 million.

Determining uncertain tax positions and the related estimated amounts requires judgment and carry estimation risk. If future tax law changes or interpretations should come to light, or additional information should become known, our conclusions regarding unrecognized tax benefits may change.