Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

(6) Income Taxes

The components of our income tax expense are as follows (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Current income tax expense	$	(0.8)	$	(1.2)	$	(1.2)	$	(1.5)
Deferred income tax expense	(6.2)		(9.4)		(12.0)		(39.0)
Income tax expense	$	(7.0)	$	(10.6)	$	(13.2)	$	(40.5)

The following schedule reconciles income tax expense and the amount calculated by applying the statutory U.S. federal tax rate to income before non-controlling interest and income taxes (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Expected income tax expense based on federal statutory tax rate	$	(6.3)	$	(8.4)	$	(16.8)	$	(38.3)
State income tax expense, net of federal benefit	(0.9)		(1.1)		(2.4)		(4.9)
Unit-based compensation (1)	0.1		0.9		7.8		7.5
Other	0.1		(2.0)		(1.8)		(4.8)
Income tax expense	$	(7.0)	$	(10.6)	$	(13.2)	$	(40.5)

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(1)Related to book-to-tax differences recorded upon the vesting of unit-based awards.

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax liabilities, net of deferred tax assets, are included in “Deferred tax liability, net” in the consolidated balance sheets.

As of September 30, 2024, we had $767.1 million of deferred tax assets, net of a $1.2 million valuation allowance, and $870.9 million of deferred tax liabilities for net deferred tax liabilities of $103.8 million. In September 2024, we recorded a deferred tax asset of $6.3 million resulting from the step-up in basis allowed under Section 743(b) of the Internal Revenue Code related to the exchanges and repurchase of the Series B Preferred Units during the nine months ended September 30, 2024, which is expected to be amortized over the useful lives of the underlying assets. Refer to “Note 7—Certain Provisions of the ENLK Partnership Agreement” for more information on our exchanges and repurchase of the Series B Preferred Units.

As of December 31, 2023, we had $758.3 million of deferred tax assets, net of a $1.2 million valuation allowance, and $862.5 million of deferred tax liabilities for net deferred tax liabilities of $104.2 million.

As of September 30, 2024, management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets, net of valuation allowance.