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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14: Income Taxes
The significant components of earnings (loss) before income taxes and the provision for income taxes are as follows (in millions):
Year Ended December 31,
202420232022
United States$32.8 $(116.8)$306.0 
Other countries143.0 86.8 32.0 
Earnings (loss) before income taxes
$175.8 $(30.0)$338.0 
Year Ended December 31,
202420232022
United States federal:
Current$28.9 $10.5 $45.7 
Deferred(32.2)(44.0)4.7 
Total United States federal income taxes(3.3)(33.5)50.4 
United States state and local:
Current7.0 7.5 27.5 
Deferred(3.8)(5.9)1.7 
Total United States state and local income taxes3.2 1.6 29.2 
All other countries:
Current39.9 39.8 54.2 
Deferred4.7 (2.5)7.8 
Total all other countries income taxes44.6 37.3 62.0 
Total provision for income taxes$44.5 $5.4 $141.6 
Differences between income tax expense reported for financial reporting purposes and tax expense computed based upon the application of the United States federal tax rate to the reported earnings (loss) before income taxes are as follows (in millions):
Year Ended December 31,
202420232022
Reconciliation of effective tax rate
Earnings (loss) before income taxes
$175.8 $(30.0)$338.0 
Taxes at the statutory rate36.9 (6.3)70.9 
Adjusted for:
State taxes, net of the federal benefit1.8 0.2 23.4 
Other permanent nondeductible items44.0 13.4 12.7 
Foreign tax rate differential7.4 (2.6)3.5 
Change in valuation allowance(31.7)9.4 11.0 
Impact of repatriation(10.3)(0.2)(3.7)
Uncertain tax positions0.4 (13.1)2.2 
Deferred tax inventory adjustment(9.9)6.5 7.1 
Tax credits(5.5)(3.5)(1.4)
Other, net11.4 1.6 15.9 
Provision for income taxes$44.5 $5.4 $141.6 
The statutory tax rate in the U.S. was 21.0% for years ended December 31, 2024, 2023 and 2022. Although our parent company is domiciled in the U.K., we have used the U.S. statutory tax rate as the Company generates more than 70% of total revenue in the U.S. market and the majority of our investors are U.S.-based. Furthermore, the majority of our industry peers are U.S.-based companies with reconciliations also utilizing 21.0%. As a result, we believe reconciling our effective tax rate from 21.0% is more meaningful for investors and improves comparability with our peers.
The Organization for Economic Co-Operation and Development (“OECD”) has directed its 38 member countries to act to prevent what it refers to as base erosion and profit shifting. The OECD announced a consensus around further changes in traditional international tax principles to address, among other things, the perceived need for a
minimum global effective tax rate of 15% (“Pillar Two”). On July 11, 2023, following the Pillar Two directive, the U.K. enacted legislation to transpose the Pillar Two directive into domestic law for years beginning after December 31, 2023. Other OECD countries, as well as countries not in the OECD, have taken similar actions to propose and implement Pillar Two legislation, pursuant to the directive. As a company organized in England and Wales, we have assessed the impact of the Pillar Two laws and identified certain jurisdictions in which Pillar Two impacts exist, however, this did not have a material impact on the Company’s financial position, income taxes or results of operations for the year ended December 31, 2024.
The tax effect of temporary differences that gave rise to deferred tax assets and liabilities are as follows (in millions):
As of December 31,
20242023
Deferred tax assets
Liabilities$143.7 $171.9 
Property, plant and equipment7.0 0.7 
Deferred expenditures154.6 107.3 
Employee benefits103.4 104.2 
Tax losses / credits179.3 199.2 
Intangible assets13.3 14.9 
Income recognition— 13.8 
Deferred tax assets601.3 612.0 
Less: valuation allowance(167.7)(222.0)
Net deferred tax assets$433.6 $390.0 
Deferred tax liabilities
Intangible assets(235.6)(254.5)
Right-of-use asset(62.9)(73.9)
Income recognition
(25.5)— 
Other(29.1)(7.9)
Total deferred tax liabilities$(353.1)$(336.3)
Net deferred tax assets$80.5 $53.7 
The Company had total valuation allowances of $167.7 million and $222.0 million as of December 31, 2024 and 2023, respectively, as it was determined that it was more likely than not that certain deferred tax assets may not be realized. These valuation allowances relate to tax loss carryforwards, other tax attributes and temporary differences that are generally available to reduce future tax liabilities in jurisdictions including but not limited to the U.K., Australia, the U.S., Germany, Poland, Brazil and France.
The total amount of gross unrecognized tax benefits was $17.8 million and $19.6 million as of December 31, 2024 and 2023, respectively. It is reasonably possible that unrecognized tax benefits may decrease by $5.2 million during the next twelve months due to the lapsing in the statute of limitations. The Company had accrued interest and penalties of $10.1 million and $8.3 million as of December 31, 2024 and 2023, respectively, net of federal and state income tax benefits as applicable. The provision for income taxes includes an expense for interest and penalties of $1.8 million, a benefit of $3.5 million and an expense of $1.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Changes in the Company’s unrecognized tax benefits are (in millions):
Year Ended December 31,
202420232022
Beginning of year$19.6 $28.6 $27.2 
Increases from prior period tax positions0.2 3.3 — 
Decreases from prior period tax positions(0.6)(1.7)— 
Decreases from statute of limitation expirations(0.8)(10.7)(5.5)
Increases from current period tax positions0.1 0.1 6.9 
Decreases relating to settlements with taxing authorities(0.7)— — 
End of year$17.8 $19.6 $28.6 
The Company is subject to income taxation in various jurisdictions around the world. Generally, the Company’s open tax years include those from 2008 to the present, although audits by taxing authorities for more recent years have been completed or are in process in several jurisdictions. As of December 31, 2024, the Company was under examination by taxing authorities in the U.S., Germany, Belgium, India, Philippines, Portugal, Singapore, Malaysia and Thailand.
As of December 31, 2024 and 2023, the Company had accumulated $11.1 billion and $11.6 billion of undistributed earnings, respectively. As of December 31, 2024 and 2023, the Company had a deferred tax liability of $1.7 million and $12.1 million, respectively, recorded for repatriation of earnings not deemed to be indefinitely reinvested. The deferred tax liability relates to income taxes and withholding taxes on potential future distributions of cash balances in excess of working capital requirements. We believe our policy of reinvesting earnings of foreign subsidiaries does not materially impact our liquidity.
As of December 31, 2024 and 2023, the Company had available operating loss carryforwards of $165.9 million and $185.9 million, respectively, and foreign tax credit carryforwards of $14.0 million and $13.1 million, respectively. Both the operating loss carryforwards and the foreign tax credit carryforwards will begin to expire in 2025. The Company also had U.S. interest expense disallowance carryforwards of $143.0 million and $99.7 million as of December 31, 2024 and 2023, respectively, which have an indefinite carryforward.
The change in deferred tax balances for operating loss carryovers from 2023 to 2024 includes increases from current year losses and decreases from current year utilization. The jurisdictional location of the operating loss carryforward is as follows:
As of December 31, 2024Range of expiration dates
United States$8.3 2025 - Indefinite
All other countries157.6 2025 - Indefinite
Total$165.9 
Valuation allowances have been provided regarding the tax benefit of certain tax loss carryforwards, other attributes and temporary differences, for which it has been concluded that it is more likely than not that the deferred tax asset will not be realized. The Company assesses both positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets, including an analysis of cumulative losses or income in recent years, as well as projections of future taxable income and potential tax planning strategies.
During 2024, the Company had changes in its valuation allowances for deferred tax assets in various jurisdictions, resulting in a net decrease of $54.3 million. The decrease was primarily driven by the Company’s ability to utilize capital losses in the U.K. of $37.5 million which were previously fully reserved, resulting in a reversal of the valuation allowance and a net decrease in the valuation allowance of $16.8 million that resulted from changes in the cumulative income and losses in various jurisdictions.