Income Tax

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Tax

Note 4 — Income Tax

The Company’s tax provision for interim periods is determined by using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to significant volatility due to several factors, including the Company's ability to accurately predict the Company’s pre-tax and taxable income and loss and the mix of jurisdictions to which they relate.

The Company's effective tax rate from continuing operations was 5.4% and 3.8% for the three and six months ended June 30, 2024, respectively, and 2.0% and 3.2% for the three and six months ended June 30, 2023, respectively, including discrete items. The Company's effective tax rate for the three and six months ended June 30, 2024 and 2023 was different than the U.S federal statutory income tax rate of 21% primarily due to the effects of the change in valuation allowance, state taxes, and the foreign rate differential.

The Company has assessed the realizability of the net deferred tax assets as of June 30, 2024 and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income to realize its deferred tax assets. The Company believes it is more likely than not that the benefit from recorded deferred tax assets will not be realized.

Based on the Company's current earnings and anticipated future earnings, the Company believes that there is a reasonable possibility that in the foreseeable future, sufficient positive evidence may become available that results in a conclusion that all or a portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve.