Income Taxes

6 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income taxes are accounted for under the asset and liability method as required by ASC 740, Income Taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured at the enacted income tax rates expected to apply in the taxable year that the asset or liability is expected to be recovered or settled.

We recorded income tax expense of $3.9 million and $5.4 million for the three and six months ended June 30, 2025 (Successor), respectively. The effective tax rate, inclusive of discrete items, was 106.3% and (26.0)% for the three and six months ended June 30, 2025 (Successor), which is driven by a combination of the disparity between results of operations as well as the tax jurisdictions across the United States and Canada, and the valuation allowance discussed in further detail below.

We recorded income tax expense of $7.9 million and $7.2 million for the three and six months ended June 30, 2024 (Predecessor), respectively. The effective tax rate, inclusive of discrete items, was 321.6% and 1,506.1% for the three and six months ended June 30, 2024 (Predecessor), respectively, which is primarily driven by Canadian federal and provincial tax rates as well as non-deductible stock compensation expense of $16.8 million recorded during the three months ended June 30, 2024.

The Company evaluated and considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for its deferred tax assets was needed. The deferred tax assets are composed primarily of net operating loss carryforwards and 163(j) interest limitation carryforwards. The Company primarily relies on reversing tax liabilities to support the realization of its deferred tax assets. Based on available evidence and limitations on interest deductions under the tax law, the Company recorded a valuation allowance of $11.1 million as of June 30, 2025, primarily against the interest expense carryforward. The Company will continue to assess the evidence and the realizability of the deferred tax assets at each reporting date. Should evidence regarding the realizability of the Company’s deferred tax assets change at a future point in time, the Company will adjust the valuation allowance as required.

On July 4, 2025, the “One Big Beautiful Bill Act,” was enacted into law. The legislation includes changes to federal tax law, including the restoration of immediate expensing of domestic research and development (“R&D”) expenditures, reinstatement of 100% bonus depreciation and more favorable rules for determining the limitation on business interest expense, among other changes. Since the enactment occurred after the balance sheet date but before the issuance of the unaudited condensed consolidated financial statements, these changes were not reflected in the income tax provision for the three and six months ended June 30, 2025. The Company is currently evaluating the impact on future periods.