Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

13.Income Taxes

The following table presents the components of our income from continuing operations before income taxes (in thousands):

	2023		2022		2021
United States earnings	$	179,522	$	77,110	$	24,687
Foreign earnings		84,531		89,112		87,901
	$	264,053	$	166,222	$	112,588

The income tax expense (benefit) attributable to income from continuing operations for the years ended December 31, 2023, December 31, 2022, and December 31, 2021 consists of the following (in thousands):

	2023			2022			2021
Current
Federal	$	37,699		$	21,323		$	653
State		13,340			9,946			6,830
Foreign		14,013			9,232			19,621
Total current income tax expense		65,052			40,501			27,104
Deferred
Federal		(5,974	)		(2,902	)		1,624
State		(590	)		(623	)		(1,263	)
Foreign		(2,350	)		2,681			(3,829	)
Total deferred tax benefit		(8,914	)		(844	)		(3,468	)
Total income tax expense	$	56,138		$	39,657		$	23,636

Income tax expense (benefit) was different from the amount computed by applying the United States federal statutory rate to pre-tax income from continuing operations as a result of the following (in thousands):

	2023					2022					2021
Income before income tax expense	$	264,053				$	166,222				$	112,588
Tax at federal statutory tax rate		55,451		21.0	%		34,907		21.0	%		23,644		21.0	%
State taxes, net of federal tax benefit		9,807		3.7	%		7,530		4.5	%		4,192		3.7	%
Change in valuation allowance		5,773		2.2	%		1,363		0.8	%		3,865		3.4	%
Change in uncertain tax positions		3,530		1.3	%		1,688		1.0	%		(80	)	-0.1	%
Foreign tax rate differential		(6,258	)	-2.4	%		(1,787	)	-1.1	%		(388	)	-0.3	%
Tax cost of foreign operations, net of credits		3,085		1.2	%		777		0.5	%		(5,151	)	-4.6	%
Foreign-Derived Intangible Income		(4,736	)	-1.8	%		(76	)	0.0	%		—		0.0	%
Noncontrolling interests		(9,821	)	-3.7	%		(6,279	)	-3.8	%		(5,225	)	-4.6	%
Federal business credits		(2,731	)	-1.0	%		(1,926	)	-1.2	%		(2,538	)	-2.3	%
Executive compensation		1,636		0.6	%		1,921		1.2	%		2,352		2.1	%
Other, net		402		0.2	%		1,539		0.9	%		2,965		2.6	%
Total income tax expense	$	56,138		21.3	%	$	39,657		23.9	%	$	23,636		21.0	%

The effective tax rate in 2023 decreased to 21.3% from 23.9% in 2022. The change in the effective tax rate was due primarily to tax benefits related to increases in the foreign-derived intangible income (FDII) deduction and a change in jurisdictional mix of earnings, partially offset by an increase in valuation allowance on foreign tax credits originating from foreign withholding taxes.

The effective tax rate in 2022 increased to 23.9% from 21.0% in 2021. The change in the effective tax rate was due primarily to a net increase of uncertain tax positions during 2022, an income tax benefit recognized in 2021 for foreign tax credits which did not reoccur in 2022, partially offset by a decrease in valuation allowance on foreign tax credit carryovers originating from foreign withholding taxes, a benefit from a change in jurisdictional mix of earnings, and a tax expense recognized in 2021 related to a nonrecurring write down of a foreign tax receivable.

The effective tax rate for the year ended December 31, 2023 differs from the federal statutory tax rate primarily due to state income taxes, valuation allowance on foreign tax credit carryovers originating from foreign withholding taxes partially offset by benefits related to untaxed income attributable to

noncontrolling interests, earnings in lower tax jurisdictions, the FDII deduction, and federal business tax credits.

The effective tax rate for the year ended December 31, 2022 differs from the federal statutory tax rate primarily due to state income taxes and a recorded valuation allowance on foreign tax credit carryovers, partially offset by benefits related to income attributable to noncontrolling interests, earnings in lower tax jurisdictions and federal business tax credits.

The components of deferred tax assets and liabilities consists of the following at December 31, 2023 and December 31, 2022 (in thousands):

	2023			2022
Deferred tax assets
Project and non-project reserves	$	23,555		$	20,862
Employee compensation and benefits		69,726			55,103
Revenue and cost recognition		37,616			43,629
Insurance accruals		14,081			14,067
Net operating losses		8,663			8,928
Lease liabilities		44,626			44,285
Tax credit carryforwards		31,727			22,333
Other		3,285			3,847
Total deferred tax assets		233,279			213,054
Valuation allowance		(34,779	)		(28,705	)
Total deferred tax assets		198,500			184,349
Deferred tax liabilities
Intangible assets		(18,783	)		(12,131	)
Right-of-use assets		(40,131	)		(40,111	)
Profit remittance tax		(5,822	)		(5,498	)
Other		(3,378	)		(1,370	)
Total deferred tax liabilities		(68,114	)		(59,110	)
Net deferred tax asset	$	130,386		$	125,239

The Company assesses the realizability of its deferred tax assets each reporting period through an analysis of potential sources of taxable income, including prior year taxable income available to absorb carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies, and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine if a valuation allowance against deferred tax assets is required. A valuation allowance is recorded against deferred tax assets to reflect the amount of deferred tax assets that is determined to be more-likely-than-not to be realized.

The Company is not asserting that any of the earnings of the foreign subsidiaries will be permanently reinvested. Therefore, the Company has recorded a deferred tax liability for the undistributed earnings net of applicable foreign tax credits.

As of December 31, 2023, and December 31, 2022, the Company’s valuation allowance against deferred tax assets was $34.8 million and $28.7 million, respectively. The Company has recorded a valuation allowance against certain tax attributes that the Company has determined are not more-likely-than-not to be realized, including certain foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital loss carryforwards. From December 31, 2022 to December 31, 2023, the Company’s valuation allowance increased by $6.1 million. This increase relates to deferred tax assets recorded for foreign tax credit carryforwards, offset in part by a decrease related to net operating loss carryforwards. The valuation allowance is recorded because the Company does not expect to have

sufficient taxable income and foreign source income to support the net operating loss carryforwards and the foreign tax credit carryforwards before they expire.

As of December 31, 2023, the Company has NOLs of $1.6 million, $30.5 million, and $30.8 million for U.S. Federal, U.S. states and foreign jurisdictions, respectively. The utilization of the U.S. federal and U.S. state NOLs are subject to certain annual limitations. Of these NOL amounts, $1.6 million, $16.7 million and $14.5 million in U.S. Federal, U.S. states and foreign jurisdictions, respectively, do not expire. The remaining amounts of NOLs in U.S. states and in foreign jurisdictions will expire if not used between 2024 and 2044.

As of December 31, 2023, the Company has foreign tax credit carryforwards of $29.8 million. The Company has provided a valuation allowance of $29.8 million as the Company considers it is not more likely than not that these credits will be realized. These foreign tax credits start expiring in the year 2030.

A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows (in thousands):

	2023			2022			2021
Beginning of year	$	22,798		$	21,181		$	16,395
Increases—current year tax positions		3,220			4,666			6,203
Increases—prior year tax positions		2,458			2,254			1,512
Decreases—prior year tax positions		(1,589	)		(3,537	)		(2,929	)
Settlements		(1,026	)		(1,447	)		—
Lapse of statute of limitations		(364	)		(319	)		—
End of year	$	25,497		$	22,798		$	21,181

At December 31, 2023, and December 31, 2022, there are $25.1 million and $21.8 million of unrecognized tax benefits that if recognized would affect the Company’s effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits as part of its income tax expense. During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, the Company recognized approximately $0.5 million, $0.7 million, and $(0.9) million in interest and penalties, respectively, in the consolidated statements of income. The total amount of interest and penalties accrued in the consolidated balance sheets was $4.6 million, $4.1 million, and $3.5 million at December 31, 2023, December 31, 2022, and December 31, 2021, respectively.

The Company conducts business globally and, as a result, the Company or one or more of its subsidiaries file income tax returns in the U.S. federal jurisdiction, various U.S. states, and foreign jurisdictions. The Company is subject to examination by tax authorities in several jurisdictions, including jurisdictions where the Company has significant activities, such as Canada, Qatar, Saudi Arabia and the United States. As of December 31, 2023, the Company’s U.S. federal income tax returns for tax years 2020 and forward remain subject to examination. U.S. states and foreign income tax returns remain subject to examination based on varying local statutes of limitations.

The Company estimates that, within 12 months, it may decrease its uncertain tax positions by approximately $5.5 million as a result of concluding various tax audits and closing tax years.

Although the Company believes its reserves for its tax positions are reasonable, the final outcome of tax audits could be significantly different, both favorably and unfavorably. It is reasonably possible that these audits may conclude in the next 12 months and that the unrecognized tax benefits the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. However, it is not currently possible to estimate the amount, if any, of such change.