Income taxes

12 Months Ended

Dec. 31, 2025

Income taxes

Income taxes

Note 14 – Income taxes:

The provision for income taxes and the difference between such provision for income taxes and the amount that would be expected using the U.S. federal statutory income tax rate are presented below.  

	Years ended December 31,
	2023		2024		2025
	(In millions)
Pre-tax income (loss):
U.S.	$	53.2	$	169.8	$	(16.6)
Non-U.S.		(72.7)		74.4		(26.4)
Total	$	(19.5)	$	244.2	$	(43.0)

	Years ended December 31,
	2023				2024				2025
	(In millions)
	Amount		Percent		Amount		Percent		Amount		Percent
U.S. federal statutory tax rate	$	(4.1)	21.0	%	$	51.3	21.0	%	$	(9.0)	21.0	%
State income taxes, net of federal income tax effect		(.4)	2.1			2.8	1.2			(1.5)	3.5
Foreign tax effects:
Germany:
Statutory tax rate difference between Germany and U.S.		3.6	(18.4)			(.4)	(.2)			2.8	(6.5)
Subnational income taxes		(7.5)	38.9			.8	.3			(6.1)	14.1
Effect of changes in tax laws enacted in the current period		—	—			—	—			19.3	(45.1)
Changes in valuation allowance		—	—			—	—			8.5	(20.0)
Other		.5	(2.8)			3.5	1.5			2.3	(5.1)
Belgium
Statutory tax rate difference between Belgium and U.S.		(2.0)	10.2			(1.1)	(.5)			(1.4)	3.2
Changes in valuation allowance		—	—			8.2	3.4			8.6	(20.0)
Other		.2	(.8)			—	—			.1	(.1)
Canada
Statutory tax rate difference between Canada and U.S.		1.3	(6.5)			.7	.3			.2	(.5)
Subnational income taxes		(2.4)	12.4			(1.4)	(.6)			(.4)	1.0
Other		(1.1)	5.2			(.4)	(.2)			(.4)	1.0
Other foreign jurisdictions		.7	(3.7)			1.3	.6			.8	(1.9)
Effect of cross-border tax laws:
Incremental tax expense (benefit) on earnings (losses) of subsidiary		(3.9)	20.1			9.3	3.8			(12.3)	28.6
Other		(.4)	2.0			3.3	1.4			.4	(.9)
Changes in valuation allowances		—	—			2.5	1.0			13.2	(30.7)
Changes in unrecognized tax benefits		(.7)	3.8			.5	.2			—	—
Other adjustments:
Incremental tax expense (benefit) on investment in Kronos		(5.5)	28.4			4.4	1.8			(7.1)	16.5
Incremental tax benefit on investment in BMI/LandWell		(2.7)	13.9			(2.6)	(1.1)			(.6)	1.5
Pension termination		—	—			—	—			(5.5)	12.8
Other		(.2)	.4			.2	—			—	—
Income tax expense (benefit)	$	(24.6)	126.2	%	$	82.9	33.9	%	$	11.9	(27.6)	%

	Years ended December 31,
	2023		2024		2025
	(In millions)
Components of income tax expense (benefit):
Current income tax expense (benefit)
U.S. federal	$	12.3	$	13.3	$	7.1
State		.3		.9		(.1)
Non-U.S.		13.5		25.3		14.4
		26.1		39.5		21.4
Deferred income tax expense (benefit)
U.S. federal		(13.6)		38.6		(22.0)
State		(1.2)		2.7		(1.8)
Non-U.S.		(35.9)		2.1		14.3
		(50.7)		43.4		(9.5)
Income tax expense (benefit)	$	(24.6)	$	82.9	$	11.9
Comprehensive provision for income taxes (benefit) allocable to:
Net income (loss)	$	(24.6)	$	82.9		11.9
Other comprehensive income (loss):
Currency translation		.4		(3.9)		3.7
Defined benefit pension plans		(7.6)		7.5		29.9
Other		(.3)		—		.1
Comprehensive income tax expense (benefit)	$	(32.1)	$	86.5	$	45.6

The amount shown in the preceding table of our income tax rate reconciliation for incremental net tax expense (benefit) on earnings (losses) of subsidiary represents current and deferred U.S. income taxes (or income tax benefit) attributable to one of our Chemicals Segment’s non-U.S. subsidiaries, which subsidiary is treated as a dual resident for U.S. income tax purposes, to the extent the current-year income (losses) of such subsidiary is subject to U.S. income tax under the U.S. dual-resident provisions of the Internal Revenue Code. The amount shown for incremental tax benefit on investment in BMI/LandWell represents current and deferred income taxes associated with distributions and earnings from our investment in BMI and LandWell.  BMI and LandWell are not members of our consolidated tax group for federal and state tax purposes although we do hold a controlling interest. Income allocable to non-affiliated equity holders is not taxable to us and results in a net incremental tax benefit.

The components of the net deferred income taxes at December 31, 2024 and 2025 are summarized in the following table.

	December 31,
	2024				2025
	Assets		Liabilities		Assets		Liabilities
		(In millions)
Tax effect of temporary differences related to:
Property and equipment	$	—	$	(69.1)	$	—	$	(66.1)
Lease assets (liabilities)		5.2		(5.3)		5.0		(5.1)
Accrued pension costs		14.3		—		.9		—
Accrued environmental liabilities		15.2		—		2.9		—
Capitalized research and development costs		6.3		—		8.5		—
Other deductible differences		12.0		—		14.7		—
Other taxable differences		—		(22.6)		—		(20.3)
Investments in subsidiaries and affiliates		10.1		(56.9)		7.4		(57.0)
Unrecognized currency gain		—		(16.8)		—		(11.1)
Tax on unremitted earnings of non-U.S. subsidiaries		—		(8.8)		—		(7.6)
Tax loss and tax credit carryforwards		126.6		—		152.9		—
Valuation allowance		(14.1)		—		(45.7)		—
Adjusted gross deferred tax assets (liabilities)		175.6		(179.5)		146.6		(167.2)
Netting of items by tax jurisdiction		(121.8)		121.8		(111.4)		111.4
Net noncurrent deferred tax asset (liability)	$	53.8	$	(57.7)	$	35.2	$	(55.8)

We periodically review our deferred tax assets (“DTA”) to determine if a valuation allowance is required. At December 31, 2025, our Chemicals Segment has German corporate and trade net operating loss (“NOL”) carryforwards of $510.8 million (DTA of $57.2 million) and $46.3 million (DTA of $5.0 million), respectively; Belgian corporate NOL carryforwards of $109.0 million (DTA of $27.2 million); and Canadian corporate and provincial NOL carryforwards of $30.9 million (DTA of $4.6 million) and $33.5 million (DTA of $3.8 million), respectively. We also have U.S. federal NOL carryforwards of $58.1 million (DTA of $12.2 million). With regards to our Belgian DTA, we did not have sufficient positive evidence to overcome the significant negative evidence of having twelve quarters of cumulative losses. Accordingly, at December 31, 2024, we concluded that we were required to recognize a non-cash deferred income tax asset valuation allowance of $8.2 million under the more-likely-than-not recognition criteria with respect to our Belgian DTA. During 2025, we recognized an aggregate $8.6 million non-cash tax expense as the result of a net increase in such deferred income tax asset valuation allowance with respect to the additional losses recognized by our Belgian operations during 2025.  At December 31, 2025, we have concluded no valuation allowance is required to be recognized for our German, U.S., and Canadian DTAs principally because such carryforwards have lengthy carryforward periods (the German and U.S. carryforwards may be carried forward indefinitely) and we currently expect to utilize the remainder of such carryforwards over the long term.  Although prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German, U.S., or Canadian operations for an extended period of time, or if applicable laws were to change such that the carryforward periods were more limited, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.  

The 2017 Tax Act limited our business interest expense to the sum of our business interest income and 30% of our adjusted taxable income as defined in the Tax Act. Any business interest expense disallowed as a deduction as a result of the limitation may be carried forward indefinitely. At December 31, 2024 and December 31, 2025, we have recorded deferred tax assets of $23.1 million and $30.6 million, respectively, for the carryforwards associated with the nondeductible portion of our interest expense and have concluded we are required to recognize a valuation allowance for such deferred tax asset under the more-likely-than-not recognition criteria. During 2025 we recognized a non-cash deferred income tax expense of $8.5 million with respect to the valuation allowance recorded on a portion of our additional interest expense carryforwards.

We recognize deferred income taxes with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock because the exemption under GAAP to avoid such recognition of deferred income taxes is not available to us. At December 31, 2025, we have recognized a deferred income tax liability with respect to our direct investment in Kronos of $49.7 million. There is a maximum amount (or cap) of such deferred income taxes we are required to recognize with respect to our direct investment in Kronos. The maximum amount of such deferred income tax liability we would be required to have recognized (the cap) is $153.6 million. During 2025, we recognized a non-cash deferred income tax benefit with respect to our direct investment in Kronos of $7.5 million for the decrease in the deferred income taxes required to be recognized with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock, to the extent such decrease related to our equity in Kronos’ net income during such period. We recognized a similar non-cash deferred income tax expense of $4.6 million in 2024 and a non-cash deferred income tax benefit of $6.4 million in 2023. A portion of the net change with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock during such periods related to our equity in Kronos’ other comprehensive income (loss) items, and the amounts shown in the table above for income tax expense (benefit) allocated to other comprehensive income (loss) items includes amounts related to our equity in Kronos’ other comprehensive income (loss) items.

Prior to the enactment of the 2017 Tax Act, the undistributed earnings of our Chemical Segment’s European subsidiaries were deemed to be permanently reinvested (we had not made a similar determination with respect to the undistributed earnings of our Canadian subsidiary). Pursuant to the repatriation tax provisions of the 2017 Tax Act which imposed a one-time repatriation tax on post-1986 undistributed earnings, we recognized current income tax expense of $74.1 million and elected to pay such tax in annual installments over an eight-year period.  We made our final installment payment of $18.6 million in 2025.

On December 10, 2024, the Department of the Treasury and the Internal Revenue Service released final currency regulations under §987 and related rules (the “2024 Final Regulations”). The 2024 Final Regulations generally apply to tax years beginning after December 31, 2024, and include transition rules that require us to compute a pretransition gain or loss for currency translation related to the operations, assets and liabilities of our non-U.S. qualified business units. Pursuant to the 2024 Final Regulations, we have calculated a pretransition gain of $77.1 million and, accordingly, our income tax expense in 2024 includes a non-cash deferred income tax expense of $16.5 million recognized in the fourth quarter.  We have elected to amortize such gain into taxable income over a ten-year period beginning in 2025, and accordingly, in 2025 we recorded a current tax expense of $1.6 million as a result of such amortization.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA, among other provisions, provides for bonus depreciation of qualified property, permanently modifies the interest expense deduction to use an adjusted taxable income based on a calculation similar to EBITDA and other computational changes, and makes changes to the international tax framework. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact on our 2025 consolidated financial statements, and we are in the process of evaluating the impact to future years as additional provisions take effect.

On July 18, 2025, Germany enacted legislation which includes, among other provisions, an additional depreciation allowance for certain fixed assets, improvements to the research and development tax allowance and, starting in 2028, a reduction of the 15% corporate tax rate by one percentage point in each of five years until the tax rate reaches 10% in 2032. We recorded a non-cash deferred tax expense of $19.3 million in the third quarter to reduce our net German deferred tax asset as a result of the reduction of the German corporate tax rate.  

Tax authorities are examining certain of our U.S. and non-U.S. tax returns and may propose tax deficiencies, including penalties and interest. Because of the inherent uncertainties involved in settlement initiatives and court and tax proceedings, we cannot guarantee that these tax matters, if any, will be resolved in our favor, and therefore our potential exposure, if any, is also uncertain. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

The following table shows the changes in the amount of our uncertain tax positions (exclusive of the effect of interest and penalties) during 2023, 2024 and 2025:

	Years ended December 31,
	2023		2024		2025
		(In millions)
Unrecognized tax benefits:
Amount at beginning of year	$	3.5	$	2.8	$	3.2
Tax positions taken in current period		.5		.5		.6
Lapse due to applicable statute of limitations		(1.2)		—		(.6)
Changes in currency exchange rates		—		(.1)		.3
Amount at end of year	$	2.8	$	3.2	$	3.5

At December 31, 2025, all of our uncertain tax benefits are classified as a component of our noncurrent deferred tax asset. If our uncertain tax positions at December 31, 2025 were recognized, there would be no net impact to our effective income tax rate.

We and Contran file income tax returns in U.S. federal and various state and local jurisdictions. We also file income tax returns in various non-U.S. jurisdictions, principally in Germany, Canada, Belgium and Norway. Our U.S. income tax returns prior to 2022 are generally considered closed to examination by applicable tax authorities. Our non-U.S. income tax returns are generally considered closed to examination for years prior to 2021 for Germany and Belgium and 2020 for Canada and Norway, although certain periods may be extended if currently under examination or for the review of cross-border transactions.

We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. The amount of interest and penalties we accrued during 2023, 2024 and 2025 was not material.

The following table shows our net tax payments made in 2023, 2024, and 2025 disaggregated by taxing jurisdiction.

	Years ended December 31,
	2023		2024		2025
	(In millions)
U.S. federal	$	21.0	$	25.2	$	27.2
State		.8		.4		.4
Non-U.S.
Norway		11.6		14.7		23.3
Germany		(5.5)		.2		(1.1)
Other		(.5)		1.3		2.3
	$	27.4	$	41.8	$	52.1