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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
(Loss) income from continuing operations before income taxes consists of the following:
 Year Ended December 31,
 202420232022
United States$(5.9)$0.2 $(21.3)
Outside the United States50.3 41.3 32.0 
$44.4 $41.5 $10.7 
Income tax expense (benefit) consists of the following:
 Year Ended December 31,
 202420232022
Current expense (benefit):
Federal$2.8 $1.7 $(1.6)
State1.1 0.1 (0.2)
Foreign15.6 13.9 9.4 
19.5 15.7 7.6 
Deferred (benefit) expense:
Federal(11.9)(7.1)(8.0)
State(1.8)(1.2)0.8 
Foreign(0.9)1.1 (1.1)
(14.6)(7.2)(8.3)
Income tax expense (benefit)$4.9 $8.5 $(0.7)
 
In 2024, the effective tax rate of 11.0% was less than the U.S. statutory rate of 21%, primarily as a result of the tax benefit of the research and development tax credit and the release of certain valuation allowances.

Several countries in which Park-Ohio Holdings does business have proposed or enacted new laws or are actively considering changes to their tax laws to align with the Organization for Economic Co-operation and Development (“OECD”) proposals. Significant details around the provisions are still uncertain as the OECD and participating countries continue to work on defining the underlying rules and administrative procedures. Enactment of this and similar legislation could significantly increase our tax obligations in countries where we do business. We will continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate. During 2024, certain countries in which Park-Ohio Holdings operates enacted Pillar Two laws, but these countries’ results did not have a material impact on income tax expense.

In 2023, the effective tax rate of 20.5% approximated the U.S. statutory rate of 21%, as the tax benefits of the foreign tax credit and research and development tax credit were offset by the tax expense of foreign earnings, GILTI and non-deductible expenses.

In 2022, the Company completed a research and development tax credit study for the current year as well as U.S. tax years open under statute. The completed study resulted in additional research and development tax credit benefits being recorded in 2022.

A reconciliation of income tax expense (benefit) computed by applying the statutory federal income tax rate to income tax benefit as recorded is as follows:
Year Ended December 31,
202420232022
Income tax expense at U.S. statutory rate$9.3 $8.7 $2.3 
Effect of state income taxes, net(0.9)(1.1)0.3 
Effect of foreign operations5.7 4.4 3.0 
Valuation allowance(2.3)(1.3)0.8 
Uncertain tax positions0.7 0.3 0.4 
Non-deductible items1.2 2.3 (0.2)
Equity compensation0.8 1.4 1.4 
Foreign tax credit(4.7)(4.3)(4.1)
Other tax credits(7.0)(3.3)(5.6)
GILTI1.5 2.4 1.8 
FDII(0.5)(0.8)(0.2)
Other, net1.1 (0.2)(0.6)
Income tax expense (benefit) as recorded$4.9 $8.5 $(0.7)
Significant components of the Company’s net deferred income tax assets and liabilities are as follows:
 Year Ended December 31,
 20242023
Deferred income tax assets:
Postretirement benefit obligation$0.2 $0.3 
Inventory12.5 13.0 
Net operating loss and credit carryforwards17.9 18.9 
Operating lease liabilities10.1 11.3 
Compensation3.3 3.7 
Capitalized research and development expenditures29.6 13.1 
Disallowed interest7.6 11.5 
Other5.8 4.1 
Total deferred income tax assets87.0 75.9 
Deferred income tax liabilities:
Depreciation14.7 15.7 
Pension19.0 17.0 
Intangible assets16.8 16.0 
Lease right-of-use assets10.1 11.3 
Other5.5 4.8 
Total deferred income tax liabilities66.1 64.8 
Net deferred income tax assets prior to valuation allowances20.9 11.1 
Valuation allowances(4.9)(7.3)
Net deferred income tax asset (liability)$16.0 $3.8 

At December 31, 2024, the Company has U.S., state and foreign net operating loss carryforwards as well as U.S. foreign tax credit carryforwards and research and development tax credit carryforwards for income tax purposes. The foreign net operating loss carryforward is $16.0 million, of which $11.6 million expires between 2025 and 2043 and the remainder has no expiration date. The Company has a tax benefit from a state net operating loss carryforward of $4.2 million, of which
$3.8 million expires between 2025 and 2044 and the remainder has no expiration date. The Company also has a non-consolidated U.S. net operating loss carryforward of $1.1 million that expires between 2035 and 2036. The Company has recorded a valuation allowance of $4.9 million against these net operating loss carryforwards in jurisdictions where those losses are not expected to be realized. The foreign tax credit carryforward is $1.2 million and expires in 2032. The U.S. research and development tax credit carryforward is $6.1 million and expires between 2031 and 2044.
 
As of December 31, 2024 and 2023, the Company was in a cumulative three-year loss position in the U.S. The Company has determined that it was more likely than not that its U.S. deferred tax assets will be realized. The Company reviews all valuation allowances related to deferred tax assets and will reverse these valuation allowances, partially or totally, when appropriate under ASC 740.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
 
202420232022
Unrecognized Tax Benefit — January 1$0.5 $0.8 $1.0 
Gross Increases to Tax Positions Related to Prior Years0.8 — 0.3 
Gross Decreases related to settlements with taxing authorities— — — 
Expiration of Statute of Limitations(0.1)(0.3)(0.5)
Unrecognized Tax Benefit — December 31$1.2 $0.5 $0.8 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $0.8 million and $0.1 million at December 31, 2024 and December 31, 2023, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During 2024 and 2023, the Company recognized a tax benefit of approximately $0.1 million in net interest and penalties due to the expiration of various uncertain tax positions. The Company had approximately $0.1 million for the payment of interest and penalties accrued at December 31, 2023. It is reasonably possible that, within the next twelve months, the amount of gross unrecognized tax benefits could be reduced by approximately $0.4 million as a result of the closure of tax statutes related to existing uncertain tax positions.
The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company’s tax years for 2015 through 2024 remain open for examination by the Internal Revenue Service and 2018 through 2024 remain open for examination by various state and foreign taxing authorities.
As of December 31, 2024, the Company has accumulated undistributed earnings generated by our foreign subsidiaries of approximately $325.6 million. We intend to indefinitely reinvest these earnings and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs.