XML 42 R24.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For financial reporting purposes, income before income taxes includes the following components:

Years Ended December 31,
(in millions)202420232022
United States$25.9 $36.4 $8.5 
Foreign(12.0)6.4 (4.1)
Income before income taxes$13.9 $42.8 $4.4 

The provision for income taxes consists of the following:

Years Ended December 31,
(in millions)202420232022
Current provision:
Federal$13.3 $8.2 $17.4 
State0.9 4.5 2.4 
Foreign2.6 2.8 2.3 
Total current provision
16.8 15.5 22.1 
Deferred benefit:
Federal(8.2)(3.6)(18.3)
State0.8 (2.8)(1.0)
Foreign0.4 — 2.2 
Total deferred benefit
(7.0)(6.4)(17.1)
Total provision:
Federal5.1 4.6 (0.9)
State1.7 1.7 1.4 
Foreign3.0 2.8 4.5 
Total income tax provision
$9.8 $9.1 $5.0 

The Company's "Income tax provision" is computed based on the domestic and foreign federal statutory rates and the average state statutory rates, net of related federal benefit.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. A reconciliation of the provision for income taxes at the statutory federal income tax rate to the amount provided is as follows:

Years Ended December 31,
(in millions)202420232022
Tax expense at the statutory federal income tax rate$2.9 $8.9 $0.9 
State income tax, net of federal income tax3.9 0.4 0.6 
Research and development tax credits(2.8)(2.8)(3.3)
Impact of uncertain tax positions(0.5)1.0 1.2 
Valuation allowance impact1.7 0.3 6.0 
Changes in tax rates0.7 0.8 0.2 
Share-based compensation0.1 0.6 0.4 
Foreign-derived intangible income deduction(0.4)(0.7)(0.9)
Foreign tax credit(0.4)(0.5)(0.2)
Goodwill impairment2.9 — — 
Other items1.7 1.1 0.1 
Total income tax provision$9.8 $9.1 $5.0 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

December 31,
(in millions)20242023
Deferred tax assets:
Amortization of research and experimental expenditures$30.7 $24.7 
Inventory reserves7.6 5.8 
Warranty reserves3.7 3.7 
Credit loss reserves0.5 0.8 
State tax loss carryforwards11.5 11.5 
Accrued vacation1.4 1.2 
Deferred compensation1.0 1.1 
Share-based compensation1.3 2.6 
Goodwill2.8 1.7 
Foreign net operating loss8.3 7.9 
Lease obligation1.6 1.3 
Employee & insurance accruals3.1 1.0 
Domestic credit carryforwards1.5 1.5 
Uncertain tax provision reserve1.1 0.2 
Deferred revenue0.9 2.2 
Valuation allowances(12.4)(12.5)
Total deferred tax assets64.6 54.7 
Deferred tax liabilities:
Property and equipment15.8 14.0 
Intangibles0.9 1.8 
Right-of-use assets1.5 1.3 
Post-retirement benefits0.8 0.5 
Other2.2 0.7 
Total deferred tax liabilities21.2 18.3 
Total net deferred assets$43.4 $36.4 

As of December 31, 2024, the Company had gross state net operating losses ("NOL") carryforwards of $235.9 million and gross foreign NOL carryforwards of approximately $28.3 million, which are available to offset future taxable income. If not used, these carryforwards will expire between 2025 and 2035. The Company does not have a federal net operating loss carryforward.

A significant portion of the valuation allowance for deferred tax assets relates to the future utilization of state and foreign NOL and state tax credit carryforwards. Future utilization of these NOL and state tax credit carryforwards is evaluated by the Company on a periodic basis, and the valuation allowance is adjusted accordingly. In 2024, the valuation allowance on these carryforwards decreased by $0.1 million, driven by the release of the valuation allowance on the deferred tax assets related to NOLs generated by the Company's Chilean ("LatAm") subsidiary of $1.5 million, partially offset by a $1.0 million increase related to the Company's Brazilian subsidiary.

The following table represents a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2024, 2023 and 2022:

Years Ended December 31,
(in millions)202420232022
Allowance balance, beginning of year$12.5 $11.9 $5.9 
Provision1.3 1.8 6.0 
Reversals(1.5)(1.6)— 
Other0.1 0.4 — 
Allowance balance, end of year$12.4 $12.5 $11.9 

Undistributed foreign earnings are considered to be indefinitely reinvested outside the U.S. as of December 31, 2024. Because those earnings are considered to be indefinitely reinvested, no deferred income taxes have been provided thereon. If the Company were to make a distribution of any portion of those earnings in the form of dividends or otherwise, any such amounts
would be subject to withholding taxes payable to various foreign jurisdictions; however, the amounts would not be subject to any additional U.S. income tax. As of December 31, 2024, the cumulative amount of undistributed U.S. GAAP earnings for the Company's foreign subsidiaries was $68.5 million.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Company is currently under examination for the years 2013, 2014, 2016, 2018 and 2019 with taxing authorities in the United States. The Company is no longer subject to U.S. federal income tax examinations by authorities for years prior to 2013. With few exceptions, the Company is no longer subject to state and local or non-U.S. income tax examinations by authorities for years prior to 2020.

The Company has a liability for unrecognized tax benefits of $16.8 million and $13.0 million (excluding accrued interest and penalties) as of December 31, 2024 and 2023, respectively. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in "Interest expense" and "Selling, general and administrative expenses", respectively, in the Consolidated Statements of Operations. The Company did not recognize any tax benefits for interest and penalties related to amounts that were settled for less than previously accrued in 2024 or 2023. The net amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $15.1 million as of December 31, 2024, of which $10.7 million and $9.5 million were included in "Other current liabilities" and "Other long-term liabilities", respectively, partially offset by $5.1 million included in "Deferred income tax assets" in the Consolidated Balance Sheets. The net amount of these unrecognized tax benefits was $15.7 million as of December 31, 2023 included in "Other long-term liabilities" in the Consolidated Balance Sheets.

A reconciliation of the beginning and ending unrecognized tax benefits excluding interest and penalties is as follows:

Years Ended December 31,
(in millions)202420232022
Balance, beginning of year$13.0 $12.0 $10.8 
Additions for tax positions taken in current year5.2 0.9 1.2 
Additions for tax positions taken in prior period— 0.1 — 
Reductions due to lapse of statutes of limitations(1.4)— — 
Balance, end of year$16.8 $13.0 $12.0 

The tax positions in the December 31, 2024 balance of unrecognized tax benefits are expected to reverse through income in future years.

In 2024, additional jurisdictions in which the Company operates enacted local legislation formally adopting the Global Anti-Base Erosion Model Rules ("Pillar Two"), which generally provides for a global minimum corporate tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework. The effective dates are generally January 1, 2024, and January 1, 2025, for different aspects of the rules and vary by jurisdiction. Pillar Two has not had a material impact on the Company's effective tax rate, consolidated results of operations, financial position or cash flows.

Additional jurisdictions are expected to implement the model rules under local law in the future, with varying effective dates. The Company is continuing to evaluate the potential effect on future periods of the Pillar Two implementation, pending legislative adoption by additional individual countries and the ongoing issuance of additional administrative guidance by the OECD.