Income Tax Matters

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Tax Matters

10. Income Tax Matters

The following table presents the income tax provision by region (in millions of dollars):

	Quarter Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Domestic	$	(2.8	)	$	0.1		$	(10.1	)	$	(6.9	)
Foreign		(0.6	)		(0.2	)		(1.6	)		(1.1	)
Total	$	(3.4	)	$	(0.1	)	$	(11.7	)	$	(8.0	)

The income tax provision for the quarters ended September 30, 2024 and September 30, 2023 was $3.4 million and $0.1 million, respectively, reflecting an effective tax rate of 22% and 2%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2024 was primarily due to a decrease of 8% related to Federal research and development credits, partially offset by: (i) an increase of 4% related to non-deductible compensation expense; (ii) an increase of 1% related to foreign withholding tax; and (iii) an increase of 1% related to other permanent items. The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2023 was primarily due to a decrease of 30% related to Federal research and development credits, partially offset by: (i) an increase of 4% for return to provision differences and (ii) an increase of 3% related to non-deductible compensation expense.

The income tax provision for the nine months ended September 30, 2024 and 2023 was $11.7 million and $8.0 million, respectively, reflecting an effective tax rate of 23% and 17%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2024 was primarily due to a decrease of 5% related to Federal research and development credits, offset by: (i) an increase of 3% related to non-deductible compensation expense; (ii) an increase of 1% related to foreign withholding tax; and (iii) an increase of 1% related to other permanent items. The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2023 was primarily due to: (i) a decrease of 9% related to Federal research and development tax credits and (ii) a decrease of 2% for return to provision differences, partially offset by: (i) an increase of 2% related to non-deductible compensation expense and (ii) an increase of 1% related to foreign withholding tax.

Our gross unrecognized benefits relating to uncertain tax positions were $7.2 million and $6.5 million at September 30, 2024 and December 31, 2023, respectively, of which, $7.2 million and $6.5 million would be recorded through our income tax provision and thus, impact the effective tax rate at September 30, 2024 and December 31, 2023, respectively, if the gross unrecognized tax benefits were to be recognized.

We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.