Income Tax Matters

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Tax Matters

14. Income Tax Matters

The following table presents Income before income taxes by geographic area (in millions of dollars):

	Year Ended December 31,
	2025		2024 As Adjusted1		2023 As Adjusted1
Domestic	$	139.7	$	78.0	$	74.7
Foreign		10.3		10.0		8.3
Income before income taxes	$	150.0	$	88.0	$	83.0

1.Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.

Tax (Provision) Benefit. Income taxes are classified as either domestic or foreign based on whether payment is made or due to the United States or a foreign country. Certain income classified as foreign is also subject to domestic income taxes.

The following table presents the components of Income tax (provision) benefit (in millions of dollars):

	Federal			Foreign			State			Total
Year Ended December 31, 2025
Current	$	1.4		$	(2.7	)	$	(2.9	)	$	(4.2	)
Deferred		(30.3	)		(1.0	)		(3.9	)		(35.2	)
Benefit applied to decrease AOCI		0.8			1.0			0.1			1.9
Income tax provision	$	(28.1	)	$	(2.7	)	$	(6.7	)	$	(37.5	)
Year Ended December 31, 20241
Current	$	(3.5	)	$	(3.1	)	$	(3.3	)	$	(9.9	)
Deferred		(15.9	)		0.6			0.7			(14.6	)
Benefit applied to decrease AOCI		1.9			—			0.3			2.2
Income tax provision	$	(17.5	)	$	(2.5	)	$	(2.3	)		(22.3	)
Year Ended December 31, 20231
Current	$	—		$	(2.2	)	$	0.6		$	(1.6	)
Deferred		(16.9	)		0.1			0.2			(16.6	)
Benefit applied to decrease AOCI		2.5			0.1			0.4			3.0
Income tax (provision) benefit	$	(14.4	)	$	(2.0	)	$	1.2			(15.2	)

1.Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.

The following table presents a reconciliation between the (provision) benefit for income taxes and the amount computed by applying the federal statutory income tax rate to Income before income taxes (in millions of dollars):

	Year Ended December 31,
	2025						2024 As Adjusted1						2023 As Adjusted1
	Amount ($)			Percent (%)			Amount ($)			Percent (%)			Amount ($)			Percent (%)
U.S. federal statutory income tax	$	(31.5	)		21.0	%	$	(18.4	)		21.0	%	$	(17.3	)		21.0	%
State and local income (tax) benefit, net of federal (national) income tax effect2		(5.2	)		3.5			(1.8	)		2.0			1.0			(1.2	)
Foreign tax effects
Canada
Income tax expense		(0.7	)		0.4			(0.4	)		0.5			(0.4	)		0.4
Undistributed earnings		(1.8	)		1.2			(0.4	)		0.4			(0.3	)		0.3
Nontaxable or nondeductible items
Nondeductible compensation		(2.4	)		1.6			(2.2	)		2.5			(1.6	)		1.9
Other items		(0.7	)		0.4			(0.3	)		0.3			0.2			(0.2	)
Tax credits
R&D credits		6.8			(4.5	)		1.7			(1.9	)		4.5			(5.5	)
R&D ASC 740 reserve		(2.0	)		1.4			(0.5	)		0.6			(1.3	)		1.6
Income tax provision	$	(37.5	)		25.0	%	$	(22.3	)		25.4	%	$	(15.2	)		18.3	%

1.Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.

2.For the year ended December 31, 2025, the state that contributed the majority (greater than 50%) of the tax effect in this category was California. The reconciling items primarily relate to current state tax expense, state NOL and rate true‑ups, and valuation allowance changes. For 2024 and 2023, the states that contributed the majority (greater than 50%) of the tax effect in this category was driven by California, Indiana, and South Carolina.

The following table presents the amounts of cash income taxes paid (in millions of dollars):

	Year Ended December 31,
	2025		2024		2023
Federal	$	2.1	$	—	$	—
State
California		0.8		0.5	*
Michigan	*			0.2	*
New York	*		*			0.1
Oregon	*			0.1		0.1
Texas	*		*			0.1
All Other States		0.3		0.5	*
Foreign
Canada		2.6		1.8		0.1
Ontario		1.8		1.3		0.1
Income taxes, net of amounts refunded	$	7.6	$	4.4	$	0.5

* The amount of income taxes paid during the year does not meet the 5.0 percent disaggregation threshold.

Deferred Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. The following table presents the components of our net deferred income tax assets and liabilities (in millions of dollars):

	As of December 31,
	2025			2024 As Adjusted1
Deferred income tax assets:
Loss and credit carryforwards	$	47.4		$	19.0
Defined benefit plans		6.6			3.1
Other assets		34.3			35.7
Lease assets		6.0			7.2
Inventories		17.5			14.5
Excess interest carryforward		—			10.8
Research & development capitalization		9.8			19.1
Valuation allowances		(1.7	)		(5.6	)
Total deferred income tax assets		119.9			103.8
Deferred income tax liabilities:
Property, plant and equipment		(183.9	)		(133.3	)
Lease liabilities		(6.0	)		(7.2	)
Undistributed foreign earnings		(5.2	)		(3.4	)
Total deferred income tax liabilities		(195.1	)		(143.9	)
Net deferred income tax liabilities	$	(75.2	)	$	(40.1	)

Tax Attributes. At December 31, 2025, we had $123.9 million of NOL carryforwards available to reduce future cash payments for federal income taxes in the United States. H.R.1, commonly referred to as the Tax Cut and Jobs Act and which became law in 2017, states that NOL carryforwards generated after December 31, 2017 do not expire and can be carried forward indefinitely, but are limited to 80% of the excess (if any) of taxable income. Our state NOL carryforwards expire periodically through 2045.

In addition, we had $22.1 million of federal R&D credit carryforwards to offset regular federal income tax requirements. Our R&D credit carryforwards expire periodically through 2045. We also had $4.6 million of state credit carryforwards that will expire periodically through 2050.

In assessing the realizability of deferred tax assets, management considers whether it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. Due to uncertainties surrounding the realization of some of our deferred tax assets, primarily including state NOL carryforwards sustained during the prior years and expiring tax benefits, we have a valuation allowance against certain deferred tax assets. When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction of income tax expense. There was a decrease in the valuation allowance of $3.8 million in 2025 and an increase in the valuation allowance of $2.8 million in 2024.

The decrease in the valuation allowance for 2025 was primarily due to expiration of state NOL carryforwards and the related reversal of their valuation allowances, along with a decrease in valuation allowance for state credits that are now expected to be utilized before expiration. The increase in the valuation allowance for 2024 was primarily due to unutilized state NOL and credit carryforwards.

Other. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company has various state income tax examinations that are currently in progress. Generally, with few exceptions, the Company’s 2021 and later tax years remain open for examination by the various state taxing authorities.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA made permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be

recognized in the period in which the legislation is enacted. Consequently, as of the date of enactment, the Company evaluated all deferred tax balances under the newly enacted tax law and made all changes required for the year ended December 31, 2025.

We have evaluated the effects of the Global anti-Base Erosion rules set forth by the Organization for Economic Co-Operation and Development, referred to as “Pillar 2,” which establishes a global minimum corporate tax rate of 15 percent. We have (i) determined that Pillar 2 legislation has been enacted in one or more of the jurisdictions in which the Company operates and the Company is within the scope of such legislation, (ii) assessed such enacted legislation and, as applicable, the Transitional Safe Harbor provisions for Pillar 2 that apply, and (iii) determined the impact will be immaterial to our financial results. We intend to file a Qualified Country-by-Country Report for the current year for each jurisdiction in which we intend to rely on the Transitional Country-by-Country Reporting Safe Harbor provisions.

We have gross unrecognized benefits relating to uncertain tax positions. The following table presents a reconciliation of changes in the gross unrecognized tax benefits (in millions of dollars):

	Year Ended December 31,
	2025			2024 As Adjusted1			2023 As Adjusted1
Gross unrecognized tax benefits at beginning of period	$	6.9		$	6.5		$	5.0
Gross increases for tax positions of current year		2.0			0.5			1.3
Gross increases for tax positions of prior years		0.2			—			0.2
Gross decreases for tax positions of prior years		—			(0.1	)		—
Settlements		(1.7	)		—			—
Gross unrecognized tax benefits at end of period	$	7.4		$	6.9		$	6.5

If and when the $7.4 million of gross unrecognized tax benefits at December 31, 2025 are recognized, $7.4 million will be reflected in our income tax provision and thus affect the effective tax rate in future periods.

We recognize interest and penalties related to unrecognized tax benefits within the income tax provision. Accrued interest and penalties, if any, are included in Long-term liabilities on our Consolidated Balance Sheets. At December 31, 2025, we had no accrued interest or penalties related to unrecognized tax benefits. At December 31, 2024, we had $0.1 million accrued for interest and penalties.

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