Income Taxes

3 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting,” and ASC Topic 740, “Accounting for Income Taxes.” At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

We recorded an income tax provision of $9.5 million and $5.0 million for the three months ended March 31, 2025 and 2024, respectively. As a percentage of pre-tax income, our effective tax rate was 81.6% and 43.3% for the three months ended March 31, 2025 and 2024, respectively. In the three months ended March 31, 2025, the primary difference between the statutory rate and the effective rate is due to matters reported discretely in the quarter primarily associated with stock compensation adjustments and the estimated loss on assets held for sale related to our Jack Wolfskin business, which we expect will not be deductible for income tax purposes. In the three months ended March 31, 2024, the primary difference between the statutory rate and the effective rate is due to tax adjustments related to stock-based compensation and the establishment of valuation allowances on certain deferred tax assets.

As of March 31, 2025, the gross liability for income taxes associated with uncertain tax positions was $27.7 million. Of this amount, $15.9 million would benefit our condensed consolidated financial statements and effective income tax rate if favorably settled. We recognize interest and penalties related to income tax matters in income tax expense.