INCOME TAXES

9 Months Ended

Sep. 30, 2021

INCOME TAXES

INCOME TAXES

(6)   INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, primarily related to excess tax benefits on stock option exercises. For the three and nine months ended September 30, 2021 discrete items adjusted were $0.3 million and $0.8 million, respectively. At September 30, 2021 the Company is currently estimating an annual effective tax rate of approximately 25%. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to various factors.

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 23% for the nine months ended September 30, 2021. The Company recorded income tax expense of $1.9 million and $2.5 million for the three and nine months ended September 30, 2021, respectively, and income tax expense of $0.1 million and $0.7 million for the three and nine months ended September 30, 2020.

Income taxes of $1.0 million and $0.7 million were paid during the nine months ended September 30, 2021 and 2020, respectively.