INCOME TAXES

6 Months Ended

Jun. 30, 2024

INCOME TAXES

INCOME TAXES

(12)   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 or expense from stock option exercises and true ups related to the filed tax return. For both the three and six months ended June 30, 2024 discrete items adjusted were minimal. For the three and six months ended June 30, 2023 discrete items adjusted were ($1.6) million and ($3.1) million, respectively. For the three and six months ended June 30, 2023, the discrete items adjusted were primarily related to changes in fair value of contingent consideration. At June 30, 2024 and 2023, the Company is estimating an annual effective tax rate of approximately 25% and 27%, respectively. 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 25% and 14% for the six months ended June 30, 2024 and 2023, respectively. The increase in in the Company’s effective tax rate for the six months ended June 30, 2024 compared to the same period in 2023 primarily relates to the tax impact of discrete items, in particular, the change in fair value of contingent consideration recorded in the six months ended June 30, 2023. For both the three and six months ended June 30, 2024, the Company recorded an income tax expense of approximately $0.4 million. For the three and six months ended June 30, 2023, the Company recorded an income tax expense of $0.7 million and $0.8 million, respectively.

Taxes of $1.3 million and $3.0 million were paid during the six months ended June 30, 2024 and 2023, respectively.