Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Following is a summary of earnings (loss) before income taxes for operations:

(In millions)	2025		2024	2023
United States	$	97.4	289.0	(450.0)
Foreign	371.3		354.0	86.0
Earnings (loss) before income taxes	$	468.7	643.0	(364.0)

Income tax (benefit) expense for the years ended December 31, 2025, 2024 and 2023 consists of the following:

(In millions)	2025		2024	2023
Current income taxes:
United States federal	$	120.1	86.2	67.0
State and local	9.2		6.0	11.9
Foreign	101.3		93.2	115.9
Total current	230.6		185.4	194.8
Deferred income taxes:
United States federal	(93.2)		(26.3)	(50.1)
State and local	(1.7)		(7.3)	(5.2)
Foreign	(36.9)		(23.6)	(54.6)
Total deferred	(131.8)		(57.2)	(109.9)
Total income tax expense	$	98.8	128.2	84.9

The geographic dispersion of earnings and losses contributes to the annual changes in the Company’s effective tax rates. Approximately 21% of the Company’s current year earnings before income taxes was generated in the U.S. The Company is also subject to taxation in other jurisdictions where it has operations, including Australia, Belgium, Brazil, Bulgaria, France, Ireland, Italy, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Russia, Spain and the United Kingdom. The effective tax rates that the Company accrues in these jurisdictions vary widely, but they are generally lower than the Company’s overall effective tax rate. The Company’s domestic effective tax rates for the years ended December 31, 2025, 2024 and 2023 were 35.3%, 20.3%, and (5.2)%, respectively, and its non-U.S. effective tax rates for the years ended December 31, 2025, 2024 and 2023 were 17.3%, 19.6%, and 71.3%, respectively. The difference in rates applicable in foreign jurisdictions results from many factors, including lower statutory rates, increase in valuation allowance, historical loss carry-forwards, financing arrangements, and other factors. The Company’s effective tax rate has been and will continue to be impacted by the geographical dispersion of the Company’s earnings and losses. To the extent that domestic earnings increase while the foreign earnings remain flat or decrease, or increase at a lower rate, the Company’s effective tax rate will increase.

Disaggregating Income Tax Disclosures

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which applies to all entities subject to income taxes. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard also updates the quarterly disclosure requirements for supplemental cash flows information to require disclosure of income taxes paid, net of refunds received. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

Following is a reconciliation of the amount of income tax expense (benefit) from continuing operations and the amount computed by multiplying earnings before income taxes by the United States federal statutory income tax rate based on the newly adopted disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures for the year ended December 31, 2025:

(In millions)	2025
	Amounts		Rate
US federal statutory income tax rate	$	98.4	21.0	%
Domestic federal
Tax credits
- Foreign tax credits	(5.1)		(1.1)	%
- Other tax credits	(6.2)		(1.3)	%
Nontaxable and nondeductible items	5.5		1.2	%
Effect of cross-border tax laws
- No permanent establishment	(24.8)		(5.3)	%
- Other	4.1		0.9	%
Other adjustments
- Amended returns	13.9		3.0	%
- Other	(2.9)		(0.6)	%
Changes in tax laws/rates	—		—	%
Changes in valuation allowances	3.4		0.7	%
Domestic State & Local income taxes, net of federal effect *	6.2		1.3	%
Foreign tax effects
Belgium
- Patent box deduction	(38.6)		(8.2)	%
- Changes in valuation allowances	(8.4)		(1.8)	%
- Other	5.5		1.2	%
Brazil
- Notional interest deduction	(9.3)		(2.0)	%
- Other	7.2		1.5	%
China	5.0		1.1	%
Luxembourg
- Changes in valuation allowances	22.1		4.7	%
- Currency translation adjustments	(11.8)		(2.5)	%
- Other	3.2		0.7	%
Malta
- Changes in valuation allowances	122.5		26.1	%
- General tax credits	(7.1)		(1.5)	%
- Notional interest deduction	(175.3)		(37.4)	%
- Nondeductible interest	59.8		12.8	%
- Other	2.1		0.4	%
Russia	5.6		1.2	%
Spain	5.8		1.2	%
Switzerland
- Changes in valuation allowances	(9.6)		(2.0)	%
- Other	(1.8)		(0.4)	%
Other foreign jurisdictions	8.0		1.6	%
Worldwide changes in unrecognized tax benefits	21.4		4.6	%
Total	$	98.8	21.1	%

*State and local taxes in California, Oklahoma, St. Louis, Minnesota and Texas made up the majority (greater than 50 percent) of the tax effect in this category.

Following is a supplemental disclosures of cash flow information related to income taxes paid based on the newly adopted disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures for the year ended December 31, 2025:

(In millions)	2025
U.S. Federal(1)	$	47.5
U.S. State and Local(2)	16.4
Foreign:
Brazil	13.4
Russia	26.9
Mexico	10.7
Other foreign jurisdictions	43.4
Foreign Total	94.4
Total	$	158.3

(1) Amounts presented do not include payments for credits purchased from third parties.

(2) No individual jurisdiction meets the 5% disaggregation threshold.

Following is a reconciliation of the amount of income tax expense (benefit) from continuing operations and the amount computed by multiplying earnings before income taxes by the United States federal statutory income tax rate for the years ended December 31, 2024, and 2023 prior to adopting disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures:

(In millions)	2024		2023
Income taxes at statutory rate	$	135.0	(76.4)
State and local income taxes, net of federal income tax benefit	(1.1)		5.7
Foreign income taxes (1)	(173.0)		(59.0)
Change in valuation allowance	218.7		302.8
Impairment of non-deductible goodwill	—		183.1
Fixed asset adjustments	(5.9)		(6.6)
Non-deductible expenses	10.3		9.3
General business credits and incentives	(16.6)		(316.3)
Global intangible low-taxed income	1.8		0.2
Prior period adjustments	3.6		(5.6)
Tax impact of restructuring	(50.8)		25.4
Tax contingencies and audit settlements, net	13.2		26.3
Impact of tax law changes on deferred taxes	6.3		0.8
Impact of foreign disregarded entities	(28.5)		—
Other, net	15.2		(4.8)
Income tax expense	$	128.2	84.9

(1) Foreign income taxes include statutory rate differences, financing arrangements, withholding taxes, local income taxes, notional deductions, and other miscellaneous items.

Following is a supplemental disclosures of cash flow information related to income taxes paid for the years ended December 31, 2024, and 2023 prior to adopting disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures:

(In millions)	2024		2023
Cash paid during the years for:
Income taxes*	$	137.5	187.0

*Amounts presented do not include payments for credits purchased from third parties

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2025, and 2024 are presented below:

(In millions)	2025		2024
Deferred tax assets:
Accounts receivable	$	18.0	13.9
Inventories	61.3		55.4
Employee benefits	57.3		53.5
Accrued expenses and other	135.0		142.3
Deductible state tax and interest benefit	18.7		15.8
Intangibles	48.7		56.1
Lease liabilities	111.8		103.2
Interest expense	129.3		53.3
Federal, foreign and state net operating losses and credits	1,154.4		940.3
Gross deferred tax assets	1,734.5		1,433.8
Valuation allowance	(939.6)		(760.5)
Net deferred tax assets	794.9		673.3
Deferred tax liabilities:
Inventories	(25.2)		(20.8)
Plant and equipment	(392.6)		(431.7)
Intangibles	(109.5)		(108.1)
Right of use operating lease assets	(105.3)		(96.6)
Prepaids	(57.6)		(52.0)
Other liabilities	(55.1)		(43.7)
Gross deferred tax liabilities	(745.3)		(752.9)
Net deferred tax asset (liability)	$	49.6	(79.6)

The Company evaluates its ability to realize the tax benefits associated with deferred tax assets by analyzing its forecasted taxable income using both historic and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry-back years (if permitted) and the availability of tax planning strategies. The valuation allowance as of December 31, 2025, and 2024 is $939.6 million and $760.5 million, respectively. The valuation allowance as of December 31, 2025, relates to the net deferred tax assets of certain of the Company’s foreign subsidiaries as well as certain state net operating losses and tax credits. The total change in the 2025 valuation allowance was an increase of $179.1 million related to increased losses and other carryforward attributes, foreign currency translation and other activities. The total change in the 2024 valuation allowance was an increase of $177.8 million primarily related to increased losses, foreign currency translation and other activities.

Management believes it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of valuation allowances, based upon the expected reversal of deferred tax liabilities and the level of historic and forecasted taxable income over periods in which the deferred tax assets are deductible.

As of December 31, 2025, the Company has state net operating loss carry forwards and state tax credits with potential tax benefits of $45.8 million, net of federal income tax benefit. A valuation allowance totaling $24.4 million has been recorded against these state deferred tax assets as of December 31, 2025. In addition, as of December 31, 2025, the Company has credits and net operating loss carry forwards in the U.S. with potential tax benefits of $11.5 million and in various foreign jurisdictions with potential tax benefits of $2,330.9 million. A valuation allowance of $9.7 million and $905.5 million, respectively, has been recorded against these deferred tax assets as of December 31, 2025. A portion of the carryforwards expire over various periods beginning in 2026 and the remaining carryforwards have an indefinite life.

The Company asserts that historical earnings are indefinitely reinvested for most of its foreign subsidiaries as of December 31, 2025. Should the remaining earnings be distributed in the form of dividends in the future, the Company might be subject to withholding taxes (possibly offset by United States foreign tax credits) in various foreign jurisdictions, but the Company would not expect material incremental United States federal or state taxes to be accrued on these previously taxed earnings. The Company changed its indefinite reinvestment assertion for some of its foreign subsidiaries as of December 31, 2025, and as a result recorded an immaterial deferred tax liability for the expected income taxes. The Company has not determined the potential deferred tax liability on its indefinitely reinvested foreign earnings, as such a determination is not practicable.

Tax Uncertainties

In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense (benefit). Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material to the Company’s consolidated results of operations or cash flow in any given quarter or annual period.

As of December 31, 2025, the Company’s gross amount of unrecognized tax benefits is $1,343.9 million, excluding interest and penalties. If the Company were to prevail on all uncertain tax positions, $88.8 million of the unrecognized tax benefits would affect the Company’s effective tax rate, exclusive of any benefits related to interest and penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In millions)	2025		2024
Balance as of January 1	$	1,195.7	1,304.7
Additions based on tax positions related to the current year	2.5		5.8
Additions for tax positions of acquired companies	—		—
Additions for tax positions of prior years	17.0		6.8
Reductions resulting from change in tax rate	—		(45.7)
Reductions resulting from the lapse of the statute of limitations	(0.8)		(0.4)
Settlements with taxing authorities	(13.6)		(3.0)
Effects of foreign currency translation	143.1		(72.5)
Balance as of December 31	$	1,343.9	1,195.7

As a result of the redemption of hybrid instruments in response to changes in global tax regimes, the Company has an ASC 740-10 liability for the full tax effected loss on hybrid instruments. This ASC 740-10-45 liability is recorded as a reduction to the related deferred tax asset in the financial statements as a result of management’s determination that it is not more likely than not that the benefit will be realized. The tax effected loss was adjusted for foreign currency translation resulting in an updated balance of $1,233.7 million as of December 31, 2025.

As of December 31, 2025, and 2024, the Company has $43.3 million and $31.3 million, respectively, accrued for the payment of interest and penalties, excluding the federal tax benefit of interest deductions where applicable. During the years ended December 31, 2025, 2024 and 2023, the Company accrued interest and penalties through income tax expense of $9.3 million, $5.1 million and $6.5 million, respectively.

An Internal Revenue Service audit of the Company’s 2018, 2019 and 2020 federal tax returns was completed during the year ended December 31, 2025, and the tax years are now in Internal Revenue Service Appeals. As permitted by the CARES Act, the company carried back its 2020 taxable losses to tax years before the corporate income tax rate was lowered by

the Tax Cut and Jobs Act. Federal income tax matters related to years prior to 2014 have been effectively settled. Various other state and foreign income tax returns are open to examination for various years.

Belgian Tax Matter

The Company is in a dispute with the Belgian Tax Authority (the “BTA”) in relation to certain intercompany loans to or from IVC BV, Unilin BV, and Unilin Holding BV, each of which is one of the Company’s subsidiaries in Belgium. The BTA has asserted that these loans were not genuine loans for Belgian tax purposes. The BTA issued assessments for the years ended December 31, 2017, 2018, 2019, 2020, and 2021 totaling approximately EUR 1.2 billion (including penalties but excluding late payment interests) combined on the three entities, whereby it rejected certain interest deductions and the deduction for dividends received from one of its subsidiaries and asserted the inclusion of income related to these loans. Some of these disputed assessments are still in the administrative phase and have been appealed administratively before the BTA while others are now proceeding in the Belgian courts. The Company believes that its tax position in Belgium was correct and intends to vigorously defend its position.