INCOME TAXES

6 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings and related estimated full year-taxes, adjusted for the impact of discrete quarterly items.

The Organization for Economic Cooperation and Development’s Model Global Anti-Base Erosion rules under Pillar Two have been enacted by various countries beginning in 2024. These enacted laws relate to the Pillar Two safe harbors, Income Inclusion Rule, Qualified Domestic Minimum Tax, and the Undertaxed Profits Rule for 2025. We have analyzed the provisions in the applicable jurisdictions and provided for the appropriate tax amounts. We do not expect a material impact for 2025.

On July 4, 2025, “One Big Beautiful Bill Act” (“OBBBA”) was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are reviewing and analyzing the full effects of the corporate tax-related provisions of the OBBBA on us.

The effective tax rate for the three months ended June 30, 2025 and 2024, respectively, was 20.0% and 23.5%. The lower effective tax rate for the three months ended June 30, 2025 reflects a deferred tax benefit of $8.3 million resulting from the release of a valuation allowance, and greater tax benefits from share-based compensation. The valuation allowance release reflects profitable results in locations that previously operated with tax losses. The effective tax rate for the six months ended June 30, 2025 and 2024, respectively, was 22.5% and 22.1%. The effective tax rate for the six months ended June 30, 2025 includes tax benefits from the valuation allowance release and from share-based compensation, offset by a one-time French surtax. The tax rate for the six months ended June 30, 2024 reflects tax incentives in certain non-US jurisdictions from intellectual property development activities and a similar amount of tax benefits from share-based compensation.

Given our current earnings and anticipated future earnings, we believe there is a reasonable possibility that within the next 12-months, sufficient positive evidence may become available to support the realization of $2.0 million to $5.0 million of deferred tax assets for which there is currently a valuation allowance. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period in which the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.