Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

16.Income Taxes

The United States and foreign components of income before income taxes and equity in earnings in affiliates are as follows:

	2022		2021		2020
	(In thousands)
Income before income taxes and equity in earnings in affiliates
United States	$	205,360	$	161,856	$	96,428
Foreign		24,460		30,966		27,700
Income before income taxes and equity in earnings in affiliates	$	229,820	$	192,822	$	124,128

The provision for income taxes consists of the following components:

	2022			2021			2020
	(In thousands)
Federal income taxes:
Current	$	25,699		$	20,006		$	8,259
Deferred		17,328			71,202			(255	)
		43,027			91,208			8,004
State income taxes:
Current		10,422			8,564			4,146
Deferred		3,960			18,587			47
		14,382			27,151			4,193
Foreign income taxes (benefit):
Current		39,904			7,780			(3,163	)
Deferred		(34,414	)		(3,409	)		11,429
		5,490			4,371			8,266
Total U.S. and foreign provision for income taxes	$	62,899		$	122,730		$	20,463

A reconciliation of the statutory U.S. federal tax rate of 21% and the effective income tax rate is as follows:

	2022			2021			2020
	(In thousands)
Provisions using statutory federal income tax rate	$	48,262		$	40,492		$	26,067
State income taxes, net of federal tax benefit		12,738			7,921			3,099
REIT benefit		—			—			(12,271	)
Change in valuation allowance		(242	)		389			(1,775	)
Federal tax credits		(1,742	)		(1,414	)		(2,015	)
Foreign income taxes		1,932			3,802			1,373
Tax impact of vested equity compensation		2,100			3,621			3,628
Impact of REIT termination		—			70,813			—
Change in contingent tax liability		452			(4,339	)		143
Asset divestiture		(5,596	)		—			—
Other, net		4,995			1,445			2,214
Total provision for income taxes	$	62,899		$	122,730		$	20,463

The Company's effective tax rate differs from the U.S. statutory rate of 21% primarily due to lower taxes on an asset divestiture in 2022

of $5.6 million, non-cash tax expense related to the termination of the REIT status in 2021 of $70.8 million and lower taxes due to a zero tax rate on earnings generated by the Company's REIT operations while a REIT in 2020 of $12.3 million. Additionally, taxes differ due to state income taxes and foreign income taxes in excess of the US statutory rate in the presented periods. State income taxes, net of federal tax benefits of $12.7 million, $7.9 million and $3.1 million were incurred in 2022, 2021 and 2020, respectively.

The following table presents the breakdown between non-current net deferred tax assets as classified on the balance sheets as of December 31, 2022 and 2021:

	2022			2021
	(In thousands)
Deferred tax assets - non-current	$	8,005		$	—
Deferred tax liabilities - non-current		(75,849	)		(80,768	)
Total net deferred tax assets	$	(67,844	)	$	(80,768	)

The significant components of the Company's deferred tax assets and liabilities consisted of the following as of December 31, 2022 and 2021:

	2022			2021
Deferred tax assets:	(In thousands)
Net operating losses	$	17,457		$	18,022
Accrued liabilities		34,333			29,473
Deferred compensation		14,437			19,052
Accrued compensation		6,928			6,694
Deferred revenue		1,654			21,134
Tax credits		4,423			3,065
Equity awards		3,322			3,694
Operating lease liability		23,556			28,756
Other, net		910			1,212
Valuation allowance		(21,016	)		(19,322	)
Total deferred tax assets	$	86,004		$	111,780
Deferred tax liabilities:
Depreciation	$	(85,402	)	$	(59,057	)
Intangible assets		(46,228	)		(48,935	)
Capitalized transaction costs		—			(15,229	)
Accounting method change		—			(2,334	)
Prepaid expenses and other		(16	)		(39,739	)
Lease right-of-use assets		(22,202	)		(27,254	)
Total deferred tax liabilities	$	(153,848	)	$	(192,548	)
Total net deferred tax assets (liabilities)	$	(67,844	)	$	(80,768	)

Deferred income taxes should be reduced by a valuation allowance if it is not more likely than not that some portion or all of the deferred tax assets will be realized. On a periodic basis, management evaluates and determines the amount of the valuation allowance required and adjusts such valuation allowance accordingly. At year end 2022 and 2021, the Company has a valuation allowance of $21.0 million and $19.3 million, respectively related to deferred tax assets for foreign net operating losses and foreign tax credits, state net operating losses and state tax credits. The valuation allowance increased by $1.7 million during the year ended December 31, 2022 related to certain deferred tax assets increases that were not benefited.

The Company provides income taxes on the undistributed earnings of non-U.S. subsidiaries except to the extent that such earnings are permanently invested outside the United States. At December 31, 2022, $10.2 million of accumulated undistributed earnings of non-U.S. subsidiaries were permanently invested outside the United States. At the existing U.S. federal income and applicable foreign withholding tax rates, additional taxes (net of foreign tax credits) of $0.5 million, consisting solely of withholding taxes, would have to be provided if such earnings were remitted currently.

At December 31, 2022, the Company had no Federal net operating loss carryforwards and $210.0 million of combined net operating loss carryforwards in various states which will begin to expire in 2023. The Company has recorded a partial valuation allowance against the deferred tax assets related to the state operating losses.

Also, as of the year ended December 31, 2022, the Company had $14.0 million of foreign operating losses which carry forward indefinitely and $1.9 million of state tax credits which will begin to expire in 2023. The Company has recorded a partial valuation allowance against the deferred tax assets related to the foreign operating losses and state tax credits.

The Company recognizes the cost of employee services received in exchange for awards of equity instruments based upon the grant date fair value of those awards. The exercise of non-qualified stock options and vesting of restricted stock awards which have been granted under the Company’s equity award plans give rise to compensation income which is includable in the taxable income of the applicable employees and the majority of which is deductible by the Company for federal and state income tax purposes. In the case of non-qualified stock options, the compensation income results from increases in the fair market value of the Company's common stock subsequent to the date of grant. At December 31, 2022, the deferred tax asset related to unexercised stock options and restricted stock grants for which the Company has recorded a book expense was $3.3 million.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

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

	2022			2021			2020
	(In thousands)
Balance at Beginning of Period	$	1,105		$	5,623		$	5,469
Additions based on tax positions related to the current year		581			133			44
Additions for tax positions of prior years		57			57			166
Reductions as a result of a lapse of applicable statutes of limitations		(223	)		(4,708	)		(56	)
Balance at End of Period	$	1,520		$	1,105		$	5,623

All amounts in the reconciliation are reported on a gross basis and do not reflect a federal tax benefit on state income taxes. The Company has accrued $1.5 million of accrued uncertain tax benefits as of December 31, 2022 which is inclusive of the federal tax benefit on state income taxes. The Company believes that it is reasonably possible that a decrease may be necessary in the unrecognized tax benefits within twelve months of the reporting date of approximately $0.1 million, related to state tax exposures, due to a lapse of the statute of limitation. The accrued uncertain tax balance at December 31, 2022 includes $1.5 million of unrecognized tax benefits which, if ultimately recognized, will reduce the Company’s annual effective tax rate.

The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the years before 2018.

The calculation of the Company’s provision (benefit) for income taxes requires the use of significant judgment and involves dealing with uncertainties in the application of complex tax laws and regulations. In determining the adequacy of the Company’s provision (benefit) for income taxes, potential settlement outcomes resulting from income tax examinations are regularly assessed. As such, the final outcome of tax examinations, including the total amount payable or the timing of any such payments upon resolution of these issues, cannot be estimated with certainty.

During the year ended December 31, 2021, the Company recognized a net decrease in interest of $0.2 million related to the change of

unrecognized tax benefits noted above. The net decrease in interest during the year ended December 31, 2022 was not significant. During the year ended December 31, 2022, the Company recorded a potential penalty of $0.1 million. There was no potential penalty recorded during the year ended December 31, 2021. The Company had approximately $0.1 million for the payment of interest and penalties accrued at December 31, 2022. The amount accrued for the payment of interest and penalties was not significant at December 31, 2021. The Company classifies interest and penalties as interest expense and operating expense, respectively.