Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income before income taxes for the three years ended December 31 was as follows:

	2025		2024		2023
U.S. operations	$	37.3	$	92.3	$	94.2
Foreign operations	20.6		12.5		29.6
Total	$	57.9	$	104.8	$	123.8

Income tax expense for the three years ended December 31 was as follows:

	2025		2024		2023
Current:
Federal	$	1.6	$	19.1	$	28.7
Foreign	7.5		7.9		8.5
State	1.1		3.6		4.0
Total current	$	10.2	$	30.6	$	41.2
Deferred:
Federal	$	5.0	$	(1.8)	$	(8.7)
Foreign	(2.0)		(7.7)		(17.3)
State	0.9		—		(0.9)
Total deferred	$	3.9	$	(9.5)	$	(26.9)
Total:
Federal	$	6.6	$	17.3	$	20.0
Foreign	5.5		0.2		(8.8)
State	2.0		3.6		3.1
Total income tax expense	$	14.1	$	21.1	$	14.3

In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or immaterial. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our approximately $107.6 million of undistributed earnings from foreign subsidiaries to the United States as those earnings continue to be permanently reinvested or the earnings will be remitted in a tax-neutral transaction.

The following table presents the reconciliation between our statutory income tax and effective income tax for the year ended December 31, 2025 in accordance with ASU 2023-09, which was adopted prospectively in 2025:

	Amount		Percent
Tax at U.S. statutory rate	$	12.1	21.0	%
Increases (decreases) in the tax rate from:
State and local income taxes, net of federal effect (a)	1.6		2.7
Foreign tax effects:
Italy	0.7		1.1
Other	1.3		2.2
Tax credits:
Research and development credits	(3.1)		(5.4)
Other tax credits	(0.1)		(0.1)
Nontaxable or nondeductible items:
Nondeductible executive compensation	2.2		3.8
Other nontaxable or nondeductible items	(0.4)		(0.6)
Changes in unrecognized tax benefits	(0.2)		(0.4)
Effective income tax rate	$	14.1	24.3	%

(a) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Florida, Georgia, Michigan, New Jersey, New York, Texas, Pennsylvania, and Wisconsin.

The following table presents the reconciliation between our statutory income taxes and effective income taxes for the two years ended December 31 prior to the adoption of ASU 2023-09:

	2024		2023
Tax at statutory rate	21.0	%	21.0	%
Increases (decreases) in the tax rate from:
State and local taxes, net of federal benefit	3.4		2.4
Effect of foreign operations	(2.2)		(10.9)
Effect of changes in valuation allowances	—		(0.2)
Nondeductible executive compensation	2.5		1.0
Stock based compensation	(2.9)		0.1
Research and development credit	(1.6)		(1.3)
Other, net	(0.1)		(0.5)
Effective income tax rate	20.1	%	11.6	%

The effect of foreign operations line item includes (3.7%) and (12.0%) benefits for 2024 and 2023, respectively, associated with reductions to deferred tax liabilities on undistributed foreign earnings as those cumulative earnings were reduced by current year statutory book losses.

Deferred tax assets and liabilities were comprised of the following as of December 31:

	2025		2024
Deferred tax assets:
Inventory	$	3.1	$	2.2
Compensation and employee benefits	10.1		12.3
Warranty reserves	2.0		2.2
Allowance for doubtful accounts and deferred revenue	5.4		2.8
Operating lease liabilities	12.4		11.0
Tax loss carryforwards	14.4		7.7
Tax credit carryforwards	6.5		3.6
Capitalized research and development costs	2.9		19.0
Goodwill and intangible assets	10.1		7.0
Other	6.8		2.5
Gross deferred tax assets	$	73.7	$	70.3
Less: valuation allowance	(3.9)		(3.3)
Total net deferred tax assets	$	69.8	$	67.0
Deferred tax liabilities:
Operating lease assets	$	13.2	$	11.3
Fixed assets	7.2		9.2
Capitalized implementation costs	6.6		5.0
Total deferred tax liabilities	$	27.0	$	25.5
Net deferred tax assets	$	42.8	$	41.5

Tax credit carryforwards consist of $5.8 million of U.S. federal and state tax credits and $1.4 million of Netherlands tax credits. We have cumulative tax losses and other tax attributes of $63.0 million in various countries ($14.4 million tax effected). Cumulative losses can be used to offset the income tax liabilities on future income in these countries. Of these losses and other tax attributes, $62.0 million have unlimited carryforward periods and $1.0 million have a limited carryforward period.

The valuation allowance as of December 31, 2025 principally applies to foreign net operating losses as well as foreign and domestic tax credit carryforwards which, in the opinion of management, are more likely than not to expire unutilized. However, to the extent that tax benefits related to these carryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense.

The amount of cash income taxes paid for the year ended December 31, 2025, disaggregated in accordance with ASU 2023-09, is as follows:

	2025
U.S. federal	2.5
U.S. state and local	2.0
Total U.S.	4.5
Foreign:
Germany	2.2
Brazil	0.9
Canada federal	0.7
Netherlands	0.7
France	0.7
Other	3.7
Total foreign	8.9
Total income taxes paid	$	13.4

The amount of cash income taxes paid during the years ended December 31, 2024 and 2023 were $30.2 million and $39.5 million, respectively.

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

	2025		2024
Beginning balance	5.9		4.1
Increases as a result of tax positions taken during a prior period	0.4		—
Increases as a result of tax positions taken during the current year	0.5		0.9
Increases relating to prior period tax positions of acquired entities	—		1.4
Decreases as a result of a lapse of the applicable statute of limitations	(1.0)		(0.5)
Increases as a result of foreign currency fluctuations	0.1		—
Ending balance	$	5.9	$	5.9

Included in the balance of unrecognized tax benefits as of December 31, 2025 and 2024 are potential benefits of $5.5 million and $5.5 million, respectively, that if recognized, would affect the effective tax rate.

We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. In addition to the liability of $5.9 million and $5.9 million for unrecognized tax benefits as of December 31, 2025 and 2024, there was approximately $0.8 million and $0.6 million, respectively, for accrued interest and penalties. To the extent interest and penalties are not assessed with respect to uncertain tax positions, the amounts accrued will be revised and reflected as an adjustment to income tax expense.

We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before 2019. The number of years which remain open for audit for U.S. state or foreign tax purposes varies by jurisdiction but generally ranges from 3-5 years. We are currently undergoing income tax examinations in various foreign jurisdictions. Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations.

On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14," commonly referred to as the One Big Beautiful Bill Act (the “Act”). The Act includes significant corporate tax provisions such as accelerated depreciation deductions, immediate expensing of domestic research costs, and modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective starting January 1, 2025. We currently expect a cash tax benefit in 2025 from the enhanced expensing provisions. The Act does not materially impact our effective tax rate.