Note 5 - Income Taxes

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(5) INCOME TAXES 

Income (losses) before income taxes derived from United States and non-U.S. operations are as follows:

(In Thousands)	Year Ended December 31,
	2025			2024			2023
Non-U.S.	$	312,794		$	262,012		$	174,103
United States		(92,549	)		(32,524	)		(35,174	)
	$	220,245		$	229,488		$	138,929

Income tax expense (benefit) consists of the following:

(In Thousands)	U.S.
	Federal			State		Non-U.S.			Total
Year Ended December 31, 2023
Current	$	—		$	1	$	43,215		$	43,216
Deferred		—			—		92			92
	$	—		$	1	$	43,307		$	43,308
Year Ended December 31, 2024
Current	$	148		$	11	$	52,864		$	53,023
Deferred		—			—		(2,807	)		(2,807	)
	$	148		$	11	$	50,057		$	50,216
Year Ended December 31, 2025
Current	$	175		$	473	$	81,960		$	82,608
Deferred		(201,507	)		—		5,691			(195,816	)
	$	(201,332	)	$	473	$	87,651		$	(113,208	)

The components of cash paid for income taxes for the year ended December 31, 2025, are as follows:

(In Thousands)	Year Ended December 31,
	2025
U.S. Federal	$	340
U.S. State and Local		14
Foreign:
Angola		7,997
Brazil		8,620
Republic of the Congo		3,469
Gabon		5,588
Guyana		4,222
Namibia		9,109
Saudi Arabia		4,010
Other Foreign Jurisdictions		16,941
Total cash taxes paid, net	$	60,310

The actual income tax expense above differs from the amounts computed by applying the U.S. federal statutory tax rate of 21% to pre-tax loss as a result of the following:

(In Thousands)	Year Ended December 31,
	2025
Earnings from continuing operations, before income tax expense	$	220,245
U.S. Federal Statutory Tax Rate		46,251		21.0	%
State and Local Income Taxes		473		0.2	%
Federal
Effect of Cross-Border Tax Laws
Subpart F		74,406		33.8	%
Net GILTI Inclusion		31,539		14.3	%
Tax Credits
Foreign tax credit		(39,984	)	(18.2	)%
Changes in Valuation Allowances		(199,965	)	(90.8	)%
Nontaxable or Nondeductible Items
Executive Compensation		3,313		1.5	%
Other		(22	)	(0.0	)%
Other Adjustments
Restructuring		(50,182	)	(22.8	)%
Other		(1,001	)	(0.5	)%
Foreign tax effects
Angola
Withholding Tax		7,333		3.3	%
Other		197		0.1	%
Australia
Effect of Rates Different than Statutory		2,537		1.2	%
Nondeductible Expenses		(2,742	)	(1.2	)%
Other		(1,554	)	(0.7	)%
Brazil
Effect of Rates Different than Statutory		3,290		1.5	%
Other		685		0.3	%
Cayman Islands
Effect of Rates Different than Statutory		5,467		2.5	%
Other		113		0.1	%
Republic of the Congo
Effect of Rates Different than Statutory		2,601		1.2	%
Deemed Profit Tax		(5,772	)	(2.6	)%
Other		2,584		1.2	%
Cote d'Ivoire
GloBE Pillar II - Top Up Tax		2,929		1.3	%
Deemed Profit Tax		(5,793	)	(2.6	)%
Other		2,189		1.0	%
Egypt
GloBE Pillar II - Top Up Tax		3,590		1.6	%
Other		(693	)	(0.3	)%
Gabon		2,984		1.4	%
Namibia
Effect of Rates Different than Statutory		2,793		1.3	%
Other		1,116		0.5	%
Saudi Arabia
Withholding Tax		2,837		1.3	%
Other		(85	)	(0.0	)%
Singapore
Effect of Rates Different than Statutory		(2,568	)	(1.2	)%
Tax Exempt Income		(11,883	)	(5.4	)%
Other		2,459		1.1	%
Suriname
Nondeductible Expenses		(3,750	)	(1.7	)%
Other		3,005		1.4	%
Other Foreign Jurisdictions		8,912		3.9	%
Changes in Unrecognized Tax Benefits		(817	)	(0.4	)%
Income Tax Expense	$	(113,208	)	(51.4	)%

(In Thousands)	Year Ended December 31,
	2024			2023
Computed “expected” tax expense (benefit)	$	48,192		$	29,175
Increase (reduction) resulting from:
Foreign income taxed at different rates		(50,669	)		(35,088	)
Uncertain tax positions (A)		(787	)		(1,401	)
Nondeductible transaction costs		(710	)		(898	)
Valuation allowance - deferred tax assets (A)		(28,040	)		(83	)
Valuation allowance - deferred tax true-up		(1,831	)		390
Deferred tax true-up		1,831			(390	)
Foreign taxes		52,842			36,339
Net GILTI Inclusion		22,249			2,705
Return to accrual		4,500			(8,079	)
Restructuring		—			13,896
Share based compensation		(13,177	)		(1,470	)
162(m) - Executive compensation		11,995			2,107
Subpart F income		3,700			6,664
Other, net		121			(559	)
	$	50,216		$	43,308

(A) The above table reflects the net impact of changes to uncertain tax benefits and valuation allowance. Reductions in unrecognized tax benefits due to lapse of statute of limitations has been fully offset with an increase to valuation allowance.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

(In Thousands)	December 31,			December 31,
	2025			2024
Deferred tax assets:
Accrued employee benefit plan costs	$	7,623		$	7,673
Stock based compensation		3,651			3,178
Net operating losses		107,159			134,280
Tax credit carryforwards		232,962			413,873
Disallowed business interest expense carryforward		—			15,556
Property and Equipment		173,844			—
Capital loss carryforward		5,269			5,261
Other		3,810			4,273
Gross deferred tax assets		534,318			584,094
Less valuation allowance		(332,006	)		(532,994	)
Net deferred tax assets		202,312			51,100
Deferred tax liabilities:
Property and Equipment		—			(45,856	)
Outside basis difference deferred tax liability		(2,891	)		(2,891	)
Foreign interest withholding tax		(2,787	)		(1,512	)
Other		(267	)		(290	)
Gross deferred tax liabilities		(5,945	)		(50,549	)
Net deferred tax assets (liabilities)	$	196,367		$	551

As of December 31, 2025, we had U.S. federal net operating loss carryforwards of $72.7 million, which are subject to an IRC Section 382 limitation. As of December 31, 2024, we had U.S. federal net operating loss carryforwards of $216.5 million, which includes $70.1 million of net operating losses subject to an IRC Section 382 limitation. We have U.S. net operating losses of $28.2 million that will begin expiring in 2035 and $44.5 million having indefinite carryforward periods. We have $232.7 million of U.S. foreign tax credits as of December 31, 2025 that will expire beginning in 2027. We have foreign net operating loss carryforwards of $389.3 million that will expire beginning in 2026 with many having indefinite carryforward periods.

IRC Sections 382 and 383 provide an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future U.S. taxable income in the event of a change in ownership. Our emergence from Chapter 11 bankruptcy proceedings in 2017 is considered a change in ownership for purposes of IRC Section 382. The merger with GulfMark in 2018 resulted in a change in ownership of GulfMark for purposes of IRC Section 382. The GulfMark ownership change results in an annual limitation of approximately $5.6 million on GulfMark’s tax attributes generated prior to the ownership change date, which begin to expire in 2035.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. 

Based on this evaluation, for the period ended December 31, 2025, a valuation allowance of $332.0 million was recorded against our net deferred tax asset. For the period ended December 31, 2024, a valuation allowance of $533.0 million was recorded against our net deferred tax asset. During the year ended December 31, 2025, we recorded non-cash deferred tax benefits totaling $201.5 million, primarily related to a release of a valuation allowance in the second quarter of 2025 and as a result of a strategic internal restructuring of our vessel ownership (Vessel Realignment) in the fourth quarter of 2025. The valuation allowance previously established against the net U.S. deferred tax asset position was released after considering all available evidence, including the three-year cumulative financial taxable income position and the domestic tax impact given our current operating structure, and determining that sufficient positive evidence existed to conclude that a portion of the valuation allowance was no longer needed. We intend to maintain a valuation allowance on the remaining U.S. foreign tax credits and net deferred tax asset balances in foreign jurisdictions until sufficient evidence supports a reversal. This tax benefit is included as a component of income tax benefit in our Consolidated Income Statement for the year ended December 31, 2025. 

We have not recognized a U.S. deferred tax liability associated with temporary differences related to investments in our non-U.S. holding companies as we do not intend to dispose of the stock of these companies. These differences relate primarily to stock basis differences attributable to factors other than earnings, given that any untaxed cumulative earnings were subject to taxation in the U.S. in 2017 in accordance with the Tax Act. Further, any post-2017 earnings of these subsidiaries will either be taxed currently for U.S. purposes or will be permanently exempt from U.S. taxation. It is not practicable to estimate the deferred tax liability associated with temporary differences related to investments in our non-U.S. holding companies due to the legal structure and complexity of U.S. and non-U.S. tax laws.

Historically, it has been our practice and intention to indefinitely reinvest the earnings of its non-U.S. subsidiaries. Considering the significant changes made by the Tax Act, we will no longer be indefinitely reinvested with regards to its non-U.S. earnings which can be repatriated free of taxation. However, we are indefinitely reinvested in the non-U.S. earnings that could be subject to taxation and no deferred taxes have been provided for such earnings. As of December 31, 2025, the non-U.S. positive unremitted earnings, for which we are indefinitely reinvested, are $320.8 million. It is not practicable to estimate the amount of taxes on positive unremitted earnings due to the legal structure and complexity of non-U.S. tax laws. We decide each period whether to indefinitely reinvest these earnings. If, as a result of these reassessments, we distribute these earnings in the future, additional tax liabilities could result.

We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The recognition and measurement of tax liabilities for uncertain tax positions in any tax jurisdiction requires the interpretation of the related tax laws and regulations as well as the use of estimates and assumptions regarding significant future events. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes during any given year.

Our balance sheet reflects the following in accordance with ASC 740:

(In Thousands)	December 31,		December 31,
	2025		2024
Tax liabilities for uncertain tax positions	$	22,855	$	24,582
Income tax payable		44,789		30,069
Income tax receivable		717		5,396

Included in the liability balances for uncertain tax positions above for the periods ending December 31, 2025 and 2024, are $10.5 million and $9.4 million of penalties and interest, respectively. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.

A reconciliation of the beginning and ending amount of all unrecognized tax benefits, and the liability for uncertain tax positions (but excluding related penalties and interest) are as follows:

(In Thousands)
Balance at December 31, 2022 (A)	$	177,382
Additions based on tax positions related to the current year		212
Additions based on tax positions related to a prior year		1,869
Settlement and lapse of statute of limitations		(165,065	)
Reductions based on tax positions related to a prior year		(712	)
Balance at December 31, 2023	$	13,686
Additions based on tax positions related to the current year		5,909
Additions based on tax positions related to a prior year		53
Settlement and lapse of statute of limitations		(3,551	)
Reductions based on tax positions related to a prior year		(889	)
Balance at December 31, 2024	$	15,208
Additions based on tax positions related to the current year		1,215
Additions based on tax positions related to a prior year		340
Settlement and lapse of statute of limitations		(3,696	)
Reductions based on tax positions related to a prior year		(723	)
Balance at December 31, 2025	$	12,344

(A) The gross balance reported as uncertain tax positions is largely offset by $157.7 million of foreign tax credits and other tax attributes.

The amount of unrecognized tax benefits that, if recognized for tax purposes, would affect the effective tax rate are $21.6 million and $21.0 million as of December 31, 2025 and  December 31, 2024 respectively.

With limited exceptions, we are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for tax years prior to December 2021. We have ongoing examinations by various foreign tax authorities and do not believe that the results of these examinations will have a material adverse effect on our financial position or results of operations.