Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
13. Income Taxes:
The effective income tax rate for the three months ended September 30, 2025 was 98.2%, compared to 23.7% for the three months ended September 30, 2024. The effective income tax rate for the nine months ended September 30, 2025 was 113.4%, compared to 26.4% for the nine months ended September 30, 2024. The Company’s effective income tax rates for the three and nine months ended September 30, 2025 and 2024, respectively, fluctuated primarily due to the increased discrete tax impact relative to pre-tax book income related to a stock compensation shortfall, intraperiod allocation revaluation of deferred tax assets and liabilities including valuation allowances as a result of the Advanced Materials & Catalysts divestiture, state tax refunds associated with prior tax years and expense related to accrued penalties and interest on historical uncertain tax positions.
The tax expense for the three and nine months ended September 30, 2025 includes a $15,620 discrete tax expense connected to intraperiod allocation associated with the revaluation of deferred tax assets and liabilities, a valuation allowance against the Company’s Kansas Investment Tax Credits, and an increase in valuation allowance against a portion of the Company’s state net operating losses. In accordance with intraperiod allocation rules, this discrete tax expense is reflected in the tax provision for continuing operations.
The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for the nine months ended September 30, 2025 was mainly due to state and local taxes, a shortfall tax expense related to stock compensation, tax benefit related to state tax refunds associated with prior tax years, discrete tax expense related to intraperiod allocation associated with the revaluation of deferred tax assets and liabilities, a valuation allowance against the Company’s Kansas Investment Tax Credits, and a valuation allowance against a portion of the Company’s state net operating losses.
The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for the nine months ended September 30, 2024 was mainly due to state and local taxes, a discrete shortfall tax expense related to stock compensation and a discrete tax expense associated with the recording of accrued penalties and interest on historical uncertain tax positions.
During the three months ended September 30, 2025, the Company reassessed its indefinite reinvestment assertion with respect to its foreign subsidiaries as a result of the decision to divest the Advanced Materials & Catalysts business, which is now classified as held for sale. The Company no longer considers the undistributed earnings of its foreign subsidiaries to be permanently reinvested in non-U.S. operations. Accordingly, the Company considered the deferred tax impacts of the repatriation of the undistributed earnings of its foreign subsidiaries and concluded that there was no net tax impact necessary based on available information. The Company recorded a full valuation allowance offsetting a potential deferred tax asset for the excess of tax basis over the book basis of the foreign subsidiaries. Valuation allowances are provided, if, based upon the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. We may release all or a portion of the valuation allowance in the near-term; however, the release of the valuation allowance will be evaluated at each reporting period until the divestiture is complete.
On July 4, 2025, H.R.1, the One Big Beautiful Bill Act (“OBBBA”), was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025.
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