Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recognizes deferred tax assets or liabilities for the differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the asset is expected to be recovered or the liability is expected to be settled.
The components of deferred tax assets and liabilities are as follows (in thousands):
December 31,
  2024 2023
Deferred tax assets:
Foreign tax credits $ 6,275  $ 19,456 
Net operating losses 137,902  153,068 
Pension liability 41  (269)
Interest expense limitation 53,572  49,431 
Accrued expenses not currently deductible 12,682  18,367 
Lease liabilities 87,778  34,553 
Other 7,660  6,544 
Gross deferred tax assets 305,910  281,150 
Valuation allowance (139,272) (155,411)
Total deferred tax assets $ 166,638  $ 125,739 
Deferred tax liabilities:
Property and equipment $ (92,505) $ (99,684)
Inventories (976) (1,366)
Investment in foreign subsidiaries and unconsolidated affiliates (2,764) (6,365)
Right-of-use lease asset (87,826) (34,496)
Intangibles (13,838) (13,245)
Other 17,692  (2,578)
Total deferred tax liabilities $ (180,217) $ (157,734)
Net deferred tax liabilities $ (13,579) $ (31,995)
As of December 31, 2024, the Company had deferred tax assets of $25.4 million recorded in other assets on the consolidated balance sheets.
For U.S. income taxes, companies may use foreign tax credits to offset the income taxes due on income earned from foreign sources. The foreign tax credits claimed for a particular taxable year may be limited. Foreign tax credits may be carried back one year and forward ten years. As of December 31, 2024, the Company had $19.5 million of excess foreign tax credits, of which, $13.2 million expired in 2024 and $6.3 million will expire after 2025.
As of December 31, 2024, the Company had a $21.8 million net operating loss carryforward in the U.S. In addition, the Company has net operating losses in certain states totaling $563.5 million, which began to expire during the twelve months ended December 31, 2024. The following table shows the expiration of such loss carryforwards (in thousands, except dates):
  December 31, 2024 Expiration
Foreign tax credit carryforwards $6,275 2025-2033
Foreign net operating loss carryforwards $373,558 Indefinite
State net operating loss carryforwards $428,533 Indefinite
State net operating loss carryforwards $134,934 2025-2042
Section 163j interest expense $255,092 Indefinite
The Company estimates the likelihood of the recoverability of its deferred tax assets. Any valuation allowance recorded is based on estimates and assumptions of taxable income in future periods and a determination is made of the magnitude of deferred tax assets which are more likely than not to be realized. If these estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets and its effective tax rate may increase which could result in a material adverse impact on the Company’s financial position and results of operations. The valuation allowance continues to be applied against certain deferred income tax assets where the Company has assessed that the realization of such assets does not meet the “more likely than not” criteria. Valuation allowances against net deferred tax
assets aggregated to $139.3 million and $155.4 million as of December 31, 2024 and 2023, respectively. As of December 31, 2024, valuation allowances were $62.3 million for foreign operating loss carryforwards, $18.6 million for other temporary differences, $26.1 million for state operating loss carryforwards, $28.2 million for interest expense limitation carryforwards, $3.2 million for foreign tax credits and $1.0 million for capital loss carryforwards. As of December 31, 2023, valuation allowances were $79.1 million for foreign operating loss carryforwards, $32.4 million for state operating loss carryforwards, $27.7 million for interest expense limitation carryforwards and $15.3 million for foreign tax credits and $0.9 million for capital loss carryforwards.
The Company recorded $3.1 million of deferred taxes related to the change in estimated UK pension liabilities. This amount is reflected in other comprehensive income. During the twelve months ended December 31, 2024, the Company utilized $27.6 million of net operating losses in various foreign jurisdictions and released through continuing operations an offsetting valuation allowance previously recorded against the net operating losses.
The components of income (loss) before income taxes for the periods reflected in the table below were as follows (in thousands):
  Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Nine Months Ended
December 31, 2022
Domestic $ 21,188  $ (39,130) $ (7,692)
Foreign 80,875  57,142  28,771 
Income (loss) before income taxes $ 102,063  $ 18,012  $ 21,079 
The components of income tax expense (benefit) for the periods reflected in the table below were as follows (in thousands):
  Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Nine Months Ended
December 31, 2022
Current:
Domestic $ 12,839  $ 10,347  $ 3,995 
Foreign 14,314  13,916  8,821 
$ 27,153  $ 24,263  $ 12,816 
Deferred:
Domestic $ (14,519) $ (2,568) $ (3,419)
Foreign (5,441) 3,237  (1,903)
$ (19,960) $ 669  $ (5,322)
Income tax expense $ 7,193  $ 24,932  $ 7,494 
The reconciliation of the U.S. Federal statutory tax rate to the effective income tax rate for the periods reflected in the table below is as follows:
  Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Nine Months Ended
December 31, 2022
Statutory rate 21.0  % 21.0  % 21.0  %
Net foreign tax on non-U.S. earnings 0.9  % 15.5  % 49.0  %
Foreign earnings double tax relief (8.0) % (9.5) % (5.0) %
Foreign earnings indefinitely reinvested abroad —  % (3.4) % (28.7) %
Change in valuation allowance (3.5) % (23.6) % (12.9) %
Foreign earnings that are currently taxed in the U.S. —  % 7.4  % 5.9  %
Changes in prior year estimates (0.3) % —  % 0.9  %
Impact of U.S. withholding tax 10.6  % 2.2  % 3.6  %
Impact of tax rate changes 2.9  % 2.6  % —  %
Foreign tax credits 12.9  % 76.5  % —  %
Deferred gains (3.1) % 7.9  % —  %
GILTI income 0.9  % 19.8  % —  %
Other, net (27.2) % 22.0  % 1.8  %
Effective tax rate 7.1  % 138.4  % 35.6  %
The Company is domiciled in the U.S. and is a U.S. tax resident. It’s subsidiaries conduct operations and earn income in numerous countries and are subject to the laws of taxing jurisdictions within those countries. The Company’s effective income tax rate for the twelve months ended December 31, 2024 is primarily impacted by income tax from non-US earnings in certain profitable jurisdictions with differences in tax rates in such taxing jurisdictions, adjustments to valuation allowances against future realization of deductible business interest expense and adjustments to valuation allowances against net operating losses.
Double tax relief is a mechanism designed to prevent companies from being taxed twice on the same income in difference jurisdictions. This relief applies to corporate entities that earn income both jurisdictions. Due to increased profitability, the Company was able to claim double tax relief where previously these amounts were written off or claimed as foreign tax expense, resulting in an incremental decrease to the effective tax rate of 8.0% for the twelve months ended December 31, 2024.
During the twelve months ended December 31, 2024, the consolidated effective income tax rate includes $13.2 million of expired foreign tax credits in the United States due to the 10-year carryforward limitation. However, there was a corresponding valuation allowance released which fully offset the impact of the effective income tax rate in the change in valuation allowances. The Company continues to evaluate tax planning strategies to maximize the utilization of available foreign tax credits and minimize expiration risks.
The Company’s 2024 consolidated effective income tax rate includes other, net discrete tax benefits of 18.4% from currency translation adjustments, a release of an unrecognized tax benefit of 4.0% due to the expiration of the statute of limitation on uncertain tax positions in foreign jurisdictions and a 7.8% tax benefit associated with adjustments to deferred tax balances.
The Company’s 2023 consolidated effective income tax rate includes $15.6 million of expired foreign tax credits in the United States due to the 10-year carryforward limitation. However, there was a corresponding valuation allowance released, which fully offset the impact of the effective income tax rate in the change in valuation allowances. The Company continues to evaluate tax planning strategies to maximize the utilization of available foreign tax credits and minimize expiration risks.
The Company’s 2023 consolidated effective income tax rate includes other, net tax expense of 5.8% from imputed interest, UK disallowed interest of 8.6% and non-deductible expenses of 5.3%.
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is currently undergoing multiple tax examinations in various jurisdictions in which it operates. The ultimate settlement and timing of these additional potential tax assessments is uncertain, but the Company will continue to vigorously defend its return filing positions and does not view additional assessments as probable at this time.
The following table summarizes the years open by jurisdiction as of December 31, 2024:
  Years Open
U.S. 2021 to present
UK 2023 to present
Nigeria 2014 to present
Guyana 2015 to present
Trinidad 2018 to present
Australia 2020 to present
Norway 2019 to present
Brazil 2020 to present
During the twelve months ended December 31, 2024, adjustments were made to estimates for uncertain tax positions in certain tax jurisdictions based upon changes in facts and circumstances, resulting in a decrease to income tax expense. As of December 31, 2024 and 2023, the Company had $0.1 million and $4.2 million, of unrecognized tax benefits respectively, all of which would have an impact on its effective tax rate, if recognized. During the twelve months ended December 31, 2024, the Company released $4.1 million of unrecognized tax benefits due to the expiration of the statue of limitations on uncertain tax positions in foreign jurisdictions.
The activity associated with unrecognized tax benefit for the periods reflected in the table below was follows (in thousands):
  Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 Nine Months Ended
December 31, 2022
Unrecognized tax benefits – beginning of period $ 4,173  $ 4,067  $ 3,942 
Increases for tax positions taken in prior periods —  106  200 
Decreases for tax positions taken in prior periods —  —  (75)
Decrease related to statute of limitation expirations (4,073) —  — 
Unrecognized tax benefits – end of period $ 100  $ 4,173  $ 4,067 
As of December 31, 2024, the Company had aggregated approximately $351.4 million in unremitted earnings generated by foreign subsidiaries. The Company expects to indefinitely reinvest these earnings. The Company has not provided deferred taxes on these unremitted earnings. If the Company’s expectations were to change, withholding and other applicable taxes incurred upon repatriation, if any, are not expected to have a material impact on its results of operations.