Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company determines its effective tax rate each quarter based upon its estimated annual effective tax rate. The Company records the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

Income tax (benefit) expense, loss before income taxes and the corresponding effective tax rate for the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Income tax (benefit) expense	$	(833)		$	32,121		$	1,824		$	15,598
Loss before income taxes	(34,053)			(92,743)			(127,337)			(208,508)
Effective tax rate	2		%	(35)		%	(1)		%	(7)		%

The effective tax rate for the three and nine months ended September 30, 2022 varied from the effective tax rate for the three and nine months ended September 30, 2021 primarily due to the initial recognition of valuation allowances in the U.S., resulting in tax expense of $31,740 and $13,278 recorded in the three and nine months ended September 30, 2021, respectively, the geographic mix of pre-tax losses, and the inability to record a benefit for pre-tax losses in the U.S. and certain foreign jurisdictions due to valuation allowances. Additionally the three and nine months ended September 30, 2022 were impacted by discrete tax impacts of the gain on sale-leaseback transaction in Europe, tax reserve changes, and other permanent items.

The income tax rate for the three and nine months ended September 30, 2022 and 2021 varied from the U.S. statutory rate primarily due to the inability to record a tax benefit for pre-tax losses in the U.S. and certain foreign jurisdictions, tax credits, the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, and other permanent items. Additionally, the income tax rate for the three and nine months ended September 30, 2021 varied from the U.S. statutory rate as a result of the initial recognition of valuation allowances in the U.S.

During the nine months ended September 30, 2022, the Company received $54,273 in cash payments from the United States Internal Revenue Service for tax refunds related to net operating loss carrybacks.

The Company’s current and future provision for income taxes is impacted by changes in valuation allowances in the U.S. and certain foreign jurisdictions. The Company’s future provision for income taxes will include no tax benefit with respect to losses incurred and, except for certain jurisdictions, no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by changes in valuation allowances and the mix of earnings among jurisdictions. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine, based on the weight of the evidence, if a valuation allowance for its deferred tax assets is necessary. Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies. If, based on the weight of the evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized, a valuation allowance is recorded. If operating results improve or decline on a continual basis in a particular jurisdiction, the Company’s decision regarding the need for a valuation allowance could change, resulting in either the initial recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax expense in the period recognized and subsequent periods. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.

Inflation Reduction Action of 2022

On August 16, 2022, the U.S. enacted the Inflation Reduction Action of 2022, which, among other things, implements a 15% minimum tax on financial statement income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on its current analysis of the provisions, the Company does not believe this legislation will have a material impact on its consolidated financial statements, but the Company is continuing to evaluate the implications.