INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 9: INCOME TAXES

The components of earnings from continuing operations before income taxes are as follows:

in millions	2023	2022	2021
Earnings from Continuing Operations
before Income Taxes
Domestic	$       1,251.0	$        788.7	$        871.6
Foreign	(5.9)	(0.6)	2.2
Total	$       1,245.1	$        788.1	$        873.8

Income tax expense (benefit) from continuing operations consists of the following:

in millions	2023	2022	2021
Income Tax Expense (Benefit) from
Continuing Operations
Current
Federal	$          274.8	$          85.2	$        103.9
State and local	64.0	43.6	34.6
Foreign	4.8	4.6	(5.0)
Total	$          343.6	$        133.4	$        133.5
Deferred
Federal	$           (44.1)	$          43.4	$          39.2
State and local	(4.2)	3.3	26.5
Foreign	4.1	12.9	0.9
Total	$           (44.2)	$          59.6	$          66.6
Total expense	$          299.4	$        193.0	$        200.1

Income tax expense (benefit) differs from the amount computed by applying the federal statutory income tax rate to earnings from continuing operations before income taxes. The sources and tax effects of the differences are as follows:

dollars in millions	2023		2022		2021
Income tax expense at the federal
statutory tax rate	$       261.5	21.0%	$       165.5	21.0%	$       183.5	21.0%
Expense (Benefit) from
Income Tax Differences
Statutory depletion	(39.0)	-3.1%	(30.6)	-3.9%	(28.3)	-3.2%
State and local income taxes, net of federal
income tax benefit	48.7	3.9%	37.5	4.8%	34.7	4.0%
Nondeductible goodwill	16.2	1.3%	10.7	1.4%	0.0	0.0%
Valuation allowance	10.3	0.8%	14.5	1.8%	13.7	1.6%
Other, net	1.7	0.1%	(4.6)	-0.6%	(3.5)	-0.5%
Total income tax expense/
Effective tax rate	$       299.4	24.0%	$       193.0	24.5%	$       200.1	22.9%

Deferred taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax liability at December 31 are as follows:

in millions	2023	2022
Deferred Tax Assets Related to
Operating lease liabilities	$          139.1	$        149.7
Asset retirement obligations & other reserves	87.1	82.5
State net operating losses	79.6	86.3
Incentive compensation	57.6	62.1
State bonus depreciation	54.7	41.4
Employee benefits	22.9	14.2
Other	82.3	72.0
Total gross deferred tax assets	$          523.3	$        508.2
Valuation allowance	(89.5)	(76.8)
Total net deferred tax asset	$          433.8	$        431.4
Deferred Tax Liabilities Related to
Property, plant & equipment	$          907.1	$        889.4
Goodwill/other intangible assets	334.4	379.2
Operating lease right-of-use assets	128.2	143.6
Other	93.0	92.0
Total deferred tax liabilities	$       1,462.7	$     1,504.2
Deferred income tax liability, net	$       1,028.9	$     1,072.8

In February 2021, the Alabama Business Competitiveness Act (ABC Act) was signed into law. The ABC Act contained a provision requiring most taxpayers to change from a three-factor, double-weighted sales method to a single-sales factor method to apportion income to Alabama. This provision had the effect of significantly reducing our apportionment of income to Alabama, thereby further inhibiting our ability to utilize our Alabama NOL carryforward. As a result, we recorded a charge in the first quarter of 2021 to increase the valuation allowance by $13.7 million.

As discussed in Note 12, in May 2022, Mexican government officials unexpectedly and arbitrarily shut down our Calica operations in Mexico. In 2023, Calica had deferred tax assets (including NOLs) of $27.4 million. As a result of the continued shutdown, we recorded a charge to increase the valuation allowance by $12.9 million to $27.4 million in 2023. The Calica NOL deferred tax asset carryforward of $24.6 million would expire between 2032 and 2033 if not utilized. Should the Mexican government lift the shutdown and/or if we are successful in our North American Free Trade Agreement (NAFTA) claim, we will reevaluate the need for a valuation allowance against the deferred tax assets.

At December 31, 2023, we have Alabama state NOL carryforward deferred tax assets of $76.1 million, against which we have a valuation allowance of $54.3 million. Almost all of the Alabama NOL carryforward would expire between 2024 and 2029 if not utilized.

In August 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA introduces a corporate alternative minimum tax (CAMT) of 15% applicable to corporations with adjusted financial statement income in excess of $1 billion, as well as certain climate-related tax provisions. The CAMT provision is effective for tax years beginning on or after January 1, 2023. We were not subject to CAMT in 2023.

The Organization for Economic Co-operation and Development (OECD) has developed a framework to enact a two-pillar solution to address the challenges arising from the digitization of a global economy. Pillar Two introduces a global minimum effective tax rate where multinational groups with consolidated revenue over €750.0 million are subject to a minimum effective tax rate of 15% on income arising in low-tax jurisdictions. Pillar Two legislation has been enacted in a certain jurisdiction in which we operate, and it will be effective beginning January 1, 2024. Most jurisdictions in which we operate have tax rates in excess of 15%. However, we believe there may be one jurisdiction in which we operate where transitional safe harbor relief may not apply. Although we are still performing an assessment of our potential exposure to Pillar Two income taxes, we do not expect a material exposure to result, and we would reflect such income taxes, if any, in our financial results beginning in 2024.

We consider the undistributed earnings, if any, related to the investment in our Canadian and Honduran subsidiaries and Canadian investment in its U.S. subsidiary to be indefinitely reinvested; accordingly, no foreign withholding or other income taxes have been provided thereon. Due to complexities in the tax laws, it is not practicable to estimate the amount of deferred income taxes not recorded that are associated with these earnings. We have not, nor do we currently anticipate in the foreseeable future, the need to repatriate funds (other than for the repayment of intercompany loan obligations) to satisfy domestic liquidity needs arising in the ordinary course of business.

Changes in our liability for unrecognized tax benefits for the years ended December 31 are as follows:

in millions	2023	2022	2021
Unrecognized tax benefits as of January 1	$           18.7	$          10.8	$            6.8
Increases for tax positions related to
Prior years	0.3	4.6	0.5
Current year	4.8	6.6	3.9
Decreases for tax positions related to
Prior years	(0.5)	(0.2)	0.0
Expiration of applicable statute of limitations	(2.3)	(3.1)	(0.4)
Unrecognized tax benefits as of December 31	$           21.0	$          18.7	$          10.8

We classify interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense. Interest and penalties recognized as income tax expense were $1.5 million in 2023, $0.8 million in 2022 and $0.2 million in 2021. The balance of accrued interest and penalties included in our liability for unrecognized tax benefits as of December 31 was $3.3 million in 2023, $1.8 million in 2022 and $0.8 million in 2021. Our liability for unrecognized tax benefits at December 31 in the table above includes $19.8 million in 2023, $17.6 million in 2022 and $10.3 million in 2021 that would affect the effective tax rate if recognized. We anticipate no single tax position generating a significant increase or decrease in our liability for unrecognized tax benefits within 12 months of this reporting date.

We file income tax returns in U.S. federal, various state and foreign jurisdictions. With the exception of certain states, we are no longer subject to U.S. federal, state or foreign exams by tax authorities for years prior to 2020.

As of December 31, 2023, income tax receivables of $1.3 million and $0.2 million are included in other accounts and notes receivable and other current assets, respectively, in the accompanying Consolidated Balance Sheet. There were similar receivables of $1.3 million and $0.4 million recorded in other accounts and notes receivable and other current assets, respectively, as of December 31, 2022.