Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The effective income tax rate for the three months ended September 30, 2024 and 2023 was 23.3% and 37.6%, respectively, resulting in a $1.0 million and $2.0 million income tax expense, respectively. The effective income tax rate for the nine months ended September 30, 2024 and 2023 was 56.8% and 27.6%, respectively, resulting in a $0.4 million income tax benefit and a $2.8 million income tax expense, respectively.

The effective tax rate reported in any given year will continue to be influenced by a variety of factors including the level of pre-tax income or loss, the income mix between jurisdictions, and any discrete items that may occur.

The Company recorded a valuation allowance against all of our deferred tax assets as of both September 30, 2024 and September 30, 2023. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.