Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recognized income tax expense of $4.6 million and $16.7 million for the three and nine months ended September 30, 2023, respectively. In comparison, income tax expense was $4.9 million and $16.5 million for the three and nine months ended September 30, 2022, respectively.

The Company calculates its provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The effective tax rate (income taxes as a percentage of income before income taxes) was 30.7% and 36.1% for the three and nine months ended September 30, 2023, respectively. In comparison, the effective tax rate was 18.0% and 21.4% for the three and nine months ended September 30, 2022, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items. The change in the fair value of the contingent earnout shares is considered a discrete item for income tax purposes and was the primary driver for the fluctuations in the tax rate year over year.