Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s effective tax rate is expressed as income tax benefit as a percentage of loss before income taxes.

On March 27, 2020, the U.S. federal government signed into law the CARES Act, to provide economic relief to U.S. companies impacted by the COVID-19 pandemic. Pursuant to the provisions of the CARES Act, the Company will carryback its net operating losses from 2019 to offset taxable net income realized in 2018.

In the three months ended June 30, 2020, the Company recorded income tax benefit of $1,448 on a loss before income taxes of $5,501, for an effective tax rate of 26.3%. In the three months ended June 30, 2019, the Company recorded income tax benefit of $225 on a loss before income taxes of $8,529, for an effective tax rate of 2.6%.

In the six months ended June 30, 2020, the Company recorded income tax benefit of $2,591 on a loss before income taxes of $17,685, for an effective tax rate of 14.7%. In the six months ended June 30, 2019, the Company recorded income tax benefit of $400 on a loss before income taxes of $16,707, for an effective tax rate of 2.4%.

The most significant factors impacting the effective tax rate in the three months ended June 30, 2020 were (i) the recording of the period expense associated with the quasi territorial tax regime called the Global Intangible Low Taxed Income Inclusion (“GILTI”), (ii) the foreign rate differential, and (iii) changes in valuation allowances in the United States and Canada. Also impacting the effective tax rate in the six months ended June 30, 2020 was the increase in net operating loss carrybacks due to the CARES Act.

The Company's U.S. federal corporate income tax rate is 21%.