Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The tax provisions for the three and six months ended June 30, 2023 and 2022 were computed using the estimated effective tax rates projected for domestic and international taxable jurisdictions for the full year as adjusted for discrete items arising during each quarter.

Income tax benefit for the six months ended June 30, 2023 was $5.9 million. Income tax expense for the six months ended June 30, 2022 was $2.7 million.

Income tax benefit for the three months ended June 30, 2023 was $2.2 million. Income tax expense for the three months ended June 30, 2022 was $0.1 million.

The effective tax rate for the three and six months ended June 30, 2023 is (187.3)% and 25.7%. The effective tax rate for the three and six months ended June 30, 2022 was 1.2% and 6.7%. The effective tax rate differs from the federal statutory rate of 21% due primarily to a full valuation allowance against the Company’s U.S. deferred tax assets, foreign jurisdictions that are taxed at different rates, state taxes, and the impact of discrete items that may occur in any given year but which are not consistent from year to year.

The Company has established a valuation allowance in the U.S. and Singapore against a portion of its remaining deferred tax assets because it is more likely than not that certain deferred tax assets will not be realized. In determining whether deferred tax assets are realizable, the Company considers numerous factors including historical profitability, the amount of future taxable income, and the existence of taxable temporary differences that can be used to realize deferred tax assets.

Additionally, the Company applies ASC 740, the accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. The Company has gross unrecognized tax benefits of $1.0 million and $0.2 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

The Inflation Reduction Act, signed into law on August 16, 2022, provides tax incentives for certain industries and imposes a 15% minimum tax on the book income of certain large corporations and a 1% excise tax on stock buybacks. The Company may be subject to the new excise tax on certain stock buybacks that occur after December 31, 2022. The Company does not anticipate a material impact from the Inflation Reduction Act on its condensed consolidated financial statements.

Additionally, in July 2023, the Company received approximately $5 million for the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act.