Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Current income tax expense or benefit represents the amounts expected to be reported on the Company's income tax returns, and deferred income tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted income tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered more likely than not to be realized.

Income (loss) from continuing operations before income taxes and equity income as reported on the Consolidated Statements of Operations consists of the following:

(In thousands)	2023		2022		2021
U.S.	$	(28,658)	$	(152,602)	$	(34,462)
International	10,108		29,644		71,968
Total income (loss) from continuing operations before income taxes and equity income	$	(18,550)	$	(122,958)	$	37,506

Income tax expense (benefit) as reported on the Consolidated Statements of Operations consists of the following:

(In thousands)	2023		2022		2021
Income tax expense (benefit):
Currently payable:
U.S. state	$	3,463	$	1,416	$	507
International	21,096		14,914		22,295
Total income taxes currently payable	24,559		16,330		22,802
Deferred U.S. federal	2,446		(6,219)		(4,594)
Deferred U.S. state	(1,163)		(2,274)		(18)
Deferred international	2,343		2,544		(9,101)
Total income tax expense (benefit) from continuing operations	$	28,185	$	10,381	$	9,089

Cash payments for income taxes were $20.1 million, $20.9 million and $21.7 million for 2023, 2022 and 2021, respectively. The cash payments for 2023 are relatively consistent with the payments for 2022 and for 2021.

A reconciliation of the normal expected statutory U.S. federal income tax expense (benefit) to the actual Income tax expense (benefit) from continuing operations as reported on the Consolidated Statements of Operations is as follows:

(In thousands)	2023		2022		2021
U.S. federal income tax expense (benefit), at statutory tax rate of 21%	$	(3,896)	$	(25,821)	$	7,877
U.S. state income taxes, net of federal income tax benefit	1,044		(929)		(310)
U.S. other domestic deductions and credits	(761)		(594)		(415)
Difference in effective tax rates on international earnings and remittances	13,311		5,779		4,488
Uncertain tax position contingencies and settlements	(768)		(290)		783
Changes in realization of deferred tax assets	14,498		8,263		(5,035)
U.S. non-deductible expenses	1,146		791		936
Nondeductible goodwill impairment	—		19,548		—
PP&E / Intangible asset impairment	2,961		3,150		—
State deferred tax rate changes	304		154		592
Foreign derived intangible income deduction	(785)		(938)		—
Share-based compensation	1,131		1,268		173
Total income tax expense (benefit) from continuing operations	$	28,185	$	10,381	$	9,089

At December 31, 2023, 2022 and 2021, the Company's annual effective income tax rate on income (loss) from continuing operations was (151.9)%, (8.4)% and 24.2%, respectively.

The Company’s international income from continuing operations before income taxes and equity income was $10.1 million and $29.6 million for 2023 and 2022, respectively. In 2022, the Company recorded a $15.0 million intangible assets impairment for the Altek business with no tax benefit. In 2023, the Company recorded a $14.1 million assets impairment for one of the HE sites in China with no tax benefit. At the same time that the write-off of PPE occurred, the forecast of future taxable income was revised, resulting in decision to record a $3.7 million income tax charge of prior year deferred tax assets in China. The Company's total international income tax expense increased from $17.5 million in 2022 to $23.4 million in 2023 primarily due to the China income tax charge and the change in mix of income.

The Company’s differences in income tax expense for 2023 and 2022 on international earnings and remittances were $13.3 million and $5.8 million, respectively, which included U.S income tax expense on international deemed remittances of $0.3 million and $0.1 million, respectively. The increase is primarily due to an increase in U.K. defined benefit pension expense related to the impact of higher discount rates applied to the Company's 2023 plan obligations and a lower return on plan assets in the current year with no tax benefit and the change in mix of income.

The Company's U.S. loss from continuing operations before income taxes and equity income was $28.7 million and $152.6 million for 2023 and 2022, respectively. The Company's total U.S. income tax increased from a $7.1 million benefit in 2022 to $4.7 million expense in 2023 primarily due to CE's business improvement, increased disallowed interest expense due to higher interest rates and a $3.0 million tax benefit recorded in 2022 on the deductible portion of the goodwill impairment for the Clean Earth business not recurring in 2023.

The income tax effects of the temporary differences giving rise to the Company's deferred tax assets and liabilities at December 31, 2023 and 2022 are as follows:

	2023 (a)				2022 (a)
(In thousands)	Asset		Liability		Asset		Liability
Depreciation and amortization	$	—	$	55,004	$	—	$	61,145
Right-of-use assets	—		23,887		—		24,826
Operating lease liabilities	24,222		—		25,024		—
Expense accruals	33,790		—		28,758		—
Inventories	3,704		—		4,011		—
Provision for receivables	3,801		—		2,781		—
Deferred revenue	6,377		—		4,484		—
Operating loss carryforwards	54,935		—		54,237		—
Tax credit carryforwards	15,298		—		21,443		—
Pensions	—		580		5,171		—
Currency adjustments	—		754		—		3,330
Section 163(j) disallowed interest expense	25,937		—		13,869		—
Research and development	6,014		—		2,795		—
Stock based compensation	7,387		—		6,580		—
Other	—		1,823		—		3,198
Subtotal	181,465		82,048		169,153		92,499
Valuation allowance	(112,905)		—		(89,234)		—
Total deferred income taxes	$	68,560	$	82,048	$	79,919	$	92,499

(a) Does not include approximately $1.1 billion of statutory loss carryforwards within Luxembourg for which the Company considers the utilization of these attributes remote and as such no deferred tax asset or corresponding valuation allowance has been recorded.

At December 31, 2023, the tax-effected amount of net operating losses ("NOLs") totaled $54.9 million. Tax-effected NOLs from international operations are $43.9 million. Of that amount, $39.6 million can be carried forward indefinitely and $4.3 million will expire at various times between 2024 and 2043. Tax-effected U.S. state NOLs are $11.0 million. Of that amount, $2.3 million expire at various times between 2024 and 2028, $1.7 million expire at various times between 2029 and 2033, $3.1 million expire at various times between 2034 and 2038 and $3.9 million expire at various times between 2039 and 2043.

Valuation allowances of $112.9 million and $89.2 million at December 31, 2023 and 2022, respectively, related principally to deferred tax assets for pension liabilities, NOLs, disallowed interest expense and foreign currency translation that are uncertain as to realizability. In 2023, the Company recorded a $12.7 million valuation allowance increase related to disallowed interest expense, a $9.3 million valuation allowance increase related to current year losses in certain foreign jurisdictions where the Company determined that it is more likely than not that these assets will not be realized, and a valuation allowance increase of $2.3 million from the effects of foreign currency translation adjustments.

The Tax Act introduced a transition tax and a territorial tax system, which was effective beginning in 2018. The territorial tax system impacts the Company's overall global capital and legal entity structure, working capital, and repatriation plan on a go-forward basis. The Company asserts that all foreign earnings will be indefinitely reinvested to meet local cash needs. The Company therefore intends to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction provided for in the Tax Act, and earnings that would not result in any significant foreign taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.

The Company recognizes accrued interest and penalty expense related to unrecognized income tax benefits in income tax expense or benefit. The Company recognized income tax benefit (expense) of $0.4 million and $(0.4) million during 2022 and 2021, respectively, for interest and penalties. There was no income tax benefit (expense) related to accrued interest and penalties during the year ended December 31, 2023. The Company has accrued $1.3 million, $1.3 million and $1.7 million for the payment of interest and penalties at December 31, 2023, 2022 and 2021, respectively.

A reconciliation of the change in the unrecognized income tax benefits balance from January 1, 2021 to December 31, 2023 is as follows:

(In thousands)	Unrecognized Income Tax Benefits		Deferred Income Tax Benefits		Unrecognized Income Tax Benefits, Net of Deferred Income Tax Benefits
Balances, January 1, 2021	$	2,896	$	(22)	$	2,874
Additions for tax positions related to the current year (includes currency translation adjustment)	316		(1)		315
Additions for tax positions related to prior years (includes currency translation adjustment)	500		—		500
Statutes of limitation expirations	(585)		1		(584)
Balance at December 31, 2021	3,127		(22)		3,105
Additions for tax positions related to the current year (includes currency translation adjustment)	189		(1)		188
Statutes of limitation expirations	(524)		2		(522)
Balance at December 31, 2022	2,792		(21)		2,771
Additions for tax positions related to the current year (includes currency translation adjustment)	439		(1)		438
Statutes of limitation expirations	(1,106)		5		(1,101)
Total unrecognized income tax benefits that, if recognized, would impact the effective income tax rate at December 31, 2023	$	2,125	$	(17)	$	2,108

Within the next twelve months, it is reasonably possible that up to $0.4 million of unrecognized income tax benefits will be recognized upon settlement of income tax examinations and the expiration of various statutes of limitations.

The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. These tax returns are subject to examinations and possible challenges by the tax authorities. Positions challenged by the tax authorities may be settled or appealed to by the Company.

The tax years that remain subject to examination for the Company's major tax jurisdictions as of December 31, 2023 are shown below:

Jurisdiction	Earliest Open Year
Brazil	2019
China	2018
France	2021
United States:
Federal income tax	2020
State income tax	2017