Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 — Income Taxes

Income before income taxes and the provision for income taxes, for the three years ended December 31, 2022, were as follows:

(In millions)	2022			2021			2020
Income before income taxes:
U.S.	$	110.6		$	21.7		$	0.8
International		39.2			0.3			(28.5	)
Total income (loss) before income taxes	$	149.8		$	22.0		$	(27.7	)
Income tax expense (benefit):
Current:
U.S.	$	28.3		$	5.4		$	(11.3	)
International		6.4			3.1			1.7
Current income tax expense (benefit)		34.7			8.5			(9.6	)
Deferred:
U.S.		(8.9	)		(2.3	)		0.1
International		5.8			(0.3	)		(51.5	)
Deferred income tax benefit		(3.1	)		(2.6	)		(51.4	)
Total income tax expense (benefit)	$	31.6		$	5.9		$	(61.0	)

A reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate of 21.0% to the effective income tax rate, for the year ended December 31, 2022, 2021 and 2020 is as follows:

(In millions)	2022			2021			2020
Provision (benefit) for taxes at U.S. federal statutory rate	$	31.5		$	4.6		$	(5.8	)
State and local taxes, net of federal benefit		0.6			(0.1	)		(4.2	)
Foreign effective rate differential		1.5			0.7			(1.9	)
Tax credits		(4.3	)		(3.5	)		(3.0	)
Change in valuation allowance		0.7			0.7			(39.5	)
Remeasurement of deferred taxes		0.7			1.4			3.5
Excess tax benefits on stock-based compensation		(0.2	)		(0.2	)		(0.9	)
Other		1.6			2.6			(4.3	)
Decrease in reserves for uncertain tax positions		(0.5	)		(0.3	)		(4.9	)
Total income tax expense (benefit)	$	31.6		$	5.9		$	(61.0	)

We do not provide for additional income or withholding taxes for any undistributed foreign earnings as we do not currently have any specific plans to repatriate funds from our international subsidiaries; however, we may do so in the future if a dividend can be remitted with no material tax impact. As of December 31, 2022, we have approximately $814.3 million of unremitted foreign earnings that we intend to keep indefinitely reinvested. Additionally, due to withholding tax, basis computations and other tax related considerations, it is not practicable to estimate any taxes to be provided on outside basis differences at this time.

Deferred Income Taxes

Deferred income taxes result from tax attributes including foreign tax credits, net operating loss carryforwards and temporary differences between the recognition of items for income tax purposes and financial reporting purposes. Principal components of deferred income taxes as of December 31, 2022 and 2021 are:

(In millions)	2022			2021
Assets
Net operating loss carryforwards	$	89.7		$	93.5
Capital loss carryforward		—			1.6
Tax credit carryforwards		9.2			10.3
Stock-based compensation		9.6			7.8
Other comprehensive income		21.4			21.1
Inventory reserves		10.5			11.5
Right of use liability		11.7			12.2
Capitalized research and development expenditures		9.8			—
Reserves and other		8.1			8.8
Subtotal		170.0			166.8
Valuation allowance		(8.3	)		(7.6	)
Total assets	$	161.7		$	159.2
Liabilities
Accelerated depreciation		(179.3	)		(188.8	)
Accelerated amortization		(18.3	)		(17.3	)
Right of use asset		(11.7	)		(12.2	)
Post-retirement obligations		(12.7	)		(11.6	)
Other		(8.2	)		(0.2	)
Total liabilities		(230.2	)	$	(230.1	)
Net deferred tax liabilities	$	(68.5	)	$	(70.9	)

Deferred tax assets and deferred tax liabilities as presented in the Consolidated Balance Sheets as of December 31, 2022 and 2021 are as follows and are recorded in other assets and deferred income taxes in the Consolidated Balance Sheets:

(In millions)	2022			2021
Long-term deferred tax assets, net	$	57.9		$	69.1
Long-term deferred tax liability, net		(126.4	)		(140.0	)
Net deferred tax liabilities	$	(68.5	)	$	(70.9	)

The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more likely than not, be realized in the future. The valuation allowance as of December 31, 2022 relates to certain U.S. and foreign tax attributes for which we have determined, based upon historical results and projected future book and taxable income levels, that a valuation allowance should continue to be maintained. The valuation allowance increased by $0.7 million in 2022 primarily based on the current year movement of U.S. and foreign tax attributes. The valuation allowance as of December 31, 2021 related primarily to certain U.S. tax attributes for which we have determined, based upon historical results and projected future book and taxable income levels, that a valuation allowance should continue to be maintained. The net change in the total valuation allowance for both years ended December 31, 2022 and 2021, was an increase of $0.7 million.

Although realization is not assured, we have concluded that it is more likely than not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if actual future income or income tax rates are lower than estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.

Net Operating Loss & Tax Credit Carryforwards

At December 31, 2022, we had tax credit carryforwards for U.S. and foreign tax purposes of $9.2 million available to offset future income taxes. These credits will begin to expire if not utilized in 2023. We also had net operating loss carryforwards for U.S. state and foreign income tax purposes of $4.9 million and $351.6 million, respectively, for which there were foreign valuation allowances of $8.4 million as of December 31, 2022. Our foreign net operating losses can be carried forward without limitation in Belgium, France, Luxembourg, and the U.K. We have a partial valuation allowance against certain foreign net operating losses for which the Company believes it is not more likely than not that the net operating losses will be utilized.

Uncertain Tax Positions

Our unrecognized tax benefits at December 31, 2022 relate to U.S. federal and various state jurisdictions.

The following table summarizes the activity related to our unrecognized tax benefits.

	Unrecognized Tax Benefits
(In millions)	2022			2021			2020
Balance as of January 1,	$	9.7		$	10.5		$	18.1
Additions based on tax positions related to the current year		0.2			0.2			0.3
Reductions for tax positions of prior years		—			—			(7.9	)
Expiration of the statute of limitations for the assessment of taxes		(7.4	)		(1.0	)		—
Balance as of December 31,	$	2.5		$	9.7		$	10.5

We had unrecognized tax benefits of $2.5 million at December 31, 2022, of which $2.5 million, if recognized, would impact our annual effective tax rate. In addition, we recognize interest accrued related to unrecognized tax benefits as a component of interest expense and penalties as a component of income tax expense in the Consolidated Statements of Operations. The Company did not recognize any interest expense or penalties related to the above unrecognized tax benefits in 2022 and 2021. During 2020, we reversed $0.2 million of accrued interest related to unrecognized tax benefits. The Company had no accrued interest as of December 31, 2022 and 2021.

We are subject to taxation in the U.S. and various states and foreign jurisdictions. The U.S. federal tax returns have been audited through 2016. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. Years in major jurisdictions that remain open to examination are the U.S. (2019 onward for Federal purposes and 2018 onward for state purposes), Austria (2019 onward), Belgium (2016 onward), France (2019 onward), Spain (2018 onward) and the U.K. (2019 onward). We are currently under examination in certain foreign tax jurisdictions. .

As of December 31, 2022, we had uncertain tax positions for which it is reasonably possible that amounts of unrecognized tax benefits could significantly change over the next year. These uncertain tax positions relate to our tax returns from 2014 onward. We believe it is reasonably possible that the total amount of unrecognized tax benefits disclosed as of December 31, 2022 may decrease by approximately $0.5 to $1.0 million in the fiscal year ending December 31, 2023 due to the expiration of statutes of limitation.