Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before income taxes is summarized as follows:

	Year Ended December 31,
(in thousands)	2021		2020		2019
United States operations	$	118,749	$	138,426	$	(456,403)
Foreign and U.S. territory operations	41,033		35,853		30,569
Total	$	159,782	$	174,279	$	(425,834)

The income tax expense (benefit) is as follows:

	Year Ended December 31,
(in thousands)	2021		2020		2019
Current expense (benefit):
Federal	$	20,052	$	(36,159)	$	(2,884)
State	7,899		(1,282)		3,585
Foreign and U.S. territories	11,568		11,130		5,299
Total current expense (benefit):	39,519		(26,311)		6,000
Deferred expense (benefit):
Federal	(13,667)		38,667		(43,579)
State	36		10,608		(27,566)
Foreign and U.S. territories	(256)		(1,022)		(464)
Total deferred expense (benefit):	(13,887)		48,253		(71,609)
Total expense (benefit):	$	25,632	$	21,942	$	(65,609)

The following table is a reconciliation of the Company’s income tax provision at the statutory federal tax rate to the Company’s effective tax rate:

	Year Ended December 31,
	2021				2020				2019
(dollars in thousands)	Amount		Rate		Amount		Rate		Amount		Rate
Federal income tax expense (benefit) at statutory tax rate	$	33,554	21.0	%	$	36,599	21.0	%	$	(89,425)	21.0	%
State income taxes, net of federal tax benefit	8,301		5.2		8,518		4.9		(18,442)		4.3
Stock based compensation	87		0.1		3,185		1.8		1,706		(0.4)
Impact of federal tax law changes	—		—		(14,476)		(8.3)		—		—
Officers' compensation	3,664		2.3		2,486		1.4		2,938		(0.7)
Goodwill impairment	—		—		—		—		43,990		(10.3)
Noncontrolling interests	(8,872)		(5.6)		(9,799)		(5.6)		(6,064)		1.4
Federal R&D credits	(1,105)		(0.7)		(3,007)		(1.7)		(3,998)		0.9
Foreign tax rate differences	(625)		(0.4)		1,491		0.9		4,940		(1.2)
Federal claim of right credit	(8,191)		(5.1)		—		—		—		—
Other	(1,181)		(0.8)		(3,055)		(1.8)		(1,254)		0.4
Income tax expense (benefit)	$	25,632	16.0	%	$	21,942	12.6	%	$	(65,609)	15.4	%

The Company’s provision for income taxes and effective tax rate for the year ended December 31, 2021 was favorably impacted by a federal claim of right tax credit resulting in a tax rate adjustment associated with an adverse 2019 jury verdict that rendered certain income recognized in 2016 to be uncollectible.

The Company's provision for income taxes and effective tax rate for the year ended December 31, 2020 was significantly impacted by a change in tax law. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. A major provision of the CARES Act allows net operating losses from the 2018, 2019 and 2020 tax years to be carried back up to five years. As a result, for the year ended December 31, 2020, the Company was able to recognize tax benefits in excess of the current federal statutory rate of 21% due to the effects of carrying back its net operating loss arising in 2019 to tax years in which the federal statutory rate was 35%.

The Company’s provision for income taxes and effective tax rate for the year ended December 31, 2019 was significantly impacted by the goodwill impairment charge discussed in Note 6. Of the total goodwill impairment charge of $379.9 million, approximately $209.5 million pertained to goodwill that was not tax deductible and yielded permanent differences between

book income and taxable income. For the year ended December 31, 2019, the Company recognized U.S. federal and state tax benefits totaling $49.4 million as a result of the impairment charge.

The following is a summary of the significant components of the deferred tax assets and liabilities:

	As of December 31,
(in thousands)	2021		2020
Deferred tax assets:
Timing of expense recognition	$	28,710	$	24,470
Net operating losses	15,824		19,968
Goodwill	11,698		19,315
Other, net	13,125		10,155
Deferred tax assets	69,357		73,908
Deferred tax liabilities:
Intangible assets, due primarily to purchase accounting	(16,453)		(15,212)
Fixed assets	(70,128)		(76,567)
Construction contract accounting	(9,196)		(9,769)
Joint ventures	(26,764)		(41,669)
Other	(15,672)		(11,962)
Deferred tax liabilities	(138,213)		(155,179)
Net deferred tax liabilities	$	(68,856)	$	(81,271)

As of December 31, 2021, the Company had net operating loss carryforwards in various states totaling $166.0 million with expiration dates ranging from 2022 to 2040. As of December 31, 2020, the Company had net operating loss carryforwards in various states totaling $196.5 million. As of December 31, 2021, the Company had federal and state tax credit carryforwards of approximately $0.1 million and $2.6 million, respectively. As of December 31, 2020, the Company had federal and state tax credit carryforwards of approximately $1.4 million and $2.0 million, respectively.

The net deferred tax liabilities are presented in the Consolidated Balance Sheets as follows:

	As of December 31,
(in thousands)	2021		2020
Deferred tax assets	$	2,133	$	1,695
Deferred tax liabilities	(70,989)		(82,966)
Net deferred tax liabilities	$	(68,856)	$	(81,271)

The Company’s policy is to record interest and penalties on unrecognized tax benefits as an element of income tax expense. The cumulative amounts related to interest and penalties are added to the total unrecognized tax liabilities on the balance sheet. The total amount of gross unrecognized tax benefits as of December 31, 2021 that, if recognized, would impact the effective tax rate is $7.5 million. The Company does not expect any significant release of unrecognized tax benefits within the next twelve months.

The Company accounts for its uncertain tax positions in accordance with GAAP. The following is a reconciliation of the beginning and ending amounts of these unrecognized tax benefits for the three years ended December 31, 2021:

	As of December 31,
(in thousands)	2021		2020		2019
Beginning balance	$	8,681	$	5,682	$	4,998
Change in tax positions of prior years	(1,319)		2,286		351
Change in tax positions of current year	1,000		1,202		1,106
Reduction in tax positions for statute expirations	(823)		(489)		(773)
Ending balance	$	7,539	$	8,681	$	5,682

The Company conducts business internationally and, as a result, one or more of its subsidiaries files income tax returns in U.S. federal, U.S. state and certain foreign jurisdictions. Accordingly, in the normal course of business, the Company is subject to examination by taxing authorities principally throughout the United States, Guam and Canada. The Company's open tax years for a U.S. federal income tax audit are 2018 and later. The 2018 federal income tax return is currently under audit by the Internal Revenue Service. The Company has various years open to audit in a number of state and local jurisdictions and is currently under audit by various state and local taxing authorities.