Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the estimated annual effective tax rate is updated and a year to date adjustment is made to the provision. The Company’s quarterly effective tax rate can be subject to significant change due to the effect of discrete items arising in a given quarter. Beginning in the second quarter of 2023, the estimated annual tax rate includes U.S. entities acquired in the Penelope acquisition.

Income tax expense for the quarter and year to date ended June 30, 2023 was $10,804 and $20,459, respectively, for an effective tax rate of 25.3 percent and 24.5 percent, respectively. The effective tax rate for the quarter and year to date ended June 30, 2023 differed from the 21 percent U.S. federal statutory rate on pretax income primarily due to state income taxes and income taxes on foreign subsidiaries, partially offset by U.S. state and federal tax credits and the deduction applicable to export activity. The Penelope acquisition had an immaterial impact on the quarter and year to date effective tax rate and deferred taxes, including any valuation allowances related to deferred taxes and reserves for uncertain tax positions.

Income tax expense for the quarter and year to date ended June 30, 2022 was $7,339 and $18,504, respectively, for an effective tax rate of 22.4 percent and 22.8 percent, respectively. The effective tax rate for the quarter and year to date ended June 30, 2022 differed from the 21 percent U.S. federal statutory rate on pretax income primarily due to state income taxes and income taxes on foreign subsidiaries, partially offset by state and federal tax credits, and the deduction applicable to export activity. The increase in income tax expense for the quarter and year to date ended June 30, 2022 was primarily due to higher income before income taxes as compared to the prior year periods.