Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 — Income Taxes

We are a U.S.-based multinational corporation subject to taxation in multiple jurisdictions. We believe that our deferred tax assets and liabilities for all jurisdictions are reasonable and fairly presented. Tax laws in each jurisdiction, as well as their interactions, are complex and their interpretation requires significant judgment.

Components of income tax provision (benefit) reflected in the consolidated statements of operations consist of the following (in thousands):

	Year Ended December 31,
	2021		2020		2019
Current tax provision (benefit):
Domestic	$	(1,103)	$	(18,927)	$	(2)
Foreign		7,347		4,109		4,376
Total current	$	6,244	$	(14,818)	$	4,374
Deferred tax provision (benefit):
Domestic	$	(5,756)	$	3,853	$	3,717
Foreign		(9,446)		(7,736)		(232)
Total deferred	$	(15,202)	$	(3,883)	$	3,485
Total income tax provision (benefit)	$	(8,958)	$	(18,701)	$	7,859

Components of income (loss) before income taxes are as follows (in thousands):

	Year Ended December 31,
	2021		2020		2019
Domestic	$	(53,989)	$	(3,406)	$	2,219
Foreign		(16,653)		4,789		63,337
Income (loss) before income taxes	$	(70,642)	$	1,383	$	65,556

The primary differences between the income tax provision (benefit) at the U.S. statutory rate and our actual income tax provision (benefit) are as follows (dollars in thousands):

	Year Ended December 31,
	2021				2020				2019
Taxes at U.S. statutory rate	$	(14,835)	21.0	%	$	290	21.0	%	$	13,767	21.0	%
Foreign tax provision (benefit)		10,856	(15.3)			(3,426)	(247.7)			(6,557)	(10.0)
CARES Act		—	—			(7,596)	(549.2)			—	—
Subsidiary restructuring		—	—			(8,333)	(602.5)			—	—
Valuation allowance release (net of U.S. tax)		(5,040)	7.1			—	—			—	—
Other		61	(0.1)			364	26.2			649	1.0
Income tax provision (benefit)	$	(8,958)	12.7	%	$	(18,701)	(1,352.2)	%	$	7,859	12.0	%

The U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S. income tax regulations. The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax rates applicable in the relevant carryback year. Under the CARES Act, we recognized a $7.6 million net tax benefit for the year ended December 31, 2020, consisting of an $18.9 million current tax benefit (refund claim) and an $11.3 million deferred tax expense (reduction in U.S. net operating loss). The refund was received in full during 2021.

During the year ended December 31, 2020, we migrated two of our foreign subsidiaries into our U.S. consolidated tax group. As a result, these subsidiaries are not subject to future U.S. branch profits tax and a net deferred tax benefit of $8.3 million was recognized.

During the year ended December 31, 2021, we released a non-U.S. valuation allowance of $6.4 million ($5.0 million net of U.S. federal tax benefit) for deferred tax assets as it is more likely than not that they will be fully utilized.

Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes. The nature of these differences and the income tax effect of each are as follows (in thousands):

	December 31,
	2021		2020
Deferred tax liabilities:
Depreciation	$	137,898	$	153,226
Debt discounts on 2022 Notes, 2023 Notes and 2026 Notes		—		9,298
Prepaid and other		1,088		—
Total deferred tax liabilities	$	138,986	$	162,524
Deferred tax assets:
Net operating losses	$	(56,369)	$	(59,794)
Reserves, accrued liabilities and other		(9,698)		(11,631)
Total deferred tax assets		(66,067)		(71,425)
Valuation allowance		14,047		19,722
Net deferred tax liabilities	$	86,966	$	110,821

At December 31, 2021, our U.S. net operating losses available for carryforward totaled $180.0 million, of which $112.3 million will begin to expire between 2035 and 2037, with the remaining $67.7 million not subject to expiration. Management believes it is more likely than not that these tax losses will be utilized prior to their expiration. At December 31, 2021, we had $5.3 million in gross U.S. tax credits, which included $3.0 million of foreign tax credits subject to a full valuation allowance. At December 31, 2021, our non-U.S. net operating losses totaled $71.0 million, and do not expire under local tax law.

At December 31, 2021, we had accumulated undistributed earnings generated by our non-U.S. subsidiaries without operations in the U.S. of approximately $62.9 million. Due to the enactment of the U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”), repatriations of foreign earnings will generally be free of U.S. federal tax but may be subject to changes in future tax legislation that may result in taxation. Management intends to indefinitely reinvest these earnings to fund our international operations. In addition, we expect future U.S. cash generation will be sufficient to meet future U.S. cash needs. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to calculate the deferred income taxes associated with these undistributed earnings.

As of December 31, 2021, we had unrecognized tax benefits of $0.1 million related to uncertain tax positions, which, if recognized, would affect the annual effective tax rate. Due to the expiration of the statute of limitations as well as effective settlements in 2021 we released the full $0.6 million reserve related to uncertain tax positions recorded in 2020. We account for tax-related interest in interest expense and tax penalties in selling, general and administrative expenses. We did not record any interest related to these positions in 2021 as the amount was immaterial.

We file tax returns in the U.S. and in various state, local and non-U.S. jurisdictions. We anticipate that any potential adjustments to our state, local and non-U.S. jurisdiction tax returns by taxing authorities would not have a material impact on our financial position. The tax periods from 2018 through 2021 are open to review and examination by the U.S. Internal Revenue Service. In non-U.S. jurisdictions, the open tax periods include 2014 through 2021.