Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 8 — Income Taxes

We operate in multiple jurisdictions with complex tax laws subject to interpretation and judgment. We believe that our application of such laws and the tax impact thereof are reasonable and fairly presented in our consolidated financial statements.

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

	Year Ended December 31,
	2022		2021		2020
Current tax provision (benefit):
Domestic	$	—	$	(1,103)	$	(18,927)
Foreign		8,217		7,347		4,109
Total current	$	8,217	$	6,244	$	(14,818)
Deferred tax provision (benefit):
Domestic	$	1,167	$	(5,756)	$	3,853
Foreign		3,219		(9,446)		(7,736)
Total deferred	$	4,386	$	(15,202)	$	(3,883)
Total income tax provision (benefit)	$	12,603	$	(8,958)	$	(18,701)

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

	Year Ended December 31,
	2022		2021		2020
Domestic	$	(13,745)	$	(53,989)	$	(3,406)
Foreign		(61,436)		(16,653)		4,789
Income (loss) before income taxes	$	(75,181)	$	(70,642)	$	1,383

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,
	2022				2021				2020
Taxes at U.S. statutory rate	$	(15,788)	21.0	%	$	(14,835)	21.0	%	$	290	21.0	%
Foreign tax provision (benefit)		18,011	(24.0)			10,326	(14.6)			(4,517)	(326.7)
CARES Act		—	—			—	—			(7,596)	(549.2)
Subsidiary restructuring		—	—			—	—			(8,333)	(602.5)
Change in valuation allowance		8,110	(10.8)			(5,675)	8.0			1,091	78.9
Non-deductible expenses		2,366	(3.1)			1,487	(2.1)			1,184	85.6
Other		(96)	0.1			(261)	0.4			(820)	(59.3)
Income tax provision (benefit)	$	12,603	(16.8)	%	$	(8,958)	12.7	%	$	(18,701)	(1,352.2)	%

During the year ended December 31, 2022, the $8.1 million increase in valuation allowance was predominantly driven by current year activity and the related change in unrealizable net deferred tax assets.

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

On March 27, 2020, the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted, extending the U.S. tax loss carryback period from three years to five years. As a result, 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 received) and an $11.3 million deferred tax expense (reduction in U.S. net operating loss). Also 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.

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,
	2022		2021
Deferred tax liabilities:
Depreciation	$	147,302	$	137,898
Prepaid and other		1,868		1,088
Total deferred tax liabilities	$	149,170	$	138,986
Deferred tax assets:
Net operating losses	$	(53,136)	$	(56,369)
Reserves, accrued liabilities and other		(19,308)		(9,698)
Total deferred tax assets		(72,444)		(66,067)
Valuation allowance		22,157		14,047
Net deferred tax liabilities	$	98,883	$	86,966

At December 31, 2022, our U.S. net operating losses available for carryforward totaled $163.1 million, of which $74.5 million will begin to expire between 2036 and 2037, with the remaining $88.6 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, 2022, we had $4.2 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, 2022, our non-U.S. net operating losses totaled $69.7 million, which do not expire under local tax law.

At December 31, 2022, we had accumulated undistributed earnings generated by our non-U.S. subsidiaries of approximately $78.9 million, which management intends to indefinitely reinvest in our international operations. Due to the enactment of the U.S. Tax Cuts and Jobs 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. It is not practicable to calculate deferred income taxes associated with these undistributed earnings given the complexities in tax laws and the manner and timing of repatriation.

At December 31, 2022, we had unrecognized tax benefits of $0.1 million related to uncertain tax positions, which, if recognized, would have an insignificant effect on 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. However, no interest has been recorded for these positions 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 2022 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 2022.