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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income from Continuing Operations Before Income Taxes
Income from continuing operations before income taxes consists of the following:
 For the Year Ended December 31,
 202320222021
United States$(100.9)$31.1 $25.9 
Foreign158.9 67.8 48.2 
Income from continuing operations before income taxes$58.0 $98.9 $74.1 
Provision
Significant components of income tax expense (benefit), net are as follows:
 For the Year Ended December 31,
 202320222021
Current:
Federal$(15.5)$(1.3)$1.7 
State and local6.6 3.5 3.2 
Foreign91.2 15.4 16.5 
Total current82.3 17.6 21.4 
Deferred:
Federal1.5 (5.6)(5.8)
State and local(1.8)1.9 1.1 
Foreign(79.0)2.0 (3.2)
Total deferred(79.3)(1.7)(7.9)
Total income tax expense, net$3.0 $15.9 $13.5 
See Note 3, “Discontinued Operations and Other Businesses Sold” for the income (loss) from discontinued operations and related income taxes.
Effective Tax Rate Reconciliation
The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows:
 Year Ended December 31,
 202320222021
Income tax expense at U.S. statutory rate$12.2 $20.8 $15.6 
State income taxes, net of federal tax benefit3.1 1.5 3.1 
Foreign withholding taxes6.3 0.2 1.6 
U.S. taxation of international operations18.7 1.4 (0.3)
Effective tax rate differential of earnings outside of United States2.8 1.7 1.8 
Change in valuation allowance(2.0)(11.6)(5.9)
Research & experimentation(2.0)(2.9)(1.0)
Provision to return0.8 5.0 0.3 
Non-deductible items0.1 0.4 2.4 
Change in uncertain tax positions2.0 (0.3)(0.2)
Share-based compensation0.1 (1.1)(4.1)
Capital (loss)(40.5)— — 
Unremitted earnings not permanently reinvested0.9 — — 
Other items0.5 0.8 0.2 
Income tax expense $3.0 $15.9 $13.5 
We reclassified certain line items of the effective tax rate reconciliation for year ended December 31, 2021 and December 31, 2022 to correspond with the year ended December 31, 2023.
Deferred Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Significant components of our deferred tax assets and liabilities are as follows:
December 31,
20232022
Deferred tax assets (“DTA”):
Accruals and reserves$48.2 $5.1 
Loss contingency0.5 70.3 
Pensions— 0.2 
Inventory127.0 78.1 
Share-based compensation2.6 2.3 
R&D Amortization18.1 7.4 
Tax credit carryforwards2.6 8.2 
Interest limitation carryover126.8 5.5 
Foreign net operating loss carryforwards36.0 8.7 
State net operating loss carryforwards4.2 2.1 
Convertible notes2.2 4.3 
Property, plant and equipment – net DTA4.4 5.2 
Other – net DTA2.2 2.9 
Total deferred tax assets before valuation allowances374.8 200.3 
Valuation allowances(90.3)(5.4)
Total deferred tax assets, net of valuation allowances$284.5 $194.9 
Deferred tax liabilities (“DTL”):
Property, plant and equipment – net DTL$58.6 $26.0 
Goodwill and intangible assets629.0 77.0 
Pensions6.4 — 
Insurance receivable— 53.5 
Unremitted earnings (APB23)19.7 — 
Other – net DTL0.6 3.1 
Investments2.3 4.5 
Deferred revenue123.5 72.0 
Total deferred tax liabilities$840.1 $236.1 
Net deferred tax liabilities$555.6 $41.2 
The net deferred tax liability is classified as follows:
Other assets
$(12.6)$(4.9)
Long-term deferred tax liabilities568.2 46.1 
Net deferred tax liabilities$555.6 $41.2 
We evaluate the recoverability of our deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis. To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded. As of December 31, 2023, we have valuation allowances totaling $90.3 consisting primarily of our operations in the United Kingdom, France, and Belgium.
We have U.S. state net operating loss carryforwards of $138.7 that may be carried forward indefinitely. As of December 31, 2023, we had $145.6 foreign net operating loss carryforwards primarily in Belgium, France, and India subject to
local tax limitations. The foreign net operating losses can be carried forward indefinitely, except in applicable jurisdictions that make up less than 12% of available net operating losses. We have tax credit carryforwards of $2.6.
Other Tax Information
We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. As a result of the Howden Acquisition during 2023, we have reevaluated our indefinite reinvestment assertion and have determined that we are partially reinvested. We are not permanently reinvested on $247.9 of the undistributed earnings of our foreign subsidiaries. The remaining earnings continue to be indefinitely reinvested outside the United States. We have assessed a total deferred tax liability of $19.7 as of December 31, 2023 on such earnings that have not been indefinitely reinvested. This is an increase of $19.7 as compared to the deferred tax liability as of December 31, 2022. We have made no provision for U.S. income taxes or additional non-U.S. taxes on certain undistributed earnings of non-U.S. subsidiaries. These earnings could become subject to additional tax if we were to dividend those earnings or sell our interest in the non-U.S. subsidiary. We cannot practically determine the amount of additional taxes that might be payable on those earnings.
The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024, and other aspects effective January 1, 2025. While it is uncertain whether the United States will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. We do not expect Pillar 2 to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows.
Cash paid for income taxes during the years ended December 31, 2023, 2022, and 2021 was $49.7, $27.0, and $57.2, respectively.
Unrecognized Income Tax Benefits
We record a liability for unrecognized income tax benefits for the amount of benefit included in our previously filed income tax returns and in our financial results expected to be included in income tax returns to be filed for periods through the date of our Consolidated financial statements for income tax positions for which it is not more likely than not to be sustained upon examination by the respective tax authority.
The reconciliation of beginning to ending gross unrecognized tax benefits is as follows:
 Year Ended December 31,
 202320222021
Unrecognized tax benefits at beginning of the year$0.7 $1.7 $1.9 
Additions for tax positions acquired during the current period34.4 — — 
Additions (reductions) for tax positions taken during the prior period3.7 — 0.4 
Reductions relating to settlements with taxing authorities(1.6)(0.3)— 
Lapse of statutes of limitation(0.2)(0.7)(0.6)
Unrecognized tax benefits at end of the year$37.0 $0.7 $1.7 
We are routinely examined by tax authorities around the world. Tax examinations remain in process in multiple countries including but not limited to Denmark, France, Germany and India. We file numerous group and separate returns in U.S. federal and state jurisdictions as well as international jurisdictions. We are subject to income taxes in the U.S federal jurisdiction and various state and foreign jurisdictions. In the United States, tax years dating back to 2020 remain subject to examination. With some exceptions, other major tax jurisdictions generally are not subject to examinations for years beginning before 2009.
Included in the balance of unrecognized tax benefits at December 31, 2023 and 2022 was $35.8 and $0.5, respectively of income tax (benefit)/expenses, which, if ultimately recognized, would impact our annual effective tax rate.
We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. We accrued approximately $0.9 and $0.1 of interest and penalties at December 31, 2023 and 2022, respectively We recognized a liability related to interest and penalties on unrecognized tax benefits of $7.0 as of December 31, 2023, primarily related to tax positions acquired in the Howden Acquisition. The amount of interest and penalties related to years prior to 2023 is immaterial. Due to
the expiration of various statutes of limitation and anticipated payments, it is reasonably possible our unrecognized tax benefits at December 31, 2023 may decrease within the next twelve months by $1.7.