INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

NOTE G – INCOME TAXES

Significant components of the provision or benefit for income taxes for the years ended December 31 were as follows:

	2023		2022		2021
	(in thousands)
Current provision on continuing operations:
Federal	$	38,860	$	79,477	$	55,684
State		10,949		19,713		14,229
Foreign		508		869		341
		50,317		100,059		70,254
Deferred benefit on continuing operations:
Federal		(4,882)		(5,591)		(6,119)
State		(682)		(793)		(1,570)
Foreign		(2)		(20)		63
		(5,566)		(6,404)		(7,626)
Total provision for income taxes on continuing operations	$	44,751	$	93,655	$	62,628
Current provision on discontinued operations:
Federal	$	14,656	$	901	$	767
State		3,599		236		201
		18,255		1,137		968
Deferred provision on discontinued operations:
Federal		—		114		21
State		—		40		16
		—		154		37
Total provision for income taxes on discontinued operations	$	18,255	$	1,291	$	1,005
Total provision for income taxes	$	63,006	$	94,946	$	63,633

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Components of the deferred tax benefit on continuing operations for the years ended December 31 were as follows:

	2023		2022		2021
	(in thousands)
Amortization, depreciation, and basis differences for property, plant and equipment and other long-lived assets(1)	$	1,744	$	4,274	$	1,409
Amortization of intangibles		6,127		(2,995)		(555)
Changes in reserves for workers’ compensation, third-party casualty, and cargo claims		(4,975)		(3,713)		(3,296)
Revenue recognition		(50)		6		(1,434)
Allowance for credit losses		1,094		(388)		170
Nonunion pension and other retirement plans		(3)		(4)		(3)
Multiemployer pension fund withdrawal		180		172		164
Federal and state net operating loss carryforwards utilized (generated)		(758)		899		(300)
State depreciation adjustments		(456)		(915)		598
Share-based compensation		531		737		(949)
Valuation allowance increase (decrease)		44		(489)		912
Other accrued expenses		(2,143)		(3,069)		(4,056)
Prepaid expenses		313		(18)		(788)
Operating lease right-of-use assets/liabilities – net		(8,065)		(651)		(228)
Other		851		(250)		730
Deferred tax benefit	$	(5,566)	$	(6,404)	$	(7,626)

(1) The Tax Cuts and Jobs Act, enacted in December 2017, allowed first year bonus depreciation at 100% for assets placed into service between September 27, 2017 and January 1, 2023. Due to an increase in the purchase of assets eligible for 100% depreciation, the deferred tax expense related to the tax depreciation expense in excess of book depreciation increased in 2022, compared to 2021.

Significant components of the deferred tax assets and liabilities of continuing operations at December 31 were as follows:

	2023		2022
	(in thousands)
Deferred tax assets:
Accrued expenses	$	60,842	$	53,785
Operating lease right-of-use liabilities		53,589		46,056
Supplemental pension liabilities		85		81
Multiemployer pension fund withdrawal		4,871		5,063
Postretirement liabilities other than pensions		3,389		3,137
Share-based compensation		5,249		5,622
Federal and state net operating loss carryovers		1,511		753
Receivable allowances		1,951		2,967
Other		709		417
Total deferred tax assets		132,196		117,881
Valuation allowance		(1,751)		(1,707)
Total deferred tax assets, net of valuation allowance		130,445		116,174
Deferred tax liabilities:
Amortization, depreciation, and basis differences for property, plant and equipment, and other long-lived assets		118,211		116,290
Operating lease right-of-use assets		43,938		44,170
Intangibles		10,256		4,442
Prepaid expenses		5,685		5,424
Total deferred tax liabilities		178,090		170,326
Net deferred tax liabilities	$	(47,645)	$	(54,152)

Reconciliation between the effective income tax rate, as computed on income from continuing operations before income taxes, and the statutory federal income tax rate for the years ended December 31 is presented in the following table:

	2023			2022			2021
	(in thousands, except percentages)
Income tax provision at the statutory federal rate of 21.0%	$	39,252		$	81,544		$	57,348
Federal income tax effects of:
State income taxes		(2,156)			(3,973)			(2,658)
Nondeductible expenses		4,040			5,606			3,596
Life insurance proceeds and changes in cash surrender value		(962)			575			(866)
Alternative fuel credit		(1,302)			(2,449)			—
Net increase (decrease) in valuation allowances		44			(464)			887
Net increase in uncertain tax positions		—			—			854
Settlement of share-based compensation		(3,989)			(6,693)			(6,021)
Foreign tax credits generated		(506)			(849)			(404)
Federal research and development tax credits		(75)			278			(2,044)
Other		(368)			311			(1,127)
Federal income tax provision		33,978			73,886			49,565
State income tax provision		10,267			18,920			12,659
Foreign income tax provision		506			849			404
Total provision for income taxes	$	44,751		$	93,655		$	62,628
Effective tax rate		23.9	%		24.1	%		22.9	%

The Company's total effective tax rate was 24.4%, 24.1% and 23.0% for 2023, 2022 and 2021, respectively, including discontinued operations which are further discussed in Note D. The effective tax rate from discontinued operations was 25.5%, 26.6% and 24.7% for 2023, 2022 and 2021, respectively. State tax rates vary among states and average approximately 6.0% to 6.5%, although some state rates are higher, and a small number of states do not impose an income tax.

Income taxes paid, excluding income tax refunds, totaled $115.7 million, $148.7 million, and $77.5 million in 2023, 2022, and 2021, respectively. Income tax refunds totaled $36.4 million, $42.3 million, and $19.4 million in 2023, 2022, and 2021, respectively.

Under Accounting Standards Codification Topic 718, Compensation – Stock Compensation, the Company may experience volatility in its income tax provision as a result of recording all excess tax benefits and tax deficiencies in the income statement upon settlement of awards, which occurs primarily during the second quarter of each year. The 2023, 2022, and 2021 tax rates reflect a tax benefit of 2.8%, 2.1%, and 2.8%, respectively.

At December 31, 2023, the Company had gross federal net operating loss carryforwards of $0.6 million. Due to taxable income, there is no need for a valuation allowance on these amounts at December 31, 2023 or 2022. At December 31, 2023, the Company had total gross state net operating losses of $26.4 million. Gross state net operating losses of $1.4 million are from the acquisition of Panther and relate to periods ending on or prior to June 15, 2012. State carryforward periods for the remaining Panther net operating losses vary from 10 to 20 years. Gross state net operating losses of $9.7 million are for subsidiaries that have had taxable losses for three or more prior tax years or have other nexus issues that reduce the likelihood of the utilization of the losses. These net operating loss carryforwards have been fully reserved with valuation allowances of $0.5 million and $0.4 million at December 31, 2023 and 2022, respectively. Additional valuation allowances of $0.2 million related to state research and development tax credits were reserved at December 31, 2023 and 2022, and less than $0.1 million related to state interest expense carryforwards was reserved at December 31, 2023 and 2022.

As the Canadian tax rate is now higher than the U.S. tax rate, it is unlikely that foreign tax credit carryforwards will be useable, as U.S. taxes will be paid at a lower rate than the tax rates in Canada. Thus, the foreign tax credit carryover is fully reserved, resulting in valuation allowances of $1.0 million at December 31, 2023 and 2022.

Consolidated federal income tax returns filed for tax years through 2019 are closed by the applicable statute of limitations. The Company is not under examination by any federal, state, or foreign taxing authorities at December 31, 2023.

At December 31, 2023 and 2022, there was a reserve for uncertain tax positions of $0.9 million related to credits taken on federal returns, of which $0.5 million will reverse in the second quarter of 2024 upon the expiration of the statute of limitations.

For 2023, 2022, and 2021, interest paid or accrued related to foreign and state income taxes was immaterial.