INCOME TAXES

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

During the three months ended September 30, 2022, the Company recognized income tax expense of $25.6 million on income of $107.4 million, an effective tax rate of 23.8%, as compared to income tax expense of $13.9 million on income of $61.4 million, an effective tax rate of 22.6%, for the three months ended September 30, 2021. The higher effective tax rate for the three months ended September 30, 2022 when compared with the three months ended September 30, 2021 is primarily due to higher tax related to the geographic distribution of income partially offset by lower U.S. tax on foreign income.

During the nine months ended September 30, 2022, the Company recognized income tax expense of $52.6 million on income of $260.8 million, an effective tax rate of 20.2%, as compared to income tax expense of $36.0 million on income of $195.5 million, an effective tax rate of 18.4%, for the nine months ended September 30, 2021. The higher effective tax rate for the nine months ended September 30, 2022 when compared with the nine months ended September 30, 2021 is primarily due to higher tax related to the geographic distribution of income and lower favorable discrete benefits partially offset by lower U.S. tax on foreign income in the current year period.

As of September 30, 2022, the Company determined that it was appropriate to retain its valuation allowance on its German interest expense deferred tax asset. However, it is reasonably possible that, in the near term, continuing improvement in operating performance and other positive evidence could change the Company’s assessment of the realizability of the German interest expense deferred tax asset resulting in the reversal of all, or part of, the related valuation allowance.