NOTE 11. INCOME TAX
The Company’s effective income tax rates for the three and six months ended February 28, 2026 were 15.2% and 7.6%, respectively, compared to the 29.4% and 23.0% in the corresponding periods. The effective tax rate is determined by computing the estimated annual effective tax rate, adjusted for discrete items, if any, which are taken into account in the appropriate period. The Company's effective tax rate can vary from period to period depending on, among other factors, the mix and amount of global earnings, the impact of loss companies for which no tax benefit is available due to valuation allowances, income tax credits, and the impact of permanent tax adjustments. On January 10, 2025, the Company was awarded a Qualifying Advanced Energy Project Tax Credit in connection with the construction of the West Virginia micro mill under section 48C of the Internal Revenue Code. The amount awarded is a nonrefundable transferable investment tax credit allocation equal to 30% of qualified expenditures for certified projects that meet prevailing wage and apprenticeship requirements. The Company is electing to account for its nonrefundable transferable investment tax credits under ASC 740 using the flow-through method. Under the flow-through method, the credit is recognized in the fiscal year that the qualifying assets are placed in service. The Company intends to utilize the credit beginning with its fiscal 2026 tax return and has included the estimated impact in the financial statements beginning in fiscal 2026. During the three and six months ended February 28, 2026, the Company recognized approximately $14.1 million and $53.8 million, respectively, in income tax benefit related to the credit. No impact was recognized in the corresponding periods.
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