INCOME TAXES |
3 Months Ended | ||||||||||||
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Mar. 31, 2026 | |||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||
| INCOME TAXES |
Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), which is based upon projected annual income or loss, including anticipated losses in certain jurisdictions, non-deductible expenses under applicable federal and local tax laws, statutory rates, and planned tax strategies across the jurisdictions in which we operate. Certain items that do not relate directly to ordinary income are excluded from the AETR and are recognized in the period in which they occur. Our effective tax rate was 50.3% and 43.6% for the three months ended March 31, 2026 and March 31, 2025, respectively. The effective tax rate for the three months ended March 31, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to a permanent adjustment related to interest on installment sales, higher projected foreign losses, for which a valuation allowance was recorded, and discrete income tax adjustments, primarily associated with foreign operations, including a $6 million cumulative adjustment related to a foreign tax provision, and share-based compensation. The effective tax rate for the three months ended March 31, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to lower pre-tax book income forecast at that time for the year 2025, which was largely driven by our modernization efforts and related costs expected to be incurred, higher expected foreign losses, for which a valuation allowance was recorded, and discrete income tax adjustments, primarily related to share-based compensation. Our income tax returns remain subject to examination by the relevant tax authorities. Certain returns are currently under audit in various jurisdictions for tax years 2007 through 2024. The amount of the unrecognized tax benefits may change within the next twelve months as a result of audits or resolution of audit-related matters. During the third quarter of 2025, the One Big Beautiful Bill Act was signed into law, making several provisions of the Tax Cuts and Jobs Act permanent. Under ASC 740, “Income Taxes,” the effects of changes in tax laws must be recognized in the period of enactment. The provisions effective during the first quarter of 2026, did not have a material impact on our effective tax rate for the quarter ended March 31, 2026, but we continue to assess the potential impact of these legal changes, including provisions that become effective later in 2026, on our business and financial results.
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