Income Taxes |
3 Months Ended |
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Mar. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax expense for interim periods is computed using an estimated annual effective tax rate (“AETR”), applied to year to date ordinary income, adjusted for discrete items recognized in the period incurred. The Company’s operations are located in the United States, therefore, the tax footnote includes only federal and state domestic tax obligations. Income Tax Expense For the three months ended March 31, 2026, the Company recorded income tax expense of $2.4 million, resulting in an effective tax rate of 25.0%, compared to income tax expense of $3.8 million and an effective tax rate of 16.6% for the three months ended March 31, 2025. Qualitative Explanation of Effective Tax Rate Drivers The Company’s effective tax rate of 25.0% for the three months ended March 31, 2026 differed from the statutory U.S. federal rate of 21.0%. The change in the effective tax rate from the prior year first quarter was primarily attributable to a lower state tax rate, driven by higher forecasted state net operating loss and state credit utilization and lower forecasted annual pretax income, as well as the impact of valuation allowance adjustments, consistent with the Company’s improved profitability following the release of the majority of its valuation allowance in 2025. Deferred Income Taxes There were no material changes in the Company’s deferred tax assets or liabilities during the three months ended March 31, 2026, other than those resulting from normal interim period activity. Refer to the Company’s consolidated financial statements as of and for the year ended December 31, 2025 for additional information regarding the components of deferred tax assets and liabilities. Valuation Allowance As of March 31, 2026, the Company maintained a valuation allowance of approximately $0.2 million. The valuation allowance relates to a capital loss carryforward. Unrecognized Tax Benefits The amount of unrecognized tax benefits, that if recognized, would affect the annual effective tax rate was approximately $0.6 million and $1.3 million as of March 31, 2026 and December 31, 2025, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. For the three months ended March 31, 2026 and 2025, interest and penalties were not material. Income Taxes Paid No income taxes were paid during the three months ended March 31, 2026. The Company received a state income tax refund of $0.2 million during the period. Open Tax Years The Company remains subject to examination by U.S. federal and state taxing authorities generally for tax years 2017 through 2026. Management does not believe the resolution of any open matters will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
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