v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
11. Income Taxes
Our income tax provision and the respective effective income tax rates are as follows (in millions, except for income tax rates):
For the Three Months Ended June 30,For the Six Months Ended June 30,
2026202520262025
Income tax expense (benefit)$16.6 $(109.6)$23.2 $(116.4)
Effective income tax rate25.0 %24.4 %23.5 %24.4 %
Our provision for income taxes for the three months ended June 30, 2026 includes a net discrete income tax benefit of $1.0 million, of which a tax benefit of $1.5 million relates to changes in our reserves for uncertain tax positions, partially offset by a net tax expense of $0.4 million related to return-to-provision adjustments and other adjustments to our worldwide tax positions.
Our provision for income taxes for the three months ended June 30, 2025 includes a net discrete income tax benefit of $12.3 million, of which a tax benefit of $17.4 million relates to the Watson Fuels sale and related asset impairment charges, partially offset by a net tax expense of $5.2 million related to return-to-provision adjustments and other changes in our reserves for uncertain tax positions.
Our provision for income taxes for the six months ended June 30, 2026 includes a net discrete income tax benefit of $3.1 million, of which a net tax benefit of $5.0 million relates to changes in our reserves for uncertain tax positions, partially offset by a net tax expense of $1.9 million related to return-to-provision and other adjustments to our worldwide tax positions.
Our provision for income taxes for the six months ended June 30, 2025 includes a net discrete income tax benefit of $11.7 million, of which a tax benefit of $17.4 million relates to the Watson Fuels sale and related asset impairment charges and $3.6 million relates to changes in our reserves for uncertain tax positions and the resolution of various worldwide tax matters, partially offset by a tax expense of $2.6 million related to a valuation allowance recorded against the deferred tax assets of a foreign subsidiary and a net tax expense of $6.8 million related to return-to-provision and other adjustments.
Our income tax provisions for the three and six months ended June 30, 2026 and 2025 were calculated based on the estimated annual effective income tax rates for the 2026 and 2025 years, respectively. The actual effective income tax rate for the 2026 year may be materially different for several reasons including differences between estimated versus actual results and the geographic tax jurisdictions in which the results are earned.
We have various tax returns under examination both in the U.S. and foreign jurisdictions. The most material of these is in Denmark, where one of our subsidiaries has been under audit since 2018. Through June 30, 2026, we have received final tax assessments for the 2013 through 2019 tax years of approximately $120.1 million (DKK 785.7 million), and proposed tax assessments for the 2020 and 2021 tax years of approximately $28.2 million (DKK 184.8 million), excluding interest, which would be material. In July 2026, the tax assessments for the 2020 and 2021 tax years were finalized with no change to the proposed amounts. We believe we have substantial defenses to these assessments and expect to continue to pursue available administrative and judicial remedies to resolve this matter.
An unfavorable resolution of one or more of the above matters could have a material adverse effect on our operating results or cash flows in the quarter or year in which the adjustments are recorded, or the tax is due or paid. As examinations are still in process or have not yet reached the final stages of the appeals process, the timing of the ultimate resolution or payments that may be required cannot be determined at this time.