INCOME TAXES |
6 Months Ended |
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Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | INCOME TAXES During the three months ended June 30, 2026, the Company recognized income tax expense of $29 million on pretax income of $139 million, an effective tax rate of 20.6%, as compared to income tax expense of $17 million on pretax income of $89 million, an effective tax rate of 18.5%, for the three months ended June 30, 2025. The higher effective tax rate for the three months ended June 30, 2026 when compared with the three months ended June 30, 2025 is primarily due to higher tax related to geographic distribution of income. During the six months ended June 30, 2026, the Company recognized income tax benefit of $4 million on pretax income of $13 million, an effective tax rate of (37.4)%, as compared to income tax expense of $22 million on pretax income of $115 million, an effective tax rate of 18.9%, for the six months ended June 30, 2025. The lower effective tax rate for the six months ended June 30, 2026 when compared with the six months ended June 30, 2025 is primarily due to an increase in favorable discrete items. On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% for large corporations, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework. A number of countries in which we operate have adopted legislation subject to the OECD transitional safe harbor rules, while other countries are still in the process of introducing legislation. In addition, the OECD continues to issue guidance on this matter including the technical documents released on January 5, 2026. In this release, the OECD issued Administrative Guidance which includes a “Side by Side” System designed to align the U.S. tax regime with Pillar Two for U.S.-parented multinational groups, effective for tax years beginning on or after January 1, 2026. While the Company has determined the impact of enacted Pillar Two legislation on its financial statements is not material, the Company will continue to evaluate the financial statement impacts as additional Pillar Two rules are enacted and OECD guidance is issued. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) (H.R.1) was signed into law by the President of the United States. The OBBBA contains significant provisions impacting corporate taxation in the U.S. with multiple effective dates. Among the changes that were effective in 2025 were modifications to capitalization of domestic research and development costs, accelerated depreciation of fixed assets and other qualifying property, as well as limitations on deductions for interest expense. Changes effective in 2026 include, among others, modifications to certain international tax provisions. The impacts of OBBBA are reflected in our results for the three and six months ended June 30, 2026. There was no material effect on our income tax expense or effective tax rate.
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