v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Tax Rate – The income tax provision for interim periods is comprised of an estimated annual effective income tax rate applied to current year ordinary income and tax associated with discrete items. These discrete items generally relate to excess stock compensation deductions, changes in tax laws, adjustments to unrecognized tax benefits and changes of estimated tax liability to the actual liability determined upon filing income tax returns. To determine the annual effective tax rate, management is required to make estimates of annual pre-tax income in each domestic and foreign jurisdiction in which we conduct business. Entities that have historical pre-tax losses and current year estimated pre-tax losses that are not projected to generate a future benefit are excluded from the estimated annual effective income tax rate.
The estimated annual effective income tax rate differs from the U.S. federal statutory tax rate due to:
June 30,
20262025
Federal income tax rate21.0%21.0%
Foreign earnings taxed at different rates(2.8)5.5 
Nondeductible expenses(1.1)2.2 
State income taxes, net of federal tax benefit1.0 1.9 
Change in tax contingency reserves(0.2)0.3 
U.S. tax on international operations, net of credits0.0 0.7 
Estimated annual effective income tax rate17.9%31.6%
The estimated annual effective income tax rate for 2026 is materially lower than the estimated annual effective income tax rate for 2025 due to the Stickney shutdown tax benefit being recorded at a tax rate of approximately 23 percent, which is materially less than the tax rate that is recorded on the pre-tax income from our worldwide operations. The estimated annual effective tax rate for 2026 is less than the federal income tax rate since the estimated result of our worldwide operations is a pre-tax loss. The effect of the higher foreign tax rate and the other reconciling tax expense items in the above table reduce the estimated annual effective income tax rate when there is a pre-tax loss.
Income taxes as a percentage of pre-tax income were 18.1 percent and 18.4 percent for the three and six months ended June 30, 2026, respectively, and 31.4 percent and 62.7 percent for the three and six months ended June 30, 2025, respectively.
The effective income tax rate for the three and six months ended June 30, 2026 was slightly higher than the respective estimated annual effective income tax rate due to various discrete items, which were not material in the aggregate or individually.
The effective income tax rate for the three months ended June 30, 2025 was slightly lower than the respective estimated annual effective income tax rate due to various discrete items, which were not material in the aggregate or individually. The effective income tax rate for the six months ended June 30, 2025 was significantly higher than the respective estimated annual effective income tax rate due to the loss on pension settlement, which was treated as a discrete item.
During the year, management regularly updates estimates of pre-tax income and income tax expense based on changes in pre-tax income projections by taxable jurisdiction, repatriation of foreign earnings, unrecognized tax benefits and other tax matters. To the extent that actual results vary from these estimates, the actual annual effective income tax rate at the end of the year could be materially different from the estimated annual effective income tax rate as of the six months ended June 30, 2026.
Effective January 1, 2024, certain jurisdictions in which we operate have enacted legislation that is consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (commonly referred to as "Pillar Two"). These Pillar Two rules include minimum domestic top up taxes, income inclusion rules and undertaxed profit rules all aimed to ensure that multinational business corporations pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate. We have analyzed our tax profile by jurisdiction and do not expect to incur top up taxes in 2026.
Unrecognized Tax Benefits – We file income tax returns in the U.S. federal jurisdiction, individual U.S. state jurisdictions and non-U.S. jurisdictions. With few exceptions, we are no longer subject to U.S. federal, U.S. state, or non-U.S. income tax examinations by tax authorities for years prior to 2020.
As of June 30, 2026 and December 31, 2025, unrecognized tax benefits of $1.2 million and $1.1 million, respectively, would affect the effective tax rate if recognized. We do not anticipate material changes to the amount of unrecognized tax benefits within the next twelve months.