v3.26.3
Income Taxes
 9 Months Ended
Sep. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The effective tax rates, including discrete items, were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Effective tax rate (1)
25.8 %34.4 %23.7 %(94.3)%
_______________
(1) The effective tax rate for the nine months ended September 30, 2025, was impacted by the goodwill impairment charge within the APT reporting unit during the second quarter of 2025. Refer to Note 7 for more information.
We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology ("EAETR"). The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision.
The determination of the EAETR is based upon a number of estimates, including the estimated annual pre-tax ordinary income in each tax jurisdiction in which we operate. As our projections of ordinary income change throughout the year, the EAETR will change period-to-period. The tax effects of discrete items are recognized in the tax provision in the period they occur. Depending on various factors, such as the item's significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter may materially impact the reported effective tax rate. As a global enterprise, our tax expense may be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors. As such, there may be significant volatility in interim tax provisions.
The table below provides a reconciliation between our reported effective tax rates and the EAETR of our continuing operations.
Three Months Ended September 30,
20262025
In millions, except percentagesBefore taxTaxEffective tax rate % impactBefore taxTaxEffective tax rate % impact
Continuing operations$68.9 $17.8 25.8 %$62.2 $21.4 34.4 %
Discrete items:
Restructuring and other (income) charges, net (1)
0.2 0.1 1.0 0.3 
(Gain) loss on sale of business (2)
3.0 0.7 — — 
Long-lived asset impairment charge (3)
— — — — 
Goodwill impairment (4)
— — — — 
(Gain) loss on strategic investments (5)
— — — — 
Proxy contest charges (5)
— — — — 
Portfolio realignment costs (5)
1.5 0.4 — — 
Other tax only discrete items
— (0.4)— (1.7)
Total discrete items4.7 0.8 1.0 (1.4)
Continuing operations, before discrete items$73.6 $18.6 $63.2 $20.0 
EAETR (7)
25.3 %31.6 %
Nine Months Ended September 30,
20262025
In millions, except percentagesBefore taxTaxEffective tax rate % impactBefore taxTaxEffective tax rate % impact
Continuing operations$149.8 $35.5 23.7 %$(36.8)$34.7 (94.3)%
Discrete items:
Restructuring and other (income) charges, net (1)
2.4 0.6 10.1 2.5 
(Gain) loss on sale of business (2)
(5.6)(1.3)— — 
Long-lived asset impairment charge (3)
32.1 8.0 — — 
Goodwill impairment (4)
— — 183.8 5.1 
(Gain) loss on strategic investments (5)
— — 2.5 0.6 
Impairment of license agreement (5)
2.8 0.7 — — 
Litigation charge (6)
16.2 3.8 — — 
Portfolio realignment costs (5)
6.7 1.6 — — 
Proxy contest charges (5)
— — 8.2 1.9 
Other tax only discrete items— 3.7 — (2.2)
Total discrete items54.6 17.1 204.6 7.9 
Continuing operations, before discrete items$204.4 $52.6 $167.8 $42.6 
EAETR (8)
25.7 %25.4 %
_______________
(1) Refer to Note 11 for more information.
(2) Refer to Note 16 for more information.
(3) Refer to Note 6 and Note 7 for more information.
(4) Refer to Note 7 for more information.
(5) Refer to Note 14 for more information.
(6) Refer to Note 13 for more information.
(7) Decrease in EAETR for the three months ended September 30, 2026, as compared to September 30, 2025, was due to impacts of the One Big Beautiful Bill Act (“OBBB”), which was signed into law on July 4, 2025, creating an increase in the EAETR for the three-month period in 2025, as the foreign-derived deduction-eligible income (“FDDEI”) was significantly reduced due to immediate deductibility of previously amortizable expenses.
(8) Increase in EAETR for the nine months ended September 30, 2026, as compared to September 30, 2025, is mainly driven by the elimination of the FDDEI due to anticipated overall taxable losses in the U.S. as a result of allowable deductions driven by completed divestitures in 2026.
At September 30, 2026 and December 31, 2025, we had deferred tax assets of $12.9 million and $11.8 million, respectively, resulting from certain historical net operating losses from our Brazil and U.S. state tax credits for which a valuation allowance has been established. The ultimate realization of these deferred tax assets depends on the generation of future taxable income during the periods in which these net operating losses and tax credits are available to be used. In evaluating the realizability of these deferred tax assets, we consider projected future taxable income and tax planning strategies in making our assessment. As of September 30, 2026, we cannot objectively assert that these deferred tax assets are more likely than not to be realized and therefore we have maintained a valuation allowance. We intend to continue maintaining a valuation allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. A release of all or a portion of the valuation allowance could be possible if we determine that sufficient positive evidence becomes available to allow us to reach a conclusion that the valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a reduction to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that we are able to actually achieve.
As a result of the OBBB signed into law in 2025, significant modifications to U.S. international tax framework became effective in 2026. Based on the analysis performed by the company, the OBBB will have an impact on the FDDEI deduction. In the absence of divestitures completed by the company as of September 30, 2026, these changes would provide a benefit to the effective tax rate, but given anticipated overall taxable losses, the FDDEI benefit is negated. Additionally, OBBB increased disallowances associated with meals and entertainment expenses, further increasing the 2026 EAETR.
During 2025, we determined that the earnings of our China subsidiaries are no longer permanently reinvested due to global trade volatility. As a result of this change, we recorded deferred tax expense of $0.6 million relating to China withholding taxes for the nine months ended September 30, 2026. With the exception of China and Belgium, the company does not currently expect to repatriate cash earnings from our foreign operations to fund U.S. operations.
Pillar Two, released by the Organisation for Economic Cooperation and Development ("OECD"), went into effect on January 1, 2024. Pillar Two's intent is to create a 15% global minimum tax for all jurisdictions in which multinational enterprises operate. To date, fourteen of our reporting jurisdictions have enacted final legislation adopting Pillar Two. While we do not anticipate that this legislation will have a material impact on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate. No tax impacts of Pillar Two were recorded for the quarter ended September 30, 2026.