Income Taxes
The Company is subject to income taxation in the United States and various state jurisdictions in which it operates. In accordance with income tax accounting standards, the Company recognizes tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities. Substantially all of the Company's income before taxes is from its domestic operations.
Income Tax Provision/(Benefit)
The provision (benefit) for income taxes is composed of the following:
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| (in thousands) | 2025 | | 2024 | | 2023 |
| Current: | | | | | |
| Federal | $ | 532 | | | $ | 1,431 | | | $ | — | |
| State | (200) | | | (1,665) | | | 3,306 | |
| Foreign | — | | | 311 | | | 204 | |
| Total current | 332 | | | 77 | | | 3,510 | |
| Deferred: | | | | | |
| Federal | (10,448) | | | (62,244) | | | 36,910 | |
| State | (61) | | | (6,045) | | | 1,035 | |
| | | | | |
| Total deferred | (10,509) | | | (68,289) | | | 37,945 | |
| Total: | | | | | |
| Federal | (9,916) | | | (60,813) | | | 36,910 | |
| State | (261) | | | (7,710) | | | 4,341 | |
| Foreign | — | | | 311 | | | 204 | |
| Total income tax provision (benefit) | $ | (10,177) | | | $ | (68,212) | | | $ | 41,455 | |
Income Taxes Paid (Refunded)
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| (in thousands) | 2025 | | 2024 | | 2023 |
| Federal | $ | (15,000) | | | $ | 8,700 | | | $ | 3 | |
| State | (264) | | | (274) | | | 596 | |
| Foreign | — | | | 312 | | | 413 | |
| Total | $ | (15,264) | | | $ | 8,738 | | | $ | 1,012 | |
Reconciliation of Effective Tax Rate
The effective tax rate on income before income taxes differed from the federal statutory income tax rate as follows:
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| Year ended December 31, |
| 2025 | | 2024 | | 2023 |
| (in thousands) | Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
| Pre-tax income | $ | (54,874) | | | | | $ | (308,450) | | | | | $ | 159,051 | | | |
| Federal statutory income tax rate | (11,524) | | | 21.0 | % | | (64,774) | | | 21.0 | % | | 33,401 | | | 21.0 | % |
| Domestic federal | | | | | | | | | | | |
| Tax credits | | | | | | | | | | | |
| Research credits | — | | | — | % | | (459) | | | 0.1 | % | | (1,652) | | | (1.0) | % |
| Other | (117) | | | 0.2 | % | | (501) | | | 0.2 | % | | (90) | | | (0.1) | % |
| Nontaxable and nondeductible items | | | | | | | | | | | |
| Executive compensation | 542 | | | (1.0) | % | | 2,707 | | | (0.9) | % | | 3,395 | | | 2.1 | % |
| Share based compensation | 665 | | | (1.2) | % | | 2,500 | | | (0.8) | % | | 1,732 | | | 1.1 | % |
| Other | 633 | | | (1.2) | % | | 569 | | | (0.2) | % | | 666 | | | 0.4 | % |
| | | | | | | | | | | |
| Other adjustments | 265 | | | (0.5) | % | | (1,366) | | | 0.4 | % | | 38 | | | — | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
Domestic state and local income taxes, net of federal effect(1) | (519) | | | 0.9 | % | | (7,168) | | | 2.3 | % | | 3,503 | | | 2.2 | % |
| | | | | | | | | | | |
| Other foreign jurisdictions | — | | | — | % | | 311 | | | (0.1) | % | | 204 | | | 0.1 | % |
| Worldwide changes in unrecognized tax benefits | (122) | | | 0.2 | % | | (31) | | | — | % | | 258 | | | 0.2 | % |
| Total | $ | (10,177) | | | 18.5 | % | | $ | (68,212) | | | 22.1 | % | | $ | 41,455 | | | 26.1 | % |
(1) In 2025, 2024, and 2023, state and local income taxes in Arizona, California, Indiana, Florida, Tennessee, and New York comprise the majority of the domestic state and local income taxes, net of federal effect category.
Deferred Taxes
The major components of the Company’s net deferred tax assets and liabilities are as follows:
| | | | | | | | | | | |
| As of December 31, |
| (in thousands) | 2025 | | 2024 |
| Deferred tax assets: | | | |
| Employee benefits | $ | 57,114 | | | $ | 38,277 | |
| | | |
| | | |
| | | |
| | | |
| Interest expense | 36,649 | | | 24,692 | |
| Net operating loss | 116,728 | | | 6,252 | |
| Tax credits | 3,546 | | | 3,683 | |
| Other | 39,523 | | | 45,543 | |
| Less: valuation allowance | (1,214) | | | (1,214) | |
| Total deferred tax assets | 252,346 | | | 117,233 | |
| Deferred tax liabilities: | | | |
| Prepaid expenses | 4,408 | | | 5,235 | |
| Depreciation | 518,472 | | | 398,022 | |
| Other | 34,882 | | | 29,569 | |
| Total deferred tax liabilities | 557,762 | | | 432,826 | |
| Net deferred tax liabilities | $ | 305,416 | | | $ | 315,593 | |
Net Operating Loss Carryforwards
At December 31, 2025, the Company recognized $103.1 million of tax-effected federal net operating loss carryforwards which may be carried forward indefinitely. Additionally, the Company recognized $13.6 million of tax-effected state net operating loss carryforwards. Under the current law, $1.6 million of the state net operating loss carryforward amounts do not expire and the remaining amounts expire in taxable years 2025 through 2044 if unused.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.