ENTRAVISION COMMUNICATIONS CORP Income Taxes Disclosure
11. INCOME TAXES
The components of income (loss) before income taxes for the years ended December 31, 2025, 2024 and 2023 (in millions):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
(117.1 |
) |
|
$ |
(40.7 |
) |
|
$ |
(38.5 |
) |
Foreign |
|
|
20.7 |
|
|
|
(25.5 |
) |
|
|
(3.0 |
) |
Income (loss) before income taxes |
|
$ |
(96.4 |
) |
|
$ |
(66.2 |
) |
|
$ |
(41.5 |
) |
The income tax expense (benefit) from continuing operations for the years ended December 31, 2025, 2024 and 2023 (in millions):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
1.4 |
|
|
$ |
6.0 |
|
|
$ |
(1.0 |
) |
State |
|
|
0.2 |
|
|
|
1.7 |
|
|
|
0.5 |
|
Foreign |
|
|
5.5 |
|
|
|
6.7 |
|
|
|
1.5 |
|
|
|
$ |
7.1 |
|
|
$ |
14.4 |
|
|
$ |
1.0 |
|
Deferred |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
(24.6 |
) |
|
$ |
(4.9 |
) |
|
$ |
(5.6 |
) |
State |
|
|
0.8 |
|
|
|
(2.1 |
) |
|
|
(2.0 |
) |
Foreign |
|
|
(1.3 |
) |
|
|
(3.3 |
) |
|
|
(1.8 |
) |
|
|
|
(25.1 |
) |
|
|
(10.3 |
) |
|
|
(9.4 |
) |
Income tax expense (benefit) |
|
$ |
(18.0 |
) |
|
$ |
4.1 |
|
|
$ |
(8.4 |
) |
The income tax expense (benefit) differs from the amount of income tax expense (benefit) determined by applying the Company’s federal corporate income tax rate of 21% to pre-tax income for the year ended December 31, 2025, after the adoption of ASU 2023-09, due to the following (in millions):
|
|
Year End December 31, 2025 |
|
|||||
|
|
$ |
|
|
% |
|
||
U.S. Federal statutory tax rate |
|
$ |
(20.2 |
) |
|
|
21.0 |
% |
State and local income taxes, net of Federal income tax effect (1) |
|
|
1.0 |
|
|
|
-1.0 |
% |
Foreign Tax Effects |
|
|
|
|
|
|
||
Spain |
|
|
|
|
|
|
||
Return to provision - Foreign |
|
|
(1.5 |
) |
|
|
1.6 |
% |
Other |
|
|
(0.4 |
) |
|
|
0.4 |
% |
Other Foreign Jurisdictions |
|
|
1.8 |
|
|
|
-1.9 |
% |
Effect of cross-border tax laws |
|
|
0.2 |
|
|
|
-0.2 |
% |
Nontaxable or nondeductible Items |
|
|
|
|
|
|
||
Share-based compensation |
|
|
1.0 |
|
|
|
-1.0 |
% |
Other |
|
|
0.2 |
|
|
|
-0.2 |
% |
Change in unrecognized tax benefits |
|
|
0.3 |
|
|
|
-0.3 |
% |
Other adjustments |
|
|
(0.4 |
) |
|
|
0.3 |
% |
Total tax provision and effective tax rate |
|
$ |
(18.0 |
) |
|
|
18.7 |
% |
(1) State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category
As previously disclosed for the tax years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate due to the following (in millions):
|
|
2024 |
|
|
2023 |
|
||
Computed “expected” income tax expense (benefit) |
|
$ |
(13.9 |
) |
|
$ |
(8.7 |
) |
Change in income tax resulting from: |
|
|
|
|
|
|
||
State taxes, net of federal benefit |
|
|
(5.3 |
) |
|
|
(1.3 |
) |
Change in fair value of earnout |
|
|
(0.2 |
) |
|
|
0.2 |
|
Non-deductible executive compensation |
|
|
0.7 |
|
|
|
1.8 |
|
Non-deductible expenses |
|
|
0.2 |
|
|
|
0.3 |
|
Foreign GILTI income |
|
|
(0.1 |
) |
|
|
(0.5 |
) |
Foreign Permanent Differences including U.S. GAAP to Statutory Differences |
|
|
(2.2 |
) |
|
|
(1.5 |
) |
Foreign rate differential |
|
|
(1.9 |
) |
|
|
— |
|
Foreign Withholdings |
|
|
0.6 |
|
|
|
0.5 |
|
Foreign non-deductible expenses |
|
|
10.0 |
|
|
|
— |
|
Other foreign permanent differences |
|
|
1.0 |
|
|
|
— |
|
Discontinued operations transaction costs |
|
|
0.1 |
|
|
|
0.2 |
|
Change in valuation allowance |
|
|
13.2 |
|
|
|
1.8 |
|
Change in tax rate |
|
|
0.9 |
|
|
|
(0.8 |
) |
Disposal of subsidiary tax benefit |
|
|
(9.8 |
) |
|
|
— |
|
Stock compensation |
|
|
2.7 |
|
|
|
1.2 |
|
Change in unrecognized tax benefits |
|
|
15.8 |
|
|
|
(0.1 |
) |
Impairment |
|
|
5.9 |
|
|
|
— |
|
Worthless stock deduction |
|
|
(13.9 |
) |
|
|
(0.7 |
) |
Other |
|
|
0.3 |
|
|
|
(0.8 |
) |
|
|
$ |
4.1 |
|
|
$ |
(8.4 |
) |
The components of the deferred tax assets and liabilities at December 31, 2025 and 2024 consist of the following (in millions):
|
|
|
2025 |
|
|
|
2024 |
|
Deferred tax assets: |
|
|
|
|
|
|
||
Accrued expenses |
|
$ |
2.7 |
|
|
$ |
1.7 |
|
Accounts receivable |
|
|
0.7 |
|
|
|
0.6 |
|
Net operating loss carryforward |
|
|
11.7 |
|
|
|
4.9 |
|
Stock-based compensation |
|
|
2.7 |
|
|
|
2.4 |
|
Interest expense carryforward |
|
|
3.9 |
|
|
|
1.1 |
|
Lease obligations |
|
|
11.5 |
|
|
|
13.3 |
|
Capital loss |
|
|
11.4 |
|
|
|
11.9 |
|
Other |
|
|
0.9 |
|
|
|
1.3 |
|
Total deferred tax assets |
|
|
45.5 |
|
|
|
37.2 |
|
Valuation allowance |
|
|
(18.7 |
) |
|
|
(14.2 |
) |
Net deferred tax assets |
|
$ |
26.8 |
|
|
$ |
23.0 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Intangible assets |
|
$ |
(31.6 |
) |
|
$ |
(45.5 |
) |
Property and equipment |
|
|
(1.2 |
) |
|
|
(1.7 |
) |
Lease assets |
|
|
(4.5 |
) |
|
|
(10.8 |
) |
Other |
|
|
(0.7 |
) |
|
|
(1.2 |
) |
Total deferred tax liabilities |
|
|
(38.0 |
) |
|
|
(59.2 |
) |
Net deferred tax liabilities |
|
$ |
(11.2 |
) |
|
$ |
(36.2 |
) |
|
|
|
|
|
|
|
||
Reported as: |
|
|
|
|
|
|
||
Deferred tax assets |
|
$ |
3.8 |
|
|
$ |
2.7 |
|
Accounts payable and accrued expenses |
|
|
(0.5 |
) |
|
|
(0.4 |
) |
Deferred tax liabilities |
|
|
(14.5 |
) |
|
|
(38.4 |
) |
Net Deferred tax liabilities |
|
$ |
(11.2 |
) |
|
$ |
(36.2 |
) |
As of December 31, 2025, the Company has certain U.S. federal, U.S. state and foreign net operating loss carryforwards of approximately $110.7 million, $114.5 million, and $4.8 million, respectively, available to offset future taxable income. The state net operating loss carryforwards will expire during the years 2030 through 2044, to the extent they are not utilized. The net operating loss carryforwards includes the U.S. and state losses on an as filed tax return basis which includes the impact of the worthless stock deduction. The foreign net operating loss carryforwards will expire during the years 2028 through 2039 in certain jurisdictions; in certain other jurisdictions, net operating loss carryforwards do not expire.
Utilization of the Company’s state net operating loss may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code (the "Code") or similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2025, the Company believes that utilization of its federal and state net operating losses are not limited under any ownership change limitations provided under the Code or under similar state statutes.
During the year ended December 31, 2025, the valuation allowance increased by $4.5 million. The increase in valuation allowance is mainly related to states with definite lived net operating loss carryover offset, release of valuation allowance for Spain and certain foreign deferred tax assets.
The Company addresses uncertainty in tax positions according to the provisions of ASC 740, “Income Taxes”, which clarifies the accounting for income taxes by establishing the minimum recognition threshold and a measurement attribute for tax positions taken or expected to be taken in a tax return in order to be recognized in the financial statements.
The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):
|
|
Amount |
|
|
Balance at December 31, 2023 |
|
$ |
2.8 |
|
Decrease in balances related to prior year tax positions |
|
|
(3.0 |
) |
Increase in balances related to current year tax positions |
|
|
17.5 |
|
Balance at December 31, 2024 |
|
|
17.3 |
|
Increase in balances related to current year tax positions |
|
|
14.4 |
|
Balance at December 31, 2025 |
|
$ |
31.7 |
|
As of December 31, 2025, the Company had $31.7 million of gross unrecognized tax benefits for uncertain tax positions. We have estimated that $14.2 million would affect the effective tax rate if recognized subject to the effect of changes in valuation allowance assessment.
The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. As of December 31, 2025, the Company had recorded accrued interest and penalties of $0.1 million and $0.2 million for the years 2021 and 2024, respectively.
The Company is subject to taxation in the United States, certain states and certain foreign jurisdictions. The tax years 2022 to 2024 and 2021 to 2024 remain open to examination by federal and state taxing jurisdictions, respectively. For foreign jurisdictions, the tax years 2012 to 2024 may remain open to examination by certain foreign jurisdictions.
During the year ended December 31, 2025, the Company changed its assertion regarding the undistributed earnings of its Smadex subsidiary. We no longer consider these earnings to be indefinitely reinvested. As a result of this change in assertion, we recorded a discrete tax expense of $0.1 million in the current year, representing the estimated foreign taxes and state taxes payable upon future repatriation. We continue to assert indefinite reinvestment for all other foreign jurisdictions.
Income taxes paid, net of (refunds) received, consisted of the following (in thousands):
|
|
Tax Payment |
|
|
Federal |
|
$ |
1,442 |
|
State and Local |
|
|
(277 |
) |
Spain |
|
|
4,527 |
|
Other |
|
|
308 |
|
Net Payment (Refund) |
|
$ |
6,000 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 16, 2022 | |
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.