ENVIRI CorpNVRI
ENVIRI Corp Income Taxes Disclosure
Income Taxes*
Current income tax expense or benefit represents the amounts expected to be reported on the Company's income tax returns, and deferred income tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted income tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered more likely than not to be realized.
Income (loss) from continuing operations before income taxes and equity income as reported on the Consolidated Statements of Operations consists of the following:
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| U.S. | $ | (107,774) | $ | (60,713) | $ | (19,870) | ||||||||||||||
| International | (29,045) | (42,867) | (25,977) | |||||||||||||||||
| Total income (loss) from continuing operations before income taxes and equity income | $ | (136,819) | $ | (103,580) | $ | (45,847) | ||||||||||||||
Income tax expense (benefit) as reported on the Consolidated Statements of Operations consists of the following:
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Income tax expense (benefit): | ||||||||||||||||||||
| Currently payable: | ||||||||||||||||||||
| U.S. federal | $ | 252 | $ | 1,020 | $ | (637) | ||||||||||||||
| U.S. state | 1,979 | 2,701 | 3,591 | |||||||||||||||||
| International | 19,511 | 24,884 | 23,801 | |||||||||||||||||
| Total income taxes currently payable | 21,742 | 28,605 | 26,755 | |||||||||||||||||
| Deferred U.S. federal | (7,619) | (4,018) | 5,679 | |||||||||||||||||
| Deferred U.S. state | 1,254 | (2,967) | (1,414) | |||||||||||||||||
| Deferred international | 7,609 | (4,786) | 3,510 | |||||||||||||||||
Total deferred income tax expense | 1,244 | (11,771) | 7,775 | |||||||||||||||||
| Total income tax expense (benefit) from continuing operations | $ | 22,986 | $ | 16,834 | $ | 34,530 | ||||||||||||||
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Recently Adopted and Recently Issued Accounting Standards, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows:
(in thousands) | 2025 | |||||||
| U.S. federal | $ | 707 | ||||||
| U.S. state and local | 1,271 | |||||||
| International: | ||||||||
| China | 5,791 | |||||||
| India | 5,253 | |||||||
| Egypt | 1,831 | |||||||
| Other foreign jurisdictions | 9,171 | |||||||
| Total | $ | 24,024 | ||||||
Cash payments for income taxes, net of refunds, were $29.1 million and $20.1 million for 2024 and 2023, respectively. The cash payments for 2025 decreased primarily due to the payments for fiscal years 2023 and 2022 in certain foreign jurisdictions in 2024 not recurring in 2025.
A reconciliation of the Income tax benefit (expense) from continuing operations to the amount computed by applying the 21% statutory U.S. federal income tax rate to Income (loss) from continuing operations before income taxes and equity income after the adoption of ASU 2023-09 is as follows:
Reconciliation to U.S. Statutory Rate (a) | 2025 | |||||||||||||
| (in thousands) | Amount | Rate | ||||||||||||
| U.S. federal statutory tax rate | $ | (28,732) | 21.0 | % | ||||||||||
State and local income taxes, net of federal income tax effect (b) | 2,555 | (1.9) | % | |||||||||||
| Foreign tax effects: | ||||||||||||||
| Brazil | ||||||||||||||
| Changes in valuation allowance | 9,761 | (7.1) | % | |||||||||||
| Other | (1,242) | 0.9 | % | |||||||||||
| China | ||||||||||||||
| Withholding taxes | 1,896 | (1.4) | % | |||||||||||
| Other | (185) | 0.1 | % | |||||||||||
| France | ||||||||||||||
| Changes in valuation allowance | 2,639 | (1.9) | % | |||||||||||
| Other | (8) | — | % | |||||||||||
| Germany | ||||||||||||||
| Local tax | (4,542) | 3.3 | % | |||||||||||
| Changes in valuation allowance | 8,161 | (6.0) | % | |||||||||||
| Statutory tax rate difference | 1,658 | (1.2) | % | |||||||||||
| Contract transfer | 1,461 | (1.1) | % | |||||||||||
| Tax rate change | 1,417 | (1.1) | % | |||||||||||
| Other | 608 | (0.4) | % | |||||||||||
| India | ||||||||||||||
| Withholding taxes | 1,532 | (1.1) | % | |||||||||||
| Other | 747 | (0.6) | % | |||||||||||
| Luxembourg | ||||||||||||||
| Changes in valuation allowance | 2,315 | (1.7) | % | |||||||||||
| Other | (632) | 0.5 | % | |||||||||||
| Switzerland | ||||||||||||||
| Contract transfer | (1,461) | 1.1 | % | |||||||||||
| Other | 197 | (0.1) | % | |||||||||||
| United Kingdom | ||||||||||||||
| Changes in valuation allowance | 3,960 | (2.9) | % | |||||||||||
| Nondeductible interest expense | 1,511 | (1.1) | % | |||||||||||
| Other | 245 | (0.2) | % | |||||||||||
| Other foreign jurisdictions | 4,021 | (2.9) | % | |||||||||||
| Effect of cross border tax laws: | 177 | (0.1) | % | |||||||||||
| Tax credits: | ||||||||||||||
| Foreign tax credits | (1,536) | 1.1 | % | |||||||||||
| General business credits | (1,078) | 0.8 | % | |||||||||||
| Changes in valuation allowance | 10,155 | (7.4) | % | |||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||
| Nondeductible transaction costs | 3,315 | (2.4) | % | |||||||||||
| Nondeductible executive compensation | 6,199 | (4.5) | % | |||||||||||
| Stock-based compensation | (1,805) | 1.3 | % | |||||||||||
| Other | 491 | (0.4) | % | |||||||||||
| Changes in unrecognized tax benefits | (814) | 0.6 | % | |||||||||||
Effective tax rate | $ | 22,986 | (16.8) | % | ||||||||||
(a) Disaggregated in accordance with ASU 2023-09, which was adopted prospectively in 2025.
(b) The states and local jurisdictions that contribute to the majority (greater than 50%) of tax effect in this category include Texas, Pennsylvania, California, Indiana and Iowa.
A reconciliation of the Income tax benefit (expense) from continuing operations to the amount computed by applying the 21% statutory U.S. federal income tax rate to Income (loss) from continuing operations before income taxes and equity income for years prior to the adoption of ASU 2023-09 is as follows:
| (In thousands) | 2024 | 2023 | |||||||||||||||
U.S. federal income tax expense (benefit), at statutory tax rate of 21% | $ | (21,751) | $ | (9,628) | |||||||||||||
| U.S. state income taxes, net of federal income tax benefit | (1,272) | 611 | |||||||||||||||
| U.S. other domestic deductions and credits | (1,241) | (1,092) | |||||||||||||||
| Difference in effective tax rates on international earnings and remittances | 29,735 | 25,240 | |||||||||||||||
| Uncertain tax position contingencies and settlements | (51) | 1,688 | |||||||||||||||
| Changes in realization of deferred tax assets | 10,366 | 14,498 | |||||||||||||||
| U.S. non-deductible expenses | 1,574 | 1,016 | |||||||||||||||
Nondeductible goodwill charges | 3,676 | — | |||||||||||||||
PP&E / Intangible asset impairment | — | 2,961 | |||||||||||||||
| State deferred tax rate changes | (63) | 304 | |||||||||||||||
| Foreign derived intangible income deduction | — | (2,199) | |||||||||||||||
| Share-based compensation | 1,967 | 1,131 | |||||||||||||||
Capital loss | (6,106) | — | |||||||||||||||
Income tax expense (benefit) from continuing operations | $ | 16,834 | $ | 34,530 | |||||||||||||
At December 31, 2025, 2024 and 2023, the Company's annual effective income tax rate on Income (loss) from continuing operations was (16.8)%, (16.3)% and (75.3)%, respectively.
The Company’s international loss from continuing operations before income taxes and equity income was $29.0 million and $42.9 million for 2025 and 2024, respectively. In 2024, the Company recorded a $2.1 million net tax benefit from the release of a prior year deferred tax asset in Canada. In 2025, the Company recorded an $8.5 million valuation allowance for deferred tax assets in Brazil as it was determined to be more likely than not that they could not be realized because of lower operating income resulting from lost contracts. The Company's total international income tax expense increased from $20.1 million in 2024 to $27.1 million in 2025 primarily due to the Brazil valuation allowance.
The Company’s differences in income tax expense for 2025 and 2024 on international earnings and remittances were $24.1 million and $29.7 million, respectively, which included U.S income tax expense on international deemed remittances of $0.2 million and $0.3 million, respectively. The decrease is primarily due to the change in mix of income.
The Company's U.S. loss from continuing operations before income taxes and equity income was $107.8 million and $60.7 million for 2025 and 2024, respectively. The increase in the loss in 2025 was driven by higher selling, general and administrative expenses ("SG&A") in Corporate and Clean Earth, which was primarily due to an increase in compensation costs which included higher stock-based compensation expense related to the fair value adjustment of certain performance-based long-term incentive plan awards ("LTIP"), as well as the accelerated vesting of LTIP's for certain employees. The year ended December 31, 2025, was also negatively impacted by increased professional fees principally related to the planned sale of Clean Earth. The Company's total U.S. income tax benefit increased from $3.3 million in 2024 to $4.1 million in 2025 primarily due to an increase in SG&A expenses in Corporate and Clean Earth, partially offset by $15.9 million of disallowed costs related to the planned sale of Clean Earth and $29.0 million of nondeductible executive compensation.
The income tax effects of the temporary differences giving rise to the Company's deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows:
2025 (a) | 2024 (a) | |||||||||||||||||||||||||
| (In thousands) | Asset | Liability | Asset | Liability | ||||||||||||||||||||||
| Depreciation and amortization | $ | — | $ | 46,207 | $ | — | $ | 47,816 | ||||||||||||||||||
| Right-of-use assets | — | 32,523 | — | 22,851 | ||||||||||||||||||||||
| Operating lease liabilities | 33,139 | — | 23,302 | — | ||||||||||||||||||||||
| Expense accruals | 27,109 | — | 26,428 | — | ||||||||||||||||||||||
| Inventories | 737 | — | 2,199 | — | ||||||||||||||||||||||
| Provision for receivables | 2,365 | — | 2,345 | — | ||||||||||||||||||||||
| Deferred revenue | 12,430 | — | 11,582 | — | ||||||||||||||||||||||
| Operating loss carryforwards | 129,675 | — | 128,412 | — | ||||||||||||||||||||||
| Tax credit carryforwards | 11,822 | — | 8,104 | — | ||||||||||||||||||||||
| Pensions | — | 7,734 | — | 7,885 | ||||||||||||||||||||||
| Currency adjustments | 1,454 | — | 98 | — | ||||||||||||||||||||||
| Section 163(j) disallowed interest expense | 56,019 | — | 40,054 | — | ||||||||||||||||||||||
| Research and development | — | — | 8,236 | — | ||||||||||||||||||||||
| Stock based compensation | 8,691 | — | 7,968 | — | ||||||||||||||||||||||
| Other | 3,026 | — | 1,524 | — | ||||||||||||||||||||||
| Subtotal | 286,467 | 86,464 | 260,252 | 78,552 | ||||||||||||||||||||||
| Valuation allowance | (210,273) | — | (196,776) | — | ||||||||||||||||||||||
| Total deferred income taxes | $ | 76,194 | $ | 86,464 | $ | 63,476 | $ | 78,552 | ||||||||||||||||||
(a)Does not include approximately $1 billion of statutory loss carryforwards within Luxembourg for which the Company considers the utilization of these attributes remote and, as such, approximately $230 million of a deferred tax asset or corresponding valuation allowance has not been recorded.
At December 31, 2025, the tax effected amount of net operating losses ("NOLs") totaled $129.7 million. Tax-effected NOLs from international operations are $96.1 million. Of that amount, $86.2 million can be carried forward indefinitely and $9.9 million will expire at various times between 2026 and 2045. Tax-effected U.S. federal NOLs are $16.8 million that can be carried forward indefinitely. Tax-effected U.S. state NOLs are $16.8 million. Of that amount, $2.4 million expire at various times between 2026 and 2030, $2.1 million expire at various times between 2031 and 2035, $4.3 million expire at various times between 2036 and 2040 and $8.0 million expire at various times between 2041 and 2045.
Valuation allowances of $210.3 million and $196.8 million at December 31, 2025 and 2024, respectively, related principally to deferred tax assets for pension liabilities, NOLs, disallowed interest expense and foreign currency translation that are uncertain as to realizability. In 2025, the Company recorded a $16.0 million valuation allowance increase related to disallowed interest expense, a $6.3 million valuation allowance increase related to prior year losses in Brazil where the Company determined that it is more likely than not that these assets will not be realized, a $24.5 million valuation allowance increase related to current year losses in certain foreign and state jurisdictions where the Company determined that it is more likely than not that these assets will not be realized, and a valuation allowance increase of $14.0 million from the effects of foreign currency translation adjustments, partially offset by a valuation allowance decrease of $37.4 million from audit adjustments and a $7.1 million valuation allowance decrease related to tax rate change in a certain foreign jurisdiction.
The Tax Act introduced a transition tax and a territorial tax system, which was effective beginning in 2018. The territorial tax system impacts the Company's overall global capital and legal entity structure, working capital, and repatriation plan on a go-forward basis. The Company asserts that all foreign earnings will be indefinitely reinvested to meet local cash needs. The Company therefore intends to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction provided for in the Tax Act, and earnings that would not result in any significant foreign taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries.
The Company recognizes accrued interest and penalty expense related to unrecognized income tax benefits in income tax expense or benefit. The Company recognized income tax benefit (expense) of $0.4 million and $(0.1) million during 2025 and 2024, respectively, for interest and penalties. There was no income tax benefit (expense) related to accrued interest and penalties during 2023. The Company has accrued $0.9 million, $1.3 million and $1.3 million for the payment of interest and penalties at December 31, 2025, 2024 and 2023, respectively.
A reconciliation of the change in the unrecognized income tax benefits balance from January 1, 2023 to December 31, 2025 is as follows:
| (In thousands) | Unrecognized Income Tax Benefits | Deferred Income Tax Benefits | Unrecognized Income Tax Benefits, Net of Deferred Income Tax Benefits | |||||||||||||||||
| Balances, January 1, 2023 | $ | 4,386 | $ | (21) | $ | 4,365 | ||||||||||||||
| Additions for tax positions related to the current year (includes currency translation adjustment) | 2,895 | (1) | 2,894 | |||||||||||||||||
| Statutes of limitation expirations | (1,106) | 5 | (1,101) | |||||||||||||||||
| Balance at December 31, 2023 | 6,175 | (17) | 6,158 | |||||||||||||||||
| Additions for tax positions related to the current year (includes currency translation adjustment) | 228 | 9 | 237 | |||||||||||||||||
| Statutes of limitation expirations | (577) | — | (577) | |||||||||||||||||
| Balance at December 31, 2024 | 5,826 | (8) | 5,818 | |||||||||||||||||
| Additions for tax positions related to the current year (includes currency translation adjustment) | 619 | — | 619 | |||||||||||||||||
| Statutes of limitation expirations | (670) | 8 | (662) | |||||||||||||||||
Total unrecognized income tax benefits that, if recognized, would impact the effective income tax rate at December 31, 2025 | $ | 5,775 | $ | — | $ | 5,775 | ||||||||||||||
The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. These tax returns are subject to examinations and possible challenges by the tax authorities. Positions challenged by the tax authorities may be settled or appealed to by the Company.
The tax years that remain subject to examination for the Company's major tax jurisdictions as of December 31, 2025 are shown below:
| Jurisdiction | Earliest Open Year | |||||||
| Brazil | 2021 | |||||||
| China | 2020 | |||||||
| France | 2023 | |||||||
| United States: | ||||||||
| Federal income tax | 2022 | |||||||
| State income tax | 2019 | |||||||
The following table reflects the changes in the Company's valuation allowance related to its deferred tax assets:
Additions (Deductions) | ||||||||||||||||||||||||||||||||
(in thousands) | Balances at Beginning of Period | Charged to Cost and Expenses | Foreign Currency Translation Adjustments | Other | Balance at End of Period | |||||||||||||||||||||||||||
For the year ended December 31, 2025(a) | $ | 196,776 | 47,459 | 16,161 | (50,123) | $ | 210,273 | |||||||||||||||||||||||||
For the year ended December 31, 2024(b) | $ | 182,179 | 27,057 | (7,240) | (5,220) | $ | 196,776 | |||||||||||||||||||||||||
For the year ended December 31, 2023(c) | $ | 138,393 | 43,460 | 3,721 | (3,395) | $ | 182,179 | |||||||||||||||||||||||||
(a) Other additions (deductions) for the year ended December 31, 2025 includes decreases of $2.1 million related to pension adjustments recorded through AOCI, $37.4 million related to audit adjustments and $7.1 million due to a tax rate change in a certain foreign jurisdiction.
(b) Other additions (deductions) for the year ended December 31, 2024 included a decrease of $5.4 million related to pension adjustments recorded through AOCI.
(c ) Other additions (deductions) for the the year ended December 31, 2023 included decreases of $1.8 million related to pension adjustments recorded through AOCI and $1.8 million related to state tax rate reductions and state NOL expirations in the U.S..
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
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.