Primo Brands CorpPRMB
Primo Brands Corp Income Taxes Disclosure
INCOME TAXES
On July 4, 2025, the One Big Beautiful Bill Act was signed into U.S. tax law and contains a broad range of tax reform provisions affecting businesses. This legislation does not have a significant impact on the Company's effective tax rate but decreases the Company's cash tax liability for the current year.
U.S. and foreign components of income (loss) before income taxes was as follows for the periods presented:
| For the Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | 168.8 | $ | 56.4 | $ | 134.8 | |||||||||||
| Foreign | (23.8) | (35.7) | (16.9) | ||||||||||||||
| Total income (loss) before taxes | $ | 145.0 | $ | 20.7 | $ | 117.9 | |||||||||||
The following table presents the components of the Provision for (benefit from) income taxes in the Consolidated Statements of Operations for the periods presented:
| For the Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
Federal | $ | 80.8 | $ | 93.0 | $ | 49.8 | |||||||||||
State and local | 30.5 | 18.4 | 15.8 | ||||||||||||||
Foreign | (0.5) | — | — | ||||||||||||||
| Total current | $ | 110.8 | $ | 111.4 | $ | 65.6 | |||||||||||
| Deferred: | |||||||||||||||||
Federal | (33.4) | (69.1) | (27.9) | ||||||||||||||
State and local | (13.0) | (0.8) | (8.4) | ||||||||||||||
Foreign | 0.2 | (8.2) | (4.2) | ||||||||||||||
| Total deferred | $ | (46.2) | $ | (78.1) | $ | (40.5) | |||||||||||
Provision for income taxes | $ | 64.6 | $ | 33.3 | $ | 25.1 | |||||||||||
As further described in Note 2 - Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09.
______________________
| For the Year Ended December 31, 2025 | |||||||||||
| ($ in millions) | Percent | Amount | |||||||||
US Federal Statutory Tax Rate | 21.0 | % | $ | 30.5 | |||||||
State and Local Income Taxes, Net of Federal Income Tax Effect1 | 9.7 | % | 14.1 | ||||||||
Foreign Tax Effects | |||||||||||
| Canada | |||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect2 | 0.1 | % | 0.1 | ||||||||
Statutory tax rate differences between Canada and United States | (0.7) | % | (1.0) | ||||||||
Permanent differences | 1.1 | % | 1.5 | ||||||||
| Changes in Valuation Allowance | 3.4 | % | 4.9 | ||||||||
| Other Foreign Jurisdictions | (0.6) | % | (0.9) | ||||||||
Tax credits | |||||||||||
| R&D and Fuel credits | (1.6) | % | (2.4) | ||||||||
Nontaxable or nondeductible items | |||||||||||
| Permanent differences | 5.5 | % | 7.9 | ||||||||
| Equity Compensation | 5.3 | % | 7.7 | ||||||||
| Transaction Costs | 1.0 | % | 1.5 | ||||||||
| Other | 0.4 | % | 0.7 | ||||||||
| Total provision for (benefit from) income taxes | 44.6 | % | $ | 64.6 | |||||||
1 State and local taxes in California, New Jersey, New York City and Texas made up the majority (greater than 50%) of the tax effect in this category in 2025.
2 Province taxes in Ontario made up the majority (greater than 50%) of the tax effect in this category in 2025.
The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company’s effective rate for the years ended December 31, 2024 and 2023.
| For the Year Ended December 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| ($ in millions) | % | Amount | % | Amount | |||||||||||||||||||
U.S. federal statutory income tax rate | 21.0 | % | $ | 4.3 | 21.0 | % | $ | 24.8 | |||||||||||||||
State and local income taxes | 42.3 | % | 8.8 | 2.6 | % | 3.1 | |||||||||||||||||
Foreign tax rate differential | (8.6) | % | (1.8) | (0.6) | % | (0.6) | |||||||||||||||||
| Impact of intercompany transactions and dividends | 9.4 | % | 2.0 | — | % | — | |||||||||||||||||
| Change in enacted tax rates | 26.2 | % | 5.4 | — | % | — | |||||||||||||||||
| Change in valuation allowance | 3.9 | % | 0.8 | — | % | — | |||||||||||||||||
| Change in uncertain tax positions | 15.2 | % | 3.1 | 0.8 | % | 0.9 | |||||||||||||||||
| Equity compensation | 3.0 | % | 0.6 | 0.3 | % | 0.3 | |||||||||||||||||
| Permanent differences | 14.5 | % | 3.0 | 0.6 | % | 0.6 | |||||||||||||||||
| Transaction costs | 38.5 | % | 8.0 | — | % | — | |||||||||||||||||
Research and development and fuel credits | (5.9) | % | (1.2) | (1.8) | % | (2.1) | |||||||||||||||||
Other | 1.4% | 0.3 | (1.6)% | (1.9) | |||||||||||||||||||
| Total provision for (benefit from) income taxes | 160.9 | % | $ | 33.3 | 21.3 | % | $ | 25.1 | |||||||||||||||
The following table presents the components of Deferred income taxes in the Consolidated Balance Sheets as of the periods presented:
| December 31, | |||||||||||
| ($ in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Lease obligations | $ | 178.9 | $ | 182.9 | |||||||
Interest limitation and carryforwards | 153.8 | 149.4 | |||||||||
Accrued liabilities and employee benefit obligations | 71.8 | 84.6 | |||||||||
Net operating loss carryforwards | 49.3 | 50.5 | |||||||||
Capitalized research and development expenses | 4.1 | 25.6 | |||||||||
Transaction costs | 3.6 | 4.6 | |||||||||
| Stock options | 8.1 | 9.6 | |||||||||
| Inventories | 4.9 | 5.1 | |||||||||
Capital Loss Carryforwards | 9.0 | — | |||||||||
Total deferred tax assets | $ | 483.5 | $ | 512.3 | |||||||
| Deferred tax liabilities: | |||||||||||
Property, plant and equipment | $ | (256.6) | $ | (285.7) | |||||||
Intangible assets | (677.0) | (734.1) | |||||||||
| Lease right-of-use assets | (162.6) | (169.1) | |||||||||
| Debt discounts and derivatives | (4.3) | (7.9) | |||||||||
Other | (2.8) | (4.4) | |||||||||
Total deferred tax liabilities | $ | (1,103.3) | $ | (1,201.2) | |||||||
Valuation allowance | (71.7) | (49.8) | |||||||||
| Net deferred tax liability | $ | (691.5) | $ | (738.7) | |||||||
As of December 31, 2025, the Company has outside tax basis differences, including undistributed earnings, in its subsidiaries. For 2025, deferred taxes have not been recorded on the undistributed earnings because the Company's subsidiaries have the ability to repatriate funds to their respective parent company tax-efficiently or the undistributed earnings are indefinitely reinvested under the accounting guidance. In order to arrive at this conclusion, the Company considered factors including, but not limited to, past experience, domestic cash requirements, cash requirements to satisfy the ongoing operations, capital expenditures and other financial obligations of its subsidiaries. It is not practicable to determine the excess book basis over outside tax basis in the shares or the amount of incremental taxes that might arise if these earnings were to be remitted. The amount of tax payable could be significantly impacted by the jurisdiction in which a distribution was made, the amount of the distribution, foreign withholding taxes under applicable tax laws when distributed, relevant tax treaties and foreign tax credits.
As of December 31, 2025, the Company has various net operating loss ("NOL") carryforwards. The Company has U.S. federal NOL carryforwards of $1.6 million which begin expiring in 2037, U.S. federal NOL carryforwards of $36.4 million which have indefinite lives, and state NOL carryforwards in the amount of $6.6 million, which begin expiring in 2026. The Company has Canadian NOL carryforwards of $136.7 million, which begin expiring in 2029. The Company's U.S. NOL carryforwards are subject to annual limitations in their use in accordance with IRC section 382.
As of December 31, 2025, the Company has capital loss carryforwards of $33.9 million primarily in Canada which have indefinite lives.
In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considers all positive and negative evidence, including the scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent operating results. Due to recent cumulative losses, it was determined that it is more likely than not the Company will not realize the benefit of NOL carryforwards, capital loss carryforwards, and other net deferred tax assets in Canada.
A reconciliation of the beginning and ending amount of our unrecognized tax benefits is as follows:
| For the Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefits at beginning of year | $ | 17.8 | $ | 1.2 | $ | — | |||||||||||
| Additions based on tax positions taken during a prior period | 24.5 | 1.1 | — | ||||||||||||||
| Additions related to acquired entities | — | 14.9 | — | ||||||||||||||
| Lapse in statute of limitations | (4.0) | — | — | ||||||||||||||
| Additions based on tax positions taken during the current period | 7.4 | 0.7 | 1.2 | ||||||||||||||
| Foreign exchange | 0.3 | (0.1) | — | ||||||||||||||
| Unrecognized tax benefits at end of year | $ | 46.0 | $ | 17.8 | $ | 1.2 | |||||||||||
If the Company recognized the tax positions, approximately $23.7 million would favorably impact the effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. There was net interest and penalties of $5.8 million, $1.1 million and nil expensed during the years ended December 31, 2025, 2024 and 2023 respectively. As of December 31, 2025 and December 31, 2024 an interest and penalties liability of $8.3 million and $2.5 million respectively was recognized in the Consolidated Balance Sheets.
The Company is subject to taxation in the United States, Canada and other foreign jurisdictions. The Company is currently under audit in Canada by the Canada Revenue Agency for tax years 2020 and 2021. The Company is also under examination by several U.S. state taxing authorities related to tax periods prior to March 31, 2021. As such and in accordance with the stock and asset purchase agreement, Nestle S.A. (the former owners of BlueTriton) bears the onus for any resulting adjustments of the aforementioned state examinations. Except for those noted above and a few other exceptions, we are no longer subject to income tax examination for years prior to 2021. To the extent that income tax attributes such as net operating losses and tax credits have been carried forward from years prior to 2021, those attributes can still be audited when utilized on returns subject to audit.
A breakdown of our cash paid for taxes is as follows:
| For the Year Ended December 31, | |||||
| ($ in millions) | 2025 | ||||
Federal | $ | 40.0 | |||
California | 3.2 | ||||
Texas | $ | 2.9 | |||
Other States | 10.0 | ||||
Foreign | $ | 0.8 | |||
| Total | $ | 56.9 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
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.