Income Taxes |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes |
Note L – Income Taxes
The table below presents the Company’s effective income tax rate on pre-tax income from continuing operations for the following periods:
During the three months ended September 30, 2025, the Company recorded a measurement period adjustment related to the Edge Acquisition, which decreased the deferred tax liability as of the acquisition date and as a result reduced the Company’s future taxable income. As discussed below, the realization of deferred tax assets is dependent upon the future generation of taxable income. As such, the impact of this adjustment resulted in a decrease of the Company’s tax benefit to $25.9 million for the nine months ended September 30, 2025 and resulted in the Company recording $6.9 million of tax expense for the three months ended September 30, 2025. The difference in effective tax rate between the three and nine months ended September 30, 2025 and 2024 is otherwise primarily related to the recognition of the deferred tax assets in the 2025 period.
The effective tax rate for the nine months ended September 30, 2025 differs from the U.S. federal income tax rate of 21.0% primarily due to the reduction of the valuation allowance discussed below, state income taxes and non-deductible compensation costs related to the Edge Incentive Units and transaction costs. The effective tax rate for the nine months ended September 30, 2024 differs from the U.S. federal income tax rate of 21.0% primarily due the valuation allowance on the realization of deferred tax assets.
The Company assesses the deferred tax assets for recoverability on a quarterly basis. In assessing the realizability of deferred tax assets, the Company evaluates whether it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss (“NOL”) carryforwards are available. During the nine months ended September 30, 2025, and in connection with the acquisition of Edge Autonomy, the Company determined that a portion of its deferred tax assets would, more-likely-than-not, be realized and, as a result, the Company recognized a tax benefit of $25.9 million for the nine months ended September 30, 2025, substantially all of which relates to the recognition of deferred tax assets and the corresponding reduction of the valuation allowance.
On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including: (i) 100% bonus depreciation: (ii) the expensing of domestic research; and (iii) adjustments to the limitation on the deduction for business interest. U.S GAAP requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company evaluated the impact of the OBBBA on its condensed consolidated financial statements and concluded that it does not have a material impact on the Company’s effective tax rate.
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