Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
For the years ended December 31, income from continuing operations before income taxes consisted of the following:
(in thousands) 2024 2023 2022
Income before income taxes
Domestic $ 592,704  $ 548,428  $ 465,991 
Foreign 37,526  37,829  32,926 
Total income from continuing operations before income taxes $ 630,230  $ 586,257  $ 498,917 
For the years ended December 31, the Company’s income tax provision consisted of the following:
2024 2023 2022
(in thousands)
Current:
Federal $ 126,246  $ 112,647  $ 92,793 
State 36,328  33,516  26,786 
Foreign 11,613  12,781  9,144 
Total current tax expense 174,187  158,944  128,723 
Deferred:
Federal (6,848) (2,349) (333)
State (2,336) (2,925) 2,011 
Foreign (1,152) (2,370) (83)
Total deferred tax (benefit) expense (10,336) (7,644) 1,595 
Total income tax provision $ 163,851  $ 151,300  $ 130,318 
The following table presents the principal components of the difference between the effective tax rate and the U.S. federal statutory income tax rate for the years ended December 31:
2024 2023 2022
(in thousands)
Income tax at statutory rate $ 132,348  $ 123,114  $ 104,773 
State income tax expense (net of federal benefit) 26,854  24,167  22,750 
Foreign tax rate differential 2,071  1,948  1,907 
Tax on unremitted earnings 355  1,408  549 
Federal tax credits (1,296) (1,362) (616)
Permanent items 2,773  2,239  445 
Other reconciling items 746  (214) 510 
Total income tax provision $ 163,851  $ 151,300  $ 130,318 
Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows:
2024 2023
(in thousands)
Deferred tax assets:
Employee compensation and benefits $ 15,146  $ 15,451 
Unearned revenues 15,243  13,998 
Insurance reserves 29,773  24,152 
Lease liabilities 118,382  90,486 
Non-amortizable intangible assets 7,792  6,883 
Other deferred tax assets 16,415  14,944 
Total deferred tax assets 202,751  165,914 
Valuation allowance (7,792) (6,883)
Net deferred tax assets $ 194,959  $ 159,031 
Deferred tax liabilities:
Fixed assets and depreciation $ 9,599  $ 12,430 
Intangible assets 93,872  81,194 
Right of use assets 102,299  81,971 
Other deferred tax liabilities —  — 
Total deferred tax liabilities $ 205,770  $ 175,595 
Net deferred taxes
Deferred tax assets 4,841  2,294 
Deferred tax liabilities (15,652) (18,858)
Net deferred taxes $ (10,811) $ (16,564)
Deferred tax assets are included in "Other assets" and deferred tax liabilities are included in "Other long-term accrued liabilities" on the balance sheet.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. As of December 31, 2024, the Company increased its valuation allowance by approximately $0.9 million related to deferred tax assets on intangible assets held in Australia. The Company does not expect to recognize such deferred tax assets as it expects to continue its operations in Australia for the foreseeable future and the related intangible assets are not amortizable for tax purposes in Australia.
The changes in the Company’s valuation allowance for deferred tax assets are as follows:
(in thousands)
December 31, 2022 $ — 
Charged to income tax expense 962 
Charged to other accounts 5,921 
December 31, 2023 6,883 
Charged to income tax expense 909 
Charged to other accounts — 
December 31, 2024 $ 7,792 
As of December 31, 2024, the Company has no net operating loss carryforwards in any federal, state, or foreign jurisdictions. The Company has a $0.2 million foreign tax credit carryforward which if not fully utilized will expire in 2026. The Company also has state tax credit carryforwards of $1.3 million which will begin to expire in 2026 if not fully utilized.
We intend to continue to grow the business in the international markets where we have a presence. As of December 31, 2024, we assert that foreign cash earnings in excess of working capital and cash needed for strategic investments and acquisitions are not intended to be indefinitely reinvested offshore and we have included the tax effects of such current and/or future repatriations, including applicable state taxes and foreign withholding tax of such cash earnings in these financial statements. Any non-cash unremitted earnings in our foreign subsidiaries are considered to be permanently reinvested and deferred taxes have not been provided on these earnings.
The total amount of unrecognized tax benefits as of December 31, 2024 that, if recognized, would affect the effective tax rate is $1.6 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31, 2024 2023 2022
(in thousands)
Unrecognized tax benefits at beginning of year $ 1,784  $ 1,394  $ 1,018 
Additions for tax positions of prior years —  653  376 
Reductions for tax positions of prior years (39) (263) — 
Settlements with taxing authorities (161) —  — 
Unrecognized tax benefits at end of year $ 1,584  $ 1,784  $ 1,394 

As of December 31, 2024, the Company believes it is reasonably possible that the amount of unrecognized tax benefits may decrease by $1.4 million over the next 12 months as it relates to U.S. federal and foreign jurisdictions.
The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were $0.6 million, $0.6 million and $0.2 million as of December 31, 2024, 2023 and 2022, respectively.
The Company files U.S. federal income tax returns, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. The Company is under examination in certain state jurisdictions for years ranging from 2019 through 2021. The Company regularly assesses the outcomes of both ongoing and future examinations for the current or prior years to determine whether the Company’s provision for income taxes is sufficient. The Company recognizes liabilities based on estimates of whether additional taxes will be due and believes its reserves are adequate in relation to any potential assessments. The outcome of any one examination, some of which may conclude during the next 12 months, is not expected to have a material impact on the Company’s financial position or results of operations.