Income Taxes |
6 Months Ended | ||
|---|---|---|---|
Sep. 30, 2026 | |||
| Income Tax Disclosure [Abstract] | |||
| Income Taxes |
At the end of each interim reporting period, the Company determines the income tax provision by using an estimate of the annual effective tax rate, adjusted for discrete items occurring in the quarter.
Beginning with the quarter ended September 30, 2026, the Company excluded Mexico from its estimate of the worldwide annual effective tax rate due to its inability to make a reliable estimate of the annual effective tax rate for that jurisdiction. Because Mexican pre-tax income is near breakeven, small changes in forecasted pre-tax income, coupled with large permanent differences that are difficult to forecast, result in significant changes in the estimated annual effective tax rate. Accordingly, the income tax provision for Mexico is based on actual year-to-date ordinary income and the related tax for the period. The U.S. jurisdiction was also excluded from the estimate of the worldwide annual effective tax rate beginning with the quarter ended June 30, 2026 because it is expected to incur an ordinary loss for the year for which no tax benefit can be recognized due to the valuation allowance. Accordingly, no income tax benefit has been recorded on the U.S. loss. The income tax provision for the remaining jurisdictions is based on the estimated annual effective tax rate applied to year-to-date ordinary income, adjusted for discrete items occurring in the period.
The Company will continue to evaluate its ability to estimate the annual effective tax rate for Mexico at each interim period. Because the Mexico provision reflects year-to-date results, the Company’s effective tax rate may fluctuate significantly from quarter to quarter and may not be indicative of the annual effective tax rate.
Our effective tax rate for the three and six months ended September 30, 2026 was 117.28% and 861.53%, respectively. The Company’s effective tax rate for the three months and six months ended September 30, 2026 differed from the federal statutory tax rate of 21% primarily due to the valuation allowance recognized against deferred tax assets in the U.S and permanent tax adjustments for intercompany interest expense in Mexico and the Netherlands.
Judgment is required in determining whether deferred tax assets will be realized in full or in part. Management assesses the available positive and negative evidence on a jurisdictional basis to estimate if deferred tax assets will be recognized and when it is more likely than not that all or some deferred tax assets will not be realized, and a valuation allowance must be established. As of September 30, 2026, the Company continues to maintain a valuation allowance in the U.S. |