Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Loss from continuing operations before incomes taxes for the United States and non-U.S. jurisdictions for the years ended December 31, 2025 and 2024 are as follows (in thousands):
Years Ended December 31,
2025 2024
Loss from continuing operations before income taxes:
United States (52,893) (26,638)
Non-U.S. (6,776) (167,780)
Total $ (59,669) $ (194,418)
The components of income tax (benefit) provision applicable to federal, state and foreign income taxes for the years ended December 31, 2025 and 2024 are as follows (in thousands):
Years Ended December 31,
2025 2024
Federal income tax expense (benefit):
Current 251  295 
Deferred (358) 2,500 
Total $ (107) $ 2,795 
State income tax expense (benefit):
Current (65) 75 
Deferred —  — 
Total $ (65) $ 75 
Foreign income tax expense (benefit):
Current 4,491  (15,913)
Deferred (232) 1,737 
Total $ 4,259  $ (14,176)
Total income tax expense (benefit):
Current 4,677  (15,543)
Deferred (590) 4,237 
Total $ 4,087  $ (11,306)
Effective January 1, 2025, we adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance has been applied retrospectively. Accordingly, the enhanced disaggregation of income tax rate reconciliation items is presented for the years ended December 31, 2025 and 2024 are as follows (in thousands):

The differences between the statutory U.S. federal income tax rate and the effective income tax rate for the years ended December 31, 2025 and 2024 are as follows (in thousands):
Years Ended December 31,
2025 2024
Amount Percent Amount Percent
U.S. federal statutory tax rate $ (12,531) 21.0  % $ (40,828) 21.0  %
State and local income taxes, net of federal income tax effect (a)
26  —  60  — 
Foreign tax effects
Canada
Statutory tax rate difference between Canada and United States 14  —  61  — 
Withholding taxes 376  (0.6) —  — 
Puerto Rico
Statutory tax rate difference between Puerto Rico and United States (1,230) 2.1  (28,352) 14.6 
Changes in valuation allowances 2,748  (4.7) 65,638  (33.8)
Interest and penalties 3,722  (6.3) 3,201  (1.7)
Withholding taxes —  —  (19,899) 10.2 
Effect of changes in tax laws or rates enacted in the current period
Effect of cross-border tax laws
Foreign branch inclusions (1,885) 3.2  (35,996) 18.5 
Tax credits
Foreign tax credits —  —  (166) 0.1 
Changes in valuation allowances 12,484  (20.9) 43,703  (22.5)
Nontaxable or nondeductible items
Other 113  (0.2) 981  (0.5)
Other adjustments 250  (0.4) 291  (0.1)
Effective tax rate $ 4,087  (6.8) % $ (11,306) 5.8  %

(a) State taxes in Kentucky and West Virginia made up the majority (greater than 50 percent) of the tax effect in this category.

The Company’s effective tax rate was (6.8)% for the year ended December 31, 2025 compared to 5.8% for the year ended December 31, 2024.

The effective tax rate for the years ended December 31, 2025 and 2024 differed from the statutory rate of 21% primarily due to the mix of earnings between the United States and Puerto Rico, changes in the valuation allowance and Canadian withholding tax. Additionally, as a result of the Settlement Agreement with PREPA, during the year ended December 31, 2024, the Company reversed $19.9 million in withholding tax accruals related to undistributed earnings from Puerto Rico.

The Company recorded interest and penalties expense of $3.7 million and $3.2 million during the years ended December 31, 2025 and 2024, respectively, related to tax year returns from 2019 to 2023 in Puerto Rico. Additionally, the Company recorded interest expense of $0.3 million and $0.3 million during the years ended December 31, 2025 and 2024, respectively related to the 2020 tax year return in the United States.
The tax effect of temporary differences and tax attributes representing deferred tax assets and liabilities at December 31, 2025 and 2024 attributable to the Company consisted of the following (in thousands):

Year Ended December 31,
2025 2024
Deferred tax assets:
Allowance for doubtful accounts $ 94  $ 167 
Section 163(j) interest limitation 1,075  5,090 
Lease asset 626  3,660 
Intangible assets 810  1,050 
Accrued liabilities 2,211  3,605 
Net operating loss carryover 120,277  114,506 
Foreign tax credits 76,570  76,570 
Accumulated other comprehensive income 970  1,068 
Other 296  207 
Valuation allowance (188,361) (187,087)
Deferred tax assets 14,568  18,836 
Deferred tax liabilities:
Property, plant and equipment $ (14,571) $ (14,140)
Lease liability (830) (3,583)
Other (1,597) (4,134)
Deferred tax liabilities (16,998) (21,857)
Net deferred tax (liability) asset $ (2,430) $ (3,021)
Reflected in accompanying balance sheet as:
Deferred income tax asset $ —  $ — 
Deferred income tax liability (2,430) (3,021)
Total $ (2,430) $ (3,021)

During the years ended December 31, 2025 and 2024, the Company recorded changes in its valuation allowance of $1.3 million and $120.5 million, respectively, related to deferred tax assets that are not expected to be utilized. The Company has foreign tax credit carryforwards of $76.6 million as of December 31, 2025. These credits have a 10-year carryforward period and begin to expire in 2028. As of December 31, 2025, the Company has federal net operating loss and 163(j) interest limitation carryforwards of $199.0 million and $5.1 million, respectively, that have an indefinite life carryforward. The Company has state net operating loss carryforwards of $14.3 million which expire between 2040 and 2045. The Company has net operating loss carryforwards in Puerto Rico of $179.2 million that have a 10-year carryforward period and expire in 2035.

The Company maintains a full valuation allowance related to U.S. foreign tax credit carryforwards, as it cannot objectively assert that these deferred tax assets are more likely than not to be realized. The Company has a full valuation allowance on U.S. tax attribute carryforwards to the extent not supported by existing deferred tax liabilities. As result of the annual limitations for net operating loss carryforwards to offset only 80 percent of taxable income, the Company reflects the net deferred tax liability as of December 31, 2025. The Company recorded the full valuation allowance with respect to the Puerto Rico net operating loss carryforwards as they are not more likely than not to be realized. All available positive and negative evidence was weighed to determine whether a valuation allowance was necessary. The most significant evidential matter relates to recent cumulative loss position in the U.S. and no projected benefit related to losses generated in Puerto Rico as of December 31, 2025.

The income taxes paid, net of refunds received, disaggregated by jurisdiction for the years ended December 31, 2025 and 2024 are as follows (in thousands):
Years Ended December 31,
2025 2024
U.S. federal $ —  $ — 
U.S. state and local
Texas —  58 
Other jurisdictions 32  43 
Foreign
Canada 785  1,001 
Income taxes paid $ 817  $ 1,102 


At December 31, 2025, Mammoth has a foreign subsidiary in Canada with undistributed earnings. These earnings may be distributed in the future. Although the Company would not be subject to U.S. income tax upon distribution, such amounts could be subject to Canadian withholding tax. Accordingly, the Company recognized a current income tax payable of $0.5 million. The Company continues to evaluate any remaining amounts for which the related tax effects cannot be reasonably estimated.

The Company has recorded interest and penalties payable of $12.5 million and $8.5 million at December 31, 2025 and 2024, respectively, related to the tax year returns from 2019 to 2023 in Puerto Rico and the 2020 tax year return in the United States. It is the Company’s policy to recognize interest and applicable penalties in income tax expense.

The Company did not have any uncertain tax positions for the years ended December 31, 2025 and 2024.
The Company’s U.S. federal tax returns for tax years 2020 through 2024 remain subject to examination by the tax authorities. The Company’s state and local income tax returns for tax years 2019 through 2024 remain subject to examination, with few exceptions, by the respective tax authorities. Puerto Rico tax returns for tax years 2019 through 2024 and Canada tax returns for the tax years 2018 through 2024 remain open to examination by the respective tax authorities.