Income Taxes

9 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded an income tax expense of $1,781,000 and $595,000 for the three and nine months ended December 31, 2025, respectively, and income tax expense of $1,929,000 and $442,000 for the three and nine months ended December 31, 2024, respectively. Income tax as a percentage of pre-tax income was 23% and 6% in the three and nine months ended December 31, 2025, respectively. Income tax as a percentage of pre-tax income (loss) was 33% and (22)% in the three and nine months ended December 31, 2024, respectively. Typically these percentages vary from the U.S. statutory rate of 21% primarily due to varying statutory tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of income for these subsidiaries.

During the three and nine months ended December 31, 2025, income tax was favorably impacted by the Act for an Immediate Tax Investment Program to Strengthen Germany as a Business Location (the "New German Tax Law"). The New German Tax Law enacted in July 2025 will lower the German corporate income tax rate from 15% to 10% by 2032. The associated revaluation of the Company’s German net deferred tax liabilities results in an income tax benefit of approximately $3,200,000 for the nine months ended December 31, 2025. The effective tax rate for the nine months ended December 31, 2025 also reflects an unfavorable impact of approximately $749,000 related to the recognition of a U.S. state tax reserve. The reserve primarily relates to the valuation of state tax attributes and if settled would have minimal cash tax impact.

The Company estimates that the effective tax rate related to continuing operations will be approximately 15% for fiscal 2026. This rate is reflective of an expected 16% favorable rate impact from the New German Tax Law discussed above, as well as an estimated 4% unfavorable impact from establishment of the state tax reserve as previously discussed.

On July 4, 2025, H.R.1, also known as the "One Big Beautiful Bill Act" ("OBBBA") was enacted into law in the United States, with many of its provisions taking effect during the Company's 2026 fiscal year. The income tax expense calculated for the three and nine months ended December 31, 2025 reflects consideration of the OBBBA. The impact to the Company’s effective tax rate as a result of the OBBBA is not expected to be material for the fiscal 2026.

Refer to the Company’s consolidated financial statements included in the 2025 Form 10-K for further information on income taxes.