Income Taxes

12 Months Ended

Apr. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the components of income before taxes for the years ended April 30, 2022, 2021 and 2020:

	Year Ended April 30,
	2022		2021		2020
	(in thousands)
United States	$	320,353	$	106,059	$	106,850
Foreign	44,466		31,035		(60,525)
Income before taxes	$	364,819	$	137,094	$	46,325

The following table presents the components of income tax expense for the years ended April 30, 2022, 2021 and 2020:

	Year Ended April 30,
	2022		2021		2020
	(in thousands)
Current
Federal	$	60,406	$	27,171	$	12,537
Foreign	11,995		9,098		1,624
State	19,327		5,594		7,857
Total Current	91,728		41,863		22,018
Deferred
Federal	4,657		(4,653)		8,986
Foreign	(4,216)		(5,870)		(7,347)
State	(792)		194		(713)
Total Deferred	(351)		(10,329)		926
Total provision for income taxes	$	91,377	$	31,534	$	22,944

The following table summarizes the significant differences between the U.S. federal statutory tax rate and the Company’s effective tax rate for financial statement for the years ended April 30, 2022, 2021 and 2020:

	Year Ended April 30,
	2022		2021		2020
	(in thousands)
Federal income taxes at statutory rate	$	76,613	$	28,793	$	9,747
State income taxes, net of federal income tax benefit	14,730		4,000		4,054
Impact of foreign rate differences	(2,827)		(1,055)		(2,861)
Impact of rate difference on impairment of goodwill	—		—		7,630
Net change in valuation allowance	350		578		9,070
Equity-based compensation	(1,659)		(1,012)		(1,196)
GILTI	1,076		1,911		704
Financing structure	—		(2,315)		(5,361)
Other	3,094		634		1,157
Total provision for income taxes	$	91,377	$	31,534	$	22,944

The tax effects of temporary differences, which give rise to deferred income taxes as of April 30, 2022 and 2021 are as follows:

	April 30,
	2022		2021
Deferred income tax assets:	(in thousands)
Allowances on accounts and notes receivable	$	4,314	$	2,617
Accrued payroll and related costs	3,758		5,093
Insurance reserves	4,079		4,086
Inventory costs	4,606		3,252
Deferred compensation	9,038		7,892
Equity compensation	3,253		2,612
Derivative instrument	281		5,083
Acquisition related costs	1,356		1,202
Net operating loss carry-forwards	1,815		1,591
Disallowed interest expense	1,330		974
Investment in partnerships	26,700		24,316
Operating lease liability	37,746		30,322
Other deferred tax assets, net	2,359		1,147
Total deferred income tax assets	100,635		90,187
Less: Valuation allowance	(11,719)		(11,768)
Total deferred income tax assets, net of valuation allowance	88,916		78,419
Deferred income tax liabilities:
Amortization of intangible assets	(43,314)		(19,488)
Operating lease right-of-use assets	(37,043)		(29,493)
Depreciation	(37,027)		(25,668)
Other deferred tax liabilities, net	(451)		(783)
Total deferred income tax liabilities	(117,835)		(75,432)
Deferred income tax (liabilities) assets, net	$	(28,919)	$	2,987

GILTI. The Company is subject to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to

reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred.

As of April 30, 2022, the Company’s assertion has not changed from the year ended April 30, 2021 that it does not intend to permanently reinvest its accumulated earnings in its non-U.S. subsidiaries and will continue to periodically distribute the earnings on an as needed basis. The Company does not anticipate significant tax consequences from any future distributions.

NOLs. During recent tax years, the Company generated certain state net operating loss carry-forwards which are available for use against taxable income in each respective state. The Company had gross state net operating losses available for carry-forward of $28.1 million and $29.7 million as of April 30, 2022 and 2021, respectively, which expire beginning in 2024.

Valuation allowance. Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carry-forwards. As of each reporting date, the Company considers new evidence, both positive and negative, that could affect the future realization of deferred tax assets. Valuation allowances are established if management believes that it is more likely than not the related tax benefits will not be realized. The valuation allowance as of April 30, 2022 and 2021 primarily relates to a portion of the Titan outside basis difference that was created as a result of the impairment of goodwill recognized during the year ended April 30, 2020 and state tax attribute carry forwards. The net operating loss carryforwards expire from 2024 to 2042.

Uncertain tax positions. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. The Company’s policy for recording penalties and interest associated with uncertain tax positions is to record such items as a component of selling, general and administrative expense. The Company had no reserve for uncertain tax positions as of April 30, 2022 and 2021.

As of April 30, 2022, the tax years ended April 30, 2019 through 2022 remain subject to examination by the U.S. Internal Revenue Service. As of April 30, 2022, the tax years ended April 30, 2021 and 2022 remain subject to examination by the Barbados Revenue Authority and the tax years ended April 30, 2018 through 2022 remain subject to examination by the Canada Revenue Agency. In states in which the Company conducts business, the statute of limitation periods for examination generally vary from three to four years. Net operating losses dating back to 2008 are still being carried forward and remain subject to examination by the taxing authorities. The Company regularly assesses the potential outcomes of future examinations to ensure 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 that no liability for uncertain tax position is necessary as of April 30, 2022 and 2021.