INCOME TAXES

12 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

10. INCOME TAXES

The Company’s sources of earnings before income taxes are primarily derived in the U.S. Earnings in jurisdictions outside of the U.S. were not significant during each of the years ended June 30, 2024, 2023 and 2022.

For the years ended June 30, the components of the provision for income taxes for continuing operations are as follows:

	2024			2023			2022
Current income tax expense:
Federal	$	5,858		$	25,115		$	22,563
State		1,709			5,728			5,680
Total current tax expense	$	7,567		$	30,843		$	28,243
Deferred tax benefit:
Federal	$	(5,302	)	$	(3,739	)	$	(1,044	)
State		(858	)		31			(413	)
Foreign		—			—			(7	)
Total deferred tax benefit		(6,160	)		(3,708	)		(1,464	)
Income tax expense	$	1,407		$	27,135		$	26,779

The difference between the statutory and the effective federal tax rate related to continuing operations for the periods below is attributable to the following:

	2024			2023			2022
Statutory income tax rate		21.00	%		21.00	%		21.00	%
State taxes (net of federal income tax benefit and valuation allowance)		(4.04	%)		2.20	%		1.76	%
Uncertain tax positions		9.89	%		1.90	%		1.99	%
Permanent differences		2.12	%		(0.90	%)		(0.69	%)
Tax credits		(11.41	%)		(0.93	%)		(0.66	%)
Change in valuation allowance		—			—			(0.03	%)
Return to provision true-ups and rate changes		(3.00	%)		(0.19	%)		0.15	%
Other		(0.68	%)		—			(0.18	%)
Effective income tax rate		13.88	%		23.08	%		23.34	%

As of June 30, 2024, and 2023, a summary of the significant components of the Company’s deferred tax assets and liabilities was as follows:

	2024			2023
Deferred tax assets:
Capitalized research costs	$	7,666		$	1,835
Warranty reserves		6,802			7,448
Accrued selling		2,755			2,177
Intangible asset basis difference		2,549			3,224
Unrecognized tax benefits		1,543			1,328
Net operating loss		1,081			750
Stock compensation		559			1,463
Other		3,073			1,967
Total deferred tax assets		26,028			20,192
Valuation allowance		(2	)		(2	)
Total deferred tax assets, net of the valuation allowance		26,026			20,190
Deferred tax liabilities:
Depreciation		(6,220	)		(6,201	)
Other		(1,222	)		(1,561	)
Total deferred tax liabilities		(7,442	)		(7,762	)
Net deferred tax assets	$	18,584		$	12,428

As of June 30, 2024, the Company has state net operating loss (NOL) carryforwards of $23.0 million. Of this amount, $0.4 million expire in varying years ranging from June 30, 2038 to June 30, 2039, while the remainder can be carried forward indefinitely.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued amounts for interest and penalties, is as follows:

	2024			2023
Balance at July 1	$	6,232		$	5,513
Additions based on tax positions related to the current year		852			1,289
Additions for tax positions of prior years		27			30
Reductions for tax positions of prior years		(250	)		(600	)
Balance at June 30	$	6,861		$	6,232

Of this total, $5.9 million and $5.4 million as of June 30, 2024 and 2023, respectively, represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The total amount of interest and penalties recorded in the consolidated statements of operations for the years ended June 30, 2024, 2023, and 2022 was an expense of $0.5 million, $0.2 million, and $0.2 million, respectively. The amounts accrued for interest and penalties at June 30, 2024 and 2023 were $1.7 million and $1.1 million, respectively, and are presented in unrecognized tax positions on the accompanying consolidated balance sheets.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of June 30, 2024, the Company has not made a current provision for U.S. or additional foreign withholding taxes on investments in foreign subsidiaries that are indefinitely reinvested. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances.

The Company and its subsidiaries are subject to U.S. federal income tax, as well as various other state income taxes and foreign income taxes. The federal income tax returns for the years ended June 30, 2021 through 2023 are subject to examination by the Internal Revenue Service. For state purposes, the statutes of limitation vary by jurisdiction. With few exceptions, the Company is no longer subject to examination by taxing authorities for years before June 30, 2021. The Company expects the total amount of unrecognized benefits to increase by approximately $0.1 million in the next twelve months. The Company records unrecognized tax benefits as liabilities and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.