Income Taxes

12 Months Ended

Oct. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 16. Income Taxes

Income is taxed in the following jurisdictions:

	Fiscal Year Ended
	October 31, 2023			October 31, 2022			October 31, 2021
Domestic	$	58.9		$	20.0		$	65.6
Foreign		(0.7	)		(0.2	)		(9.9	)
Income before provision for income taxes	$	58.2		$	19.8		$	55.7

Provision for income taxes is summarized as follows:

	Fiscal Year Ended
	October 31, 2023			October 31, 2022			October 31, 2021
Current:
Federal	$	19.7		$	4.2		$	8.8
State		6.1			0.9			1.3
Foreign		(0.1	)		—			0.1
Total Current		25.7			5.1			10.2
Deferred:
Federal		(10.5	)		(1.9	)		(0.4	)
State		(2.3	)		1.4			1.5
Foreign		—			—			—
Total Deferred		(12.8	)		(0.5	)		1.1
Provision for income taxes	$	12.9		$	4.6		$	11.3

Income tax provision at the federal statutory rate is reconciled to the Company’s provision for income taxes as follows:

	Fiscal Year Ended
	October 31, 2023			October 31, 2022			October 31, 2021
Income tax provision at federal statutory rate	$	12.2		$	4.1		$	11.7
Taxes on foreign income which differ from the U.S.    statutory rate		—			—			(0.1	)
State tax expense		2.2			0.1			2.3
CARES Act impact		—			—			(4.2	)
Manufacturing and research incentives		(3.5	)		(1.9	)		(0.6	)
Nondeductible items		0.3			0.1			0.5
Uncertain tax positions		1.2			0.3			—
Valuation allowance		0.3			2.2			2.1
Bargain purchase gain		—			—			0.1
Stock-based compensation		0.2			(0.4	)		(0.1	)
Other items		—			0.1			(0.4	)
Provision for income taxes	$	12.9		$	4.6		$	11.3

Tax expense for fiscal year 2023 was favorably impacted by incentives for U.S. research. Tax expense was unfavorably impacted by additional unrecognized tax benefits recorded during the year.

Tax expense for fiscal year 2022 was favorably impacted by incentives for U.S. research and stock-based compensation tax deductions. Tax expense was unfavorably impacted by valuation allowances on certain state tax attributes.

Tax expense for fiscal year 2021 was favorably impacted by tax benefits related to net operating loss carrybacks allowable under the CARES Act and incentives for U.S. research. Tax expense was unfavorably impacted by the valuation allowances related to the loss on our China JV.

No items included in Other items in the income tax reconciliation above are individually, or when appropriately aggregated, significant.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The Cares Act is an emergency stimulus package that includes spending and tax benefits to strengthen the U.S. economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions include removal of certain limitations on utilization of net operating losses, allowing for net operating loss carrybacks for certain past and future losses, increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Reform Act. In fiscal year 2021, the Company evaluated the impact of the CARES Act and recorded a tax benefit of $4.2 million in fiscal year 2021 for the carryback of its fiscal year 2020 net operating loss. As the Company carried the losses back to years beginning before January 1, 2020, the 2021 fiscal year tax benefit of $4.2 million is a result of the rate differential between the previous 35% federal tax rate and current statutory rate of 21%.

Temporary differences and carryforwards that give rise to deferred tax assets and liabilities include the following items:

	October 31, 2023			October 31, 2022
Deferred tax assets:
Product warranty	$	6.8		$	4.9
Inventory		5.6			5.1
Deferred employee benefits		9.5			4.9
Net operating loss and credit carryforwards		8.0			7.4
Other reserves and allowances		4.4			6.5
Capitalized research expenditures		7.8			—
Gross deferred tax assets		42.1			28.8
Less: valuation allowance		(5.2	)		(6.0	)
Deferred tax assets		36.9			22.8
Deferred tax liabilities:
Intangible assets		(25.9	)		(24.1	)
Property, plant and equipment		(16.6	)		(17.7	)
Other		(2.6	)		(2.0	)
Deferred tax liabilities		(45.1	)		(43.8	)
Net deferred tax liability	$	(8.2	)	$	(21.0	)

The net deferred tax liabilities were recorded as noncurrent liabilities in the consolidated balance sheet for fiscal years 2023 and 2022.

As of October 31, 2023, the Company has capital loss carryforwards of $7.7 million which expire in 2026 and are offset by a valuation allowance. The Company has state net operating loss carryforwards of $84.4 million, which begin to expire in 2028 and are partially offset by a valuation allowance. The Company also has net operating loss carryforwards generated in Canada of $0.6 million and Singapore of $0.9 million, which are offset by valuation allowances because the losses are projected to expire prior to being utilized. The Company has state tax credit carryforwards of $1.5 million, which will begin to expire in 2024 and are partially offset by a valuation allowance.

The Company, or one of its subsidiaries, files income tax returns in the United States, Canada, Singapore and various state jurisdictions. With few exceptions, fiscal years 2016 through 2022 remain open to tax examination by Canadian and U.S. federal and state tax authorities. The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves.

A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:

	Fiscal Year Ended
	October 31, 2023		October 31, 2022		October 31, 2021
Balance at beginning of year	$	3.8	$	3.6	$	2.7
Additions for tax positions in prior year		0.5		—		1.0
Additions for tax positions in current year		0.5		0.2		0.1
Cash settlements with taxing authorities		—		—		(0.2	)
Balance at end of year	$	4.8	$	3.8	$	3.6

If recognized, $5.6 million, $4.3 million, and $4.0 million of the Company’s unrecognized tax benefits as of October 31, 2023, October 31, 2022 and October 31, 2021, respectively, would affect the Company’s effective income tax rate.