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Income Taxes
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income before income taxes includes the following components:
Year ended June 30,
($000s)202520242023
United States$24,494 $18,492 $21,938 
Foreign21,438 22,494 18,388 
Total$45,932 $40,986 $40,326 
The major components of the provision for income tax expense are as follows:
Year ended June 30,
($000s)202520242023
Current tax expense:
Federal$7,019 $3,203 $385 
State2,113 1,532 487 
Foreign3,054 2,241 3,467 
Total current expense$12,186 $6,976 $4,339 
Deferred tax:
Federal$(2,735)$(124)$4,019 
State(445)155 843 
Foreign62 324 (457)
Total deferred (benefit) / expense$(3,118)$355 $4,405 
Provision for income tax expense$9,068 $7,331 $8,744 

The Company’s income tax provision includes the results of the Company’s U.S. operations and its various foreign operations including subsidiaries based in Canada, Jamaica, Nicaragua, Pakistan, Honduras, the Philippines, United Arab Emirates, and Saudi Arabia. Historically, the Company’s Bermuda-based companies have not been subject to income tax as there is no corporate income tax in Bermuda. On December 27, 2023, the Bermuda Corporate Income Tax Act 2023 was passed which provides for a 15% corporate tax rate beginning on or after January 1, 2025 for companies with revenue in excess of 750 million Euros. The Company continues to evaluate the impact of this legislation, but it does not anticipate that it will have a material impact on the Company’s operations.
Differences between U.S. federal statutory income tax rates and our effective tax rates for the years ended June 30, 2025, 2024, and 2023 are as follows:
Year ended June 30,
202520242023
U.S. federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal deduction3.3 %2.8 %1.4 %
Foreign rate differential(3.2)%(4.7)%(5.7)%
Non-deductible expenses / exempt income0.2 %1.0 %1.2 %
Employment and other tax credits(1.4)%(1.8)%(2.9)%
Prior year provision / other items(0.1)%0.5 %3.1 %
Change in valuation allowance(0.1)%(0.9)%3.6 %
Effective tax rate percentage19.7 %17.9 %21.7 %

The effective tax rate was 19.7% and 17.9% for the fiscal years ended June 30, 2025 and 2024, respectively. The increase in the effective tax rate between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete items recorded in the prior year.

We have been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of Nicaragua, Pakistan, Honduras, Jamaica, and certain qualifying locations in the Philippines. Generally, a Tax Holiday is an agreement between us and a foreign government under which we receive certain tax benefits in that country. In Nicaragua, we have been granted approval of exemption from income taxes through October 2025, which is expected to be extended for another 10 years upon application. In Pakistan, we have been granted approval for an indefinite exemption from income taxes on all exported IT services. In Honduras, we
have been granted approval of exemption from income taxes under the Free Tax Zone Law until 2033. In Jamaica, we have been granted the Special Economic Zone (SEZ) developer status for multiple sites, which provides the Company with various tax incentives under the Jamaica SEZ Act including lower income tax rates. The Tax Holidays for our qualifying Philippines facilities expire at staggered dates through 2031.

Our Tax Holidays could be eliminated if there are future changes in our operations or the governmental authorities approve legislation to modify the Tax Holidays in the various taxing jurisdictions. The aggregate reduction in income tax expense due to the above Tax Holidays was $5.7 million, $5.4 million, and $3.4 million for the years ended June 30, 2025, 2024, and 2023, respectively. The aggregate reduction in income tax expense per diluted share was $0.36, $0.29, and $0.18 for the years ended June 30, 2025, 2024, and 2023, respectively.
Significant components of deferred tax assets and liabilities included in the consolidated balance sheets are as follows:
($000s)June 30,
2025		June 30,
2024
Deferred tax assets
Provision for employee benefits and other expenses4,201 1,724 
Section 174 research and development capitalization1,630 1,116 
Net operating losses1,878 1,879 
Property and equipment, net1,337 687 
Lease liability (right of use assets)3,767 5,048 
Net unrealized loss on hedging(182)103 
Total deferred tax assets$12,631 $10,557 
Valuation allowance(1,162)(1,127)
Total deferred tax assets, net of valuation allowance$11,469 $9,430 
Deferred tax liabilities
Right of use assets(3,199)(3,957)
Intangible assets(1,107)(1,178)
Other liability— (10)
Total deferred tax liabilities$(4,306)$(5,145)
Net deferred tax assets and liabilities$7,163 $4,285 
The Company had no U.S. gross federal net operating loss carry forwards as of June 30, 2025 and 2024, respectively, and gross state net operating loss carry forwards of approximately $11.3 million and $12.4 million as of June 30, 2025 and 2024, respectively, which may be available to offset state income tax liabilities in the future. The state net operating losses will expire based on each state’s income tax laws. The Company’s Canadian subsidiary had net operating loss carry forwards of $2.1 million as of June 30, 2025 and 2024, respectively, which will begin to expire in 2028. The Company’s UK and European subsidiaries had net operating loss carry forwards of $2.4 million and $2.2 million as of June 30, 2025 and 2024, respectively, which can be carried forward indefinitely. These amounts are estimated amounts for the year ended June 30, 2025, and based on the income tax returns filed for the year ended June 30, 2024.
The Company assesses the available positive and negative evidence whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.
On the basis of this evaluation, valuation allowances of $1.2 million and $1.1 million have been recorded as of June 30, 2025 and 2024, respectively, to recognize only the portion of the Company’s deferred tax assets that are expected to be realized in certain foreign taxing jurisdictions. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present.
We do not provide for deferred taxes on the excess of the financial reporting basis over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration or not subject to taxation in the U.S. or in the local country.
Under accounting standards for uncertainty in income taxes (ASC 740-10), a company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

($000s)June 30,
2025		June 30,
2024		June 30,
2023
Beginning balance$— $— $— 
Additions for tax positions related to current year— — — 
Additions for tax positions of prior years1,032 — — 
Additions for acquisitions— — — 
Reductions for tax positions of prior years— — — 
Reductions for settlements— — — 
Reductions for expiration of statute of limitations— — — 
Effect of foreign currency transactions— — — 
Ending balance$1,032 $— $— 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0.8 million as of June 30, 2025. There were no tax benefits included in the balance of unrecognized tax benefits for the years ended June 30, 2024 and 2023 that, if recognized, would affect the Company’s effective tax rate. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We have not recorded any interest expense or penalties in income tax expense for the years ended June 30, 2025, 2024 and 2023. We do not have any interest or penalties accrued as of June 30, 2025 and 2024. Over the next 12 months, the amount of the Company’s liability for unrecognized income tax benefits shown above is not expected to change materially.
We file numerous consolidated and separate income tax returns in the U.S. federal and various state jurisdictions as well as in various foreign jurisdictions. Our U.S. federal returns and most state returns for tax years 2021 and forward are subject to examination. Tax return filings in the United Kingdom for the year ended June 2021 and onward are still open for examination. Tax return filings in Canada for the year ended June 2022 and onward are still open for examination. Tax return filings in Luxembourg for the year ended June 2020 and onward are still open for examination as well as Cyprus tax returns for the years ended June 2019.

Public Law No: 119-21, the One Big Beautiful Bill Act (the “Act”) was signed on July 4, 2025, which marks the date of enactment for the tax provisions included in the Act. The Company is evaluating the impact of this enactment.

In June 2024, a U.S. subsidiary received a letter from the Internal Revenue Services (“IRS”) requesting information for examination of the year ended June 30, 2022. The IRS performed and concluded the review of the examination. A final Letter 590, dated May 27, 2025 was issued stating that no changes have been made to the reported tax period under review.