Income Taxes

9 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur. The annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pre-tax income, or loss, of the Company in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, the Company’s tax expense or benefit can be impacted by changes in tax rates or laws, the finalization of tax audits, and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

During the three and nine months ended March 31, 2023, deferred taxes were determined by the year-to-date tax expense with current taxes accounting for the remaining tax expense recorded in the period. Income tax expense was $5.4 million, or 22.5 percent of pre-tax income for the three months ended March 31, 2023, as compared with income tax benefit of $0.8 million, or 9.6 percent of pre-tax loss for the three months ended March 31, 2022. Income tax expense for the nine months ended March 31, 2023, was $5.9 million, or 24.7 percent of pre-tax income as compared with income tax benefit of $16.8 million, or 24.5 percent of pre-tax loss for the nine months ended March 31, 2022.

Income tax expense for the three months ended March 31, 2023, includes the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized. Also included is a discrete tax benefit of $0.2 million for anticipated interest on Internal Revenue Service ("IRS") income tax refund claims and a discrete tax charge of $0.2 million as a result of changes in the Company’s prior year tax positions. Income tax benefit for the three months ended March 31, 2022 included the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized.

Income tax expense for the nine months ended March 31, 2023, includes the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized. Also included is a discrete tax benefit of $0.8 million for anticipated interest on IRS income tax refund claims as well as discrete tax charges of $0.6 million for the impact of a state tax legislative change and $0.5 million as a result of changes in the Company’s prior year tax positions. Income tax benefit for the nine months ended March 31, 2022 included the unfavorable impacts of losses in certain foreign jurisdictions for which no tax benefit can be recognized.

The Inflation Reduction Act of 2022 (the "IRA") was enacted on August 16, 2022. The IRA includes climate and energy provisions, extends the Affordable Care Act subsidies, increases Internal Revenue Enforcement funding and allows Medicare to negotiate prescription drug prices. The IRA creates a 15 percent corporate alternative minimum tax on profits of corporations whose average annual adjusted financial statement income for any consecutive three-tax-year period preceding the tax year exceeds $1.0 billion and is effective for tax years beginning after December 31, 2022. The IRA also creates an excise tax of 1 percent on stock repurchases by publicly traded U.S. corporations, effective for repurchases after December 31, 2022. The provisions of the IRA are not expected to have a significant impact on the Company's financial position, results of operations or cash flows.