Income Taxes

12 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before income taxes for the Company's domestic and foreign operations was as follows:

	Years Ended June 30,
($ in millions)	2023		2022		2021
Domestic	$	51.2	$	(74.0)	$	(252.5)
Foreign	21.3		10.9		(45.4)
Income (loss) before income taxes	$	72.5	$	(63.1)	$	(297.9)

The expense (benefit) for income taxes from continuing operations consisted of the following:

	Years Ended June 30,
($ in millions)	2023		2022		2021
Current:
Federal	$	8.6	$	(14.7)	$	(37.3)
State	2.6		0.1		(0.6)
Foreign	5.3		3.7		3.2
Total current	16.5		(10.9)		(34.7)
Deferred:
Federal	(0.9)		(1.0)		(22.6)
State	(0.5)		(2.7)		(10.5)
Foreign	1.0		0.6		(0.5)
Total deferred	(0.4)		(3.1)		(33.6)
Total income tax expense (benefit)	$	16.1	$	(14.0)	$	(68.3)

The following is a reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company's effective income tax rates: 

	Years Ended June 30,
(% of pre-tax income (loss))	2023		2022		2021
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	2.8		3.1		2.9
Foreign tax rate differential	0.9		(1.0)		(0.4)
Research and development tax credit	(3.5)		4.4		1.1
Adjustments of prior years' income taxes	8.7		(7.4)		(0.2)
Non-taxable income	(0.8)		(1.0)		0.4
Non-deductible expenses	(0.1)		(0.7)		(0.9)
Non-deductible compensation	1.4		(1.1)		(0.1)
Share-based compensation	—		(0.7)		(0.5)
Changes in valuation allowances	(7.4)		6.0		(0.3)
Law changes	0.4		—		—
Interest on prior tax positions	(1.3)		0.2		—
Other, net	0.1		(0.6)		(0.1)
Effective income tax rate	22.2	%	22.2	%	22.9	%

Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. As of June 30, 2023, the Company had net operating loss carryforwards of $10.0 million in the United Kingdom. These losses have an indefinite carryforward period. However, realization of these future tax benefits is expected to be limited to approximately $2.8 million. The Company also had state net operating loss carryforwards of $227.8 million expiring between fiscal years 2024 and 2043. A significant portion of the state net operating loss carryforwards are subject to an annual limitation that, under current law, is likely to limit future tax benefits to approximately $6.9 million. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted in the near term if estimates of future taxable income during the carry forward periods change.

Valuation allowances decreased by $7.7 million during fiscal year 2023. The expiration of $4.5 million net operating losses, for which no tax benefit was recognized, caused a reduction in the valuation allowance. In addition, $1.7 million of net operating losses, for which no tax benefit was recognized, were written off as the likelihood of utilization is remote. The write-off of these net operating losses reduced the valuation allowance. Law changes in certain state jurisdictions further reduced the valuation allowance by $2.2 million. As a result of increases in estimates of projected future taxable income during the carryforward period, valuation allowance was reduced by $0.9 million for the expected realization of previously limited net operating loss carryforwards. This was offset by a $1.6 million increase in net operating losses incurred in certain tax jurisdictions for which no tax benefit was recognized.

The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheets are summarized in the table below:

	June 30,
($ in millions)	2023		2022
Deferred tax assets:
Pensions	$	39.8	$	43.2
Postretirement provisions	20.0		26.9
Non-equity compensation	16.0		7.5
Net operating loss carryforwards	22.5		44.5
Tax credit carryforwards	1.2		17.0
Operating lease liability	10.0		10.5
Other	22.3		29.3
Gross deferred tax assets	131.8		178.9
Valuation allowances	(13.6)		(21.3)
Total deferred tax assets	118.2		157.6
Deferred tax liabilities:
Depreciation	(237.6)		(262.9)
Intangible assets	(5.8)		(5.2)
Inventories	(27.4)		(28.9)
Operating lease right-of-use asset	(8.0)		(8.3)
Other	(3.1)		(9.0)
Total deferred tax liabilities	(281.9)		(314.3)
Deferred tax liabilities, net	$	(163.7)	$	(156.7)