Income Taxes

6 Months Ended

Dec. 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.

Income tax expense was $12.5 million, or 22.6 percent of pre-tax income for the three months ended December 31, 2023, as compared with income tax expense of $1.5 million, or 19.5 percent of pre-tax income for the three months ended December 31, 2022. Income tax expense for the six months ended December 31, 2023 was $21.0 million, or 19.5 percent of pre-tax income as compared with income tax expense of $0.5 million, or negative 500.0 percent of pre-tax loss for the six months ended December 31, 2022.

Income tax expense for the three months ended December 31, 2022 included a discrete tax benefit of $0.6 million for anticipated interest on IRS income tax refund claims. Also included was the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized.

Income tax expense for the six months ended December 31, 2023 includes discrete tax benefits of $4.7 million attributable to employee share-based compensation. Income tax expense for the six months ended December 31, 2022, included the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized. Also included was a discrete tax benefit of $0.6 million for anticipated interest on IRS income tax refund claims as well as a discrete tax charge of $0.6 million for the impact of a state tax legislative change. The effective tax rate for the six months ended December 31, 2022 of negative 500.0 percent was due primarily to the near breakeven year-to-date pre-tax loss of $0.1 million for the six months ended December 31, 2022 in relation to permanent tax adjustments and discrete items during the period.