Income Taxes

12 Months Ended

Apr. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Prior to the Separation, income taxes were calculated as if we file income tax returns on a standalone basis. Our U.S. operations and certain of our non-U.S. operations historically have been included in the tax returns of our former parent or its subsidiaries. We believe the assumptions supporting our allocation and presentation of income taxes on a separate return basis were reasonable.

Income tax expense/(benefit) from operations consists of the following (in thousands):

	For the Year Ended April 30,
	2022		2021			2020
Current:
Federal	$	2,356	$	8,356		$	693
State		302		1,085			149
Foreign		3		4			4
Total current		2,661		9,445			846
Deferred:
Deferred federal		5,958		(3,222	)		(11,266	)
Deferred state		725		(336	)		(1,233	)
Total deferred		6,683		(3,558	)		(12,499	)
Total income tax expense/(benefit)	$	9,344	$	5,887		$	(11,653	)

The following table presents a reconciliation of the provision for income taxes from operations at statutory rates to the provision (benefit) in the consolidated and combined financial statements (in thousands):

	For the Year Ended April 30,
	2022			2021				2020
Federal income taxes expected at the statutory rate (a)	$	(11,663	)	$		5,101		$		(22,649	)
State income taxes, less federal income tax benefit		(633	)			586				(1,117	)
Stock compensation		(276	)			(83	)			86
Research and development tax credit		(291	)			(288	)			(199	)
Goodwill impairment		7,633			—					11,741
Change in deferred tax valuation allowance		14,200				241			—
Other		374				330				485
Total income tax expense/(benefit)	$	9,344		$		5,887		$		(11,653	)

(a)We had a federal statutory rate of 21% in fiscal 2022, 2021, and 2020.

Deferred tax assets (liabilities) related to temporary differences are the following (in thousands):

	April 30, 2022				April 30, 2021
Non-current tax assets (liabilities):
Inventories	$		1,594		$	1,241
Accrued expenses, including compensation			1,805			2,827
Product liability			29			6
Workers' compensation			7			8
Warranty reserve			147			165
Stock-based compensation			801			592
State bonus depreciation			98			51
Property taxes		—				9
Property, plant, and equipment			(1,949	)		(1,696	)
Intangible assets			11,817			3,500
Right-of Use assets			(5,570	)		(5,879	)
Right-of Use lease liabilities			5,803			6,152
Other			(141	)		(52	)
Less valuation allowance			(14,441	)		(241	)
Net deferred tax asset/(liability) — total	$	—			$	6,683

There were no federal or state net operating loss carryforwards or credits as of April 30, 2022 and 2021.

As of April 30, 2022, we established a full valuation allowance of $14.4 million, an increase of $14.2 million over the prior fiscal year, against our net deferred income tax assets based on management's assessment that it was more likely than not that our deferred income tax assets will not be realized. We will continue to evaluate the need for a valuation allowance on our deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances.

As of April 30, 2021 we had $241,000 of valuation allowances provided on our deferred tax assets primarily related to IRC Section 162(m) limitations on the deductibility of certain executive compensation.

The income tax provisions (benefit) represent effective tax rates of (16.8%), 24.2%, and 10.8% for the fiscal year ended April 30, 2022, 2021, and 2020, respectively. Excluding the impact of the non-cash goodwill impairment charges, and establishing the full valuation allowance against our deferred taxes, our effective tax rate for the fiscal year ended April 30, 2022 was 19.6%. Excluding the impact of the non-cash goodwill impairment charges, our effective tax rate for the fiscal year ended April 30, 2020 was 17.4%.

U.S. income taxes have not been provided on $228,000 of undistributed earnings of our foreign subsidiary since it is our intention to permanently reinvest such earnings offshore. If the earnings were distributed in the form of dividends, we would not be subject to U.S. tax as a result of the Tax Act but could be subject to foreign income and withholding taxes. Determination of the amount of this unrecognized deferred income tax liability is not practicable.

At April 30, 2022 and 2021, we did not have any gross tax-effected unrecognized tax benefits.

With limited exception, we are subject to U.S. federal, state, and local, or non-U.S. income tax audits by tax authorities for fiscal years subsequent to April 30, 2018.