Income Taxes

12 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

10. INCOME TAXES

The Company recognizes deferred tax assets to the extent that they believe the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. As of June 30, 2023, it was determined the Company had reached a more-likely-than-not position that the Company will realize the entirety of its deferred tax assets. Therefore, the Company reversed the previously recorded valuation allowance against the federal and state deferred tax assets recorded as of June 30, 2022 of $9.8 million. As of June 30, 2024 the Company maintains is determination that it is more-likely-than-not that deferred tax assets will be realized.

Income tax expense was calculated based upon the following components of income before income taxes for the years ended June 30:

(in thousands)	2024		2023		2022
United States	$	15,348	$	6,680	$	2,150
Outside the United States		202		2,539		3,752
Income before income taxes	$	15,550	$	9,219	$	5,902

The income tax (provision) benefit is as follows for the years ended June 30:

(in thousands)	2024			2023			2022
Federal - current	$	(4,708	)	$	(799	)	$	(2,966	)
State and other - current		(1,768	)		(796	)		(1,084	)
Deferred		1,454			7,154			—
Total	$	(5,022	)	$	5,559		$	(4,050	)

Reconciliation between the U.S. federal statutory tax rate and the effective tax rate is as follows for the years ended June 30:

	2024				2023				2022
Federal statutory tax rate		21.0		%		21.0		%		21.0		%
State taxes, net of federal effect		4.7				5.2				(0.7	)
Foreign rate differential		2.1				2.8				5.7
Uncertain tax positions		1.1				(2.1	)			(2.6	)
Stock based compensation		(1.1	)			(0.5	)			(1.0	)
Section 162(m)		4.2				2.5				1.9
Foreign adjustments		1.7				(0.1	)			(8.9	)
Expired state credits		0.6				17.1				—
Research & development credit		(4.8	)			—				—
Remeasurement of deferred tax assets and valuation allowance		0.3				(106.7	)			42.8
Amended return impacts		—				—				7.8
State rate change and other state items		2.1				(0.5	)			2.7
Other		0.4				1.0				(0.1	)
Effective tax rate		32.3		%		(60.3	)	%		68.6		%

The components of the gross liabilities related to unrecognized tax benefits and the related deferred tax assets are as follows:

	June 30,
(in thousands)	2024		2023
Gross unrecognized tax benefits	$	607	$	424
Accrued interest and penalties		172		132
Gross liabilities related to unrecognized tax benefits	$	779	$	556
Deferred tax assets		84		38
Valuation allowance		—		—
Net deferred tax assets	$	84	$	38

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2024		2023			2022
Balance at July 1	$	424	$	604		$	640
Reductions for tax positions of the prior year		—		—			(72	)
Additions based on tax positions related to the current year		183		10			70
Lapse of statute of limitations		—		(190	)		(188	)
Addition for tax positions of the prior year		—		—			154
Balance at June 30	$	607	$	424		$	604

The Company records interest expense and penalties related to income taxes as income tax expense in the consolidated statements of income. The Company does not expect that there will be any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The amount of unrecognized tax benefits as of June 30, 2024, and 2023 that if recognized, would affect the effective tax rate was $0.4 million and $0.3 million respectively.

The primary components of deferred tax assets and (liabilities) are as follows:

	June 30,
(in thousands)	2024			2023
Accounts receivable	$	602		$	654
Inventory		1,995			1,490
Self-insurance		22			25
Payroll and related		1,001			938
Accrued liabilities		668			633
Property, plant, and equipment		1,100			1,202
Investment tax credit		185			303
Valuation allowance		(52	)		—
Net operating loss carryover		7			361
Lease assets		(15,160	)		(17,158	)
Lease liabilities		16,185			18,129
Research & development expenditure		1,909			—
Other		145			577
Total	$	8,607		$	7,154

On June 30, 2024, certain state tax attribute carryforwards of $0.2 million were available, with $0.2 million of credits expiring beginning in fiscal years 2025 through 2028, and $0.1 million of state NOLs carryforward. Some of the state NOL carryforwards will have an indefinite carryforward and some will expire in varying amounts between 2039 and 2041. As of June 30, 2024, it was determined that the Company has reached a more-likely-than-not position that the Company will realize the entirety of its state attribute carryforwards and its U.S. federal deferred tax assets.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. Generally, fiscal years 2020 through 2024 remain open to examination by the Internal Revenue Service or other taxing jurisdictions to which the Company is subject.