Income Taxes

12 Months Ended

Jan. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax expense for fiscal years ended January 31, 2025 and 2024 is reconciled to the statutory federal income tax rates of 21% for the tax years ended January 31, is as follows (in thousands):

	2025		2024
Statutory	$	6,011	$	6,140
State taxes (net of federal tax)	1,197		1,346
Change in valuation allowance	(15)		(613)
State rate adjustment	83		164
Change in unrecognized tax benefits	65		34
Stock compensation	(315)		16
Expirations of attributes	21		56
Permanent differences	(278)		69
Return to provision true-up	11		118
Income tax expense	$	6,780	$	7,330

Significant components of the expense for income taxes attributed to continuing operations are as follows for the years ended January 31, is as follows (in thousands):

	2025		2024
Current
Federal	$	5,142	$	5,567
State	1,408		963
	6,550		6,530
Deferred
Federal	(75)		301
State	320		1,112
	245		1,413
Change in valuation allowance	(15)		(613)
	230		800
Income tax expense	$	6,780	$	7,330

Deferred tax assets and liabilities are comprised of the following as of January 31, respectively, as follows (in thousands):

	2025		2024
Deferred tax assets
Accrued vacation and sick leave	$	2,238	$	2,143
Retirement plans	1,725		2,391
Insurance reserves	227		197
Warranty	126		128
Net operating loss carryforwards	439		599
Right of use liability	9,505		1,935
Inventory	1,709		1,878
Other	580		536
	16,549		9,807
Deferred tax liabilities
Tax in excess of book depreciation	(804)		(882)
Right of use assets	(8,979)		(1,663)
Other	(709)		(377)
	(10,492)		(2,922)
Valuation allowance	(236)		(251)
Net long term deferred tax asset	$	5,821	$	6,634

In assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all of its deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, the availability of tax carry backs, tax-planning strategies, and results of recent operations (including cumulative income (losses) in recent years), to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.

At January 31, 2025, the Company recorded a partial valuation allowances of $236,000 on certain state NOL to reduce the carrying amount of deferred tax assets to an amount that is more-likely-than-not to be realized. The net change in the valuation allowance for the year ended January 31, 2025, was a decrease of $15,000. At January 31, 2025, the Company had no NOL for U.S. federal tax purposes and $6.3 million for state income tax purposes, expiring at various dates through January 31, 2041. The net change in the valuation allowance for the year ended January 31, 2024, was a decrease of $613,000. At January 31, 2024, the Company had no NOL for U.S. federal tax purposes, and $9.0 million for state income tax purposes, expiring at various dates through January 31, 2041.

The following table summarizes the activity related to our gross unrecognized tax benefits for the years ended January 31, respectively, as follows (in thousands):

	2025		2024
Beginning balances as of January 31,	$	92	$	62
Increases related to prior year tax positions	15		8
Decreases related to prior year tax positions	—		—
Increases related to current year tax positions	57		33
Decreases related to lapsing of statute of limitations	(7)		(11)
Ending balance as of January 31,	$	157	$	92

At January 31, 2025, the Company’s unrecognized tax benefits associated with uncertain tax positions were $157,000, of which $124,000 if recognized, would favorably affect the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense which is consistent with the recognition of the items in prior reporting. The Company had recorded a liability for interest and

penalties related to unrecognized tax benefits of $50,000 at January 31, 2025, and $37,000 at January 31, 2024. The year ended January 31, 2019 and subsequent years remain open for examination by the IRS and state tax authorities. The Company is not currently under IRS or state examination.

The specific timing of when the resolution of each tax position will be reached is uncertain. As of January 31, 2025, it is reasonably possible that unrecognized tax benefits will decrease by $6,800 within the next 12 months due to the expiration of the statute of limitations.