Note 14 - Income Taxes

12 Months Ended

Jun. 30, 2026

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 14 — INCOME TAXES  

The following information is provided for the years ended  June 30, 2026, 2025 and 2024:

(In thousands)	2026			2025			2024
Components of income before income taxes:
United States	$	30,396		$	30,083		$	32,295
Foreign		1,078			2,955			804
Income before income taxes	$	31,474		$	33,038		$	33,099
Provision (benefit) for income taxes - current
U.S. Federal	$	637		$	8,384		$	6,907
Foreign		1,781			700			(30	)
State and local		575			1,933			2,851
Total current	$	2,993		$	11,017		$	9,728
Provision (benefit) for income taxes - deferred
U.S. Federal		5,485			(2,279	)		(983	)
International		(446	)		202			(665	)
State and local		863			(285	)		42
Total deferred	$	5,902		$	(2,362	)	$	(1,606	)
Total provision for income taxes	$	8,895		$	8,655		$	8,122

	2026						2025						2024
(In thousands)	Amount			Rate			Amount			Rate			Amount			Rate
Reconciliation to federal statutory rate:
Federal statutory rate	$	6,610			21.0		$	6,937			21.0		$	6,951			21.0
State and local taxes, net of federal benefit (a)		1,135			3.6			1,146			3.5			1,402
Foreign tax effects																	4.2
Canada
Transaction costs		884			2.8			-			-			-			-
Statutory income tax rate differential		247			0.8			299			1.0			39			0.1
Other		156			0.5			-			-			(208	)		(0.6	)
Other foreign jurisdictions		41			0.1			(19	)		(0.1	)		11			0.1
Effects of changes in tax laws or rates enacted
Effects of cross-border tax laws		(32	)		(0.1	)		155			0.5			(47	)		(0.1	)
Tax credits		(429	)		(1.4	)		(284	)		(0.9	)		(353	)		(1.1	)
Non-taxable or non-deductible items
Transaction costs		830			2.7			220			0.6			-			-
Officer's compensation		3,886			12.5			591			1.8			615			1.8
Other		129			0.4			124			0.4			49			0.1
Changes in unrecognized tax (benefit) expense		(58	)		(0.2	)		122			0.3			177			0.5
Stock-based compensation		(4,259	)		(13.5	)		(927	)		(2.8	)		(763	)		(2.3	)
Other		(245	)		(0.8	)		291			0.9			249			0.8
Effective tax rate	$	8,895			28.4		$	8,655			26.2		$	8,122			24.5

(a)  In 2026, 2025, and 2024 state and local income taxes in California, Florida, Illinois, Massachusetts, New Jersey, Rhode Island, Texas, Blue Ash (OH) comprise the majority of the state and local income taxes, net of federal effect category.

The components of deferred income tax assets and (liabilities) at  June 30, 2026 and 2025 are as follows:

Components of deferred income tax assets and liabilities
(In thousands)	2026			2025
Uncertain tax positions	$	316		$	241
Reserves against current assets		3,230			2,384
Accrued expenses		4,260			3,962
Deferred compensation		2,659			2,479
Stock-based compensation		1,964			2,017
Interest		1,820			-
Capitalized R&D		123			3,885
State net operating loss carryover and credits		938			108
Lease Liability		10,111			4,841
U.S. Federal net operating loss carryover and credits		4,817			-
Deferred income tax asset before valuation allowance		30,238			19,917
Valuation allowance		(108	)		(108	)
Deferred income tax asset		30,130			19,809
Goodwill, acquisition costs and intangible assets		(37,295	)		(7,578	)
Depreciation		(9,827	)		(3,436	)
Foreign investment		(280	)		-
Right of Use Asset		(9,729	)		(4,702	)
Deferred income tax liability		(57,131	)		(15,716	)
Net deferred income tax asset (liability)	$	(27,001	)	$	4,093

The Company has US net operating loss carry forward deferred tax assets of $4.8 million and $0 million at June 30, 2026 and June 30, 2025 respectively. The increase of $4.8 million for the year is from the acquisition of SRR Holdings Inc. and has an unlimited carryforward period.  Utilization of the federal net operating loss is limited by Internal Revenue Code Section 382.

The company has Interest expense limitation carry forward deferred tax asset of $1.8 million at June 30, 2026.  The increase of $1.8 million for the year is from the acquisition of SRR Holdings Inc. and has an unlimited carryforward period.  Utilization of the interest expense is limited by Internal Revenue Code Section 382.

The Company has state net operating loss carryovers and tax credit deferred tax assets of $0.9 million and $0 million at June 30, 2026 and June 30, 2025 respectively.  The increase of $0.9 million for the year is from the acquisition of SRR Holdings Inc. A valuation allowance of $0.1 million exists at June 30, 2026, against Oregon tax credits not expected to be used.  The Oregon credits are otherwise expected to expire over a 4-year period beginning June 30, 2027.

At June 30, 2026, tax, interest, and penalties, net of potential federal tax benefits, were $1.7 million, $0.4 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $2.3 million. The entire uncertain tax position of $2.3 million, net of federal tax benefit, would impact the effective tax rate if recognized.  An uncertain tax position and tax indemnification receivable of $0.9 million was recognized as a result of the CBH acquisition. The liability for uncertain tax position is included in Other Long-Term Liabilities.

At June 30, 2025, tax, interest, and penalties, net of potential federal tax benefits, were $1.8 million, $0.3 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $2.3 million. The entire uncertain tax position of $2.3 million net of federal tax benefit, would impact the effective tax rate if recognized. An uncertain tax position and tax indemnification receivable of $1.1 million was recognized as a result of the CBH acquisition. The liability for uncertain tax position is included in Other Long-Term Liabilities.

At June 30, 2024, tax, interest, and penalties, net of potential federal tax benefits, were $0.6 million, $0.3 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $1.1 million. The entire uncertain tax position of $0.6 million, net of federal tax benefit, would impact the effective tax rate if recognized.

The amounts of cash taxes paid by LSI are as follows:

(In thousands)	2026		2025		2024
Federal	$	6,650	$	4,585	$	8,571
State		1,928		1,282		1,000
Canada		542		-		-
Total cash taxes paid	$	9,120	$	5,867	$	9,571

The Company is recording estimated interest and penalties related to potential underpayment of income taxes as a component of tax expense in the Consolidated Statements of Operations. The Company recognized a $(0.1) million net tax (benefit) in fiscal 2026 and a net tax expense of $0.1 million in both fiscal years 2025 and 2024, related to the change in reserves for uncertain tax positions. The Company recognized interest net of federal benefit and penalties of $72,000 and $25,000, respectively, in fiscal 2026, $12,000 and $21,000, respectively, in fiscal 2025, and $17,000 and $37,000, respectively, in fiscal 2024. 

The tax activity in the liability for uncertain tax positions was as follows:

(In thousands)	2026			2025			2024
Balance at the beginning of the fiscal year	$	2,086		$	825		$	656
Decreases - tax positions in prior period		(364	)		(101	)		(63	)
Increase - tax positions from acquired company		-			1,149			-
Increase - tax positions in current period		201			213			232
Balance at end of the fiscal year	$	1,923		$	2,086		$	825

The Company files a consolidated federal income tax return in the United States, and files various combined and separate tax returns in numerous state and local jurisdictions, and also in Canada, Mexico, Jamaica, Barbados, and Puerto Rico. In general, the Company is no longer subject to U.S. Federal, state, and local tax examinations by tax authorities for fiscal years ending prior to June 30, 2023.