Income Taxes

6 Months Ended

Jul. 31, 2021

Income Taxes

7. Income Taxes

7.

Income Taxes

The Company's effective tax rate for the second quarter of FY22 was 34.8% which differs from the U.S. federal statutory rate of 21% primarily due to rate differentials in foreign tax jurisdictions and state income taxes. In the second quarter of 2022, the Company recorded a discrete item related to the remeasurement of deferred taxes for $762 thousand of tax expense primarily as a result of the statutory change in the State of Alabama apportionment factor. The Company's effective tax rate for the second quarter of FY21 was 4.3%, which differs from the U.S. statutory rate of 21% primarily due to Global Intangible Low-taxed Income (“GILTI”) and an adjustment to reflect the recapture of U.S. net operating losses ("NOL") as a result of applying the GILTI high tax exclusion in tax years FY19 and FY20. The Company's effective tax rate for the six months ended July 31, 2021 was 29.1% which differs from the U.S. federal statutory rate of 21% primarily due to rate differentials in foreign tax jurisdictions, state income taxes and the discrete item discussed above. The Company's effective tax rate for the six months ended July 31, 2020 was 18.8% which differs from the U.S. statutory rate of 21% primarily due to GILTI and an adjustment to reflect the recapture of U.S. NOL as a result of applying the GILTI high tax exclusion in tax years FY19 and FY20.. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. The valuation allowance was $2.3 million and $2.7 million at July 31, 2021 and January 31, 2021, respectively.