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Income Taxes | 12 Months Ended
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Jun. 30, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income Before Income Taxes The components of income before income taxes are as follows:
Year Ended June 30, | 2023 |  | 2022 |  | 2021
U.S. | $ | 423,316 |  |  | $ | 287,367 |  |  | $ | 152,202 |
Foreign | 26,495 |  |  | 42,423 |  |  | 24,860 |
Income before income taxes | $ | 449,811 |  |  | $ | 329,790 |  |  | $ | 177,062 |
Provision The provision for income taxes consists of:
Year Ended June 30, | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 84,294 |  |  | $ | 40,608 |  |  | $ | 46,685 |
State and local | 19,026 |  |  | 10,188 |  |  | 11,035 |
Foreign | 5,468 |  |  | 6,404 |  |  | 5,665 |
Total current | 108,788 |  |  | 57,200 |  |  | 63,385 |
Deferred: |  |  |  |  |
Federal | (1,881) |  |  | 12,467 |  |  | (24,168) |
State and local | (84) |  |  | 2,659 |  |  | (4,740) |
Foreign | (3,751) |  |  | 50 |  |  | (2,172) |
Total deferred | (5,716) |  |  | 15,176 |  |  | (31,080) |
Total | $ | 103,072 |  |  | $ | 72,376 |  |  | $ | 32,305 |
Effective Tax Rates The following reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate:
Year Ended June 30, | 2023 |  | 2022 |  | 2021
Statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Effects of: |  |  |  |  |
State and local taxes | 3.5 |  |  | 3.3 |  |  | 3.2 |
Stock compensation | (1.0) |  |  | (1.5) |  |  | (2.5) |
GILTI/FDII | (0.2) |  |  | 0.2 |  |  | 0.1 |
R & D credit | (0.4) |  |  | (0.4) |  |  | (1.5) |
U.S. tax on foreign income, net | — |  |  | (0.4) |  |  | (0.5) |
Impact of foreign operations | 0.2 |  |  | 0.4 |  |  | — |
Non-deductibles/Deductible dividend | 0.6 |  |  | 0.2 |  |  | — |
Interest deduction | (0.4) |  |  | (0.6) |  |  | (1.1) |
Valuation allowance | (0.6) |  |  | (0.6) |  |  | 0.1 |
Other, net | 0.2 |  |  | 0.3 |  |  | (0.6) |
Effective income tax rate | 22.9 | % |  | 21.9 | % |  | 18.2 | %
Consolidated Balance Sheets Significant components of the Company’s deferred tax assets and liabilities are as follows:
June 30, | 2023 |  | 2022
Deferred tax assets: |  |  |
Compensation liabilities not currently deductible | $ | 17,726 |  |  | $ | 19,131 |
Other expenses and reserves not currently deductible | 18,215 |  |  | 17,143 |
Leases | 26,345 |  |  | 26,688 |
Net operating loss carryforwards | 6,809 |  |  | 7,371 |
Capitalization of R&D costs | 11,646 |  |  | — |
Other | 381 |  |  | 563 |
Total deferred tax assets | $ | 81,122 |  |  | $ | 70,896 |
Less: Valuation allowance | (3,459) |  |  | (6,271) |
Deferred tax assets, net of valuation allowance | $ | 77,663 |  |  | $ | 64,625 |
Deferred tax liabilities: |  |  |
Inventories | $ | (15,174) |  |  | $ | (13,728) |
Goodwill and intangibles | (52,463) |  |  | (46,513) |
Leases | (26,179) |  |  | (26,509) |
Hedging instrument | (9,081) |  |  | (6,446) |
Depreciation and differences in property bases | (9,757) |  |  | (9,760) |
Total deferred tax liabilities | (112,654) |  |  | (102,956) |
Net deferred tax liabilities | $ | (34,991) |  |  | $ | (38,331) |
Net deferred tax liabilities are classified as follows: |  |  |
Other assets | $ | 9,990 |  |  | $ | 5,677 |
Other liabilities | (44,981) |  |  | (44,008) |
Net deferred tax liabilities | $ | (34,991) |  |  | $ | (38,331) |
As of June 30, 2023 and 2022, the Company had foreign net operating loss carryforwards of approximately $29,374 and $32,018, respectively, the tax benefit of which is approximately $6,440 and $6,677, respectively. These loss carryforwards will expire at various dates beginning in 2033. Also, as of June 30, 2023 and 2022, the Company had state net operating loss carryforwards, the tax benefit of which is approximately $466 and $878, respectively, which will expire at various dates beginning in 2027. Valuation allowances are provided against deferred tax assets where it is considered more-likely-than-not that the Company will not realize the benefit of such assets. The remaining net deferred tax asset is the amount management believes is more-likely-than-not of being realized. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory tax rates and future income levels. The Company evaluates the realization of its deferred tax assets each quarter throughout the year. D uring the years ended June 30, 2023 and 2022, the Company recorded a net tax benefit related to the change in valuation allowances of $2,657 and $1,937, respectively. The total valuation allowance provided against the deferred tax assets in Canada and Mexico is $3,415 and $6,228 as of June 30, 2023 and 2022, respectively. As of June 30, 2023, the Company had accumulated undistributed earnings of non-U.S. subsidiaries of approximately $172,914. The vast majority of such earnings have previously been subjected to the one-time transition tax or the Global Intangible Low Taxed Income ("GILTI") inclusion. Therefore, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign withholding and state income taxes. In addition, we expect foreign tax credits would be available to either offset or partially reduce the tax cost in the event of a distribution. We intend, however, to indefinitely reinvest these earnings and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs. Unrecognized Income Tax Benefits The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2023, 2022, and 2021:
Year Ended June 30, | 2023 |  | 2022 |  | 2021
Unrecognized Income Tax Benefits at beginning of the year | $ | 4,926 |  |  | $ | 5,230 |  |  | $ | 4,955 |
Current year tax positions | 622 |  |  | 505 |  |  | 285 |
Prior year tax positions | (86) |  |  | (83) |  |  | 620 |
Expirations of statutes of limitations | (641) |  |  | (726) |  |  | (630) |
Unrecognized Income Tax Benefits at end of year | $ | 4,821 |  |  | $ | 4,926 |  |  | $ | 5,230 |
The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. During 2023, 2022, and 2021, the Company recognized $239, $(362), and $144 of expense (income), respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income. The Company had a liability for penalties and interest of $1,115, $876, and $1,238 as of June 30, 2023, 2022, and 2021, respectively. The Company does not anticipate a significant change to the total amount of unrecognized income tax benefits within the next twelve months. Included in the balance of unrecognized income tax benefits at June 30, 2023, 2022, and 2021 are $4,722, $4,813, and $4,986 respectively, of income tax benefits that, if recognized, would affect the effective income tax rate. The Company is subject to U.S. federal income tax examinations for the tax years 2019 through 2023 and to state and local income tax examinations for the tax years 2017 through 2023. In addition, the Company is subject to foreign income tax examinations for the tax years 2016 through 2023. The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year, or as a reduction of a deferred tax asset.

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