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Income Taxes

12 Months Ended

Jun. 30, 2023

Income Taxes

Income Taxes

12. Income Taxes

The components of income before income taxes consisted of the following:

​

​	​	​	​	​	​	​	​	​	​
For the Year Ended June 30		2023			2022			2021
Domestic	​	$	14,776	​	$	27,695	​	$	12,684
Foreign	​		39,295	​		44,632	​		53,784
Income before income taxes	​	$	54,071	​	$	72,327	​	$	66,468

​

Components of the provision for income taxes were:

​

​	​	​	​	​	​	​	​	​	​
For the Year Ended June 30		2023			2022			2021
Current provision (benefit):		​			​			​
Federal	​	$	9,801	​	$	4,874	​	$	99
State and local	​		1,810	​		1,468	​		887
Foreign	​		12,750	​		17,613	​		13,280
Total current provision	​		24,361	​		23,955	​		14,266
Deferred provision (benefit):	​		​	​		​	​
Federal	​		(6,151)	​		(75)	​		291
State and local	​		(266)	​		251	​		(110)
Foreign	​		3,424	​		23	​		(2,663)
Change in valuation allowance–foreign	​		97	​		(1,002)	​		299
Total deferred provision (benefit)	​		(2,896)	​		(803)	​		(2,183)
​	​	​	​	​	​	​	​	​	​
Provision for income taxes	​	$	21,465	​	$	23,152	​	$	12,083

​

Reconciliations of the federal statutory rate to the Company’s effective tax rate were:

​

​	​	​	​	​	​	​	​
For the Year Ended June 30		2023		2022		2021	​
Federal income tax rate		21.0	%	21.0	%	21.0	%
State and local taxes, net of federal benefit		2.0	​	2.0	​	0.8	​
Foreign income tax rates		8.9	​	4.8	​	4.2	​
Changes in uncertain tax positions	​	5.1	​	4.4	​	(6.8)	​
Global Intangible Low-Taxed Income		3.3	​	0.3	​	1.3	​
Recognition of federal and foreign tax credits	​	(0.9)	​	(0.9)	​	(2.1)	​
Change in valuation allowance	​	0.2	​	(1.4)	​	0.5	​
Foreign derived intangible income	​	(3.7)	​	(2.1)	​	—	​
Foreign withholding taxes	​	2.8	​	0.1	​	—	​
Other		1.0	​	3.8	​	(0.7)	​
Effective tax rate		39.7	%	32.0	%	18.2	%

​

We record the Global Intangible Low-Taxed Income (“GILTI”) aspects of comprehensive U.S. income tax legislation as a period expense. The provision for income taxes for the year ended June 30, 2023 and 2022, included $1,775 and $207 of federal tax expense from the effects of GILTI, respectively.

The Company benefits from certain tax holidays in Israel; the impact of which are included within Foreign Income Taxes.

In July 2023, the IRS provided guidance to determine whether a foreign tax is eligible for a U.S. foreign tax credit for tax years 2022 and 2023. As a result of this new guidance, the Company will record a tax benefit of approximately $1,223 related to the year ended June 30, 2023, in the three months ending September 30, 2023.

The tax effects of significant temporary differences that comprise deferred tax assets and liabilities were:

​

​	​	​	​	​	​	​
As of June 30		2023			2022
Deferred tax assets:	​	​	​	​	​	​
Employee-related accruals	​	$	5,461	​	$	6,879
Inventory	​		2,864	​		2,288
Environmental remediation	​		1,733	​		751
Net operating loss carry forwards–domestic	​		839	​		1,323
Net operating loss carry forwards–foreign	​		4,389	​		4,348
Operating lease liabilities	​	​	6,521	​	​	7,639
R&D cost capitalization	​	​	4,283	​	​	—
Other	​	​	(1,311)	​		(1,066)
​	​		24,779	​		22,162
Valuation allowance	​		(2,598)	​		(2,618)
​	​		22,181	​		19,544
Deferred tax liabilities:	​		​	​		​
Property, plant and equipment and intangible assets	​	​	(6,286)	​	​	(7,187)
Operating lease ROU assets	​	​	(6,280)	​	​	(7,489)
Unrealized foreign exchange	​	​	(1,906)	​	​	—
Other	​		(712)	​		(24)
​	​		(15,184)	​		(14,700)
​	​	​	​	​	​	​
Net deferred tax asset	​	$	6,997	​	$	4,844

​

Deferred taxes are included in the consolidated balance sheets as follows:

​

​	​	​	​	​	​	​
As of June 30		2023			2022
Other assets	​	$	8,711	​	$	5,849
Other liabilities	​		(1,714)	​		(1,005)
​	​	$	6,997	​	$	4,844

​

The valuation allowance established against deferred tax assets was:

​

​	​	​	​	​	​	​	​	​	​
As of June 30		2023			2022			2021
Balance at beginning of period	​	$	2,618	​	$	3,709	​	$	3,403
(Benefit) provision for income taxes	​	​	(20)	​		(1,091)	​		306
Balance at end of period	​	$	2,598	​	$	2,618	​	$	3,709

​

The Company records valuation allowances against certain foreign and state deferred tax assets when, after considering all of the available evidence, it is more likely than not that these assets will not be realized.

The Company has $18,570 of state net operating loss carry forwards. $9,035 that will expire in 2023 through 2042, and $9,535 that do not expire, and $18,938 of foreign net operating loss carry forwards of which most are in jurisdictions that have no expiration.

If amounts are repatriated from certain of our foreign subsidiaries, we could be subject to additional non-U.S. income and withholding taxes. We consider undistributed earnings of such foreign subsidiaries to be indefinitely reinvested. At June 30, 2023, our cash and cash equivalents and short-term investments included $78,980 held by our international subsidiaries. We do not provide income taxes for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.

As tax law is complex and often subject to varied interpretations, it is uncertain whether some of our tax positions will be sustained upon examination. Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in our financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. Substantially all of these unrecognized tax benefits, if recognized, would reduce our effective income tax rate.

Reconciliations of the beginning and ending amounts of gross unrecognized tax benefits are as follows:

​

​	​	​	​	​	​	​	​	​	​
As of June 30		2023			2022			2021
Unrecognized tax benefits–beginning of period	​	$	7,832	​	$	5,311	​	$	9,507
Tax position changes–current period	​		2,181	​		5,333	​		1,873
Tax position changes–prior periods, including settlements with tax authorities	​		193	​		(1,175)	​		(5,354)
Lapse of statute of limitations	​		(194)	​		(1,071)	​		(1,109)
Effect of changes in exchange rates	​		(563)	​		(566)	​		394
Unrecognized tax benefits–end of period	​		9,449	​		7,832	​		5,311
Interest and penalties–end of period	​		981	​		427	​		391
Total liabilities related to uncertain tax positions	​	$	10,430	​	$	8,259	​	$	5,702

​

We recognize interest and penalties associated with uncertain tax positions as a component of the provision for income taxes. We recognized and recorded interest and penalties expense of $589, $74, and $69 for 2023, 2022 and 2021, respectively.

Income tax returns for the following periods are no longer subject to examination by the relevant tax authorities:

● U.S. federal and significant states, through June 30, 2019;

● Brazil, through December 31, 2017; and

● Israel, through June 30, 2019, for certain subsidiaries and through June 30, 2020, for certain subsidiaries.

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The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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