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Income Taxes

12 Months Ended

Jun. 30, 2024

Income Taxes

Income Taxes

12. Income Taxes

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

​

​	​	​	​	​	​	​	​	​	​
For the Year Ended June 30		2024			2023			2022
Domestic	​	$	(22,820)	​	$	14,776	​	$	27,695
Foreign	​		33,736	​		39,295	​		44,632
Income before income taxes	​	$	10,916	​	$	54,071	​	$	72,327

​

​

Components of the provision for income taxes were:

​

​	​	​	​	​	​	​	​	​	​
For the Year Ended June 30		2024			2023			2022
Current provision:		​			​			​
Federal	​	$	3,037	​	$	9,801	​	$	4,874
State and local	​		1,718	​		1,810	​		1,468
Foreign	​		15,740	​		12,750	​		17,613
Total current provision	​		20,495	​		24,361	​		23,955
Deferred provision (benefit):	​		​	​		​	​
Federal	​		(4,755)	​		(6,151)	​		(75)
State and local	​		(1,523)	​		(266)	​		251
Foreign	​		(4,468)	​		3,424	​		23
Change in foreign valuation allowances	​		(1,249)	​		97	​		(1,002)
Total deferred benefit	​		(11,995)	​		(2,896)	​		(803)
​	​	​	​	​	​	​	​	​	​
Provision for income taxes	​	$	8,500	​	$	21,465	​	$	23,152

​

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

​

​	​	​	​	​	​	​	​
For the Year Ended June 30		2024		2023		2022	​
U.S. federal statutory income tax rate		21.0	%	21.0	%	21.0	%
State and local taxes, net of federal benefit		(1.1)	​	2.0	​	2.0	​
Higher taxes on non-U.S. income		9.9	​	8.9	​	4.8	​
Changes in uncertain tax positions	​	30.7	​	5.1	​	4.4	​
Global Intangible Low-Taxed Income		18.3	​	3.3	​	0.3	​
Recognition of federal and foreign tax credits	​	(10.6)	​	(3.1)	​	(0.9)	​
Change in valuation allowance	​	(11.4)	​	0.2	​	(1.4)	​
Foreign derived intangible income	​	(3.8)	​	(3.7)	​	(2.1)	​
Non-U.S. withholding and related taxes, net, on planned repatriation	​	28.4	​	—	​	—	​
Impact of foreign tax credit regulations and related changes	​	(20.0)	​	1.9	​	—	​
Non-deductible operating expenses	​	11.3	​	0.9	​	0.8	​
Non-deductible acquisition costs	​	4.3	​	—	​	—	​
Other		0.9	​	3.2	​	3.1	​
Effective income tax rate		77.9	%	39.7	%	32.0	%

​

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 years ended June 30, 2024, 2023 and 2022, included $2,003, $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 Higher taxes on non-U.S. income.

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

​

​	​	​	​	​	​	​
As of June 30		2024			2023
Deferred tax assets:	​	​	​	​	​	​
Employee-related accruals	​	$	6,620	​	$	5,461
Inventory	​		1,521	​		2,864
Environmental remediation	​		767	​		1,733
Net operating loss carry forwards–domestic	​		777	​		839
Net operating loss carry forwards–foreign	​		3,813	​		4,389
Operating lease liabilities	​	​	6,788	​	​	6,521
R&D cost capitalization	​	​	7,227	​	​	4,283
Unrealized foreign exchange	​	​	1,470	​	​	—
Carried foreign interest expense	​	​	4,518	​	​	—
Other	​	​	7,224	​		(1,311)
​	​		40,725	​		24,779
Valuation allowance	​		(1,288)	​		(2,598)
​	​		39,437	​		22,181
Deferred tax liabilities:	​		​	​		​
Property, plant and equipment and intangible assets	​	​	(5,282)	​	​	(6,286)
Operating lease ROU assets	​	​	(6,441)	​	​	(6,280)
Unrealized foreign exchange	​	​	—	​	​	(1,906)
Non-U.S. withholding and related taxes, net, on planned repatriation	​	​	(2,828)	​	​	—
Other	​		(6,182)	​		(712)
​	​		(20,733)	​		(15,184)
​	​	​	​	​	​	​
Net deferred tax asset	​	$	18,704	​	$	6,997

​

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

​

​	​	​	​	​	​	​
As of June 30		2024			2023
Other assets	​	$	19,371	​	$	8,711
Other liabilities	​		(667)	​		(1,714)
​	​	$	18,704	​	$	6,997

​

The valuation allowance established against deferred tax assets was:

​

​	​	​	​	​	​	​	​	​	​
As of June 30		2024			2023			2022
Balance at beginning of period	​	$	2,598	​	$	2,618	​	$	3,709
(Benefit) provision for income taxes	​	​	(1,310)	​		(20)	​		(1,091)
Balance at end of period	​	$	1,288	​	$	2,598	​	$	2,618

​

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 $17,250 of state net operating loss carry forwards. $9,320 that will expire in 2024 through 2043, and $7,930 that do not expire, and $16,208 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 expect to repatriate approximately $80,000 of non-U.S. earnings, which will be subject to applicable non-U.S. withholding and related taxes, net of reductions in U.S. income taxes. As of June 30, 2024 we recorded a liability of $2,828 related to the planned repatriation of international earnings. We consider all other undistributed earnings of such foreign subsidiaries to be indefinitely reinvested. At June 30, 2024, our cash and cash equivalents and short-term investments included $111,890 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		2024			2023			2022
Unrecognized tax benefits–beginning of period	​	$	9,449	​	$	7,832	​	$	5,311
Tax position changes–current period	​		2,066	​		2,181	​		5,333
Tax position changes–prior periods, including settlements with tax authorities	​		615	​		193	​		(1,175)
Lapse of statute of limitations	​		(58)	​		(194)	​		(1,071)
Effect of changes in exchange rates	​		(211)	​		(563)	​		(566)
Unrecognized tax benefits–end of period	​		11,861	​		9,449	​		7,832
Interest and penalties–end of period	​		1,689	​		981	​		427
Total liabilities related to uncertain tax positions	​	$	13,550	​	$	10,430	​	$	8,259

​

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 $740, $589 and $74 for 2024, 2023 and 2022, 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, 2018; and

● Israel, through June 30, 2020, for certain subsidiaries and through June 30, 2021, for certain subsidiaries.

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The entire disclosure for income tax.

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