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Income Taxes

12 Months Ended

Oct. 31, 2024

Income Taxes

Income Taxes

9. Income Taxes

​

The income tax provision from continuing operations consists of the following for the years ended October 31, (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​
​		2024			2023			2022
​	​	​	​		​	​	​	​	​	​
Current:	​	​	​	​	​	​	​	​	​	​
Federal	​	$	1,987	​	$	2,144	​	$	3,778	​
State	​		105	​		281	​		147	​
Foreign	​		1,564	​		1,143	​		1,209	​
Total current	​		3,656	​		3,568	​		5,134	​
​	​	​	​	​	​	​	​	​	​	​
Deferred:	​	​	​	​	​	​	​	​	​	​
Federal	​		290	​		(349)	​		(2,568)	​
State	​		718	​		273	​		487	​
Foreign	​		(604)	​		2,656	​		(701)	​
Total deferred	​		404	​		2,580	​		(2,782)	​
Change in valuation allowance	​	​	(1,735)	​	​	—	​	​	813	​
Total income tax provision	​	$	2,325	​	$	6,148	​	$	3,165	​

​

The following table presents domestic and foreign components of income (loss) before income taxes for the years ended October 31, (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​	​	2024		​	2023		​	2022
Domestic	​	$	10,518	​	$	4,485	​	$	(1,743)
Foreign	​	​	(1,345)	​	​	6,716	​	​	(1,940)
Income (loss) before taxes	​	$	9,173	​	$	11,201	​	$	(3,683)

​

The above income (loss) before income taxes includes the net loss from unconsolidated entities of $0.5 million and $0.9 million for the years ended October 31, 2024 and 2023, which is recorded in foreign operations, respectively.

​

Significant components of our deferred tax assets (liabilities) as of October 31, are as follows (in thousands):

​

​	​	​	​	​	​	​	​
​		2024			2023
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Intangible assets	​	$	—	​	$	941	​
Stock-based compensation	​		837	​		316	​
State taxes	​		6	​		7	​
Allowance for accounts receivable	​	​	868	​	​	1,276	​
Inventories	​	​	515	​	​	591	​
Accrued liabilities	​	​	2,596	​	​	2,238	​
Operating lease liabilities	​	​	6,474	​	​	14,444	​
Net operating loss	​	​	2,510	​	​	4,109	​
Capital loss carryover	​	​	801	​	​	806	​
Credits and incentives	​		901	​		1,099	​
Total deferred income tax assets	​	​	15,508	​	​	25,827	​
​	​	​	​	​	​	​	​
Property, plant, and equipment	​		(1,153)	​		(6,340)	​
Intangible assets	​	​	(32)	​	​	​	​
Operating lease - right of use assets	​	​	(4,597)	​	​	(12,111)	​
Prepaid expense	​	​	(491)	​	​	​	​
Other	​		—	​		(227)	​
Total deferred income tax liabilities	​	​	(6,273)	​	​	(18,678)	​
Valuation allowance	​	​	(1,762)	​	​	(4,885)	​
Net deferred income tax assets	​	$	7,473	​	$	2,264	​

​

The Company’s net deferred income tax assets as presented in the consolidated balance sheets consists of the following items as of October 31, (in thousands):

​

​	​	​	​	​	​	​
​		Year Ended October 31,
​	​	2024		​	2023
Deferred income tax assets	​	$	7,473	​	$	3,010
Deferred income tax liabilities	​	​	—	​	​	(746)
Net deferred income tax assets	​	$	7,473	​	$	2,264

​

As of October 31, 2024 and 2023, the Company had a federal net operating loss carryforward of none and $6.6 million, respectively. As of October 31, 2024 and 2023, the Company has gross state net operating loss carryforwards of approximately $10.8 million and $13.4 million, respectively, with carryforward periods primarily ranging from 20 years to indefinite. As of October 31, 2024 and 2023, the Company has gross foreign net operating loss carryforwards of approximately $6.1 million and $6.3 million, respectively, with carryforward periods 10 years from generation.

​

The Company records a valuation allowance against deferred tax assets when determined that all or a portion of the deferred tax assets are not more likely than not to be realized based on all available evidence. During the fourth quarter of the year ended October 31, 2024, the Company completed the sale of the Fresh Cut business, which generated taxable income and, as a result, the Company was able to utilize all its federal net operating losses, and a portion of its state net operating losses. The Company’s domestic continuing operations have generated cumulative operating income for the last three years, and the Company expects the profitability trend to continue. Based on this evaluation, the Company determined that it is more likely than not for the Company to realize a majority of the deferred tax assets, with the exception of the federal and state capital loss carryforwards, and state tax credits. As of October 31, 2024 and 2023, there is a valuation allowance of $1.8 million and $4.9 million, respectively, against the deferred tax assets that are more likely not to be realized. During the year ended October 31, 2024, the Company decreased the valuation allowance against deferred income tax assets by $3.1 million. During the year ended October 31, 2023, the Company increased the valuation allowance against deferred income tax assets by $3.1 million.

​

A reconciliation of the significant differences between the federal statutory income tax rate and the effective income tax rate on pretax income from continuing operations for the years ended October 31, is as follows:

​

​	​	​	​	​	​	​	​
​		2024		2023		2022
​	​	​	​	​	​	​	​
Federal statutory tax rate		21.0	%	21.0	%	21.0	%
State taxes, net of federal effects		5.8	​	4.2	​	(0.7)	​
Foreign tax rate differential		(1.3)	​	5.4	​	4.7	​
Uncertain tax positions		—	​	—	​	4.7	​
Stock based compensation		(0.6)	​	4.8	​	(5.6)	​
Provision to return	​	5.2	​	2.2	​	(54.5)	​
US tax on foreign income, net	​	—	​	2.9	​	—	​
State rate change		0.2	​	(0.1)	​	(2.3)	​
Valuation allowance	​	(18.9)	​	—	​	(22.1)	​
Limits on executive compensation	​	—	​	3.9	​	—	​
Other permanent differences	​	12.3	​	3.5	​	(32.7)	​
Other		1.6	​	7.2	​	1.6	​
​		25.3	%	55.0	%	(85.9)	%

​

As of October 31, 2024, and 2023, we had $11.1 million for unrecognized tax benefits related primarily to the 2013 Mexico Assessment. See Note 7 for further information.

​

A reconciliation of the beginning and ending amount of gross unrecognized taxes (exclusive of interest and penalties) was as follows (in thousands):

​

​	​	​	​	​	​	​
​		Year Ended October 31,
​	​	2024		​	2023
Beginning balance	​	$	11,131	​	$	11,131
Reductions based on tax positions related to prior periods	​	​	—	​	​	—
Gross increase - Tax positions in prior periods	​		—	​		—
Gross increase - Tax positions in current period	​		—	​		—
Ending balance	​	$	11,131	​	$	11,131

​

Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months due to tax examination changes, settlement activities, expirations of statutes of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, the Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months. The Company accounts for income taxes regarding uncertain tax positions and recognized interest and penalties related to uncertain tax positions in income tax benefit/(expense) in the consolidated statements of operations.

​

We are subject to U.S. federal income tax as well as income of multiple state tax and foreign tax jurisdictions. We are no longer subject to U.S. income tax examinations for the fiscal years prior to October 31, 2021, and are no longer subject to state income tax examinations for fiscal years prior to October 31, 2020.

The Company determined that certain foreign earnings to be indefinitely reinvested outside the United States. Our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate the cash to fund our U.S. operations. However, if these funds were repatriated, we would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable to foreign tax authorities.

In 2021, the Organization for Economic Cooperation and Development announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Pillar Two is not expected to materially impact our effective tax rate or cash flows in the next

fiscal year. New legislation or guidance could change our current assessment. We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in Mexico where we operate. Mexico plans to apply Pillar Two regulation starting in 2025.

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The entire disclosure for income tax.

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