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v3.23.2

Income Taxes (Tables) | 12 Months Ended
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Apr. 30, 2023
Income Tax Disclosure [Abstract] |
Schedule of Income Tax Expense Attributable to (Loss) Income from Operations | Income tax expense consists of:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
current |  |  |  |  |  |  |  |  |
federal |  | $ | — |  |  |  | — |  |  |  | (17 | )
state |  |  | 1 |  |  |  | 2 |  |  |  | 3 |
foreign |  |  | 3,053 |  |  |  | 2,156 |  |  |  | 4,151 |
uncertain income tax positions |  |  | 78 |  |  |  | 37 |  |  |  | (204 | )
|  |  | 3,132 |  |  |  | 2,195 |  |  |  | 3,933 |
deferred |  |  |  |  |  |  |  |  |
federal |  |  | (1,591 | ) |  |  | 1,121 |  |  |  | (1,933 | )
state |  |  | (66 | ) |  |  | 47 |  |  |  | (80 | )
2017 Tax Cuts and Jobs Act |  |  | — |  |  |  | — |  |  |  | (3,674 | )
undistributed earnings – foreign subsidiaries |  |  | 628 |  |  |  | 76 |  |  |  | 112 |
U.S. federal & state carryforwards and credits |  |  | (5,162 | ) |  |  | (971 | ) |  |  | 451 |
uncertain income tax positions |  |  | — |  |  |  | (380 | ) |  |  | 380 |
foreign |  |  | (629 | ) |  |  | 615 |  |  |  | (22 | )
valuation allowance |  |  | 6,818 |  |  |  | 183 |  |  |  | 8,526 |
|  |  | (2 | ) |  |  | 691 |  |  |  | 3,760 |
|  | $ | 3,130 |  |  |  | 2,886 |  |  |  | 7,693 |
Schedule of (Loss) Income before Income Taxes Related to Foreign and U.S. Operations | (Loss) income before income taxes related to our foreign and U.S. operations consists of:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
Foreign |  |  |  |  |  |  |  |  |
China |  | $ | 7,062 |  |  |  | 6,998 |  |  |  | 10,007 |
Canada |  |  | 1,516 |  |  |  | 1,302 |  |  |  | 4,764 |
Haiti |  |  | (3,483 | ) |  |  | (980 | ) |  |  | 817 |
Cayman Islands |  |  | — |  |  |  | — |  |  |  | (5 | )
Total Foreign |  |  | 5,095 |  |  |  | 7,320 |  |  |  | 15,583 |
United States |  |  | (33,485 | ) |  |  | (7,645 | ) |  |  | (4,703 | )
|  | $ | (28,390 | ) |  |  | (325 | ) |  |  | 10,880 |
Summary of Differences in Income Tax Expense at Federal Income Tax Rate and Effective Income Tax Rate | The following schedule summarizes the principal differences between the income tax expense at the federal income tax rate and the effective income tax rate reflected in the consolidated financial statements:
|  | 2023 |  |  | 2022 |  |  | 2021 |
U.S. federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
valuation allowance |  |  | (24.0 | ) |  |  | (56.3 | ) |  |  | 78.4 |
income tax effects of the 2017 Tax Cuts and Jobs Act |  |  | — |  |  |  | — |  |  |  | (33.8 | )
global intangible low taxed income tax (GILTI) |  |  | — |  |  |  | (540.9 | ) |  |  | — |
foreign tax rate differential |  |  | (4.0 | ) |  |  | (206.2 | ) |  |  | 10.9 |
income tax effects of Chinese foreign exchange gains and losses |  |  | (0.9 | ) |  |  | (20.6 | ) |  |  | (8.4 | )
withholding taxes associated with foreign tax jurisdictions |  |  | (2.4 | ) |  |  | (172.8 | ) |  |  | 7.7 |
uncertain income tax positions |  |  | (0.3 | ) |  |  | 105.4 |  |  |  | 1.6 |
U.S. state income taxes |  |  | 0.6 |  |  |  | 21.5 |  |  |  | 0.3 |
stock-based compensation |  |  | (0.3 | ) |  |  | (3.3 | ) |  |  | 0.3 |
gain on bargain purchase |  |  | — |  |  |  | — |  |  |  | (1.6 | )
other (3) |  |  | (0.7 | ) |  |  | (35.8 | ) |  |  | (5.7 | )
consolidated effective income tax rate (1) (2) |  |  | (11.0 | )% |  |  | (888.0 | )% |  |  | 70.7 | %
(1) Our consolidated effective income tax rate during fiscal 2023 was much more negatively affected by the mix of earnings and losses between our U.S. operations and foreign subsidiaries, as compared with fiscal 2022 and 2021. During fiscal 2023, we incurred a significantly higher pre-tax loss from our U.S. operations totaling $(33.5) million, compared with $(7.6) million and $(4.7) million for fiscal 2022 and 2021, respectively. As a result, a significantly higher income tax benefit was not recognized due to a full valuation allowance being applied against our U.S. net deferred income tax assets during fiscal 2023, as compared with fiscal 2022 and 2021. In addition, almost all of our taxable income for each of fiscal 2023, 2022, and 2021 was earned by our foreign operations located in China and Canada, which have higher income tax rates than the U.S. (2) During fiscal 2023, we incurred a significantly higher consolidated pre-tax loss totaling $(28.4) million, compared with a much lower consolidated pre-tax loss totaling $(325,000) during fiscal 2022 and pre-tax income totaling $10.9 million during fiscal 2021. As a result, the principal differences between income tax expense at the U.S. federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced for fiscal 2022 and 2021, compared with fiscal 2023. (3) “Other” for all periods presented represents miscellaneous adjustments that pertain to U.S. permanent differences such as meals and entertainment and income tax provision to return adjustments.
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities consist of the following:
(dollars in thousands) |  | 2023 |  |  | 2022 |
deferred tax assets: |  |  |  |  |  |
accounts receivable |  | $ | 297 |  |  |  | 227 |
inventories |  |  | 3,277 |  |  |  | 2,020 |
compensation |  |  | 2,676 |  |  |  | 2,437 |
liabilities and other |  |  | 5 |  |  |  | 28 |
intangible assets and goodwill |  |  | 395 |  |  |  | 536 |
property, plant, and equipment (1) |  |  | 179 |  |  |  | 199 |
operating lease liability |  |  | 781 |  |  |  | 1,297 |
foreign income tax credits - U.S. |  |  | 783 |  |  |  | 783 |
loss carryforwards – U.S. |  |  | 13,564 |  |  |  | 8,373 |
valuation allowance - U.S. |  |  | (18,675 | ) |  |  | (11,857 | )
total deferred tax assets |  |  | 3,282 |  |  |  | 4,043 |
deferred tax liabilities: |  |  |  |  |  |
undistributed earnings on foreign subsidiaries |  |  | (4,213 | ) |  |  | (3,586 | )
property, plant and equipment (2) |  |  | (3,450 | ) |  |  | (4,292 | )
right of use assets |  |  | (964 | ) |  |  | (1,520 | )
other |  |  | (129 | ) |  |  | (121 | )
total deferred tax liabilities |  |  | (8,756 | ) |  |  | (9,519 | )
Net deferred liabilities |  | $ | (5,474 | ) |  |  | (5,476 | )
(1) Pertains to the company’s operations located in China. (2) Pertains to the company’s operations located in the U.S. and Canada.
Summary of Valuation Allowances Against U.S. Net Deferred Income Tax Assets | Based on our assessments as of April 30, 2023, and May 1, 2022, valuation allowances against our U.S. net deferred income tax assets pertain to the following:
(dollars in thousands) |  | April 30, 2023 |  |  | May 1, 2022 |
U.S. federal and state net deferred income tax assets |  | $ | 16,345 |  |  | $ | 9,527 |
U.S. capital loss carryforward |  |  | 2,330 |  |  |  | 2,330 |
|  | $ | 18,675 |  |  | $ | 11,857 |
Summary of Change in Valuation Allowances Against U.S. Net Deferred Income Tax Assets | A summary of the change in the valuation allowances against our U.S. net deferred income tax assets follows:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
beginning balance |  | $ | 11,857 |  |  |  | 11,674 |  |  |  | 3,148 |
change in judgement of beginning of year U.S. valuation allowance (1) |  |  | — |  |  |  | — |  |  |  | 6,964 |
change in valuation allowance associated with current year earnings |  |  | 7,252 |  |  |  | 1,640 |  |  |  | 1,004 |
change in estimate during current year (2) |  |  | (434 | ) |  |  | (1,457 | ) |  |  | 558 |
ending balance |  | $ | 18,675 |  |  |  | 11,857 |  |  |  | 11,674 |
(1) Refer to the above "Assessment" subsection within the section titled Deferred Income Taxes – Valuation Allowance for further details regarding our assessment and conclusions reached for providing a full valuation allowance against our U.S net deferred income tax assets during the first quarter of fiscal 2021. (2) Amounts represent changes in our U.S. net deferred income tax asset balances during the current year that pertain to (i) income tax provision to return adjustments, (ii) changes in estimates of our U.S. effective income tax rate that pertain to U.S. state income tax rates and apportionment percentages, (iii) recognition of an uncertain income tax position due to the expiration of statute of limitations, (iv) expiration of certain U.S. state loss carryforwards, and (v) other immaterial items.
Schedule of Unrecognized Tax Benefit | The following table sets forth the change in the company’s unrecognized income tax benefit:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
beginning balance |  | $ | 1,101 |  |  |  | 1,444 |  |  |  | 1,269 |
increases from prior period tax positions |  |  | 175 |  |  |  | 114 |  |  |  | 249 |
decreases from prior period tax positions |  |  | (97 | ) |  |  | (77 | ) |  |  | (74 | )
lapse of applicable statute of limitations |  |  | — |  |  |  | (380 | ) |  |  | — |
ending balance |  | $ | 1,179 |  |  |  | 1,101 |  |  |  | 1,444 |
Summary of Income Taxes Paid (Refunded) | The following table sets forth income taxes paid (refunded) by jurisdiction:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
United States federal - Alternative Minimum Tax (AMT) credit refunds (1) |  | $ | — |  |  | $ | — |  |  | $ | (1,510 | )
United States federal - Transition Tax |  |  | 265 |  |  |  | 266 |  |  |  | 226 |
China - Income Taxes |  |  | 1,831 |  |  |  | 2,036 |  |  |  | 2,076 |
China - Withholding Taxes Associated with Earnings and Profits Distribution to U.S. Parent |  |  | — |  |  |  | 487 |  |  |  | 798 |
Canada - Income Taxes |  |  | 228 |  |  |  | 311 |  |  |  | 1,408 |
|  | $ | 2,324 |  |  | $ | 3,100 |  |  | $ | 2,998 |
(1) In accordance with the provisions of the TCJA, we elected to treat our prior AMT credit carryforward balance of $1.5 million as refundable. We received refunds totaling $1.5 million in two separate installments totaling $746,000 and $764,000 during the first and second quarters of fiscal 2021, respectively.

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