v3.26.1
INCOME TAXES
 12 Months Ended
Mar. 31, 2026
INCOME TAXES [Abstract]  
INCOME TAXES
15. INCOME TAXES
 
We account for our tax positions in accordance with Codification Topic 740. Under the guidance, we evaluate uncertain tax positions based on the two-step approach. The first step is to evaluate each uncertain tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in an audit, including resolution of related appeals or litigation processes, if any. For tax positions that are not likely of being sustained upon audit, the second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
 
As of March 31, 2026, and 2025, we do not have any unrecognized tax benefits for uncertain tax positions. We recognize accrued interest and penalties related to unrecognized tax benefits as part of income tax expense.
 
We file income tax returns, including returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. The tax years ended March 31, 2025, March 31, 2024, and March 31, 2023, are subject to examination by federal and state taxing authorities.
A reconciliation of income taxes computed at the statutory federal income tax rate of 21.0% to the provision for income taxes included in the consolidated statements of operations is as follows (in thousands, except percentages):
 
                         
                                  
     Year ended March 31,  
     2026      2025      2024  
     Amount      Percent      Amount      Percent      Amount      Percent  
U.S. federal statutory tax rate
 $ 36,422    21.0%  $ 22,286    21.0%  $ 28,400    21.0%
                                  
Domestic federal reconciling items:
                                
 Nontaxable or non-deductible items:
                                
 Non-deductible executive compensation
   2,434    1.4%    2,020    1.9%    1,718    1.3%
 Other
   403    0.2%    (189)    (0.2)%    97    0.1%
 Cross border tax laws
   (105)    0.0%    (131)    (0.1)%    (170)    (0.1)%
 Other (1)
   (9)    0.0%    (97)    (0.1)%    (172)    (0.3)%
                                  
State and local income taxes, net of federal income tax effect (2)
   9,962    5.7%    5,504    5.2%    8,094    6.0%
                                  
Foreign tax effects
                                
Other foreign jurisdictions
   211    0.1%    292    0.3%    (56)    0.0%
                                  
Total
 $ 49,318    28.4%  $ 29,685    28.0%  $ 37,911    28.0%
 
(1) Represents several adjustments, none of which are significant for separate disclosure.
(2) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Virginia, and New York.
 
Income (loss) from continuing operations before income tax expense (benefit):
 
             
 
Year ended March 31,
    2026     2025     2024  
U.S.
  $ 165,705   $ 101,325   $ 129,317 
Foreign
    7,733     4,799     5,921 
Total
  $ 173,438   $ 106,124   $ 135,238 
 
The components of the provision for income taxes from continuing operations are as follows (in thousands):
 
     Year ended March 31,    
Current:
   2026      2025      2024  
Federal
 $ 34,490   $ 21,928   $ 28,394 
State
   12,141     7,121     11,006 
Foreign
   1,795     1,092     1,236 
Total current expense
   48,426     30,141     40,636 
                   
Deferred:
                 
Federal
   569     (551)     (1,898) 
State
   284     (50)     (778) 
Foreign
   39     145     (49) 
Total deferred expense (benefit)
   892     (456)     (2,725) 
                   
Total income tax expense:
                 
Total federal
   35,059     21,377     26,496 
Total state
   12,425     7,071     10,228 
Total foreign
   1,834     1,237     1,187 
Provision for income taxes
 $ 49,318   $ 29,685   $ 37,911 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows (in thousands):
 
         
   
March 31, 2026
   
March 31, 2025
 
Deferred tax assets:
         
Accrued vacation
 $2,875   $2,744 
Deferred revenue
  7,512    7,108 
Allowance for credit losses
  785    1,745 
Restricted stock
  801    301 
Operating leases
  850     -  
Other deferred tax assets
  1,936    841 
Inventory reserve
  455    1,313 
Capitalized research expenditures
  374    1,666 
Accrued bonus
  2,602    2,708 
Lease liabilities
  4,291    5,067 
Other credits and carryforwards
  14    101 
Gross deferred tax assets
  22,495    23,594 
Less: valuation allowance
  (14)    (63) 
Net deferred tax assets
  22,481    23,531 
           
Deferred tax liabilities:
         
Property and equipment
  (2,296)    (2,516) 
Operating leases
   -     (7,804) 
Prepaid expenses
  (4,090)    (4,095) 
Right-of-use assets
  (3,988)    (4,714) 
Tax deductible goodwill
  (3,152)    (2,198) 
Total deferred tax liabilities
  (13,526)    (21,327) 
           
Net deferred tax asset
 $8,955   $2,204 
 
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Based on this evaluation as of March 31, 2026, we are recognizing a valuation allowance to offset gross deferred tax assets primarily attributable to net operating losses at certain of the foreign subsidiaries and foreign tax credit carry forwards. We believe that it is more likely than not that we will realize the remaining gross deferred tax assets through generating taxable income or the reversal of existing temporary differences attributable to the gross deferred tax liabilities.
 
The following table presents income taxes paid, net of refunds, for the year ended March 31, 2026 (in thousands):
 
                
 

Year Ended March 31,  
   
2026
   
2025
   
2024
 
                
U.S. federal
 $33,013   $36,119   $29,171 
                
Domestic state and local:
              
California (1)
   -     2,491    2,598 
Other
  11,152    9,374    8,283 
Total state and local
  11,152    11,865    10,881 
                
Foreign
  1,901    748    1,474 
Total
 $46,066   $48,732   $41,526 
 
(1) The amount of income taxes paid for the year ended March 31, 2026 was less than 5% of total income taxes paid.