v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As of the fiscal year ended June 30, 2026, the Company maintains the ability to access the earnings of foreign subsidiaries. The Company considered recording a deferred tax liability related to federal, state and withholding tax and determined that no liability should be recorded. There is no certainty as to the timing of the distributions of such earnings to the U.S. in whole or in part.
Income tax expense (benefit) consists of:
Fiscal Year Ended June 30,
202620252024
(in thousands)
Current:
Federal$16,658 $12,736 $15,626 
State4,452 3,805 3,608 
Foreign(805)3,498 5,578 
Total current20,305 20,039 24,812 
Deferred:
Federal1,982 2,320 (827)
State1,938 (217)(911)
Foreign645 706 (293)
Total deferred4,565 2,809 (2,031)
Provision for income taxes$24,870 $22,848 $22,781 

The following table presents a reconciliation of the statutory income tax rate, expressed as a percentage of income before income taxes, to the effective income tax rate for the year ended June 30, 2026, following the adoption of ASU 2023-09.
Fiscal Year Ended June 30, 2026
$%
(in thousands)
U.S. Federal income tax at statutory rate$21,78621.0 %
United States
State and Local Income Taxes(1)
5,4555.3 %
Federal
Effect of Cross-Border Tax Laws
Global intangible low-taxed income(475)(0.5)%
FDII(481)(0.5)%
Subpart F Income1,6371.6 %
Other(136)(0.1)%
Tax Credits
Foreign Tax Credit(1,380)(1.3)%
Changes in Valuation Allowances(6,162)(5.9)%
Nontaxable or Nondeductible Items
Non-deductible compensation2,3102.2 %
Capital Loss Expiration5,3305.1 %
Other(82)(0.1)%
Other Adjustments(571)(0.6)%
Brazil
Non-taxable income(1,197)(1.2)%
Pillar-Two1,1881.1 %
Payable true-up(2,551)(2.5)%
Other(336)(0.3)%
Other Foreign Jurisdictions2270.2 %
Changes in Unrecognized Tax Benefits3080.3 %
Provision for income taxes$24,87024.0 %
(1) The states that contribute the majority (greater than 50.0%) of the tax effect in this category include California, Illinois, Minnesota, New Jersey and New York.

The following table presents a reconciliation of the U.S. Federal income tax expense for the fiscal years ended June 30, 2025 and June 30, 2024 with the applicable statutory rate of 21.0%, prior to the adoption of ASU 2023-09.
Fiscal Year Ended June 30,
20252024
(in thousands)
U.S. statutory rate21.0 %21.0 %
U.S. Federal income tax at statutory rate$19,823 $20,967 
Increase (decrease) in income taxes due to:
State and local income taxes, net of Federal benefit2,788 1,939 
Tax credits(573)(1,794)
Valuation allowance(445)1,131 
Effect of varying statutory rates in foreign operations, net1,382 2,109 
Stock compensation(1,258)(76)
Reduction in prior year transition tax(2,065)— 
Earnings from foreign subsidiaries778 776 
Losses on dispositions— (2,816)
Global intangible low taxed income tax
475 (832)
Nontaxable income(136)(927)
Nondeductible compensation2,144 1,412 
Notional interest deduction on net equity(928)— 
Other863 892 
Provision for income taxes$22,848 $22,781 

On August 26, 2024, the U.S. Tax Court issued an opinion in Varian Medical Systems, Inc. v. Commissioner. The opinion related to the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (the company’s fiscal year 2018). While the company was not a party to the case, the opinion resulted in a change to its tax position, and as such recorded a tax benefit of $2.1 million as a reduction to the provision for income taxes in the June 30, 2025 fiscal year.

During the June 30, 2024 fiscal year, the Company received a favorable ruling in Brazil regarding an exclusion from taxable income and as a result recognized a $1.5 million income tax recovery for prior years.

Subsequent to the 2023 fiscal year-end, the IRS issued Notice 2023-55 which provides taxpayers with Brazilian subsidiaries temporary relief from the final foreign tax credit regulations. As a result, the company recognized a tax benefit of $1.5 million during the 2024 fiscal year for creditable foreign taxes for the 2023 fiscal year.
The following table presents income taxes paid, net of refunds, for the year ended June 30, 2026, based on the adoption of ASU 2023-09:
Fiscal year ended June 30, 2026
(in thousands)
Federal$21,606 
State4,864 
Foreign
Brazil2,386 
Other Foreign48 
Total$28,904 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
June 30,
20262025
(in thousands)
Deferred tax assets derived from:
Allowance for accounts receivable$4,720 $8,055 
Inventories2,651 2,690 
Nondeductible accrued expenses8,310 7,376 
Net operating loss carryforwards273 268 
Tax credits8,876 9,574 
Deferred compensation7,678 6,984 
Stock compensation4,946 4,186 
Capital loss carryforwards5,170 11,579 
Timing of amortization deduction from intangible assets2,342 7,675 
Timing of depreciation and other deductions from building and equipment694 437 
Total deferred tax assets45,660 58,824 
Valuation allowance(13,322)(19,633)
Total deferred tax assets, net of allowance32,338 39,191 
Deferred tax liabilities derived from:
Timing of amortization deduction from goodwill(21,748)(17,659)
Timing of amortization deduction from intangible assets— (2,763)
Total deferred tax liabilities(21,748)(20,422)
Net deferred tax assets$10,590 $18,769 

The components of pretax earnings are as follows:
Fiscal Year Ended June 30,
202620252024
(in thousands)
Domestic$91,799 $78,460 $78,653 
Foreign11,944 15,936 21,188 
Worldwide pretax earnings$103,743 $94,396 $99,841 
As of June 30, 2026, there were (i) gross net operating loss carryforwards of approximately $0.9 million for U.S. federal income tax purposes; (ii) gross state net operating loss carryforwards of approximately $1.1 million; (iii) state income tax credit carryforwards of approximately $3.3 million that began to expire in the 2026 tax year; (iv) withholding tax credits of approximately $5.3 million; (v) foreign tax credits of $1.0 million, and (vi) gross capital loss carryovers of $20.7 million. The Company maintains a valuation allowance of $0.1 million for U.S. federal net operating losses, $5.2 million for capital loss carryforwards, a less than $0.1 million valuation allowance for state net operating losses, a $5.3 million valuation allowance for withholding tax credits, a $1.0 million valuation allowance for foreign tax credits, and a $1.6 million valuation allowance for state income tax credits, where it was determined that, in accordance with ASC 740, it is more likely than not that they cannot be utilized.

The Company recognizes excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements in accordance with ASU 2016-09. The Company recognized net tax benefit of $0.5 million for the fiscal year ended June 30, 2026, net tax benefit of $1.2 million for the fiscal year ended June 30, 2025 and net tax benefit of less than $0.1 million for the fiscal year ended June 30, 2024.

As of June 30, 2026, the Company had gross unrecognized tax benefits of $1.3 million, $1.1 million of which, if recognized, would affect the effective tax rate. This reflects an increase of $0.6 million on a gross basis over the prior fiscal year. The Company does not expect that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Income Statements. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets. The total amount of interest and penalties accrued, but excluded from the table below, were $0.6 million, $1.0 million and $1.3 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
June 30,
202620252024
(in thousands)
Beginning Balance$698 $1,141 $1,172 
Additions based on tax positions related to the current year75 86 89 
Additions based on tax positions related to prior years605 — — 
Reduction for tax positions of prior years(82)(529)(120)
Ending Balance$1,296 $698 $1,141 

The Company conducts business internationally and, as a result, one or more of its subsidiaries files income tax returns in the United States federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries in which it operates. With certain exceptions, the Company is no longer subject to state and local, or non-United States income tax examinations by tax authorities for tax years before June 30, 2021.

On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was signed into law. The Act permanently extends key provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation, and introduces changes to the international tax framework. We have evaluated the impact of the Act on our future effective tax rate, tax liabilities, and cash taxes and concluded that its adoption did not have a material impact on our consolidated financial statements.