v3.26.1
INCOME TAXES
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

11. INCOME TAXES

The Company adopted ASU No. 2023-09, Improvements to Income Tax Disclosures, for the annual disclosures for the year ended June 30, 2026, on a prospective basis. Comparative financial information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods.

For the years ended June 30, the sources of income (loss) before income tax expense were as follows:

 

 

2026

 

 

2025

 

 

2024

 

Domestic income

 

$

1,275

 

 

$

13,560

 

 

$

29,956

 

Foreign income (loss)

 

 

72

 

 

 

(25

)

 

 

17

 

Total income from continuing operations before income tax expense:

 

$

1,347

 

 

$

13,535

 

 

$

29,973

 

 

For the years ended June 30, the components of the provision for income taxes for continuing operations are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

2026

 

 

2025

 

 

2024

 

Current income tax (benefit) expense:

 

 

 

 

 

 

 

 

 

Federal

 

$

(936

)

 

$

3,827

 

 

$

6,870

 

State

 

 

786

 

 

 

1,182

 

 

 

1,860

 

Total current tax (benefit) expense

 

$

(150

)

 

$

5,009

 

 

$

8,730

 

Deferred tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

$

2,491

 

 

$

(1,923

)

 

$

(2,072

)

Foreign

 

 

10

 

 

 

—

 

 

 

—

 

State

 

 

597

 

 

 

(266

)

 

 

72

 

Total deferred tax expense (benefit)

 

 

3,098

 

 

 

(2,189

)

 

 

(2,000

)

Income tax expense

 

$

2,948

 

 

$

2,820

 

 

$

6,730

 

For the year ended June 30, 2026, a reconciliation of the expected tax provision at the statutory federal income tax rate to the Company’s recorded tax provision consisted of the following, subsequent to the adoption of ASU No. 2023-09 (in thousands, except percentages):

 

 

2026

 

 

 

Amount

 

 

Percent

 

U.S. Federal Statutory Rate

 

 

279

 

 

 

21.00

%

State and local income taxes, net of federal effect

 

 

 

 

 

 

State income tax expense, net of federal benefit(1)

 

 

867

 

 

 

65.25

%

Foreign taxes, other

 

 

(5

)

 

 

(0.39

%)

Effect of cross-border tax laws

 

 

(24

)

 

 

(1.79

%)

Tax credits

 

 

(539

)

 

 

(40.51

%)

Nontaxable or nondeductible items, net

 

 

 

 

 

 

Meals and entertainment

 

 

40

 

 

 

3.01

%

Nondeductible executive compensation

 

 

347

 

 

 

26.14

%

Nondeductible transaction costs

 

 

2,250

 

 

 

169.22

%

Excess tax (benefits) on equity awards

 

 

(238

)

 

 

(17.88

%)

Other

 

 

7

 

 

 

0.51

%

Changes in unrecognized tax benefits

 

 

(20

)

 

 

(1.53

%)

Other

 

 

(16

)

 

 

(4.17

%)

Effective income tax rate from continuing operations

 

 

2,948

 

 

 

218.86

%
(1)
State and local income taxes in Florida and Utah comprise the majority (greater than 50%) of the state and local income taxes, net of federal effect category.

For the years ended June 30, a reconciliation of the expected tax provision at the statutory federal income tax rate to the Company’s recorded provision consisted of the following, prior to the adoption of ASU No. 2023-09:

 

 

2025

 

 

2024

 

Statutory income tax rate

 

 

21.00

%

 

 

21.00

%

State taxes (net of federal income tax benefit and valuation allowance)

 

 

2.41

%

 

 

2.17

%

Uncertain tax positions

 

 

4.34

%

 

 

3.26

%

Tax credits

 

 

(6.03

%)

 

 

(3.10

%)

Return to provision true-ups and rate changes

 

 

(0.52

%)

 

 

(1.15

%)

Permanent differences

 

 

(0.35

%)

 

 

0.49

%

Other

 

 

(0.02

%)

 

 

(0.22

%)

Effective income tax rate

 

 

20.83

%

 

 

22.45

%

 

As of June 30, 2026, and 2025, a summary of the significant components of the Company’s deferred tax assets and liabilities was as follows:

 

 

2026

 

 

2025

 

Deferred tax assets:

 

 

 

 

 

 

Capitalized research costs

 

$

718

 

 

$

8,499

 

Warranty reserves

 

 

6,964

 

 

 

6,031

 

Accrued selling

 

 

1,976

 

 

 

2,210

 

Intangible asset basis difference

 

 

—

 

 

 

1,923

 

Unrecognized tax benefits

 

 

3,551

 

 

 

1,637

 

Accrued compensation

 

 

1,039

 

 

 

912

 

Net operating loss

 

 

7,217

 

 

 

1,003

 

Stock compensation

 

 

2,660

 

 

 

713

 

Other

 

 

3,392

 

 

 

1,972

 

Total deferred tax assets

 

 

27,517

 

 

 

24,900

 

Valuation allowance

 

 

—

 

 

 

—

 

Total deferred tax assets, net of the valuation allowance

 

 

27,517

 

 

 

24,900

 

Deferred tax liabilities:

 

 

 

 

 

 

Depreciation

 

 

(16,816

)

 

 

(4,983

)

Intangible asset basis difference

 

 

(10,912

)

 

 

—

 

Other

 

 

(1,167

)

 

 

(1,003

)

Total deferred tax liabilities

 

 

(28,895

)

 

 

(5,986

)

Net deferred tax assets (liabilities)

 

$

(1,378

)

 

$

18,914

 

As of June 30, 2026, the Company has gross federal net operating loss (NOL) carryforwards of $29.6 million, which can be carried forward indefinitely. As of June 30, 2026, the Company has gross state net operating loss (NOL) carryforwards of $24.3 million. Of this amount, $0.1 million expire in varying years ranging from June 30, 2038, to June 30, 2039, while the remainder can be carried forward indefinitely.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued amounts for interest and penalties, is as follows:

 

 

2026

 

 

2025

 

Balance at July 1

 

$

6,853

 

 

$

6,861

 

Additions based on tax positions related to the current year

 

 

321

 

 

 

348

 

Additions for tax positions of prior years

 

 

6,882

 

 

 

—

 

Reductions for tax positions of prior years

 

 

(679

)

 

 

(356

)

Balance at June 30

 

$

13,377

 

 

$

6,853

 

Of this total, $12.2 million as of June 30, 2026 and 2025, represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The total amount of interest and penalties recorded in the consolidated statements of operations for the years ended June 30, 2026, and 2025, was an expense of $0.4 million, respectively, and for the year ended June 30, 2024, was an expense of $0.5 million. The amounts accrued for interest and penalties at June 30, 2026 and 2025 were $4.9 million and $2.2 million, respectively, and are presented in unrecognized tax positions on the accompanying consolidated balance sheets.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of June 30, 2026, the Company has not made a current provision for U.S. or additional foreign withholding taxes on investments in foreign subsidiaries that are indefinitely reinvested. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances.

The Company and its subsidiaries are subject to U.S. federal income tax, as well as various other state income taxes and foreign income taxes. The federal income tax returns for the years ended June 30, 2023 through 2025 are subject to examination by the Internal Revenue Service. For state purposes, the statutes of limitation vary by jurisdiction. With few exceptions, the Company is no longer subject to examination by taxing authorities for years before June 30, 2023. The Company records unrecognized tax benefits as liabilities and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current

estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

The amounts of cash taxes paid, net of refunds, for the year ended June 30, 2026, included the following, subsequent to the adoption of ASU 2023-09:

Federal

 

$

1,660

 

State and local

 

 

398

 

Net income taxes paid

 

$

2,058

 

Income taxes paid, net of refunds, did not exceed 5% of total income taxes paid, net of refunds, for any foreign jurisdictions during the period presented. Income taxes paid, net of refunds, exceeded 5% of total income taxes paid, net of refunds in the following state and local jurisdiction: Michigan ($111), representing 5.18% of total income taxes paid, net of refunds.