Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
9 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

13. INCOME TAXES

Net income from operations before provision for income taxes is shown below (in thousands):

 

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2024

 

 

 

2023

 

 

2024

 

 

2023

 

U.S.

 

$

6,403

 

 

 

$

45,766

 

 

$

48,753

 

 

$

146,895

 

Foreign

 

 

37

 

 

 

 

7

 

 

 

50

 

 

 

33

 

 

$

6,440

 

 

 

$

45,773

 

 

$

48,803

 

 

$

146,928

 

 

The Company files a consolidated federal income tax return based on a June 30 tax year end. The provision for income tax expense by jurisdiction and the effective tax rate are shown below (in thousands):

 

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2024

 

 

 

2023

 

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

1,089

 

 

 

$

9,171

 

 

$

9,441

 

 

$

29,074

 

State and local

 

 

182

 

 

 

 

606

 

 

 

1,239

 

 

 

3,000

 

Foreign

 

 

15

 

 

 

 

(2

)

 

 

25

 

 

 

22

 

Income tax expense

 

$

1,286

 

 

 

$

9,775

 

 

$

10,705

 

 

$

32,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

 

20.0

%

 

 

 

21.4

%

 

 

21.9

%

 

 

21.8

%

Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rates for the three and nine months ended March 31, 2024 and 2023 primarily due to the excess tax benefit from share-based compensation and the foreign derived intangible income special deduction, partially offset by Section 162(m) executive compensation disallowance, state taxes (net of federal tax benefit), and other normal course non-deductible expenditures.

Income Taxes Receivable and Payable

As of March 31, 2024 and June 30, 2023, we had an income tax receivable of $4.3 million and payable of $1.0 million, respectively.

Deferred Tax Assets and Liabilities

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized by evaluating both positive and negative evidence. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of March 31, 2024 and June 30, 2023, management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets. We based this conclusion on historical and projected operating performance, as well as our expectation that our operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets. A tax valuation allowance was considered unnecessary, as management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets.

As of March 31, 2024, the condensed consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a federal deferred tax liability of $14.5 million and a state deferred tax liability of $2.3 million. As of June 30, 2023, the condensed consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a federal deferred tax liability of $14.4 million and a state deferred tax liability of $2.3 million.

Unrecognized Tax Benefits

The Company has taken or expects to take certain tax benefits on its income tax return filings that it has not recognized as a tax benefit (i.e., an unrecognized tax benefit) on its condensed consolidated statements of income. The Company's measurement of its uncertain tax positions is based on management's assessment of all relevant information, including, but not limited to prior audit experience, audit settlement, or lapse of the applicable statute of limitations. As of March 31, 2024, there have been no material changes to our unrecognized tax benefits or any related interest or penalties since June 30, 2023.