Income Taxes

12 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Before Income Taxes

The components of income before income taxes are as follows:

Year Ended June 30,	2024		2023		2022
U.S.	$	467,785	$	423,316	$	287,367
Foreign	30,345		26,495		42,423
Income before income taxes	$	498,130	$	449,811	$	329,790

Provision

The provision for income taxes consists of:

Year Ended June 30,	2024		2023		2022
Current:
Federal	$	86,501	$	84,294	$	40,608
State and local	23,016		19,026		10,188
Foreign	3,925		5,468		6,404
Total current	113,442		108,788		57,200
Deferred:
Federal	(791)		(1,881)		12,467
State and local	1,159		(84)		2,659
Foreign	(1,442)		(3,751)		50
Total deferred	(1,074)		(5,716)		15,176
Total	$	112,368	$	103,072	$	72,376

Effective Tax Rates

The following reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate:

Year Ended June 30,	2024		2023		2022
Statutory income tax rate	21.0	%	21.0	%	21.0	%
Effects of:
State and local taxes	4.0		3.5		3.3
Stock compensation	(1.2)		(1.0)		(1.5)
GILTI/FDII	(0.4)		(0.2)		0.2
R & D credit	(0.4)		(0.4)		(0.4)
U.S. tax on foreign income, net	(0.1)		—		(0.4)
Impact of foreign operations	0.3		0.2		0.4
Non-deductibles/Deductible dividend	0.9		0.6		0.2
Interest deduction	(0.4)		(0.4)		(0.6)
Valuation allowance	(0.7)		(0.6)		(0.6)
Other, net	(0.4)		0.2		0.3
Effective income tax rate	22.6	%	22.9	%	21.9	%

Consolidated Balance Sheets

Significant components of the Company’s deferred tax assets and liabilities are as follows:

June 30,	2024		2023
Deferred tax assets:
Compensation liabilities not currently deductible	$	18,646	$	17,726
Other expenses and reserves not currently deductible	15,008		18,215
Leases	34,771		26,345
Net operating loss carryforwards	6,340		6,809
Capitalization of R&D costs	17,584		11,646
Other	300		381
Total deferred tax assets	$	92,649	$	81,122
Less: Valuation allowance	(158)		(3,459)
Deferred tax assets, net of valuation allowance	$	92,491	$	77,663
Deferred tax liabilities:
Inventories	$	(18,086)	$	(15,174)
Goodwill and intangibles	(63,733)		(52,463)
Leases	(34,473)		(26,179)
Hedging instrument	(5,965)		(9,081)
Depreciation and differences in property bases	(10,506)		(9,757)
Total deferred tax liabilities	(132,763)		(112,654)
Net deferred tax liabilities	$	(40,272)	$	(34,991)
Net deferred tax liabilities are classified as follows:
Other assets	$	11,306	$	9,990
Other liabilities	(51,578)		(44,981)
Net deferred tax liabilities	$	(40,272)	$	(34,991)

As of June 30, 2024 and 2023, the Company had foreign net operating loss carryforwards of approximately $24,627 and $29,374, respectively, the tax benefit of which is approximately $6,146 and $6,440, respectively. These loss carryforwards will expire at various dates beginning in 2036. As of June 30, 2024 and 2023, the Company had state net operating loss carryforwards, the tax benefit of which is approximately $194 and $466, respectively, which will expire at various dates beginning in 2034.

Valuation allowances are provided against deferred tax assets where it is considered more-likely-than-not that the Company will not realize the benefit of such assets. The remaining net deferred tax asset is the amount management believes is more-likely-than-not of being realized. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory tax rates and future income levels. The Company evaluates the realization of its deferred tax assets each quarter throughout the year. During the years ended June 30, 2024 and 2023, the Company recorded a net tax benefit related to the change in valuation allowances of $3,283 and $2,657, respectively. The total valuation allowance provided against the deferred tax assets is $158 and $3,415 as of June 30, 2024 and 2023, respectively.

As of June 30, 2024, the Company had accumulated undistributed earnings of non-U.S. subsidiaries of approximately $186,420. The vast majority of such earnings have previously been subjected to the one-time transition tax or the Global Intangible Low Taxed Income (GILTI) inclusion. Therefore, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign withholding and state income taxes. In addition, we expect foreign tax credits would be available to either offset or partially reduce the tax cost in the event of a distribution. We intend, however, to indefinitely reinvest these earnings and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs.

Unrecognized Income Tax Benefits

The Company and its subsidiaries file income tax returns in U.S. federal, various state, local, and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2024, 2023, and 2022:

Year Ended June 30,	2024		2023		2022
Unrecognized Income Tax Benefits at beginning of the year	$	4,821	$	4,926	$	5,230
Current year tax positions	105		622		505
Prior year tax positions	(412)		(86)		(83)
Expirations of statutes of limitations	(1,466)		(641)		(726)
Unrecognized Income Tax Benefits at end of year	$	3,048	$	4,821	$	4,926

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. During 2024, 2023, and 2022, the Company recognized $296, $239, and $(362) of expense (income), respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income. The Company had a liability for penalties and interest of $1,411, $1,115, and $876 as of June 30, 2024, 2023, and 2022, respectively. The Company anticipates a decrease to unrecognized income tax benefits within the next twelve months of approximately $2,250, of which all would affect the effective income tax rate. Included in the balance of unrecognized income tax benefits at June 30, 2024, 2023, and 2022 are $2,946, $4,722, and $4,813 respectively, of income tax benefits that, if recognized, would affect the effective income tax rate.

The Company is subject to U.S. federal income tax examinations for the tax years 2019 through 2024 and to state and local income tax examinations for the tax years 2018 through 2024. In addition, the Company is subject to foreign income tax examinations for the tax years 2017 through 2024.

The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year, or as a reduction of a deferred tax asset.