Income Taxes

12 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

(Loss) income before income taxes was as follows:

	Year Ended September 30,
	2021		2020		2019
Domestic	$	(129,814)	$	94,002	$	(45,364)
Foreign	75,020		79,345		108,470
Total	$	(54,794)	$	173,347	$	63,106

Taxes on income consisted of the following:

	Year Ended September 30,
	2021		2020		2019
U.S. federal and state:
Current	$	29,712	$	20,733	$	23,461
Deferred	(39,609)		(7,048)		(23,182)
Total	(9,897)		13,685		279
Foreign:
Current	25,417		21,053		27,580
Deferred	(1,737)		(4,219)		(3,968)
Total	23,680		16,834		23,612
Total U.S. and foreign	$	13,783	$	30,519	$	23,891

The Provision for income taxes at our effective tax rate differed from the statutory rate as follows:

	Year Ended September 30,
	2021		2020		2019
Federal statutory rate	21.0	%	21.0	%	21.0	%
U.S. benefits from research and experimentation activities	3.4		(1.5)		(2.9)
State taxes, net of federal effect	1.2		1.1		(4.7)
Foreign income at other than U.S. rates	(11.6)		1.7		10.3
Excess compensation	(3.3)		0.4		6.4
Share-based compensation	7.4		(2.2)		(7.2)
U.S. tax reform	—		—		14.1
Global Intangible Low Taxed Income ("GILTI")	1.5		—		3.1
Foreign derived intangible income	14.4		(3.4)		(3.9)
Change in reserve positions	(11.1)		1.9		0.3
Goodwill impairment	(47.5)		—		—
Other, net	(0.6)		(1.4)		1.4
Provision for income taxes	(25.2)	%	17.6	%	37.9	%

The negative effective tax rate during fiscal 2021 in relation to the loss before income taxes of $54,794 was primarily attributable to the unfavorable impact of goodwill impairment charges related to PIM and wood treatment, partially offset by a tax benefit related to share-based compensation and foreign derived intangible income.

The decrease in the effective tax rate during fiscal 2020 was primarily attributable to the absence of a discrete charge recorded in fiscal 2019 related to the final regulations issued under the Tax Cuts and Jobs Act and the absence of unfavorable tax treatment of certain non-deductible costs related to the KMG Acquisition. Additionally, the tax rate was favorably impacted by the final tax regulations issued in July 2020, which provided for a high-tax exception for those jurisdictions subject to the GILTI tax, for which the Company qualified.

The following table presents the changes in the balance of gross unrecognized tax benefits during the last three fiscal years:

Balance September 30, 2018	$	1,434
Additions for tax positions relating to the current fiscal year	271
Additions for tax positions relating to prior fiscal years	9,839
Balance September 30, 2019	11,544
Additions for tax positions relating to the current fiscal year	4,691
Additions for tax positions relating to prior fiscal years	140
Reduction for tax positions relating to prior fiscal years	(1,337)
Balance September 30, 2020	15,038
Additions for tax positions relating to the current fiscal year	5,288
Additions for tax positions relating to prior fiscal years	2,162
Reduction for tax positions relating to prior fiscal years	(113)
Balance September 30, 2021	$	22,375

The entire balance of unrecognized tax benefits shown above as of September 30, 2021 and 2020, would affect our effective tax rate if recognized. Additions for tax positions of $5,288 recorded in the current fiscal year are mainly due to liabilities related to mix of jurisdictional earnings from intercompany transactions. Interest accrued and penalties charged to expense in fiscal years 2021, 2020 and 2019 was immaterial.

At September 30, 2021, the tax periods open to examination by the U.S. federal, state and local governments include fiscal years 2015 through 2021, and the tax periods open to examination by foreign jurisdictions include fiscal years 2016 through 2021. We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months.

Significant components of net deferred tax assets and liabilities were as follows:

	September 30,
	2021		2020
Deferred tax assets:
Employee benefits	$	7,877	$	8,920
Inventory	6,469		4,657
Accrued expenses	3,121		2,615
Share-based compensation expense	5,686		5,709
Credit and other carryforwards	9,647		5,803
Lease obligations	6,858		—
Interest rate swap	3,732		8,506
Other	579		1,238
Valuation allowance	(2,880)		(2,948)
Total deferred tax assets	$	41,089	$	34,500
Deferred tax liabilities:
Depreciation and amortization	$	94,425	$	131,237
Lease right-of-use assets	6,689		—
Withholding on transition taxes	4,696		4,156
Other	3,396		3,606
Total deferred tax liabilities	$	109,206	$	138,999

As of September 30, 2021, the Company had foreign and domestic net operating loss carryforwards (“NOLs”) of $28,243, which will expire over the period between fiscal years 2022 and 2041. We have recorded a tax-effected valuation allowance of $2,880 against the deferred tax assets related to certain foreign and U.S. federal and state NOLs, as well as on certain federal tax credit carryforwards. As of September 30, 2021, the Company had a U.S. federal and state tax credit carryforward of $1,325, which will expire beginning in fiscal years 2022 through 2031.