Income Taxes

12 Months Ended

Apr. 30, 2021

The following table presents the components of income before taxes for the years ended April 30, 2021, 2020 and 2019:


	Year Ended April 30,
	2021		2020		2019
	(in thousands)
United States	$	106,059	$	106,850	$	62,878
Foreign	31,035		(60,525)		7,163
Income before taxes	$	137,094	$	46,325	$	70,041

The following table presents the components of income tax expense for the years ended April 30, 2021, 2020 and 2019:


	Year Ended April 30,
	2021		2020		2019
	(in thousands)
Current
Federal	$	27,171	$	12,537	$	11,858
Foreign	9,098		1,624		13,739
State	5,594		7,857		5,929
Total Current	41,863		22,018		31,526
Deferred
Federal	(4,653)		8,986		453
Foreign	(5,870)		(7,347)		(16,931)
State	194		(713)		(1,009)
Total Deferred	(10,329)		926		(17,487)
Total provision for income taxes	$	31,534	$	22,944	$	14,039

The following table summarizes the significant differences between the U.S. federal statutory tax rate and the Company’s effective tax rate for financial statement for the years ended April 30, 2021, 2020 and 2019:


	Year Ended April 30,
	2021		2020		2019
	(in thousands)
Federal income taxes at statutory rate	$	28,793	$	9,747	$	14,715
State income taxes, net of federal income tax benefit	4,000		4,054		2,440
Impact of foreign rate differences	1,162		(2,861)		418
Impact of rate difference on impairment of goodwill	—		7,630		—
Net change in valuation allowance	578		9,070		664
Nondeductible meals & entertainment	252		592		635
Equity-based compensation	(1,012)		(1,196)		(53)
GILTI	1,911		704		241
Nondeductible transaction costs	—		90		529
Intercompany interest expense	(4,532)		(5,361)		(5,255)
Other	382		475		(295)
Total provision for income taxes	$	31,534	$	22,944	$	14,039

The tax effects of temporary differences, which give rise to deferred income taxes as of April 30, 2021 and 2020 are as follows:


	April 30,
	2021		2020
Deferred income tax assets:	(in thousands)
Allowances on accounts and notes receivable	$	2,617	$	2,016
Accrued payroll and related costs	5,093		1,859
Insurance reserves	4,086		2,501
Inventory costs	3,252		2,630
Deferred compensation	7,892		7,426
Equity compensation	2,612		2,695
Derivative instrument	5,083		7,850
Acquisition related costs	1,202		1,311
Net operating loss carry-forwards	1,591		1,595
Disallowed interest expense	974		736
Investment in partnerships	24,316		16,535
Deferred rent	829		1,112
Noncompete agreements	95		120
Other deferred tax assets, net	1,147		1,424
Total deferred income tax assets	60,789		49,810
Less: Valuation allowance	(11,768)		(10,183)
Total deferred income tax assets, net of valuation allowance	49,021		39,627
Deferred income tax liabilities:
Amortization of intangible assets	(19,583)		(18,917)
Rebates	(151)		(400)
Depreciation	(25,668)		(21,508)
Deferred financing costs	(463)		(1,582)
Other deferred tax liabilities, net	(169)		(334)
Total deferred income tax liabilities	(46,034)		(42,741)
Deferred income tax liabilities, net	$	2,987	$	(3,114)

GILTI. The Company is subject to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred.

As of April 30, 2021, the Company’s assertion has not changed from the year ended April 30, 2020 that it does not intend to permanently reinvest its accumulated earnings in its non-U.S. subsidiaries and will continue to periodically distribute the earnings on an as needed basis. The Company does not anticipate significant tax consequences from any future distributions.

NOLs. During recent tax years, the Company generated certain state net operating loss carry-forwards which are available for use against taxable income in each respective state. The Company had gross state net operating losses available for carry-forward of $29.7 million as of April 30, 2021 and gross federal and state net operating losses available for carry-forward of $0.7 million and $27.4 million as of April 30, 2020, respectively, which expire beginning in 2024.

Valuation allowance. Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carry-forwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. The tax credits, carryforwards and net operating losses expire from 2022 to 2041.

Valuation allowances are established if management believes that it is more likely than not the related tax benefits will not be realized. The valuation allowance as of April 30, 2021 and 2020 primarily relates to a portion of the Titan outside basis difference that was created as a result of the impairment of goodwill recognized during the year ended April 30, 2021 and state tax attribute carry forwards.

Uncertain tax positions. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. The Company’s policy for recording penalties and interest associated with uncertain tax positions is to record such items as a component of selling, general and administrative expense. The Company had no reserve for uncertain tax positions as of April 30, 2021 and 2020.

As of April 30, 2021, the tax years ended April 30, 2021, 2020, 2019 and 2018 remain subject to examination by the U.S. Internal Revenue Service. In states in which the Company conducts business, the statute of limitation periods for examination generally vary from three to four years. Net operating losses dating back to 2008 are still being carried forward and remain subject to examination by the taxing authorities. The Company regularly assesses the potential outcomes of future examinations to ensure the Company’s provision for income taxes is sufficient. The Company recognizes liabilities based on estimates of whether additional taxes will be due and believes that no liability for uncertain tax position is necessary as of April 30, 2021 and 2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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