Income Taxes

12 Months Ended

May 31, 2023

Income Taxes

Income Taxes

6. Income Taxes

The provision for income tax on income from continuing operations includes the following components:

	For the Year Ended
	May 31,
	2023		2022		2021
Current:
Federal	$	25.9	$	11.0	$	5.2
State		2.9		2.6		1.2
Foreign		4.8		4.3		3.4
		33.6		17.9		9.8
Deferred		(2.2)		8.7		8.4
	$	31.4	$	26.6	$	18.2

The reconciliation from the U.S. federal statutory income tax rate of 21.0% to our effective income tax rate is as follows:

	For the Year Ended
	May 31,
	2023		2022		2021
Provision for income tax at the federal statutory rate	21.0	%	21.0	%	21.0	%
Tax expense (benefit) from stock-based compensation	(2.0)		(2.0)		1.1
Non-deductible compensation	2.8		1.1		1.2
State income taxes, net of federal benefit	2.6		4.9		3.8
Other	1.5		0.3		1.1
Effective income tax rate	25.9	%	25.3	%	28.2	%

Income before provision for income taxes includes the following components:

	For the Year Ended
	May 31,
	2023		2022		2021
Domestic	$	87.7	$	77.1	$	43.7
Foreign		33.5		28.0		20.8
	$	121.2	$	105.1	$	64.5

Our foreign earnings are comprised primarily of the results of our operations in Canada and Europe.

Deferred tax assets and liabilities result primarily from the differences in the timing of the recognition of transactions for financial reporting and income tax purposes. Our deferred tax assets and liabilities consist of the following components:

	May 31,
	2023		2022
Deferred tax assets:
Operating lease liabilities	$	17.8	$	21.0
Employee and retirement benefits		8.0		7.6
State net operating losses		6.9		8.0
Other		4.4		1.9
Total deferred tax assets		37.1		38.5
Deferred tax liabilities:
Intangible assets		(27.3)		(10.3)
Tangible assets		(19.5)		(21.7)
ROU operating lease assets		(18.6)		(22.1)
Other		(5.3)		(4.4)
Total deferred tax liabilities		(70.7)		(58.5)
Net deferred tax liabilities	$	(33.6)	$	(20.0)

As of May 31, 2023, we have determined that the realization of our deferred tax assets is more likely than not and that a valuation allowance is not required. Our net operating losses have carry forward periods that range from 5 to 20 years. Our history of operating earnings, our expectations for continued future earnings, the nature of certain of our deferred tax assets and the scheduled reversal of deferred tax liabilities, primarily related to depreciation, support the recoverability of the majority of the deferred tax assets.

Income tax receivable was $6.8 and $2.7 million at May 31, 2023 and 2022, respectively, and was included in Prepaid expenses and other current assets on the Consolidated Balance Sheet.

Our federal income tax returns for fiscal years 2020 and subsequent are open for examination. Various states and foreign jurisdictions also remain open subject to their applicable statute of limitations.