Income Taxes

12 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We file a consolidated federal income tax return. Taxes based on income for the years ended June 30 have been provided as follows:

	2023		2022		2021
Currently payable:
Federal	$	20,147	$	19,751	$	32,655
State and local	3,978		1,974		7,460
Total current provision	24,125		21,725		40,115
Deferred federal, state and local provision	7,886		1,077		3,298
Total taxes based on income	$	32,011	$	22,802	$	43,413

For the years ended June 30, our effective tax rate varied from the statutory federal income tax rate as a result of the following factors:

	2023		2022		2021
Statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes	2.4		0.7		3.2
Research and development tax credit	(1.1)		(1.7)		(0.8)
Net windfall tax benefits - stock-based compensation	(0.4)		(0.1)		(0.6)
Other	0.4		0.4		0.6
Effective rate	22.3	%	20.3	%	23.4	%

Our net deferred tax liability for all periods presented has been classified as noncurrent. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at June 30 were comprised of:

	2023		2022
Deferred tax assets:
Employee medical and other benefits	$	7,561	$	6,638
Operating lease liabilities	5,613		6,553
Section 174 research and development capitalization	4,281		—
Inventories	4,143		1,668
Receivables	3,042		2,756
Intangible assets	1,426		—
Other accrued liabilities	1,600		1,443
Total deferred tax assets	27,666		19,058
Deferred tax liabilities:
Property, plant and equipment	(50,106)		(33,738)
Goodwill	(19,070)		(15,930)
Operating lease right-of-use assets	(5,815)		(6,726)
Intangible assets	—		(1,494)
Other	—		(59)
Total deferred tax liabilities	(74,991)		(57,947)
Net deferred tax liability	$	(47,325)	$	(38,889)

Prepaid federal income taxes of $3.3 million were included in Other Current Assets at June 30, 2023. Prepaid state and local income taxes of $0.8 million and $1.9 million were included in Other Current Assets at June 30, 2023 and 2022, respectively.

Net cash payments for income taxes for each of the years ended June 30 were as follows:

	2023		2022		2021
Net cash payments for income taxes	$	26,327	$	17,827	$	40,735

The gross tax contingency reserve at June 30, 2023 was $0.9 million and consisted of estimated tax liabilities of $0.4 million and interest and penalties of $0.5 million. The unrecognized tax benefits recorded as the gross tax contingency reserve noted in the following table for June 30, 2023 and 2022 would affect our effective tax rate, if recognized.

The following table sets forth changes in our total gross tax contingency reserve (including interest and penalties):

	2023		2022
Balance, beginning of year	$	925	$	1,253
Tax positions related to the current year:
Additions	—		—
Reductions	—		—
Tax positions related to prior years:
Additions	39		45
Reductions	(106)		(373)
Settlements	—		—
Balance, end of year	$	858	$	925

We have not classified any of the gross tax contingency reserve at June 30, 2023 in Accrued Liabilities as none of these amounts are expected to be resolved within the next 12 months. Consequently, the entire liability of $0.9 million was included in Other Noncurrent Liabilities. We expect that the amount of these liabilities will change within the next 12 months; however, we do not expect the change to have a significant effect on our financial position or results of operations.

We recognize interest and penalties related to these tax liabilities in income tax expense. For each of the years ended June 30, we recognized the change in the accrual for net tax-related interest and penalties as follows:

	2023		2022
Benefit recognized for net tax-related interest and penalties	$	(13)	$	(22)

We had accrued interest and penalties at June 30 as follows:

	2023		2022
Accrued interest and penalties included in the gross tax contingency reserve	$	494	$	507

We file federal and various state and local income tax returns in the United States. With limited exceptions, we are no longer subject to examination of U.S. federal or state and local income taxes for years prior to 2020.