Income Taxes (Tables)

12 Months Ended

Apr. 28, 2024

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense Attributable to (Loss) Income from Operations

Income tax expense consists of:

(dollars in thousands)	2024			2023			2022
current
federal	$	—			—			—
state		—			1			2
foreign		2,584			3,053			2,156
uncertain income tax positions		78			78			37
		2,662			3,132			2,195
deferred
federal		1,342			(1,591	)		1,121
state		63			(66	)		47
undistributed earnings – foreign subsidiaries		627			628			76
U.S. federal & state carryforwards and credits		(4,734	)		(5,162	)		(971	)
uncertain income tax positions		—			—			(380	)
foreign		(240	)		(629	)		615
valuation allowance		3,329			6,818			183
		387			(2	)		691
	$	3,049			3,130			2,886

Schedule of (Loss) Income before Income Taxes Related to Foreign and U.S. Operations

Loss before income taxes related to our foreign and U.S. operations consists of:

(dollars in thousands)	2024			2023			2022
Foreign
China	$	9,091			7,062			6,998
Canada		902			1,516			1,302
Haiti		(2,127	)		(3,483	)		(980	)
Vietnam		(22	)		—			—
Total Foreign		7,844			5,095			7,320
United States		(18,614	)		(33,485	)		(7,645	)
	$	(10,770	)		(28,390	)		(325	)

Summary of Differences in Income Tax Expense at Federal Income Tax Rate and Effective Income Tax Rate

The following schedule summarizes the principal differences between the income tax expense at the federal income tax rate and the effective income tax rate reflected in the consolidated financial statements:

	2024			2023			2022
U.S. federal income tax rate		21.0	%		21.0	%		21.0	%
valuation allowance		(30.9	)		(24.0	)		(56.3	)
global intangible low taxed income tax (GILTI) (1)		—			—			(540.9	)
foreign tax rate differential		(4.7	)		(4.0	)		(206.2	)
income tax effects of Chinese foreign exchange gains and losses		(3.6	)		(0.9	)		(20.6	)
withholding taxes associated with foreign tax jurisdictions		(6.5	)		(2.4	)		(172.8	)
uncertain income tax positions		(0.7	)		(0.3	)		105.4
U.S. state income taxes		0.8			0.6			21.5
stock-based compensation		(1.8	)		(0.3	)		(3.3	)
other (2)		(1.9	)		(0.7	)		(35.8	)
consolidated effective income tax rate (3) (4) (5)		(28.3	)%		(11.0	)%		(888.0	)%

(1)See the below section titled "GILTI" for further details for the GILTI tax incurred during fiscal 2022.

(2)“Other” for all periods presented represents miscellaneous adjustments that pertain to U.S. permanent differences such as meals and entertainment and income tax provision to return adjustments.

(3)Our negative consolidated effective income tax rates during fiscal 2024, 2023, and 2022, were caused by the mix of earnings between our U.S. operations and foreign subsidiaries, as our taxable income stems from our operations located in China and Canada, which have higher income tax rates than the U.S. In addition, we applied a full valuation allowance against our U.S. deferred income tax assets during fiscal 2024, 2023, and 2022, respectively. Consequently, an income tax benefit was not recognized for the pre-tax losses associated with our U.S. operations totaling $(18.6) million, $(33.5) million, and $(7.6) million that were incurred during fiscal 2024, 2023, and 2022, respectively.

(4)During fiscal 2024, we incurred a significantly lower consolidated pre-tax loss of $(10.8) million, compared with a significantly higher pre-tax loss of $(28.4) million incurred during fiscal 2023. As a result, the principal differences between income tax expense at the U.S. federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced during fiscal 2024 compared with fiscal 2023.

(5)During fiscal 2023, we incurred a significantly higher consolidated pre-tax loss totaling $(28.4) million, compared with a much lower consolidated pre-tax loss totaling $(325,000) during fiscal 2022. As a result, the principal differences between income tax expense at the U.S. federal income tax rate and the effective income tax rate reflected in the consolidated financial statements were more pronounced for fiscal 2022, compared with fiscal 2023.

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities consist of the following:

(dollars in thousands)	2024			2023
deferred tax assets:
accounts receivable	$	195			297
inventories		1,972			3,277
compensation		2,152			2,676
liabilities and other		8			5
intangible assets and goodwill		349			395
property, plant, and equipment (1)		171			179
operating lease liability		693			781
foreign income tax credits - U.S.		783			783
loss carryforwards – U.S.		18,344			13,564
valuation allowance - U.S.		(22,004	)		(18,675	)
total deferred tax assets		2,663			3,282

deferred tax liabilities:
undistributed earnings on foreign subsidiaries		(4,840	)	(4,213	)
property, plant and equipment (2)		(2,694	)	(3,450	)
right of use assets		(851	)	(964	)
other		(139	)	(129	)
total deferred tax liabilities		(8,524	)	(8,756	)
Net deferred liabilities	$	(5,861	)	(5,474	)

(1)Pertains to the company’s operations located in China.

(2)Pertains to the company’s operations located in the U.S. and Canada.

Summary of Valuation Allowances Against U.S. Net Deferred Income Tax Assets

Based on our assessments as of April 28, 2024, and April 30, 2023, valuation allowances against our U.S. net deferred income tax assets pertain to the following:

(dollars in thousands)	April 24, 2023		April 30, 2023
U.S. federal and state net deferred income tax assets	$	19,674	$	16,345
U.S. capital loss carryforward		2,330		2,330
	$	22,004	$	18,675

Summary of Change in Valuation Allowances Against U.S. Net Deferred Income Tax Assets

A summary of the change in the valuation allowances against our U.S. net deferred income tax assets follows:

(dollars in thousands)	2024		2023			2022
beginning balance	$	18,675		11,857			11,674
change in valuation allowance associated with current year earnings		3,318		7,252			1,640
change in estimate during current year (1)		11		(434	)		(1,457	)
ending balance	$	22,004		18,675			11,857

(1)Amounts represent changes in our U.S.net deferred income tax asset balances during the current year that pertain to (i) income tax provision to return adjustments; (ii) changes in estimates of our U.S. effective income tax rate that pertain to U.S. state income tax rates and apportionment percentages, (iii) recognition of an uncertain income tax position due to expiration of statute of limitations; (iv) expiration of certain U.S. state loss carryforwards; and (v) other immaterial items.

Schedule of Unrecognized Tax Benefit

The following table sets forth the change in the company’s unrecognized income tax benefit:

(dollars in thousands)	2024			2023			2022
beginning balance	$	1,179			1,101			1,444
increases from prior period tax positions		197			175			114
decreases from prior period tax positions		(118	)		(97	)		(77	)
lapse of applicable statute of limitations		—			—			(380	)
ending balance	$	1,258			1,179			1,101

Summary of Income Taxes Paid (Refunded)

The following table sets forth income taxes paid (refunded) by jurisdiction:

(dollars in thousands)	2024		2023		2022
United States federal - Transition Tax	$	499	$	265	$	266
China - Income Taxes		2,317		1,831		2,036
China - Withholding Taxes Associated with Earnings     and Profits Distribution to U.S. Parent		—		—		487
Canada - Income Taxes		468		228		311
	$	3,284	$	2,324	$	3,100