Income Taxes

12 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Sources of Pretax Income (Loss) 

	Fiscal Years Ended
	June 30, 2022		June 30, 2021		June 30, 2020
	(In thousands)
Domestic	$	(53,258)	$	(38,867)	$	(32,660)
Foreign	(5,025)		(4,396)		(3,984)
Total	$	(58,283)	$	(43,263)	$	(36,644)

Components of the Provision for Income Tax Expense (Benefit)

	Fiscal Years Ended
	June 30, 2022		June 30, 2021		June 30, 2020
	(In thousands)
Current:
Federal	$	230	$	(13,154)	$	(376)
State	28		465		412
Foreign	1		(239)		23
	259		(12,928)		59
Deferred:
Federal	2,504		774		(5,000)
State	2,858		(291)		(1,091)
Foreign	(4)		406		2,462
	5,358		889		(3,629)
	$	5,617	$	(12,039)	$	(3,570)

Reconciliation Between the Expected Income Tax Provision Applying the Domestic Federal Statutory Tax Rate and the Reported Income Tax Provision 

	Fiscal Years Ended
	June 30, 2022		June 30, 2021		June 30, 2020
	(In thousands)
Expected benefit for federal income taxes at the statutory rate	$	(12,239)	$	(9,085)	$	(7,695)
State income taxes, net of federal benefit	(1,971)		(1,240)		(768)
Impairment of non-deductible goodwill(1)	1,132		—		1,813
Charges without tax benefit	265		961		1,707
Change in valuation allowance(2)	17,943		2,797		3,062
Excess tax expense (benefit) on stock-based compensation	1,019		1,826		230
Research and development and other tax credits	(613)		(1,707)		(1,724)
Foreign tax differential	(232)		(96)		(132)
Federal rate differential net operating loss carryback(3)	141		(5,223)		—
Change in uncertain tax positions	(120)		(7)		20
Other	292		(265)		(83)
Provision (benefit) for federal, state and foreign income taxes	$	5,617	$	(12,039)	$	(3,570)

(1)In fiscal 2022, we impaired $18.3 million of goodwill, which included $5.4 million of non-deductible goodwill. In fiscal 2020, we impaired $32.9 million of goodwill, which included $8.6 million of non-deductible goodwill. See Note 4 - Goodwill and Other Intangible Assets for more information about the impairments.

(2)In fiscal 2022, due to the existence of a cumulative loss over a three-year period, we recorded a full valuation allowance of $17.9 million against our deferred tax assets. These assets are primarily comprised of federal net operating losses, which have an indefinite carryforward, federal tax credits and state net operating losses. To the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated, we will realize the benefit associated with the net operating losses for which the valuation allowance has been provided. In fiscal 2021, we placed $2.8 million of valuation allowances, including $1.5 million on certain state net operating loss carryforwards due to a recent history of cumulative losses for a subsidiary. In fiscal 2020, we placed $3.1 million of valuation allowances on net operating loss carryforwards and foreign tax credits primarily related to Canada.

(3)Relates to fiscal 2021 net operating losses carried back under provisions of the CARES Act to fiscal years 2016 and 2017 which had a 35% federal tax rate.

Significant Components of our Deferred Tax Assets and Liabilities

	June 30, 2022		June 30, 2021
	(In thousands)
Deferred tax assets:
Warranty reserve	$	206	$	206
Bad debt reserve	340		231
Paid-time-off accrual	315		747
Insurance reserve	1,019		1,229
Legal reserve	79		146
Net operating loss benefit and credit carryforwards	23,717		14,966
Accrued compensation and pension	736		690
Prepaid insurance	16		27
Stock compensation expense on nonvested deferred shares	1,910		1,895
Accrued losses	1,089		64
Restructuring reserve	160		725
Book over tax amortization	5,449		3,765
Deferred FICA	1,427		1,920
Foreign currency translation and other	1,002		665
Valuation allowance	(28,615)		(11,104)
Total deferred tax assets	8,850		16,172
Deferred tax liabilities:
Tax over book depreciation	7,842		10,315
Receivable holdbacks and other	1,034		596
Total deferred tax liabilities	8,876		10,911
Net deferred tax asset (liability)	$	(26)	$	5,261

As reported in the Consolidated Balance Sheets:

	June 30, 2022	June 30, 2021
	(In thousands)
Deferred income tax assets	—	5,295
Deferred income tax liabilities	(26)	(34)
Net deferred tax asset (liability)	(26)	$	5,261

Valuation Allowance

In fiscal 2022, due to the existence of a cumulative loss over a three-year period, we recorded a full valuation allowance of $17.9 million against our deferred tax assets. These assets are primarily comprised of federal net operating losses, which have an indefinite carryforward, federal tax credits and state net operating losses. To the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated, we will realize the benefit associated with the net operating losses for which the valuation allowance has been provided.

Operating Loss and Tax Credit Carryforwards

We have net operating loss carryforwards and tax credit carryforwards in federal, state and foreign jurisdictions. The valuation allowance at June 30, 2022 and June 30, 2021 reduces the recognized tax benefit of these carryforwards to an amount that is more likely than not to be realized.  The gross carryforwards will generally expire as shown below for each jurisdiction:

Operating Loss and Tax Credit Carryforwards	Expiration Period	Amount (in thousands)
Federal net operating loss	Indefinite	$	27,207
Federal tax credits	June 2041 to June 2042	$	1,700
Federal foreign tax credits	June 2023 to June 2025	$	655
State net operating losses	June 2025 to indefinite	$	73,889
State tax credits	June 2033 to indefinite	$	912
Foreign net operating losses	June 2029 to June 2042	$	37,379
Foreign tax credits	June 2035 to June 2042	$	676

Net Operating Loss Carryback Refund

Through provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the "CARES Act"), we had an income tax benefit from the ability to carryback the fiscal 2021 federal net operating loss to a period with a higher statutory federal income tax rate. We estimate that we will receive a $12.6 million tax refund in connection with this carryback, which is included in income taxes receivable in the Consolidated Balance Sheets.

Refund of Overpayment of Estimated Taxes

In January 2022, we received a $2.4 million tax refund in connection with overpayments of estimated taxes from prior years.

Deferred Payroll Taxes

As of June 30, 2022, we have a balance of $5.6 million remaining on U.S. payroll taxes we deferred through provisions of the CARES Act. We paid half of the original deferred payroll tax balance during the second quarter of fiscal 2022 and must repay the remaining balance by December 31, 2022. The remaining balance of deferred payroll taxes is included within accrued wages and benefits in the Consolidated Balance Sheets.

Other

In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in our foreign operations. We do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30.

We file tax returns in multiple domestic and foreign taxing jurisdictions. With a few exceptions, we are no longer subject to examination by taxing authorities through fiscal 2017. At June 30, 2022, we updated our evaluation of our open tax years in all known jurisdictions. As of June 30, 2022, we have a $0.3 million liability for unrecognized tax positions and the payment of related interest and penalties. We treat the related interest and penalties as income tax expense. Due to the uncertainties related to these tax matters, we are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority will occur.