Prestige Consumer Healthcare Inc.PBH
Prestige Consumer Healthcare Inc. Income Taxes Disclosure
Income Taxes
Recent U.S. tax legislation
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. We evaluated the provisions of the OBBBA effective during fiscal year ended March 31, 2026 and determined that there was no material impact on our estimated annual effective tax rate.
Income before income taxes consists of the following:
| Year Ended March 31, | |||||||||||||||||
| (In thousands) | 2026 | 2025 | 2024 | ||||||||||||||
| United States | $ | 237,057 | $ | 249,803 | $ | 239,405 | |||||||||||
| Foreign | 20,439 | 34,386 | 36,620 | ||||||||||||||
| Total income before income taxes | $ | 257,496 | $ | 284,189 | $ | 276,025 | |||||||||||
The provision for income taxes consists of the following:
| Year Ended March 31, | |||||||||||||||||
| (In thousands) | 2026 | 2025 | 2024 | ||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 31,573 | $ | 34,156 | $ | 28,302 | |||||||||||
| State | 4,455 | 5,914 | 3,662 | ||||||||||||||
| Foreign | 8,614 | 11,092 | 11,652 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | 17,297 | 12,237 | 20,582 | ||||||||||||||
| State | 8,004 | 5,210 | 3,034 | ||||||||||||||
| Foreign | (2,748) | 975 | (546) | ||||||||||||||
| Total provision for income taxes | $ | 67,195 | $ | 69,584 | $ | 66,686 | |||||||||||
The principal components of our deferred tax balances are as follows:
| March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Deferred Tax Assets | |||||||||||
| Allowance for credit losses and sales returns | $ | 3,404 | $ | 2,920 | |||||||
| Inventory capitalization | 1,941 | 2,069 | |||||||||
| Inventory reserves | 2,432 | 1,221 | |||||||||
| Net operating loss carryforwards | 9,225 | — | |||||||||
| State income taxes | 11,759 | 9,631 | |||||||||
| Accrued liabilities | 3,810 | 1,275 | |||||||||
| Accrued compensation | 3,067 | 3,653 | |||||||||
| Stock compensation | 3,746 | 3,506 | |||||||||
| Research and development | 1,692 | 6,231 | |||||||||
| Lease liability | 11,732 | 12,086 | |||||||||
| Unrealized foreign exchange loss | 401 | 245 | |||||||||
| Other | 8,705 | 11,268 | |||||||||
| Total deferred tax assets | $ | 61,914 | $ | 54,105 | |||||||
| Deferred Tax Liabilities | |||||||||||
| Property, plant and equipment | $ | (11,692) | $ | (9,081) | |||||||
| Intangible assets | (476,973) | (451,368) | |||||||||
| Right-of-use asset | (12,009) | (12,413) | |||||||||
| Total deferred tax liabilities | $ | (500,674) | $ | (472,862) | |||||||
| Net deferred tax liability | $ | (438,760) | $ | (418,757) | |||||||
The total net deferred tax liability shown above is net of $8.7 million and $0.8 million of deferred tax assets which are included in Other long-term assets on the Consolidated Balance Sheets as of March 31, 2026 and 2025, respectively.
We had no valuation allowance as of March 31, 2026 and March 31, 2025.
For the year ended March 31, 2026, we adopted ASU 2023-09 on a prospective basis. Differences between the provision for income taxes at the U.S. federal statutory income tax rate and the provision in the consolidated statements of operations are as follows:
| Year Ended March 31, | ||||||||||||||
| 2026 | ||||||||||||||
| (In thousands) | % | |||||||||||||
| Income tax provision at statutory rate | $ | 54,074 | 21.0 | % | ||||||||||
State income taxes (net of Federal income tax benefit) (a) | 11,526 | 4.5 | % | |||||||||||
| Foreign tax effects: | ||||||||||||||
| Australia: | ||||||||||||||
| Statutory tax rate difference between Australia and the U.S. | 2,457 | 1.0 | % | |||||||||||
| Other foreign jurisdictions | (964) | (0.5) | % | |||||||||||
| Effect of cross-border tax laws: | ||||||||||||||
| Global intangible low taxed income | 211 | 0.1 | % | |||||||||||
| Foreign derived intangible income | (1,032) | (0.4) | % | |||||||||||
| Subpart F | 130 | 0.1 | % | |||||||||||
| Tax credits: | ||||||||||||||
| Research and Development | (736) | (0.3) | % | |||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||
| Compensation limitations | 1,229 | 0.5 | % | |||||||||||
| Stock compensation | (149) | (0.1) | % | |||||||||||
| Changes in unrecognized tax liabilities | 241 | 0.1 | % | |||||||||||
| Other | 208 | 0.1 | % | |||||||||||
| Total provision for income taxes | $ | 67,195 | 26.1 | % | ||||||||||
(a) During the year ended March 31, 2026, the state of California comprised more than 50% of the tax effect in this category.
Differences between the provision for income taxes at the U.S. federal statutory income tax rates and the provision prior to the adoption of ASU 2023-09 are as follows:
| Year Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (In thousands) | % | % | |||||||||||||||||||||
| Income tax provision at statutory rate | $ | 59,680 | 21.0 | $ | 57,965 | 21.0 | |||||||||||||||||
| Foreign tax provision | 4,691 | 1.7 | 3,164 | 1.1 | |||||||||||||||||||
| State income taxes provision, net of federal income tax benefit | 10,187 | 3.6 | 6,004 | 2.2 | |||||||||||||||||||
| Research and development | (600) | (0.2) | (700) | (0.3) | |||||||||||||||||||
| Compensation limitations | 1,312 | 0.5 | 1,910 | 0.7 | |||||||||||||||||||
| Foreign tax credit | (622) | (0.2) | (889) | (0.3) | |||||||||||||||||||
| Uncertain tax positions | (3,694) | (1.3) | 390 | 0.1 | |||||||||||||||||||
| Other | (1,370) | (0.6) | (1,158) | (0.3) | |||||||||||||||||||
| Total provision for income taxes | $ | 69,584 | 24.5 | $ | 66,686 | 24.2 | |||||||||||||||||
The components of Income taxes paid, net of refunds received, consists of the following:
| (In thousands) | Year Ended March 31, 2026 | |||||||||||||
| Federal | $ | 28,100 | ||||||||||||
| State | 6,143 | |||||||||||||
| Foreign: | ||||||||||||||
| Australia | 10,512 | |||||||||||||
| Other foreign | 1,189 | |||||||||||||
| Income taxes paid, net of refunds | $ | 45,944 | ||||||||||||
Uncertain tax liability activity is as follows:
| 2026 | 2025 | 2024 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Balance – beginning of year | $ | 1,066 | $ | 3,325 | $ | 3,295 | |||||||||||
| Reductions based on lapse of statute of limitations | (228) | (2,649) | (417) | ||||||||||||||
| Payments and other movements | 428 | 390 | 447 | ||||||||||||||
| Balance – end of year | $ | 1,266 | $ | 1,066 | $ | 3,325 | |||||||||||
We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. We did not incur any material interest or penalties related to income taxes in 2026, 2025 or 2024. We are subject to taxation in the United States and various state and foreign jurisdictions, and we are generally open to examination from the year ended March 31, 2022 forward. We are currently under audit with the California state taxing authority for the years ended March 31, 2023 and 2024.
We have made the assessment that the undistributed after-tax earnings from our foreign subsidiaries through March 31, 2026 were not indefinitely reinvested and can be remitted to the U.S. parent in a tax-neutral transaction under either the subsidiary countries' relevant income tax treaties or their internal tax law. Accordingly, we have not recorded a deferred tax liability related to these undistributed earnings.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 14, 2026 | Showing above |
| 2025 | May 9, 2025 | |
| 2024 | May 15, 2024 | |
| 2023 | May 5, 2023 | |
| 2022 | May 6, 2022 | |
| 2021 | May 7, 2021 | |
| 2020 | May 8, 2020 | |
| 2019 | May 13, 2019 | |
| 2018 | May 10, 2018 | |
| 2017 | May 17, 2017 | |
| 2016 | May 17, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.