KADANT INC

Previous wording

Our consolidated bookings increased 17% to $251.7 million in the second quarter of 2024 compared to the second quarter of 2023, including a 13% increase from acquisitions and a 5% increase in organic bookings due to strong demand for our parts and consumables products across all segments. We expect overall demand for our products in the second half of 2024 to be similar to the first half of the year, despite persistent economic headwinds in certain regions. For 2024, we expect higher annual parts and consumables bookings driven by the high percentage of aftermarket business at our recent acquisitions. While demand for our parts and consumables products remains strong, we have seen a lengthening in the timing for securing capital orders as customers are being more cautious with some delaying large capital expenditures to later in the year or into early next year. This is due to several factors, including economic uncertainty surrounding actions by central banks, macroeconomic conditions abroad, and the consolidation of some of our large customers. Looking beyond 2024, we see long-term strength in our end markets as customers continue to turn to our products to help maximize productivity with more efficient production processes. In addition, we see growth opportunities from proposed and adopted legislation in the U.S. and abroad aimed at fueling investment, including those targeting environmental initiatives.

Current wording

Our consolidated bookings increased 15% to $240.3 million in the third quarter of 2024 compared to the third quarter of 2023, due to strong contributions from our recent acquisitions and increased demand for our parts and consumables products. While demand for our parts and consumables products remains strong, we have seen a lengthening in the timing for securing capital orders as customers are being more cautious with some delaying large capital expenditures to later in the year or into 2025. This is due to several factors, including economic uncertainty surrounding actions by central banks, macroeconomic conditions abroad, and the consolidation of some of our large customers. These sluggish market conditions led to a 2% decrease in organic bookings, which is defined as bookings excluding the effect of foreign currency translation and acquisitions, compared to the third quarter of 2023. We anticipate stronger capital bookings in the fourth quarter of 2024 as customers prepare for 2025 projects, which we expect will result in sequentially higher bookings. However, the timing of securing capital orders can be uncertain and could shift by quarter due to macroeconomic uncertainty or other factors. The high percentage of aftermarket business at our recent acquisitions is expected to lead to increased annual bookings from our parts and consumables products in 2024. Looking beyond 2024, we see long-term strength in our end markets as customers continue to turn to our products to help maximize productivity with more efficient production processes. In addition, we see growth opportunities from proposed and adopted legislation in the U.S. and abroad aimed at fueling investment, including those targeting environmental initiatives.

Previous wording

•Flow Control – Our Flow Control segment bookings increased 7%, including 5% from organic bookings, compared to the second quarter of 2023 primarily resulting from increased demand in Europe for our parts and consumables products due to improvements in the paper market. Despite higher bookings in the quarter in Europe, there is continued uncertainty in the end markets we serve primarily due to geopolitical tensions and weak macroeconomic conditions. In North America, economic conditions and the consolidation of several of our large customers has created some uncertainty on the timing for securing capital orders. While we expect demand to follow its historical pattern and moderate slightly in the second half of 2024, the strength of our end markets and a record backlog at the end of the second quarter has placed the Flow Control segment in a solid position as we enter the second half of the year.

Current wording

•Flow Control – Our Flow Control segment bookings increased 7% compared to the third quarter of 2023, including a 12% increase from acquisitions. Organic bookings decreased 5% compared to the third quarter of 2023 led by decreased demand for our capital equipment products in Europe as a result of challenging market conditions and a slowdown in manufacturing activity. In Europe, there is continued uncertainty in the end markets we serve primarily due to geopolitical tensions and weak macroeconomic conditions. In North America, demand for our capital equipment in 2024 has been impacted by mill shutdowns and the consolidation of some of our large customers. We expect steady demand in our Flow Control segment in the fourth quarter of 2024.

Previous wording

•Material Handling – Our Material Handling segment bookings increased 28% compared to the second quarter of 2023, including 22% from acquisitions and 6% from organic bookings. The majority of our conveying and vibratory business is in North America where market conditions have caused customers to be more cautious with large capital expenditures. However, the long-term outlook for the aggregates industry remains strong fueled by new infrastructure projects as a result of significant federal and state investment. The largest concentration in our baling business is in Europe, where a growing need for efficient waste handling and packing solutions across various industries is increasing demand for our baling products. We expect steady demand in our Material Handling segment to continue for the remainder of 2024.

Current wording

•Material Handling – Our Material Handling segment bookings increased 10% compared to the third quarter of 2023, including a 19% increase from acquisitions. Organic bookings decreased 9% compared to the third quarter of 2023 led by weak demand at our conveying and vibratory business where market conditions have caused customers to be more cautious with large capital expenditures. However, the long-term outlook for the aggregates industry remains strong, particularly in North America, fueled by new infrastructure projects as a result of significant federal and state investment. Organic bookings increased at our baling business due to strong demand for our capital products as more industries focus on waste reduction and recycling. We expect demand in our Material Handling segment to remain stable in the fourth quarter of 2024.

Previous wording

Our global operations have been and continue to be impacted by complex market conditions fueled by inflationary pressures, geopolitical tensions, labor availability and uncertainty in the markets. While the U.S economy has proven more resilient than predicted, growth in the European economy has slowed due to high interest rates and elevated inflation, and China's manufacturing activity has contracted. We expect our operating environment to continue to be challenging, which creates continued uncertainty for the remainder of 2024. However, we believe that the fundamentals of our business remain strong, particularly given our solid market position in key product lines, solid global operations teams, and long-term strength of our end markets.

Current wording

Our global operations have been and continue to be impacted by complex market conditions fueled by inflationary pressures, geopolitical tensions, labor availability and uncertainty in the markets. While the U.S economy has proven more resilient than predicted, growth in the European economy has slowed due to high interest rates and elevated inflation, and China's manufacturing activity has contracted. We expect our operating environment to continue to be challenging, which creates continued uncertainty in the short-term. However, we believe that the fundamentals of our business remain strong, particularly given our solid market position in key product lines, solid global operations teams, and long-term strength of our end markets.

Previous wording

See Note 2, Acquisitions, in the accompanying condensed consolidated financial statements for further details.

Current wording

See Note 2, Acquisitions, in the accompanying condensed consolidated financial statements for further information related to our 2024 acquisitions.

Previous wording

The following table presents the change in revenue by segment between the second quarters of 2024 and 2023, and those changes excluding the effect of foreign currency translation and acquisitions which we refer to as change in organic revenue. Organic revenue excludes the effect of acquisitions for the four quarterly reporting periods following the date of the acquisition. The presentation of the change in organic revenue is a non-GAAP measure. We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its performance, especially when comparing such results to prior periods. This non-GAAP measure should not be considered superior to or a substitute for the corresponding U.S. generally accepted accounting principles (GAAP) measure.

Current wording

The following table presents the change in revenue by segment between the third quarters of 2024 and 2023, and those changes excluding the effect of foreign currency translation and acquisitions which we refer to as change in organic revenue. Organic revenue excludes the effect of acquisitions for the four quarterly reporting periods following the date of the acquisition. The presentation of the change in organic revenue is a non-GAAP measure. We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its performance, especially when comparing such results to prior periods. This non-GAAP measure should not be considered superior to or a substitute for the corresponding U.S. generally accepted accounting principles (GAAP) measure.

Previous wording

Consolidated revenue increased 12% in the second quarter of 2024, while organic revenue increased 2%. The increase in organic revenue is largely due to increased demand for our capital equipment products at our Industrial Processing segment, partially offset by weaker demand for our Flow Control capital equipment products and Material Handling parts and consumables (aftermarket) products. From a geographic perspective, the majority of the organic revenue increase was driven by higher demand in North America where the U.S. economy and industrial demand continued to demonstrate resiliency against inflationary pressures, partially offset by softening demand in Europe due to weak macroeconomic conditions.

Current wording

Consolidated revenue increased 11% in the third quarter of 2024, while organic revenue decreased 1%. The decrease in organic revenue is largely due to decreased demand for capital equipment products at our Material Handling segment, partially offset by increased demand for our parts and consumables products, especially at our Industrial Processing segment. From a geographic perspective, the majority of the organic revenue decrease was driven by softening demand in Europe due to weak macroeconomic conditions, offset in part by higher demand in North America where the U.S. economy and industrial demand continued to demonstrate resiliency against inflationary pressures.

Previous wording

Revenue at our Industrial Processing segment increased 28% in the second quarter of 2024, including a 16% increase from acquisitions. Organic revenue increased 13% in the second quarter of 2024 principally due to increased demand for our capital equipment products at both our wood processing and stock-preparation businesses. At our wood processing business, capital equipment revenue increased 86% in Europe due to the shipment of several large projects. At our stock-preparation business, the increased demand primarily related to replacement and refurbishment projects in North America and from mills in China seeking fiber processing solutions with reduced energy consumption.

Current wording

Revenue at our Industrial Processing segment increased 17% in the third quarter of 2024, including a 16% increase from acquisitions. Organic revenue increased 2% due to increased demand for our parts and consumables products in North America. Demand for replacement parts at our wood processing business remains strong, offsetting lower capital project activity resulting from continued weakness in new home starts. At our stock-preparation business, increased demand for capital equipment products, primarily related to replacement and refurbishment projects in North America, was partially offset by decreased demand for our parts and consumable products in China and Europe.

Previous wording

Gross profit margin by segment in the second quarters of 2024 and 2023 is as follows:

Current wording

Gross profit margin by segment in the third quarters of 2024 and 2023 is as follows:

Previous wording

Consolidated gross profit margin increased to 44.4% in the second quarter of 2024 compared with 43.5% in the second quarter of 2023 due to higher margins achieved on our capital equipment products across all our segments, especially at our Industrial Processing segment.

Current wording

Consolidated gross profit margin increased to 44.7% in the third quarter of 2024 compared with 43.3% in the third quarter of 2023 due to higher margins achieved on our capital equipment products across all our segments, especially at our Industrial Processing segment. This increase was partially offset by the inclusion of $1.2 million of amortization expense related to acquired profit in inventory, which lowered consolidated gross profit margin in 2024 by 0.5 percentage points.

Previous wording

•Increased to 41.3% at our Industrial Processing segment from 39.5% in the 2023 period due to higher margins achieved on our capital equipment products. This was partially offset by lower margins achieved on our parts and consumables products and, to a lesser extent, the inclusion of $0.3 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.2 percentage points.

Current wording

•Increased to 44.0% at our Industrial Processing segment from 39.5% in the 2023 period due to higher margins achieved on both our capital equipment and parts and consumable products, and, to a lesser extent, a higher proportion of parts and consumables revenue. This was partially offset by the inclusion of $0.5 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.4 percentage points.

Previous wording

Selling, general, and administrative (SG&A) expenses by segment in the second quarters of 2024 and 2023 are as follows:

Current wording

Selling, general, and administrative (SG&A) expenses by segment in the third quarters of 2024 and 2023 are as follows:

Previous wording

Consolidated SG&A expenses as a percentage of revenue increased to 25% in 2024 from 24% in 2023 due to the impact of our acquisitions and acquisition-related costs. Consolidated SG&A expenses increased $10.0 million, or 17%, primarily due to the inclusion of $8.2 million of SG&A expenses from acquisitions and an incremental $1.6 million of acquisition-related costs. Acquisition-related costs included in SG&A consist of amortization expense associated with acquired backlog and acquisition costs.

Current wording

Consolidated SG&A expenses as a percentage of revenue increased to 25% in the third quarter of 2024 from 24% in the third quarter of 2023 due to the impact of our acquisitions and acquisition-related costs. Consolidated SG&A expenses increased $11.2 million, or 19%, primarily due to the inclusion of $9.7 million of SG&A expenses from acquisitions and an incremental $1.2 million of acquisition-related costs. Acquisition-related costs included in SG&A consist of amortization expense associated with acquired backlog and acquisition costs.

Previous wording

•Increased $1.8 million at our Flow Control segment principally due to the inclusion of $0.6 million of SG&A expenses from an acquisition, $0.8 million of acquisition-related costs and increased compensation expense.

Current wording

•Increased $3.3 million at our Flow Control segment principally due to the inclusion of $2.2 million of SG&A expenses from acquisitions, $0.7 million of acquisition-related costs and increased compensation expense.

Previous wording

•Increased $5.2 million at our Industrial Processing segment due to the inclusion of $4.8 million of SG&A expenses from acquisitions and increased compensation expense associated with new and existing personnel.

Current wording

•Increased $5.4 million at our Industrial Processing segment due to the inclusion of $4.8 million of SG&A expenses from acquisitions, $0.2 million of acquisition-related costs and increased compensation costs and travel expenses.

Previous wording

•Increased$2.7 millionat our Material Handling segment principally due to the inclusion of $2.7 million of SG&A expenses from acquisitions and $0.7 million of acquisition-related costs, partially offset by a decrease of $0.3 million in external commissions.

Current wording

•Increased$2.5 millionat our Material Handling segment principally due to the inclusion of $2.7 million of SG&A expenses from acquisitions and $0.3 million of acquisition-related costs, partially offset by a decrease in expense from sales incentives.

Previous wording

Other costs of $0.1 million were incurred in the second quarter of 2023 within our Industrial Processing segment related to the write-down of certain fixed assets that were not moved to a new manufacturing facility in China and facility moving costs.

Current wording

•Relocation costs of $0.5 million within our Industrial Processing segment related to the write-down of certain fixed assets that were not moved to a new manufacturing facility in China and facility moving costs.

Previous wording

Interest expense increased to $5.2 million in the second quarter of 2024 from $2.2 million in the second quarter of 2023 due to increased borrowings under our revolving credit facility, which were primarily used to fund our acquisitions and, to a lesser extent, a higher weighted-average interest rate.

Current wording

Interest expense increased to $5.5 million in the third quarter of 2024 from $2.1 million in the third quarter of 2023 due to increased borrowings under our revolving credit facility, which were primarily used to fund our acquisitions and, to a lesser extent, a higher weighted-average interest rate.

Previous wording

Provision for income taxes increased to $12.0 million in the second quarter of 2024 from $11.2 million in the second quarter of 2023.

Current wording

Provision for income taxes increased to $12.0 million in the third quarter of 2024 from $10.8 million in the third quarter of 2023.

Previous wording

The effective tax rate of 26% in the six months of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries. These items were offset in part by foreign tax credits and net excess income tax benefits from stock-based compensation arrangements.

Current wording

The effective tax rate of 27% in the third quarter of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, nondeductible expenses, the cost of repatriating the earnings of certain foreign subsidiaries, and tax expense associated with the Global Intangible Low-Taxed Income provisions. These items were offset in part by foreign tax credits.

Previous wording

Net income increased to $31.6 million in the second quarter of 2024 from $29.9 million in the second quarter of 2023 primarily due to a $5.3 million increase in operating income, offset in part by a $3.0 million increase in interest expense and a $0.8 increase in provision for income taxes (see discussions above for further details).

Current wording

Net income increased to $31.9 million in the third quarter of 2024 from $31.0 million in the third quarter of 2023 primarily due to a $5.4 million increase in operating income, offset in part by a $3.4 million increase in interest expense and a $1.1 million increase in provision for income taxes (see discussions above for further details).

Previous wording

First Six Months 2024 Compared With First Six Months 2023

Current wording

First Nine Months 2024 Compared With First Nine Months 2023

Previous wording

The following table presents changes in revenue and organic revenue by segment between the first six months of 2024 and 2023. Organic revenue is a non-GAAP measure as defined above in the results of operations for the second quarter of 2024 compared with the second quarter of 2023.

Current wording

The following table presents changes in revenue and organic revenue by segment between the first nine months of 2024 and 2023. Organic revenue is a non-GAAP measure as defined above in the results of operations for the third quarter of 2024 compared with the third quarter of 2023.

Previous wording

Consolidated revenue in the first six months of 2024 increased 10%, while organic revenue remained flat. Stronger demand at our Industrial Processing segment, especially for our capital equipment products, was offset by weaker demand for our products at our other segments. From a geographic perspective, the majority of the change in organic revenue was driven by softening demand in Europe due to weak macroeconomic conditions, largely offset by strong industrial demand in North America.

Current wording

Consolidated revenue in the first nine months of 2024 increased 11%, while organic revenue remained flat. Weaker demand at our Material Handling and Flow Control segments was largely offset by stronger demand at our Industrial Processing segment, especially for our capital equipment products. From a geographic perspective, organic revenue was impacted by softening demand in Asia and Europe due to weak macroeconomic conditions, largely offset by stronger industrial demand in North America.

Previous wording

Revenue at our Flow Control segment decreased 3% in the first six months of 2024 due to decreased demand for our capital equipment products in Europe and China reflecting the challenging market conditions and slowdown in manufacturing activity. This decrease was partially offset by higher demand for our capital equipment products in North America driven by continued strength in the U.S. economy and underlying packaging industry.

Current wording

Revenue at our Flow Control segment remained flat while organic revenue decreased 2% in the first nine months of 2024 due to decreased demand for our capital equipment products in Europe reflecting the challenging market conditions and slowdown in manufacturing activity. This decrease was partially offset by higher demand for our capital equipment products in North America driven by continued strength in the U.S. economy and underlying packaging industry.

Previous wording

Revenue at our Industrial Processing segment increased 27% in the first six months of 2024, including an 18% increase from acquisitions. Organic revenue increased 10% in the first six months of 2024 primarily due to increased demand for our capital equipment products at both our wood processing and stock-preparation businesses. At our wood processing business, capital equipment revenue increased 20% due to higher demand for debarking products in Europe and the shipment of a large capital project for oriented strand board in North America. At our stock-preparation business, capital equipment revenue increased 25% due to higher completion rates on large projects recognized on an over time basis in China and increased replacement and refurbishment projects in North America.

Current wording

Revenue at our Industrial Processing segment increased 24% in the first nine months of 2024, including a 17% increase from acquisitions. Organic revenue increased 7% in the first nine months of 2024 primarily due to increased demand for our capital equipment products at our stock-preparation and wood processing businesses and for our aftermarket products at our wood processing business. Revenue from parts and consumables products increased 8% at our wood processing business due to maintenance requirements for our customers in North America. At our stock-preparation business, capital equipment revenue increased 24% due to higher completion rates on large projects recognized on an over time basis in China and increased replacement and refurbishment projects in North America.

Previous wording

Revenue at our Material Handling segment increased 7% in the first six months of 2024 due to our acquisitions. Organic revenue decreased 9% driven by weaker demand for our products in North America and Europe. At our baling business in Europe, decreased demand for our capital equipment products was due to weaker market conditions, which have lengthened quote-to-order times and delayed several large projects to later in the year. At our conveying and vibratory business, several large parts orders associated with capital projects in the first half of 2023 resulted in comparatively lower organic parts and consumables revenue in the first half of 2024.

Current wording

Revenue at our Material Handling segment increased 7% in the first nine months of 2024, including a 17% increase from acquisitions. Organic revenue decreased 10% driven by weaker demand for our products in North America and Europe. At our baling business in Europe, decreased demand for our capital equipment products resulted from weaker market conditions, which have lengthened quote-to-order times and delayed several large projects to later in the year. At our conveying and vibratory business, several large parts orders associated with capital projects in the first nine months of 2023 resulted in comparatively lower organic parts and consumables revenue in the first nine months of 2024.

Previous wording

Gross profit margin by segment in the first six months of 2024 and 2023 is as follows:

Current wording

Gross profit margin by segment in the first nine months of 2024 and 2023 is as follows:

Previous wording

Consolidated gross profit margin increased to 44.5% in the first six months of 2024 compared with 43.9% in the first six months of 2023 due to higher margins achieved on our capital equipment products across all our segments, especially at our Industrial Processing segment. This increase was partially offset by the inclusion of $2.9 million of amortization expense related to acquired profit in inventory, which lowered consolidated gross profit margin in 2024 by 0.5 percentage points.

Current wording

Consolidated gross profit margin increased to 44.5% in the first nine months of 2024 compared with 43.7% in the first nine months of 2023 due to higher margins achieved on our capital equipment products across all our segments, especially at our Industrial Processing segment. This increase was partially offset by the inclusion of $4.1 million of amortization expense related to acquired profit in inventory, which lowered consolidated gross profit margin in 2024 by 0.6 percentage points.

Previous wording

•Increased to 36.8% at our Material Handling segment from 36.4% in the 2023 period primarily due to higher margins achieved on our capital equipment products. This increase was partially offset by the inclusion of $1.0 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.8 percentage points.

Current wording

•Increased to 52.9% at our Flow Control segment from 52.3% in the 2023 period primarily due to higher margins achieved on our capital equipment products. This increase was partially offset by the inclusion of $1.0 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.3 percentage points.

Previous wording

•Increased to 41.5% at our Industrial Processing segment from 40.0% in the 2023 period due to higher margins achieved on our capital equipment products and, to a lesser extent, a higher proportion of parts and consumables revenue. These increases were partially offset by the inclusion of $1.6 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.7 percentage points.

Current wording

•Increased to 42.3% at our Industrial Processing segment from 39.8% in the 2023 period due to higher margins achieved on our capital equipment products and, to a lesser extent, a higher proportion of parts and consumables revenue. These increases were partially offset by the inclusion of $2.1 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.7 percentage points.

Previous wording

SG&A expenses by segment in the first six months of 2024 and 2023 are as follows:

Current wording

SG&A expenses by segment in the first nine months of 2024 and 2023 are as follows:

Previous wording

Consolidated SG&A expenses as a percentage of revenue increased to 27% in the first six months of 2024 compared with 25%in the first six months of 2023 principally due to the impact of our acquisitions and acquisition-related costs. Consolidated SG&A expenses increased $21.8 million, or 18%, primarily due to the inclusion of $15.5 million of SG&A expenses from acquisitions, $3.6 million of acquisition-related costs and increased compensation expense associated with new and existing personnel.

Current wording

Consolidated SG&A expenses as a percentage of revenue increased to 26% in the first nine months of 2024 compared with 25%in the first nine months of 2023 principally due to the impact of our acquisitions and acquisition-related costs. Consolidated SG&A expenses increased $32.9 million, or 19%, primarily due to the inclusion of $25.3 million of SG&A expenses from acquisitions, $4.7 million of acquisition-related costs and increased compensation expense associated with new and existing personnel.

Previous wording

•Increased$3.0 million at our Flow Control segment principallydue to the inclusion of $0.6 million of SG&A expenses from an acquisition, $0.8 million of acquisition-related costs and increased compensation expense.

Current wording

•Increased$6.2 million at our Flow Control segment principallydue to the inclusion of $2.9 million of SG&A expenses from acquisitions, $1.5 million of acquisition-related costs and increased compensation expense.

Previous wording

•Increased$11.4 million at our Industrial Processing segmentdue to the inclusion of $9.9 million of SG&A expenses from acquisitions and $0.7 million of acquisition-related costs.

Current wording

•Increased$16.8 million at our Industrial Processing segmentdue to the inclusion of $14.7 million of SG&A expenses from acquisitions, $0.8 million of acquisition-related costs and increased compensation expense associated with new and existing personnel. These increases were partially offset by a $0.4 million favorable effect of foreign currency translation.

Previous wording

•Increased$6.1 millionat our Material Handling segment primarily due to the inclusion of $4.9 million of SG&A expenses from acquisitions and $2.1 million of acquisition-related costs, partially offset by a decrease of $0.4 million in external commissions.

Current wording

•Increased$8.6 millionat our Material Handling segment primarily due to the inclusion of $7.7 million of SG&A expenses from acquisitions and $2.4 million of acquisition-related costs, partially offset by a decrease in expense related to external commissions and sales incentives.

Previous wording

•Increased$1.3 million at Corporate due to increased consulting costs and compensation expense.

Current wording

•Increased$1.3 million at Corporate due to increased compensation expense and consulting costs.

Previous wording

Other costs of $0.1 million were incurred in the first six months of 2023 within our Industrial Processing segment related to the write-down of certain fixed assets that were not moved to a new manufacturing facility in China and facility moving costs.

Current wording

•Relocation costs of $0.6 million within our Industrial Processing segment related to the write-down of certain fixed assets that were not moved to a new manufacturing facility in China and facility moving costs.

Previous wording

Interest expense increased to $9.9 million in the first six months of 2024 from $4.6 million in the first six months of 2023 due to increased borrowings under our revolving credit facility, which were primarily used to fund our acquisitions and, to a lesser extent, a higher weighted-average interest rate.

Current wording

Interest expense increased to $15.4 million in the first nine months of 2024 from $6.7 million in the first nine months of 2023 due to increased borrowings under our revolving credit facility, which were primarily used to fund our acquisitions and, to a lesser extent, a higher weighted-average interest rate.

Previous wording

The effective tax rate of 28% in the second quarter of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, nondeductible expenses, and the cost of repatriating the earnings of certain foreign subsidiaries. These items were offset in part by foreign tax credits.

Current wording

The effective tax rate of 26% in the first nine months of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries. These items were offset in part by foreign tax credits.