WESCO INTERNATIONAL INC

Previous wording

We employ approximately 20,000 people, maintain relationships with more than 50,000 suppliers, and serve nearly 150,000 customers worldwide. With millions of products, end-to-end supply chain services, and leading digital capabilities, we provide innovative solutions to meet customer needs across commercial and industrial businesses, contractors, government agencies, educational institutions, telecommunications providers, and utilities. Our innovative value-added solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. We operate nearly 800 branches, warehouses and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

Current wording

We employ approximately 20,000 people, maintain relationships with more than 50,000 suppliers, and serve nearly 150,000 customers worldwide. With millions of products, end-to-end supply chain services, and leading digital capabilities, we provide innovative solutions to meet customer needs across commercial and industrial businesses, contractors, government agencies, educational institutions, telecommunications providers, utilities and technology companies. Our innovative value-added solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. We operate nearly 800 branches, warehouses and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

Previous wording

The EES segment, with approximately 6,600 employees supporting customers in more than 50 countries, supplies a broad range of products and solutions primarily to the construction, industrial, and original equipment manufacturer (“OEM”) markets. The product portfolio in this business includes a broad range of electrical equipment and supplies, automation and connected devices (the “Internet of Things” or “IoT”), security, lighting, wire and cable, safety, and maintenance, repair and operating (“MRO”) products from industry-leading manufacturing partners. The EES service portfolio includes contractor solutions to improve project execution, direct and indirect manufacturing supply chain optimization programs, lighting and renewables advisory services, and digital and automation solutions to improve safety and productivity.

Current wording

The EES segment, with approximately 6,700 employees supporting customers in more than 50 countries, supplies a broad range of products and solutions primarily to the construction, industrial, and original equipment manufacturer (“OEM”) markets. The product portfolio in this business includes a broad range of electrical equipment and supplies, automation and connected devices (the “Internet of Things” or “IoT”), security, lighting, wire and cable, safety, and maintenance, repair and operating (“MRO”) products from industry-leading manufacturing partners. The EES service portfolio includes contractor solutions to improve project execution, direct and indirect manufacturing supply chain optimization programs, lighting and renewables advisory services, and digital and automation solutions to improve safety and productivity.

Previous wording

Our financial results for the first six months of 2024 compared to the first six months of 2023 reflect a single-digit decline in sales driven by a decrease in volume partially offset by the benefits of price inflation in certain segments, as well as margin contraction, loss on abandonment of assets, and higher facilities and IT costs, partially offset by the gain recognized on the divestiture of our WIS business, lower professional services and consulting fees, transportation costs, and payroll and payroll-related expenses.

Current wording

Our financial results for the first nine months of 2024 compared to the first nine months of 2023 reflect a single-digit decline in sales driven by a decrease in volume partially offset by the benefits of price inflation in certain segments. Additionally, financial results were impacted by a loss on abandonment of assets, higher facilities and IT costs and higher payroll and payroll-related expenses, partially offset by the gain recognized on the divestiture of our WIS business, as well as lower professional services and consulting fees.

Previous wording

Net sales for the first six months of 2024 decreased $437.7 million, or 3.9%, over the corresponding prior year period. The decrease reflects estimated volume decline of approximately 4% driven primarily by a decrease in volume for the UBS segment, with less significant decreases in the CSS and EES segments, as well as the decrease from the divestiture of the WIS business of 1.8%, and the negative impact of fluctuations in foreign exchange rates of 0.1%. These negative factors were partially offset by the estimated impact of changes in price of approximately 2%. Cost of goods sold as a percentage of net sales was 78.4% and 78.2% for the first six months of 2024 and 2023, respectively. The unfavorable increase of 20 basis points reflects a shift in sales mix, lower supplier volume rebates, inventory adjustments, and lower cash discounts.

Current wording

Net sales for the first nine months of 2024 decreased $592.7 million, or 3.5%, over the corresponding prior year period. The decrease reflects estimated volume decline of approximately 3% driven primarily by a decrease in volume for the UBS segment, with a less significant decrease in the EES segment, partially offset by an increase in the CSS segment. Other negative factors include the decrease from the divestiture of the WIS business of 2.3% and the negative impact of fluctuations in foreign exchange rates of 0.2%. These negative factors were partially offset by the favorable impact from the number of workdays of 0.5% and by the estimated impact of changes in price of approximately 2%. Cost of goods sold as a percentage of net sales was 78.3% for the current and prior year nine-month period.

Previous wording

Income from operations was $586.5 million for the first six months of 2024 compared to $710.2 million for the first six months of 2023, a decrease of $123.7 million, or 17.4%. Income from operations as a percentage of net sales was 5.4% for the current six-month period, compared to 6.3% for the first six months of the prior year. Income from operations for the first six months of 2024 includes a loss on abandonment of assets of $17.8 million as a result of the write-off of certain capitalized cloud computing arrangement implementation costs relating to a third-party developed operations management software product that will no longer be utilized, digital transformation costs of $12.1 million, restructuring costs of $9.0 million, and excise taxes on excess pension plan assets of $4.8 million. Adjusted for these amounts, income from operations was 5.8% of net sales for the first six months of 2024. For the first six months of 2023, income from operations was 6.7% of net sales, as adjusted for digital transformation costs of $15.6 million, merger-related and integration costs of $14.8 million, restructuring costs of $9.8 million, and accelerated trademark amortization of $0.8 million. For the six months ended June 30, 2024, income from operations declined compared to the prior year due to a decline in sales and higher cost of goods sold as a percentage of net sales, as well as an increase in costs to operate our facilities, primarily due to rental cost increases and an increase in IT costs. These negative factors were partially offset by a decrease in professional services and consulting fees, volume-related costs such as transportation, and lower payroll and payroll-related expenses.

Current wording

Income from operations was $922.1 million for the first nine months of 2024 compared to $1,090.7 million for the first nine months of 2023, a decrease of $168.6 million, or 15.5%. Income from operations as a percentage of net sales was 5.7% for the current nine-month period, compared to 6.4% for the first nine months of the prior year. Income from operations for the first nine months of 2024 includes a loss on abandonment of assets of $17.8 million as a result of the write-off of certain capitalized cloud computing arrangement implementation costs relating to a third-party developed operations management software product that will no longer be utilized, digital transformation costs of $17.5 million, restructuring costs of $9.5 million, and excise taxes on excess pension plan assets of $4.8 million. Adjusted for these amounts, income from operations was 6.0% of net sales for the first nine months of 2024. For the first nine months of 2023, income from operations was 6.8% of net sales, as adjusted for digital transformation costs of $28.5 million, merger-related and integration costs of $16.9 million, restructuring costs of $15.4 million, and accelerated trademark amortization of $1.2 million. For the nine months ended September 30, 2024, income from operations declined compared to the prior year due to a decline in sales, as well as an increase in costs to operate our facilities, an increase in IT costs and higher payroll and payroll-related expenses. These negative factors were partially offset by a decrease in professional services and consulting fees.

Previous wording

Operating cash flow for the first six months of 2024 was $522.5 million. Net cash provided by operating activities included net income of $348.9 million and non-cash adjustments to net income totaling $32.1 million, which primarily comprised depreciation and amortization of $91.6 million, a loss on abandonment of assets of $17.8 million, stock-based compensation expense of $12.8 million, amortization of debt discount and debt issuance costs of $8.8 million, a loss recognized on the extinguishment of debt of $6.8 million, and pension settlement cost of $5.5 million, partially offset by a gain of $102.9 million, resulting from the divestiture of our WIS business, as described in Note 4, “Acquisitions and Divestitures”. Operating cash flow was positively impacted by net changes in assets and liabilities of $141.6 million, which primarily comprised an increase in accounts payable of $341.9 million, primarily due to the timing of inventory purchases and payments to suppliers, partially offset by an increase in trade accounts receivable of $258.8 million due to the timing of receipts from customers. These cash inflows were partially offset by the payment of management incentive compensation earned in 2023, which resulted in a cash outflow of approximately $50.4 million in the first six months of 2024, which was partially offset by the accrual of management incentive compensation earned in the current year.

Current wording

Operating cash flow for the first nine months of 2024 was $824.6 million. Net cash provided by operating activities included net income of $553.5 million and non-cash adjustments to net income totaling $66.3 million, which primarily comprised depreciation and amortization of $137.6 million, stock-based compensation expense of $19.6 million, a loss on abandonment of assets of $17.8 million and amortization of debt discount and debt issuance costs of $12.2 million, partially offset by a gain of $122.2 million, resulting from the divestiture of our WIS business, as described in Note 4, “Acquisitions and Divestitures”. Operating cash flow was positively impacted by net changes in assets and liabilities of $204.8 million, which primarily comprised an increase in accounts payable of $478.0 million, primarily due to the timing of payments to suppliers, as well as inventory purchases, partially offset by an increase in trade accounts receivable of $217.9 million due to the timing of receipts from customers. Operating cash flow was also negatively impacted by the payment of management incentive compensation earned in 2023, which resulted in a cash outflow of approximately $50.5 million in the first nine months of 2024, which was partially offset by the accrual of management incentive compensation earned in the current year.

Previous wording

Investing activities primarily included $334.2 million in proceeds from the divestiture of the WIS business, net of cash transferred, partially offset by $41.2 million of capital expenditures mostly consisting of internal-use computer software and information technology hardware to support our digital transformation initiatives, as well as equipment and leasehold improvements to support our global network of branches, warehouses and sales offices, and $30.1 million paid to acquire entroCIM.

Current wording

Investing activities primarily included $354.9 million in proceeds from the divestiture of the WIS business, net of cash transferred, partially offset by $70.4 million of capital expenditures mostly consisting of internal-use computer software and information technology hardware to support our digital transformation initiatives, as well as equipment and leasehold improvements to support our global network of locations, and $41.7 million paid in the aggregate to acquire the entroCIM business (“entroCIM”) and Independent Electric Supply Inc. (“IES”), net of cash acquired.

Previous wording

Financing activities primarily comprised the redemption of our $1,500.0 million aggregate principal amount of 7.125% Senior Notes due 2025 (the “2025 Notes”), proceeds of $900.0 million and $850.0 million related to the issuance of our 6.375% Senior Notes due 2029 (the “2029 Notes”) and our 6.625% Senior Notes due 2032 (the “2032 Notes” and, together with the 2029 Notes, the “2029 and 2032 Notes”), respectively. Additionally, financing activities comprised net repayments of $328.0 million related to our revolving credit facility (the “Revolving Credit Facility”), net repayments of $40.0 million related to our accounts receivable securitization facility (the “Receivables Facility”), and payment of total debt issuance costs of $26.6 million related to the issuance of the 2029 and 2032 Notes and amendments to the Revolving Credit Facility and Receivables Facility. The first six months of 2024 also included $350.0 million of common stock repurchases, $41.2 million and $28.7 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $26.0 million of payments for taxes related to the exercise and vesting of stock-based awards.

Current wording

Financing activities primarily comprised the redemption of our $1,500.0 million aggregate principal amount of 7.125% Senior Notes due 2025 (the “2025 Notes”), and proceeds of $900.0 million and $850.0 million related to the issuance of our 6.375% Senior Notes due 2029 (the “2029 Notes”) and our 6.625% Senior Notes due 2032 (the “2032 Notes” and, together with the 2029 Notes, the “2029 and 2032 Notes”), respectively. Additionally, financing activities comprised net repayments of $468.0 million related to our revolving credit facility (the “Revolving Credit Facility”), net repayments of $100.0 million related to our accounts receivable securitization facility (the “Receivables Facility”), and payment of total debt issuance costs of $26.6 million related to the issuance of the 2029 and 2032 Notes and amendments to the Revolving Credit Facility and Receivables Facility. The first nine months of 2024 also included $375.0 million of common stock repurchases, $61.4 million and $43.1 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $26.2 million of payments for taxes related to the exercise and vesting of stock-based awards.

Previous wording

As of June 30, 2024, we had $1.1 billion in total available borrowing capacity under our Revolving Credit Facility and $40.0 million of available borrowing capacity under our Receivables Facility. The Revolving Credit Facility and the Receivables Facility both mature in March 2027. As of June 30, 2024, we also had $8.2 million of borrowing capacity available under our international lines of credit that did not directly reduce availability under the Revolving Credit Facility.

Current wording

As of September 30, 2024, we had $1.2 billion in total available borrowing capacity under our Revolving Credit Facility and $100.0 million of available borrowing capacity under our Receivables Facility. The Revolving Credit Facility and the Receivables Facility both mature in March 2027.

Previous wording

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; there was no change in the number of workdays in the second quarter of 2024 compared to the second quarter of 2023.

Current wording

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; the third quarter of 2024 had one more workday compared to the third quarter of 2023.

Previous wording

Net sales were $5.5 billion for the second quarter of 2024 compared to $5.7 billion for the second quarter of 2023, a decrease of 4.6%. Adjusting for the decrease from the divestiture of the WIS business of 3.5% and the unfavorable impact from fluctuations in foreign exchange rates of 0.3%, organic sales for the second quarter of 2024 declined by 0.8%, reflecting an approximately 3% decline in volume, driven by declines in the EES and UBS segments, partially offset by a volume increase in the CSS segment, and the impact of changes in price, which favorably impacted organic sales by approximately 2%.

Current wording

Net sales were $5.5 billion for the third quarter of 2024 compared to $5.6 billion for the third quarter of 2023, a decrease of 2.7%. Adjusting for the decrease from the divestiture of the WIS business of 3.5%, the unfavorable impact from fluctuations in foreign exchange rates of 0.2%, and the favorable impact from the number of workdays of 1.6%, organic sales for the third quarter of 2024 declined by 0.6%, reflecting an approximately 2% decline in volume, driven by declines in the EES and UBS segments, partially offset by a volume increase in the CSS segment, and the impact of changes in price, which favorably impacted consolidated organic sales by approximately 2%.

Previous wording

Cost of goods sold for the second quarter of 2024 was $4.3 billion compared to $4.5 billion for the second quarter of 2023, a decrease of $0.2 billion. Cost of goods sold as a percentage of net sales was 78.1% and 78.4% for the second quarter of 2024 and 2023, respectively. The favorable decrease of 30 basis points primarily reflects the impact from the divestiture of the WIS business.

Current wording

Cost of goods sold for the third quarter of 2024 was $4.3 billion compared to $4.4 billion for the third quarter of 2023, a decrease of $0.1 billion. Cost of goods sold as a percentage of net sales was 77.9% and 78.4% for the third quarter of 2024 and 2023, respectively. The favorable decrease of 50 basis points primarily reflects the impact from the divestiture of the WIS business.

Previous wording

Selling, general and administrative (“SG&A”) expenses primarily include payroll and payroll-related costs, shipping and handling, travel and entertainment, facilities, utilities, information technology expenses, professional and consulting fees, credit losses, gains (losses) on the sale, disposal, or abandonment of property and equipment, as well as real estate and personal property taxes. SG&A expenses for the second quarter of 2024 totaled $828.4 million versus $831.7 million for the second quarter of 2023, a decrease of $3.3 million, or 0.4%. As a percentage of net sales, SG&A expenses were 15.1% and 14.5% for the second quarter of 2024 and 2023, respectively. SG&A expenses for the second quarter of 2024 include a $17.8 million loss on abandonment of assets, $6.1 million of digital transformation costs, and $0.9 million of restructuring costs. SG&A expenses for the second quarter of 2023 include $9.8 million of restructuring costs, $7.3 million of digital transformation costs, and $3.6 million of merger-related and integration costs. Adjusted for the loss on abandonment of assets, digital transformation costs, and restructuring costs, SG&A expenses were $803.6 million, or 14.7% of net sales, for the second quarter of 2024. Adjusted for restructuring costs, digital transformation costs, and merger-related and integration costs, SG&A expenses were $811.0 million, or 14.1% of net sales, for the second quarter of 2023.

Current wording

Selling, general and administrative (“SG&A”) expenses primarily include payroll and payroll-related costs, shipping and handling, travel and entertainment, facilities, utilities, information technology expenses, professional and consulting fees, credit losses, gains (losses) on the sale, disposal, or abandonment of property and equipment, as well as real estate and personal property taxes. SG&A expenses for the third quarter of 2024 totaled $831.1 million versus $796.4 million for the third quarter of 2023, an increase of $34.7 million, or 4.4%. As a percentage of net sales, SG&A expenses were 15.1% and 14.1% for the third quarter of 2024 and 2023, respectively. SG&A expenses for the third quarter of 2024 include $5.4 million of digital transformation costs and $0.5 million of restructuring costs. SG&A expenses for the third quarter of 2023 include $12.9 million of digital transformation costs, $5.6 million of restructuring costs, and $2.1 million of merger-related and integration costs. Adjusted for digital transformation costs and restructuring costs, SG&A expenses were $825.2 million, or 15.0% of net sales, for the third quarter of 2024. Adjusted for digital transformation costs, restructuring costs, and merger-related and integration costs, SG&A expenses were $775.8 million, or 13.7% of net sales, for the third quarter of 2023.

Previous wording

SG&A payroll and payroll-related expenses for the second quarter of 2024 of $506.6 million decreased by $16.9 million compared to the same period in 2023 as a result of a decrease in other payroll expenses of $12.6 million, primarily driven by a reduction in long-term incentive plan expense, as well as lower salaries of $7.8 million due to the impact of headcount reductions taken at the end of the second quarter of 2023 and from the divestiture of the WIS business, partially offset by wage inflation. These decreases in other payroll expenses and salaries are partially offset by an increase of $6.7 million in commissions and incentives.

Current wording

SG&A payroll and payroll-related expenses for the third quarter of 2024 of $520.1 million increased by $13.5 million compared to the same period in 2023 as a result of an increase of $9.6 million in commissions and incentives and a $9.6 million increase in benefits, partially offset by a decrease in other payroll expenses of $3.3 million, primarily driven by a reduction in long-term incentive plan expense.

Previous wording

SG&A expenses not related to payroll and payroll-related costs for the second quarter of 2024 were $321.8 million, a increase of $13.6 million compared to the same period in 2023, which primarily reflects an increase of $17.8 million due to the loss on abandonment of assets, and higher costs to operate our facilities of $6.8 million. These increases were partially offset by a decrease of $4.5 million in professional service and consulting fees, including decreases in merger-related and integration costs and costs related to digital transformation initiatives.

Current wording

SG&A expenses not related to payroll and payroll-related costs for the third quarter of 2024 were $311.0 million, an increase of $21.2 million compared to the same period in 2023, which primarily reflects higher costs to operate our facilities of $7.0 million, higher transportation costs of $4.5 million, higher employee expenses of $3.3 million, and higher IT costs of $3.2 million.

Previous wording

Income from operations was $323.5 million for the second quarter of 2024 compared to $363.8 million for the second quarter of 2023. The decrease of $40.3 million, or 11.1%, reflects a decrease in sales due to volume declines, partially offset by lower cost of goods sold as a percentage of net sales, as described above.

Current wording

Income from operations was $335.6 million for the third quarter of 2024 compared to $380.5 million for the third quarter of 2023. The decrease of $44.9 million, or 11.8%, reflects a decrease in sales due to volume declines and an increase in SG&A expenses as described above, partially offset by lower cost of goods sold as a percentage of net sales, as described above.

Previous wording

Other non-operating income totaled $95.9 million for the second quarter of 2024 compared to expense of $0.8 million for the second quarter of 2023. In the second quarter of 2024, we completed the divestiture of our WIS business and recognized a gain from the sale of $102.9 million. Additionally, in the second quarter of 2024, we recognized a $3.8 million loss on termination of a business arrangement. Due to fluctuations in the U.S. dollar against certain foreign currencies, we recognized a net foreign currency exchange loss of $3.4 million for the second quarter of 2024 compared to a net loss of $3.8 million for the second quarter of 2023. We recognized net benefits of $0.4 million and $0.5 million associated with the non-service cost components of net periodic pension cost (benefit) for the three months ended June 30, 2024 and 2023, respectively. Adjusted for the gain on the divestiture of our WIS business and the loss on termination of a business arrangement, other non-operating expense was $3.2 million for the second quarter of 2024.

Current wording

Other non-operating income totaled $24.9 million for the third quarter of 2024 compared to expense of $3.7 million for the third quarter of 2023. During the third quarter, we finalized the divestiture of our WIS business and recognized an additional gain from the sale of $19.3 million. Due to fluctuations in the U.S. dollar against certain foreign currencies, we recognized a net foreign currency exchange gain of $2.5 million for the third quarter of 2024 compared to a net loss of $1.4 million for the third quarter of 2023. We recognized net benefits of $2.4 million and $0.2 million associated with the non-service cost components of net periodic pension cost (benefit) for the three months ended September 30, 2024 and 2023, respectively. The non-service cost components of net periodic pension benefit for the third quarter of 2024 includes income of $2.2 million as a result of the finalization of the liabilities transferred as part of the settlement of the Anixter Inc. Pension Plan. Adjusted for the gain on the divestiture of our WIS business as well as the pension settlement cost reduction, other non-operating income was $3.4 million for the third quarter of 2024.

Previous wording

The provision for income taxes was $87.8 million for the second quarter of 2024 compared to $71.8 million for the corresponding quarter of the prior year, resulting in effective tax rates of 27.4% and 27.2%, respectively.

Current wording

The provision for income taxes was $69.3 million for the third quarter of 2024 compared to $44.3 million for the corresponding quarter of the prior year, resulting in effective tax rates of 25.3% and 15.9%, respectively. The higher effective tax rate for the third quarter of 2024 is due to lower discrete income tax benefits resulting from the exercise and vesting of stock-based awards as compared to the prior year. The corresponding quarter of the prior year also reflected discrete income tax benefits relating to the reversal of the valuation allowance against Brazilian deferred tax assets and 2022 U.S. federal return-to-provision adjustments.

Previous wording

Net income and earnings per diluted share attributable to common stockholders were $217.7 million and $4.28, respectively, for the second quarter of 2024 compared to $178.7 million and $3.41, respectively, for the second quarter of 2023. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, the gain recognized on the divestiture of the WIS business, the loss on termination of a business arrangement, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $163.5 million and $3.21, respectively, for the three months ended June 30, 2024. Adjusted for restructuring costs, digital transformation costs, merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $194.3 million and $3.71, respectively, for the three months ended June 30, 2023.

Current wording

Net income and earnings per diluted share attributable to common stockholders were $189.9 million and $3.81, respectively, for the third quarter of 2024 compared to $219.0 million and $4.20, respectively, for the third quarter of 2023. Adjusted for digital transformation costs, restructuring costs, the additional gain recognized on the divestiture of the WIS business, the pension settlement cost reduction, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $178.1 million and $3.58, respectively, for the three months ended September 30, 2024. Adjusted for digital transformation costs, restructuring costs, merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $234.4 million and $4.49, respectively, for the three months ended September 30, 2023.

Previous wording

Adjusted EBITDA, a non-GAAP financial measure, was $400.1 million for the second quarter of 2024, compared to $442.3 million for the second quarter of 2023. Adjusted EBITDA decreased $42.2 million, or 9.5% year-over-year. The decrease primarily reflects the $265.8 million decrease in net sales, partially offset by a corresponding decrease in cost of goods sold of $221.4 million and a $3.3 million decrease in SG&A expenses, as described above. Included in the decrease in SG&A expenses were the loss on abandonment of assets of $17.8 million, and cloud computing arrangement amortization of $3.0 million, partially offset by the lack of merger-related and integration costs in the second quarter of 2024 compared to $3.6 million in the second quarter of 2023, as well as a year-over-year decrease in restructuring and digital transformation costs of $8.9 million and $1.2 million, respectively.

Current wording

Adjusted EBITDA, a non-GAAP financial measure, was $398.1 million for the third quarter of 2024, compared to $457.0 million for the third quarter of 2023. Adjusted EBITDA decreased $58.9 million, or 12.9% year-over-year. The decrease primarily reflects the $155.0 million decrease in net sales and a $34.7 million increase in SG&A expenses, partially offset by a corresponding decrease in cost of goods sold of $145.7 million, as described above. Included in the increase in SG&A expenses was cloud computing arrangement amortization of $3.8 million, partially offset by the lack of merger-related and integration costs in the third quarter of 2024 compared to $2.1 million in the third quarter of 2023, as well as a year-over-year decrease in digital transformation and restructuring costs of $7.5 million and $5.1 million, respectively.

Previous wording

CSS reported net sales of $1,865.9 million for the second quarter of 2024 compared to $1,850.9 million for the second quarter of 2023, an increase of $15.0 million, or 0.8%. Adjusting for the unfavorable impact from fluctuations in foreign exchange rates of 0.3%, CSS organic sales for the second quarter of 2024 grew by 1.1%, primarily reflecting volume growth in the data center solutions business, partially offset by declines in the enterprise network infrastructure and security solutions businesses. Changes in price did not have a material impact on the year-over-year growth in CSS organic sales.

Current wording

CSS reported net sales of $1,955.1 million for the third quarter of 2024 compared to $1,778.0 million for the third quarter of 2023, an increase of $177.1 million, or 10.0%. Adjusting for the unfavorable impact from fluctuations in foreign exchange rates of 0.1% and the favorable impact from the number of workdays of 1.6%, CSS organic sales for the third quarter of 2024 grew by 8.5%, primarily reflecting volume growth in the data center solutions and security solutions businesses. Changes in price did not have a material impact on the year-over-year growth in CSS organic sales.

Previous wording

UBS reported net sales of $1,440.9 million for the second quarter of 2024 compared to $1,694.3 million for the second quarter of 2023, a decrease of $253.4 million, or 15.0%. Adjusting for the decrease from the divestiture of the WIS business of 11.9% and the unfavorable impact from fluctuations in foreign exchange rates of 0.1%, UBS organic sales for the second quarter of 2024 declined by 3.0%, reflecting volume declines of approximately 6%, primarily as a result of declines in the utility and broadband businesses. The decline in volume was partially offset by the impact of changes in price, which favorably impacted organic sales by approximately 3%.

Current wording

UBS reported net sales of $1,383.1 million for the third quarter of 2024 compared to $1,675.7 million for the third quarter of 2023, a decrease of $292.6 million, or 17.5%. Adjusting for the decrease from the divestiture of the WIS business of 11.7%, the unfavorable impact from fluctuations in foreign exchange rates of 0.2%, and the favorable impact from the number of workdays of 1.6%, UBS organic sales for the third quarter of 2024 declined by 7.2%, reflecting volume declines of approximately 9%, primarily as a result of declines in the utility and broadband businesses. The decline in volume was partially offset by the impact of changes in price, which favorably impacted organic sales by approximately 1%.

Previous wording

Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. For the three months ended June 30, 2024, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, loss on abandonment of assets, digital transformation costs, cloud computing arrangement amortization, and restructuring costs. For the three months ended June 30, 2023, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, restructuring costs, digital transformation costs, and merger-related and integration costs. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales.

Current wording

Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. For the three months ended September 30, 2024, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, digital transformation costs, cloud computing arrangement amortization, and restructuring costs. For the three months ended September 30, 2023, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, digital transformation costs, restructuring costs, and merger-related and integration costs. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales.

Previous wording

(5)Accelerated trademark amortization represents additional amortization expense resulting from changes in the estimated useful lives of certain legacy trademarks that have migrated to our master brand architecture.

Current wording

(4)Accelerated trademark amortization represents additional amortization expense resulting from changes in the estimated useful lives of certain legacy trademarks that have migrated to our master brand architecture.

Previous wording

(7)The adjustments to income from operations have been tax effected at a rate of approximately 27% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

(6)The adjustments to income from operations and other (income) expense, net have been tax effected at rates of approximately 24% and 27% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Note: For the three months ended June 30, 2024, SG&A expenses, income from operations, other non-operating (income) expense, the provision for income taxes and earnings per diluted share have been adjusted to exclude the loss on abandonment of assets, digital transformation costs, restructuring costs, the gain recognized on the divestiture of the WIS business, the loss on termination of business arrangement, and the related income tax effects. For the three months ended June 30, 2023, SG&A expenses, income from operations, the provision for income taxes and earnings per diluted share have been adjusted to exclude restructuring costs, digital transformation costs, merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Current wording

Note: For the three months ended September 30, 2024, SG&A expenses, income from operations, other non-operating (income) expense, the provision for income taxes and earnings per diluted share have been adjusted to exclude digital transformation costs, restructuring costs, the gain recognized on the divestiture of the WIS business, the reduction to pension settlement cost, and the related income tax effects. For the three months ended September 30, 2023, SG&A expenses, income from operations, the provision for income taxes and earnings per diluted share have been adjusted to exclude digital transformation costs, restructuring costs, merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Previous wording

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; there was no change in the number of workdays in the first six months of 2024 compared to the first six months of 2023.

Current wording

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; the first nine months of 2024 had one more workday compared to the first nine months of 2023.

Previous wording

Net sales were $10.8 billion for the first six months of 2024 compared to $11.3 billion for the first six months of 2023, a decrease of 3.9%. Adjusting for the decrease from the divestiture of the WIS business of 1.8%, and the unfavorable impacts from fluctuations in foreign exchange rates of 0.1%, organic sales for the first six months of 2024 declined by 2.0%, reflecting an approximately 4% decline in volume, driven by declines in all three segments, partially offset by the impact of changes in price, which favorably impacted organic sales by approximately 2%.

Current wording

Net sales were $16.3 billion for the first nine months of 2024 compared to $16.9 billion for the first nine months of 2023, a decrease of 3.5%. Adjusting for the decrease from the divestiture of the WIS business of 2.3%, the unfavorable impact from fluctuations in foreign exchange rates of 0.2%, and the favorable impact from the number of workdays of 0.5%, organic sales for the first nine months of 2024 declined by 1.5%, reflecting an approximately 3% decline in volume, driven by declines in the EES and UBS segments, partially offset by a volume increase in the CSS segment, and the impact of changes in price, which favorably impacted consolidated organic sales by approximately 2%.

Previous wording

SG&A expenses primarily include payroll and payroll-related costs, shipping and handling, travel and entertainment, facilities, utilities, information technology expenses, professional and consulting fees, credit losses, gains (losses) on the sale, disposal, or abandonment of property and equipment, as well as real estate and personal property taxes. SG&A expenses for the first six months of 2024 totaled $1,657.8 million versus $1,649.4 million for the first six months of 2023, an increase of $8.4 million, or 0.5%. As a percentage of net sales, SG&A expenses were 15.3% and 14.6% for the first six months of 2024 and 2023, respectively. SG&A expenses for the first six months of 2024 include a $17.8 million loss on abandonment of assets, $12.1 million of digital transformation costs, $9.0 million of restructuring costs, and $4.8 million of excise taxes on excess pension plan assets. SG&A expenses for first six months of 2023 include $15.6 million of digital transformation costs, $14.8 million of merger-related and integration costs, and $9.8 million of restructuring costs. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, and excise taxes on excess pension plan assets, SG&A expenses were $1,614.1 million, or 14.9% of net sales, for the first six months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, and restructuring costs, SG&A expenses were $1,609.2 million, or 14.3% of net sales, for the first six months of 2023.

Current wording

SG&A expenses primarily include payroll and payroll-related costs, shipping and handling, travel and entertainment, facilities, utilities, information technology expenses, professional and consulting fees, credit losses, gains (losses) on the sale, disposal, or abandonment of property and equipment, as well as real estate and personal property taxes. SG&A expenses for the first nine months of 2024 totaled $2,488.9 million versus $2,445.8 million for the first nine months of 2023, an increase of $43.1 million, or 1.8%. As a percentage of net sales, SG&A expenses were 15.3% and 14.5% for the first nine months of 2024 and 2023, respectively. SG&A expenses for the first nine months of 2024 include a $17.8 million loss on abandonment of assets, $17.5 million of digital transformation costs, $9.5 million of restructuring costs, and $4.8 million of excise taxes on excess pension plan assets. SG&A expenses for first nine months of 2023 include $28.5 million of digital transformation costs, $16.9 million of merger-related and integration costs, and $15.4 million of restructuring costs. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, and excise taxes on excess pension plan assets, SG&A expenses were $2,439.3 million, or 14.9% of net sales, for the first nine months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, and restructuring costs, SG&A expenses were $2,385.0 million, or 14.1% of net sales, for the first nine months of 2023.

Previous wording

SG&A payroll and payroll-related expenses for the first six months of 2024 of $1,030.7 million decreased by $5.0 million compared to the same period in 2023 as a result of a decrease in other payroll expenses of $21.7 million, primarily driven by a reduction in long-term incentive plan expense, as well as a decrease of $6.8 million in temporary labor expense. These decreases were partially offset by higher salaries of $15.2 million due to wage inflation, partially offset by the impact of headcount reduction actions taken at the end of the second quarter of 2023 and the impact of the divestiture of the WIS business, and an increase to commissions and incentive compensation expenses of $9.1 million.

Current wording

SG&A payroll and payroll-related expenses for the first nine months of 2024 of $1,550.8 million increased by $8.5 million compared to the same period in 2023 primarily as a result of higher salaries of $6.9 million due to wage inflation, partially offset by the impact of headcount reduction actions taken at the end of the second quarter of 2023 and the impact of the divestiture of the WIS business. Additional factors include an increase to commissions and incentive compensation expenses of $18.7 million, and an increase to benefit expenses of $8.9 million. These increases were partially offset by a decrease in other payroll expenses of $16.1 million, primarily driven by a reduction in long-term incentive plan expense, as well as a decrease of $9.9 million in temporary labor expense.

Previous wording

SG&A expenses not related to payroll and payroll-related costs for the first six months of 2024 were $627.1 million, an increase of $13.4 million compared to the same period in 2023, which primarily reflects an increase of $18.5 million in other income and deductions, driven by the loss on abandonment of assets, higher costs to operate our facilities of $14.7 million, an increase of $8.0 million in IT costs, and an increase of $5.3 million in taxes. These increases were partially offset by a $13.4 million decrease in professional service and consulting fees, including decreases in merger-related and integration costs and costs related to digital transformation initiatives, and a decrease of $10.7 million in transportation costs due to the decrease in sales volume noted above.

Current wording

SG&A expenses not related to payroll and payroll-related costs for the first nine months of 2024 were $938.1 million, an increase of $34.6 million compared to the same period in 2023, which primarily reflects an increase of $21.6 million in other income and deductions, driven by the loss on abandonment of assets, higher costs to operate our facilities of $21.6 million, an increase of $11.2 million in IT costs, and an increase of $6.6 million in taxes. These increases were partially offset by a $16.5 million decrease in professional service and consulting fees, including decreases in merger-related and integration costs and costs related to digital transformation initiatives, and a decrease of $6.2 million in transportation costs due to the decrease in sales volume noted above.

Previous wording

Income from operations was $586.5 million for the first six months of 2024 compared to $710.2 million for the first six months of 2023. The decrease of $123.7 million, or 17.4%, reflects a decrease in sales due to volume declines, higher cost of goods sold as a percentage of net sales, and higher SG&A expenses, as described above.

Current wording

Income from operations was $922.1 million for the first nine months of 2024 compared to $1,090.7 million for the first nine months of 2023. The decrease of $168.6 million, or 15.5%, reflects a decrease in sales due to volume declines, and higher SG&A expenses, as described above.

Previous wording

Other non-operating income totaled $74.3 million for the first six months of 2024 compared to expense of $10.9 million for the first six months of 2023. In the first six months of 2024, we completed the divestiture of our WIS business and recognized a gain from the sale of $102.9 million. Additionally, in the first six months of 2024, we recognized a $3.8 million loss on termination of a business arrangement. Due to fluctuations in the U.S. dollar against certain foreign currencies, we recognized a net foreign currency exchange loss of $20.7 million for the first six months of 2024 compared to a net loss of $13.2 million for the first six months of 2023. We recognized net costs of $5.5 million and net benefits $0.7 million associated with the non-service cost components of net periodic pension cost (benefit) for the six months ended June 30, 2024 and 2023, respectively. The year-over-year increase in net periodic pension costs was due to pension settlement cost to recognize unrealized losses previously reported as a component of other comprehensive income (loss) related to the benefit obligation of the Anixter Inc. Pension Plan as a result of the final settlement of the plan in the first quarter of 2024. Adjusted for the gain on the divestiture of our WIS business, the loss on termination of a business arrangement, and the $5.5 million pension settlement cost described above, other non-operating expense was $19.3 million for the first six months of 2024.

Current wording

Other non-operating income totaled $99.3 million for the first nine months of 2024 compared to expense of $14.6 million for the first nine months of 2023. In the first nine months of 2024, we completed the divestiture of our WIS business and recognized a gain from the sale of $122.2 million. Additionally, in the first nine months of 2024, we recognized a $3.8 million loss on termination of a business arrangement. Due to fluctuations in the U.S. dollar against certain foreign currencies, we recognized a net foreign currency exchange loss of $18.2 million for the first nine months of 2024 compared to a net loss of $14.6 million for the first nine months of 2023. We recognized net costs of $3.2 million and net benefits of $0.9 million associated with the non-service cost components of net periodic pension cost (benefit) for the nine months ended September 30, 2024 and 2023, respectively. The year-over-year increase in net periodic pension costs was due to pension settlement cost to recognize unrealized losses previously reported as a component of other comprehensive income (loss) related to the benefit obligation of the Anixter Inc. Pension Plan as a result of the final settlement of the plan in the first quarter of 2024. Adjusted for the gain on the divestiture of our WIS business, the loss on termination of a business arrangement, and the $3.3 million pension settlement cost described above, other non-operating expense was $15.8 million for the first nine months of 2024.

Previous wording

The provision for income taxes was $118.7 million for the first six months of 2024 compared to $115.9 million in last year's comparable period, resulting in effective tax rates of 25.4% and 22.9%, respectively. The higher effective tax rate for the first six months of 2024 is due to lower discrete income tax benefits resulting from the exercise and vesting of stock-based awards as compared to the prior year period.

Current wording

The provision for income taxes was $188.1 million for the first nine months of 2024 compared to $160.2 million in last year's comparable period, resulting in effective tax rates of 25.4% and 20.4%, respectively. The higher effective tax rate for the first nine months of 2024 is due to lower discrete income tax benefits resulting from the exercise and vesting of stock-based awards as compared to the prior year period. The prior year period also reflected discrete income tax benefits relating to the reversal of the valuation allowance against Brazilian deferred tax assets and 2022 U.S. federal return-to-provision adjustments.

Previous wording

Net income and earnings per diluted share attributable to common stockholders were $319.2 million and $6.22, respectively, for the first six months of 2024 compared to $361.5 million and $6.90, respectively, for the first six months of 2023. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, excise taxes on excess pension plan assets, the gain recognized on the divestiture of the WIS business, the loss on termination of a business arrangement, pension settlement cost, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $282.9 million and $5.51, respectively, for the first six months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $391.3 million and $7.47, respectively, for the first six months of 2023.

Current wording

Net income and earnings per diluted share attributable to common stockholders were $509.1 million and $10.02, respectively, for the first nine months of 2024 compared to $580.5 million and $11.08, respectively, for the first nine months of 2023. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, excise taxes on excess pension plan assets, the gain recognized on the divestiture of the WIS business, the loss on termination of a business arrangement, pension settlement cost, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $461.0 million and $9.07, respectively, for the first nine months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $625.7 million and $11.94, respectively, for the first nine months of 2023.

Previous wording

Adjusted EBITDA, a non-GAAP financial measure, was $740.5 million for the first six months of 2024 compared to $863.0 million for the first six months of 2023. Adjusted EBITDA decreased $122.5 million, or 14.2% year-over-year. The decrease primarily reflects the $437.7 million decrease in net sales, and a $8.4 million increase in SG&A expenses, partially offset by a corresponding decrease in cost of goods sold of $322.7 million, as described above. Included in the increase in SG&A expenses were the loss on abandonment of assets of $17.8 million, cloud computing arrangement amortization of $5.9 million, and excise taxes on excess pension plan assets of $4.8 million, partially offset by the lack of merger-related and integration costs in the first six months of 2024 compared to $14.8 million in the first six months of 2023, as well as a year-over-year decrease in digital transformation and restructuring costs of $3.5 million and $0.8 million, respectively.

Current wording

Adjusted EBITDA, a non-GAAP financial measure, was $1,138.6 million for the first nine months of 2024 compared to $1,320.0 million for the first nine months of 2023. Adjusted EBITDA decreased $181.4 million, or 13.7% year-over-year. The decrease primarily reflects the $592.7 million decrease in net sales, and a $43.1 million increase in SG&A expenses, partially offset by a corresponding decrease in cost of goods sold of $468.4 million, as described above. Included in the increase in SG&A expenses were the loss on abandonment of assets of $17.8 million, cloud computing arrangement amortization of $9.7 million, and excise taxes on excess pension plan assets of $4.8 million, partially offset by the lack of merger-related and integration costs in the first nine months of 2024 compared to $16.9 million in the first nine months of 2023, as well as a year-over-year decrease in digital transformation and restructuring costs of $11.0 million and $5.9 million, respectively.

Previous wording

EES reported net sales of $4,271.9 million for the first six months of 2024 compared to $4,335.4 million for the first six months of 2023, a decrease of $63.5 million, or 1.5%. Adjusting for the unfavorable impact from fluctuations in foreign exchange rates of 0.3%, EES organic sales for the first six months of 2024 declined by 1.2%, reflecting volume declines of approximately 4%, primarily as a result of declines in the construction and original equipment manufacturers businesses, partially offset by an increase in the industrial business. The decline in volume was partially offset by the impact of changes in price, which favorably impacted organic sales by approximately 3%.

Current wording

EES reported net sales of $6,423.1 million for the first nine months of 2024 compared to $6,526.1 million for the first nine months of 2023, a decrease of $103.0 million, or 1.6%. Adjusting for the unfavorable impact from fluctuations in foreign exchange rates of 0.3% and the favorable impact from the number of workdays of 0.5%, EES organic sales for the first nine months of 2024 declined by 1.8%, reflecting volume declines of approximately 4%, primarily as a result of a decline in the construction business. The decline in volume was partially offset by the impact of changes in price, which favorably impacted organic sales by approximately 3%.

Previous wording

EES reported adjusted EBITDA of $360.7 million for the first six months of 2024, or 8.4% of net sales, compared to $372.0 million for the first six months of 2023, or 8.6% of net sales. Adjusted EBITDA decreased $11.3 million, or 3.0% year-over-year. The decrease primarily reflects the $63.5 million decrease in net sales, as described above, partially offset by a corresponding decrease in cost of goods sold of $41.2 million, which is inclusive of lower supplier volume rebates of approximately $10.3 million. SG&A expenses decreased $11.6 million as compared to the prior year, which was primarily attributed to lower headcount-related salaries and benefits of $13.3 million, a decrease in bad debt expense of $4.4 million due to improved collections from customers, and lower transportation costs of $2.3 million, driven by lower sales volume. These decreases were partially offset by an increase in commissions and incentives of $6.8 million, and higher costs to operate our facilities of $1.8 million, which includes an increase in rents.

Current wording

EES reported adjusted EBITDA of $547.0 million for the first nine months of 2024, or 8.5% of net sales, compared to $563.5 million for the first nine months of 2023, or 8.6% of net sales. Adjusted EBITDA decreased $16.5 million, or 2.9% year-over-year. The decrease primarily reflects the $103.0 million decrease in net sales, as described above, partially offset by a corresponding decrease in cost of goods sold of $90.6 million, which is inclusive of lower supplier volume rebates of approximately $4.2 million. SG&A expenses increased $3.6 million as compared to the prior year, which was primarily attributed to an increase in commissions and incentives of $13.6 million, and an increase in transportation costs of $2.3 million, partially offset by a decrease in benefits of $7.4 million and a decrease in bad debt expense of $5.5 million.

Previous wording

CSS reported net sales of $3,536.0 million for the first six months of 2024 compared to $3,582.9 million for the first six months of 2023, a decrease of $46.9 million, or 1.3%. Adjusting for the unfavorable impact from fluctuations in foreign exchange rates of 0.1%, CSS organic sales for the first six months of 2024 declined by 1.2%, primarily as a result of volume declines in the security solutions and enterprise network infrastructure businesses, partially offset by growth in the data center solutions business. Changes in price did not have a material impact on the year-over-year decline in CSS organic sales.

Current wording

CSS reported net sales of $5,491.1 million for the first nine months of 2024 compared to $5,360.9 million for the first nine months of 2023, an increase of $130.2 million, or 2.4%. Adjusting for the unfavorable impact from fluctuations in foreign exchange rates of 0.1% and the favorable impact from the number of workdays of 0.5%, CSS organic sales for the first nine months of 2024 grew by 2.0%, primarily as a result of growth in the data center solutions business, partially offset by volume declines in the security solutions and enterprise network infrastructure businesses. Changes in price did not have a material impact on the year-over-year increase in CSS organic sales.

Previous wording

CSS reported adjusted EBITDA of $278.0 million for the first six months of 2024, or 7.9% of net sales, compared to $335.0 million for the first six months of 2023, or 9.3% of net sales. Adjusted EBITDA decreased $57.0 million, or 17.0% year-over-year. The decrease primarily reflects the $46.9 million decrease in net sales, as well as a slight increase in cost of goods sold of $2.0 million, which is inclusive of an increase in inventory adjustments of $8.6 million and lower supplier volume rebates of approximately $2.7 million. SG&A expenses increased $8.6 million as compared to the prior year, which was primarily attributed to increased commissions and incentives of $3.4 million, higher costs to operate our facilities of $3.3 million, which includes an increase in rents and the opening of a new facility, and higher bad debt expense of $1.1 million. These increases were partially offset by lower transportation costs of $3.9 million, as a result of lower sales volume.

Current wording

CSS reported adjusted EBITDA of $453.2 million for the first nine months of 2024, or 8.3% of net sales, compared to $510.5 million for the first nine months of 2023, or 9.5% of net sales. Adjusted EBITDA decreased $57.3 million, or 11.2% year-over-year. The decrease reflects an increase in cost of goods sold of $157.2 million, which is inclusive of an increase in inventory adjustments of $8.3 million, and an increase in SG&A expenses of $31.3 million, partially offset by an increase in net sales of $130.2 million, as described above. The increase in SG&A expenses is primarily attributed to increased commissions and incentives of $8.9 million, higher salaries of $6.6 million, higher costs to operate our facilities of $5.4 million, which includes an increase in rents and the opening of a new facility, and higher benefits expense of $2.3 million.