DXP ENTERPRISES INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
DXPE$140.68+5.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001020710-24-000097
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001020710-25-000092
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 98 current paragraphs.
52 unchanged; 21 reworded; 25 added; 20 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
The global economy continues to experience elevated levels of volatility and uncertainty, driven by a combination of geopolitical developments and macroeconomic factors. Recent imposition of new and expanded tariffs have further contributed to disruptions in the capital markets and global supply chains. These developments may impact the Company’s operations, financial condition, and results of operations.
Current report
The Company is actively monitoring economic conditions in the U.S. and internationally, including the potential ramifications of evolving trade policies, changes in interest rates, inflationary pressures, and the risk of a global or regional economic recession. In response to these factors, the Company is continuously reviewing various strategies designed to mitigate certain adverse effects of changing inflationary conditions and supply chain challenges, while continuing to maintain market price competitiveness.
Current report
Historically, the Company's broad and diverse customer base and the generally non-discretionary nature of its products have provided a degree of resilience during periods of economic contraction in the industrial MRO market. However, the ultimate impact of ongoing macroeconomic conditions, including recent tariff-related developments, remains uncertain and cannot be predicted at this time.
Current report
For further discussion of the Company's risks and uncertainties, see Part I, Item 1A: Risk Factors in the Company’s 2024 Form 10-K.
Current report
Our results of operations are not directly comparable on a year-over-year basis due to various prior acquisitions and the varying size and number of acquisitions in any comparable period. We account for acquisitions under Accounting Standards Codification 805, Business Combinations ("ASC 805"). Accordingly, the results of acquisitions are included subsequent to their respective acquisition dates and the Company provides detail around Organic and Acquisition Sales as defined in our Key Business Metrics. During the three months ended March 31, 2025, acquisition sales were $31.1 million compared $11.8 million for the three months ended March 31, 2024.
Current report
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. We continue to generate adequate cash from operating activities. We believe that our operating cash flow, cash on hand, and other sources of liquidity including our ABL and Term Loan B, will be sufficient to allow us to continue investing in the business including capital expenditures, strategic acquisitions and investments, paying interest and servicing debt, repurchasing common stock when deemed appropriate, and manage our capital structure on a short-term and long-term basis.
Current report
Cash
Current report
Cash Flows
Current report
We believe the Company has adequate funding to support its working capital needs within the business.
Current report
Debt
Current report
At March 31, 2025, our total outstanding debt was $647.3 million, or 59.3 percent of total capitalization (total debt plus shareholders' equity) of $1.1 billion. $646.3 million of this outstanding debt bears interest at various floating rates. For a further discussion of the Company's debt refer to Note 8. Long-Term Debt.
Current report
Liquidity
Current report
The following table summarizes the amount of borrowing capacity under our ABL Revolver as follows (in thousands):
Current report
At March 31, 2025, the Company had $223.2 million of liquidity including $114.3 million in cash and $108.9 million in availability under the ABL Revolver.
Current report
We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase shares of the Company's common stock, and for other activities.
Current report
Free Cash Flow is not a measure of liquidity under U.S. GAAP, and may not be defined and calculated by other companies in the same manner. Free Cash Flow should not be considered in isolation or as an alternative to net cash provided by operating activities. Free Cash Flow reconciles to the most directly comparable U.S. GAAP financial measure of cash flows from operations.
Current report
The following table sets forth the reconciliation of net cash provided by operating activities to Free Cash Flow (in thousands):
Current report
Uses of Liquidity
Current report
Internally generated cash flows are the primary source of working capital and growth initiatives, including acquisitions and growth capital expenditures. The Company expects to continue to return excess capital to shareholders through share repurchases, when appropriate.
Current report
Working Capital
Current report
Working capital as of March 31, 2025 was $325.3 million, an increase of $34.3 million compared to $291.0 million as of December 31, 2024. The increase was primarily due to sustained sales growth and acquisitions.
Current report
Acquisitions
Current report
For a discussion of the Company’s acquisitions refer to Note 12. Business Acquisitions. During March 31, 2025 and 2024, the Company invested $12.9 million and $39.3 million, respectively, in acquisitions.
Current report
Capital Expenditures
Current report
The Company's capital expenditures was $19.9 million and $2.9 million for the three months ended March 31, 2025 and 2024, respectively. This includes a purchase of a facility, continued facility enhancements, tools and equipment, software and technology enhancements across the Company.
Removed paragraphs (20)
Previous report
Free Cash Flow
Previous report
Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023
Previous report
SALES. Sales for the nine months ended September 30, 2024 increased $59.6 million, or 4.7 percent, to approximately $1,331.1 million from $1,271.6 million for the prior year's corresponding period. The overall increase in sales was the result of an increase in sales within our IPS segment of $67.0 million, offset by decreases in sales in our SC and SCS segments of $2.3 million and $5.1 million, respectively. The fluctuations in sales are further explained in our business segment discussions below.
Previous report
Service Centers segment. Sales for the SC segment decreased by $2.3 million, or 0.3 percent for the nine months ended September 30, 2024, compared to the prior year's corresponding period. Sales from acquisitions for the SC segment increased $4.1 million compared to the corresponding period. Total sales for the SC segment excluding acquisitions decreased $6.4 million from the prior year's corresponding period. This sales decrease is primarily the result of timing and business mix within the segment.
Previous report
Innovative Pumping Solutions segment. Sales for the IPS segment increased by $67.0 million, or 42.3 percent for the nine months ended September 30, 2024 compared to the prior year's corresponding period. Sales from acquisitions for the IPS segment increased $29.4 million compared to the corresponding period. Total sales for the IPS segment excluding acquisitions increased $37.6 million from the prior year's corresponding period. This increase was primarily the result of an increase in project related jobs due to increased capital spending by oil and gas producers and renewables sector.
Previous report
Supply Chain Services segment. Sales for the SCS segment decreased by $5.1 million, or 2.6 percent, for the nine months ended September 30, 2024, compared to the prior year's corresponding period. The decrease in sales was primarily the result of customer facilities closing where we operated.
Previous report
OPERATING INCOME. Operating income for the nine months ended September 30, 2024 decreased by $2.6 million or 2.4% to $106.1 million from $108.7 million in the prior year's corresponding period. This decrease in operating income is primarily related to the aforementioned increase in SG&A.
Previous report
INTEREST EXPENSE. Interest expense for the nine months ended September 30, 2024 increased $10.6 million compared with the prior year's corresponding period. This increase was primarily due to the Company borrowing an additional $125.0 million on its Term Loan during the fourth quarter of 2023 and incurring higher than average interest rates on such debt due to changes in the macroeconomic environment and the associated increasing interest rate policy by the U.S. Federal Reserve Bank.
Previous report
Free Cash Flow
Previous report
On October 3, 2024, the Company entered into an amendment (the “Third Term Loan Amendment”) on its existing Senior Secured Term Loan B, repricing and borrowing an incremental $105 million that was added to the existing Senior Secured Term Loan B. Including the new borrowings, the Company will have $649.5 million in Senior Secured Term Loan B borrowings. The new Senior Secured Term Loan B borrowings mature on October 13, 2030, and are priced at Term SOFR plus an applicable margin of 3.75 percent.
Previous report
Financial Covenants:
Previous report
The Company's principal financial covenants under the ABL Credit Agreement and Term Loan B Agreement include:
Previous report
Fixed Charge Coverage Ratio – The Fixed Charge Coverage Ratio under the ABL Credit Agreement is defined as the ratio for the most recently completed four-fiscal quarter period, of (a) EBITDA minus capital expenditures (excluding (i) those financed or funded with debt (other than the ABL Loans), (ii) the portion thereof funded with the net proceeds from asset dispositions of equipment or real property which the Company is permitted to reinvest pursuant to the Term Loan and (iii) the portion thereof funded with the net proceeds of casualty insurance or condemnation awards in respect of any equipment and real estate which DXP is not required to use to prepay the ABL Loans pursuant to the Term Loan B Agreement or with the proceeds of casualty insurance or condemnation awards in respect of any other property)minus cash taxes paid (net of cash tax refunds received during such period), to (b) fixed charges. The Company is restricted from allowing its fixed charge coverage ratio to be less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under the ABL Revolver falls below a threshold set forth in the ABL Credit Agreement.
Previous report
As of September 30, 2024, the Company's Fixed Charge Coverage Ratio was 1.72 to 1.00.
Previous report
Secured Leverage Ratio – The Term Loan B Agreement requires that the Company’s Secured Leverage Ratio, defined as the ratio, as of the last day of any fiscal quarter of consolidated secured debt (net of unrestricted cash, not to exceed $200 million) as of such day to EBITDA, beginning with the fiscal quarter ending September 30, 2024, is either equal to or less than as indicated in the table below:
Previous report
As of September 30, 2024, the Company’s Secured Leverage Ratio was 2.54 to 1.00.
Previous report
EBITDA as defined under the Term Loan B Agreement for financial covenant purposes means, without duplication, for any period of determination, the sum of, consolidated net income during such period; plus to the extent deducted from consolidated net income in such period: (i) income tax expense, (ii) franchise tax expense, (iii) interest expense, (iv) amortization and depreciation during such period, (v) all non-cash charges and adjustments, and (vi) non-recurring cash expenses related to the Term Loan, provided, that if the Company acquires or disposes of any property during such period (other than under certain exceptions specified in the Term Loan B Agreement, including the sale of inventory in the ordinary course of business), then EBITDA shall be calculated, after giving pro forma effect to such acquisition or disposition, as if such acquisition or disposition had occurred on the first day of such period.
Previous report
The Company was in compliance with all financial covenants as of September 30, 2024.
Previous report
Funding Commitments
Previous report
We intend to pursue additional acquisition targets, but the timing, size or success of any acquisition and the related potential capital commitments cannot be determined with certainty. We continue to expect to fund future acquisitions primarily with cash flows from operations and borrowings, including the undrawn portion of the credit facility or new debt issuances, but may also issue additional equity either directly or in connection with acquisitions. There can be no assurance that additional financing for acquisitions will be available at terms acceptable to the Company.
Reworded paragraphs (21)
Previous wording
The following management discussion and analysis ("MD&A") of the financial condition and results of operations of DXP Enterprises, Inc. together with its subsidiaries (collectively "DXP," "Company," "us," "we," or "our") for the three and nine months ended September 30, 2024 should be read in conjunction with our previous Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, and the consolidated financial statements and notes thereto included in such reports. The Company's consolidated financial statements are prepared in accordance with U.S. GAAP.
Current wording
The following management discussion and analysis ("MD&A") of the financial condition and results of operations of DXP Enterprises, Inc. together with its subsidiaries (collectively "DXP," "Company," "us," "we," or "our") for the three months ended March 31, 2025 should be read in conjunction with our previous Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, and the consolidated financial statements and notes thereto included in such reports. The Company's consolidated financial statements are prepared in accordance with U.S. GAAP.
Previous wording
The replacement and mission-critical nature of our products and services within the Company's Service Centers and Innovative Pumping Solutions business segments and industrial and manufacturing environments and processes drives a demand and outlook that are correlated with global, national and regional industrial production, capacity utilization and long-term GDP growth. For the nine months ended September 30, 2024, we had approximately $1,137.2 million in sales in our Service Centers and Innovative Pumping Solutions segments, an increase of approximately 6.0 percent compared to the nine months ended September 30, 2023. Our performance has been strengthened by price increases from our vendors and suppliers and the Company's acquisition activity. During the nine months ended September 30, 2024, $40.5 million was associated with recent acquisitions in the water and wastewater markets. We are encouraged by the tapering effects of inflation and believe as we move forward, demand should be consistent across all the end markets we provide products and service.
Current wording
The replacement and mission-critical nature of our products and services within the Company's Service Centers and Innovative Pumping Solutions business segments and industrial and manufacturing environments and processes drives a demand and outlook that are correlated with global, national and regional industrial production, capacity utilization and long-term GDP growth. For the three months ended March 31, 2025, we had approximately $413.3 million in sales in our Service Centers and Innovative Pumping Solutions segments, an increase of approximately 17.9 percent compared to the three months ended March 31, 2024. Our performance has been strengthened by price increases from our vendors and suppliers and the Company's acquisition activity. During the three months ended March 31, 2025, $13.2 million was associated with recent acquisitions in the water and wastewater markets.
Previous wording
For the nine months ended September 30, 2024, we had approximately $193.9 million in sales in our Supply Chain Services segment, a decrease of approximately 2.6 percent compared to the nine months ended September 30, 2023. This is primarily due to some facility closures with some of our customers as well as the inherent efficiencies we bring to customers as part of our value proposition. As we move forward and given our increasing demand, we expect our performance to be driven by either the addition of new customers or an increase in spend by our existing customers.
Current wording
For the three months ended March 31, 2025, we had approximately $63.3 million in sales in our Supply Chain Services segment, an increase of approximately 2.1 percent compared to the three months ended March 31, 2024. This is primarily due to new customer facilities, slightly offset by facility closures due to the inherent efficiencies we bring to customers as part of our value proposition. As we move forward and given our increasing demand, we expect our performance to be driven by either the addition of new customers or an increase in spend by our existing customers.
Previous wording
There were 64 business days during the three months ended September 30, 2024 and 63 business days during the three months ended September 30, 2023.
Current wording
From time to time, typically based upon a leap year, our comparable business days may not equal each other. There were 63 business days during the three months ended March 31, 2025 and 63 business days during the three months ended March 31, 2024, as such there was no comparability impact this quarter.
Previous wording
We define and calculate free cash flow as net cash (used in) provided by operating activities less net purchases of property and equipment.
Current wording
We define and calculate free cash flow as net cash (used in) provided by operating activities less purchases of property and equipment.
Previous wording
SALES. Sales for the three months ended September 30, 2024 increased $53.7 million, or 12.8 percent, to approximately $472.9 million from $419.2 million for the prior year's corresponding period. The overall increase in sales was the result of an increase in sales in our SC, IPS, and SCS segments of $22.4 million, $30.9 million, and $0.5 million, respectively. The fluctuations in sales are further explained in our business segment discussions below.
Current wording
SALES. Sales for the three months ended March 31, 2025 increased $63.9 million, or 15.5 percent, to approximately $476.6 million from $412.6 million for the prior year's corresponding period. The overall increase in sales was the result of an increase in sales in our SC, IPS, and SCS segments of $38.6 million, $24.0 million, and $1.3 million, respectively. The fluctuations in sales are further explained in our business segment discussions below.
Previous wording
Service Centers segment. Sales for the SC segment increased $22.4 million, or 7.6 percent, for the three months ended September 30, 2024, compared to the prior year's corresponding period. This sales increase is primarily the result of the timing of jobs and business mix, as well as $13.0 million associated with recent acquisition.
Current wording
Service Centers segment. Sales for the SC segment increased $38.6 million, or 13.4 percent, for the three months ended March 31, 2025, compared to the prior year's corresponding period. This sales increase was the result of increases within our Texas Gulf Coast, Ohio River Valley, and California regions, offset by decreases in our North Rockies region. Additionally, $17.9 million in sales increase was associated with recent acquisitions.
Previous wording
Innovative Pumping Solutions segment. Sales for the IPS segment increased $30.9 million, or 52.3 percent, for the three months ended September 30, 2024, compared to the prior year's corresponding period. This sales increase is primarily the result of the timing of jobs, increased project related work, and $15.6 million was associated with recent acquisitions in the water and wastewater markets.
Current wording
Innovative Pumping Solutions segment. Sales for the IPS segment increased $24.0 million, or 38.5 percent, for the three months ended March 31, 2025, compared to the prior year's corresponding period. This sales increase was the result of increases within our fabrication and global solutions groups. Additionally, $13.2 million was associated with recent acquisitions in the water and wastewater markets.
Previous wording
Supply Chain Services segment. Sales for the SCS segment increased by $0.5 million, or 0.7 percent, for the three months ended September 30, 2024, compared to the prior year's corresponding period. The increase in sales was primarily the result of increased business activity.
Current wording
Supply Chain Services segment. Sales for the SCS segment increased by $1.3 million, or 2.1 percent, for the three months ended March 31, 2025, compared to the prior year's corresponding period. The increase in sales was primarily the result of increases within our oil and gas end market, offset by decreases in our bearings and powertrain end markets.
Previous wording
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"). SG&A for the three months ended September 30, 2024 increased by $16.8 million, or 18.7 percent, to $106.5 million from $89.7 million for the prior year's corresponding period. The increase in SG&A is primarily the result of increased payroll, incentive compensation and related taxes and 401(k) expenses.
Current wording
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"). SG&A for the three months ended March 31, 2025 increased by $15.0 million, or 15.8 percent, to $109.8 million from $94.8 million for the prior year's corresponding period. The increase in SG&A is primarily the result of increased payroll, incentive compensation and related taxes and 401(k) expenses.
Previous wording
OPERATING INCOME. Operating income for the third quarter of 2024 increased by $3.8 million to $39.6 million, from $35.9 million in the prior year's corresponding period. This increase in operating income was driven by the increase in sales during the period.
Current wording
OPERATING INCOME. Operating income for the first quarter of 2025 increased by $11.4 million to $40.5 million, from $29.1 million in the prior year's corresponding period. This increase in operating income was primarily driven by increases in our SC and IPS segments.
Previous wording
INTEREST EXPENSE. Interest expense for the third quarter of 2024 increased $3.0 million compared to the prior year's corresponding period. This increase was primarily due to the Company borrowing an additional $125.0 million on its Term Loan during the fourth quarter of 2023.
Current wording
INTEREST EXPENSE. Interest expense for the first quarter of 2025 decreased $0.9 million compared to the prior year's corresponding period. This decrease was primarily due to the Company refinancing its Term Loan during the fourth quarter of 2024.
Previous wording
INCOME TAXES. Our effective tax rate from continuing operations was a tax expense of 11.1 percent for the three months ended September 30, 2024, compared to a tax expense of 26.3 percent for the three months ended September 30, 2023. Compared to the U.S. statutory rate for the three months ended September 30, 2024, the effective tax rate was decreased by research and development tax credits and other tax credits and partially offset by state taxes, foreign taxes, nondeductible expenses, contingent consideration payments, and uncertain tax positions recorded for research and development tax credits.
Current wording
INCOME TAXES. Our effective tax rate from continuing operations was a tax expense of 24.2 percent for the three months ended March 31, 2025, compared to a tax expense of 27.2 percent for the three months ended March 31, 2024. Compared to the U.S. statutory rate for the three months ended March 31, 2025, the effective tax rate was increased by state taxes, foreign taxes, nondeductible expenses, and uncertain tax positions recorded for research and development tax credits and partially offset by research and development tax credits and other tax credits.
Previous wording
We define and calculate free cash flow as net cash (used in) provided by operating activities less net purchases of property and equipment.
Current wording
We define and calculate free cash flow as net cash (used in) provided by operating activities less purchases of property and equipment.
Previous wording
Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of financing. As a distributor of MRO products and services and fabricator of custom pumps and packages, working capital can fluctuate as a result of changes in inventory levels, accounts receivable and costs in excess of billings for project work. Additional cash is required for capital items for information technology, warehouse equipment, leasehold improvements, pump manufacturing and safety services equipment. We also require cash to pay our lease obligations and to service our debt.
Current wording
Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of debt and existing cash balances. As a distributor of MRO products and services, we require certain amounts of working capital to primarily fund inventories and accounts receivables. Additional cash is required for capital items for information technology, warehouse equipment, leasehold improvements, pump manufacturing and safety services equipment. We also require cash to pay our lease obligations, fund project work-in-process and to service our debt.
Previous wording
As of September 30, 2024, we had available cash of $35.0 million and credit facility availability of $131.6 million. We have a $135.0 million asset-backed line of credit (the "ABL Revolver"), partially offset by letters of credit of $3.4 million. We had no borrowings outstanding on our ABL Revolver as of September 30, 2024.
Current wording
As of March 31, 2025, we had available cash of $114.3 million and credit facility availability of $108.9 million. We have a $135.0 million asset-backed line of credit (the "ABL Revolver"), partially offset by letters of credit of $26.1 million. We had no borrowings outstanding on our ABL Revolver as of March 31, 2025.
Previous wording
The Company generated $70.1 million of cash from operating activities during the nine months ended September 30, 2024 compared to $63.8 million of cash generated during the prior year's corresponding period.
Current wording
The Company generated $3.0 million of cash from operating activities during the three months ended March 31, 2025 compared to $27.0 million of cash generated during the prior year's corresponding period.
Previous wording
For the nine months ended September 30, 2024, net cash used in investing activities was $165.1 million compared to a $16.0 million use of cash during the prior year’s corresponding period. This $149.2 million increase was primarily driven by acquisition activity during the nine months ended September 30, 2024. Total cash paid for acquisitions, net of cash acquired, was $149.4 million compared to $8.8 million for the nine months ended September 30, 2023. The increase is also driven by purchases of property and equipment of $15.7 million for the nine months ended September 30, 2024 compared to $7.1 million for the nine months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025, net cash used in investing activities was $30.1 million compared to a $42.2 million million use of cash during the prior year’s corresponding period. This $12.1 million decrease was primarily driven by lower acquisition activity during the three months ended March 31, 2025. Total cash paid for acquisitions, net of cash acquired, was $12.9 million compared to $39.3 million for the three months ended March 31, 2024.
Previous wording
For the nine months ended September 30, 2024, net cash used in financing activities was $42.4 million, compared to net cash used in financing activities of $66.7 million during the prior year’s corresponding period. The decrease was primarily due to share repurchases of $28.8 million for the nine months ended September 30, 2024 compared to $56.2 million for the nine months ended September 30, 2023. The Company also paid contingent consideration of $4.6 million for the nine months ended September 30, 2024 compared to $5.1 million for the nine months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025, net cash used in financing activities was $7.1 million, compared to net cash used in financing activities of $18.1 million during the prior year’s corresponding period. The decrease was primarily due to share repurchase activity during the three months ended March 31, 2024.
Previous wording
The Company believes it has adequate funding and liquidity to meet its normal working capital needs during the next twelve months. However, the Company may require additional debt outside of our credit facilities or equity financing to fund potential acquisitions. Such additional financings may include additional bank debt or the public or private sale of debt or equity securities. In connection with any such financing, the Company may issue securities that dilute the interests of our shareholders.
Current wording
We believe our cash generated from operations will meet our normal working capital needs during the next twelve months. However, we may require additional debt outside of our credit facilities or equity financing to fund potential acquisitions. Such additional financings may include additional bank debt or the public or private sale of debt or equity securities. In connection with any such financing, we may issue securities that substantially dilute the interests of our shareholders.
Previous wording
The Company's unaudited condensed financial statements are prepared in accordance with U.S. GAAP. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared on substantially the same basis as our annual Consolidated Financial Statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023. For a more complete discussion of our significant accounting policies and business practices, refer to the consolidated Annual Report on Form 10-K filed with the SEC on March 11, 2024. The results of operations for the nine months ended September 30, 2024 are not necessarily indicative of results expected for the full fiscal year.
Current wording
The Company's unaudited condensed financial statements are prepared in accordance with U.S. GAAP. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared on substantially the same basis as our annual Consolidated Financial Statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024. For a more complete discussion of our significant accounting policies and business practices, refer to the consolidated Annual Report on Form 10-K filed with the SEC on March 10, 2025. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of results expected for the full fiscal year.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"). SG&A for the nine months ended September 30, 2024 increased by approximately $28.0 million, or 10.2 percent, to $301.7 million from $273.7 million for the prior year's corresponding period. The increase in SG&A is primarily the result of increased payroll, incentive compensation and related taxes and 401(k) expenses as a result of increased business activity.
Previous report — wording carried elsewhere
INCOME TAXES. Our effective tax rate from continuing operations was a tax expense of 21.1 percent for the nine months ended September 30, 2024, compared to a tax expense of 26.8 percent for the nine months ended September 30, 2023. Compared to the U.S. statutory rate for the nine months ended September 30, 2024, the effective tax rate was decreased by research and development tax credits and other tax credits and partially offset by state taxes, foreign taxes, nondeductible expenses, contingent consideration payments, and uncertain tax positions recorded for research and development tax credits.