What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-03-10 · 108 added, 57 removed, 389 unchanged (30% of the section changed)

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Risk Factors .

NON-GAAP FINANCIAL MEASURES

In an effort to provide investors with additional information regarding our results of operations as determined by U.S.

GAAP, we disclose non-GAAP financial measures.

The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S.

Our primary non-GAAP financial measures are organic sales ("Organic Sales"), sales per business day ("Sales per Business Day"), organic sales per business day ("Organic Sales per Business Day"), free cash flow ("Free Cash Flow"), earnings before interest, taxes, depreciation and amortization ("EBITDA") adjusted EBITDA ("Adjusted EBITDA"), EBITDA Margin, and Adjusted EBITDA Margin.

The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way.

These measures are not substitutes for their comparable U.S.

GAAP financial measures.

Management uses these non-GAAP financial measures to assist in comparing our performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes do not directly reflect our underlying operations.

Management believes that presenting our non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our results.

We believe that the presentation of these non-GAAP financial measures, when considered together with the corresponding U.S.

GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting our business than could be obtained absent these disclosures.

Refer to the Non-GAAP Financial Measures and Reconciliation section below for detailed reconciliations of our non-GAAP financial measures.

Matters Affecting Comparability

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.

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 twelve months ended December 31, 2025, acquisition sales were $96.0 million compared to $98.5 million for the twelve months ended December 31, 2024.

General Overview

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Our comprehensive knowledge, specialized services and leading brands serve MRO, OEM and capital equipment end users in virtually all industrial markets through our multi-channel capabilities that provide choice, convenience, expertise, timely response and an overall ease of doing business.

The Company's products are marketed in the U.S., Canada, Mexico, U.A.E., and India to customers that are engaged in a variety of industries, many of which may be counter cyclical to each other.

The Company's products are marketed in the U.S., Canada, Mexico, U.A.E., India, and Saudi Arabia to customers that are engaged in a variety of industries, many of which may be counter cyclical to each other.

Demand for our products generally is subject to changes in the U.S.

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Gross Profit Margin 31.5 % 30.9 % 30.1 %

Income from Operations $ 176,870 $ 145,382 $ 138,722

Income from Operations Margin 8.8 % 8.1 % 8.3 %

Net Income $ 88,677 $ 70,489 $ 68,812

Net Income Margin 4.4 % 3.9 % 4.1 %

EBITDA $ 218,602 $ 182,304 $ 170,182

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Adjusted EBITDA Margin 11.2 % 10.6 % 10.4 %

Net cash provided by operating activities $ 94,264 $ 102,211 $ 106,222

Free Cash Flow

$ 53,978 $ 77,143 $ 93,959

(1) Prior period segment disclosures have been recast.

For additional information, please refer to Note 20.

Segment Reporting .

Organic Sales and Acquisition Sales

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EBITDA and Adjusted EBITDA

We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization, and non-controlling interest.

We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization minus stock-based compensation expense, non-controlling interest before taxes and all other non-cash charges, adjustments, and non-recurring items.

We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization.

We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization plus stock-based compensation expense and all other non-cash charges, adjustments, and non-recurring items.

We identify the impact of all other non-cash charges, adjustments and non-recurring items because we believe these items do not directly reflect our underlying operations.

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Sales for the year ended December 31, 2025 increased $214.3 million, or 11.9%, to approximately $2.0 billion from $1.8 billion for the prior corresponding period.

Customer demand was generally healthy throughout fiscal 2024, resulting in industry expected volume growth, complemented by additional pricing actions taken by the Company's vendors after strong pricing action in 2022 and 2023, which ultimately, gets passed on to customers.

As such, some of the 2024 sales increase is the result of increases in price with increases in volume as well as the contribution from acquisitions and the related sales of rotating equipment and air compressors.

Customer demand was generally healthy throughout fiscal 2025, resulting in industry expected volume growth.

Some of the 2025 sales increase was the result of our ability to maintain margins and focus on profitability as well as the contribution from accretive acquisitions over time.

However, the Company cannot reasonably estimate whether these strategies will help mitigate the impact of these economic disruptors in the future.

The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements.

The Company considered the impact of economic trends on the assumptions and estimates used in preparing the consolidated financial statements.

In the opinion of management, all material adjustments necessary for a fair presentation of the Company’s financial results for the year have been made.

These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macro economic trends.

These adjustments are of a normal recurring nature but are complicated by the continued uncertainty surrounding these macroeconomic trends.

The severity, magnitude and duration of certain economic trends continue to be uncertain and are difficult to predict.

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Therefore, we cannot reasonably estimate the full future impacts of these matters at this time.

As our operations have generally stabilized from the COVID-19 pandemic and related inflationary pressures, we have seen growth from our supportive served end-markets and our focus on organic and inorganic sales growth.

We have seen growth from our supportive served end-markets and our focus on organic and inorganic sales growth.

Our sales volume is expected to deliver sustainable and healthy growth, while our diversification efforts have unlocked gains in margins, cash flow and overall organizational efficiency.

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Assuming a positive general macroeconomic environment and continued supportive environments in our end markets, we expect fiscal 2026 growth to be comparable to 2025 growth metrics with the continued execution of acquisition activity.

We expect our interest expense in 2025 will be relatively higher than the amounts incurred in 2024 due to our refinancing in the fourth quarter of 2024.

We expect our interest expense in 2026 to be relatively higher than the amounts incurred in 2025 due to incremental financing activities, but mitigated by proactively securing favorable terms to reduce overall borrowing costs .

We expect to generate sufficient cash from operations and have sufficient capacity under our ABL credit facility to fund any working capital, capital expenditures, share repurchases, and debt payments in 2026.

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We will seek to improve our working capital utilization, with a particular focus on improving the management of accounts receivable, inventory and cost in excess of billings.

In 2025, our cash flows for investing activities will be focused on strategic initiatives, information technology software and infrastructure, general upgrades and cost reduction opportunities and we currently estimate capital expenditures to be between $15.0 million and $25.0 million, before consideration of any acquisition activity.

In 2026, our cash flows for investing activities will be focused on strategic initiatives, information technology software and infrastructure, general upgrades and cost reduction opportunities.

Our sales growth strategy in recent years has focused on internal growth and acquisitions.

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$ 88.7 4.4 $ 70.4 3.9 $ 68.9 4.1

Net loss attributable to noncontrolling interest — — — — (0.1) —

Net income attributable to DXP Enterprises, Inc.

$ 70.4 3.9 $ 68.9 4.1 $ 48.2 3.3

Earning per share:

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$ 5.37 $ 4.22 $ 3.89

The following table sets forth the disaggregation of revenue from sales associated with recent acquisitions for the twelve months ended December 31, 2025 and 2024 (in thousands) :

Sales Acquisition Sales Organic Sales

Twelve Months Ended December 31, 2025

Service Centers $ 1,373,140 $ 56,164 $ 1,316,976

Innovative Pumping Solutions 390,291 39,879 350,412

Supply Chain Services 252,934 — 252,934

Total Sales $ 2,016,365 $ 96,043 $ 1,920,322

Twelve Months Ended December 31, 2024

Service Centers (1)

$ 1,236,775 $ 36,944 $ 1,199,831

Innovative Pumping Solutions (1)

308,850 61,556 247,294

Supply Chain Services 256,415 — 256,415

Total Sales $ 1,802,040 $ 98,500 $ 1,703,540

Service Centers $ 136,365 $ 19,220 $ 117,145

Innovative Pumping Solutions 81,441 (21,677) 103,118

Supply Chain Services (3,481) — (3,481)

Total $ Change $ 214,325 $ (2,457) $ 216,782

Service Centers 11.0 % 52.0 % 9.8 %

Innovative Pumping Solutions 26.4 % (35.2) % 41.7 %

Supply Chain Services (1.4) % N/A (1.4) %

Total % Change 11.9 % (2.5) % 12.7 %

(1) Prior period segment disclosures have been recast.

For additional information, please refer to Note 20.

Segment Reporting .

Year Ended December 31, 2025 compared to Year Ended December 31, 2024

Sales for the year ended December 31, 2025 increased $214.3 million, or 11.9%, to approximately $2.0 billion from $1.8 billion for the year ended December 31, 2024.

The sales increase was primarily due to new acquisitions within our SC and IPS segments during the year ended December 31, 2024.

The sales increase was primarily due to increased sales within our SC and IPS segments during the year ended December 31, 2025.

Sales in our SC and IPS segments increased $136.4 million and $81.4 million, respectively, offset by a decrease in sales in our SCS segment of $3.5 million.

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Service Centers Segment.

Sales for the Service Centers segment increased by $23.1 million, or 1.9% for the year ended December 31, 2024, compared to the year ended December 31, 2023.

Sales from acquisitions for the SC segment increased by $17.7 million during the twelve months ended December 31, 2024.

Total sales for the SC segment excluding acquisitions increased $5.4 million from the prior year's corresponding period.

This sales increase was primarily due to increase in sales within our Ohio River Valley, Southwest, South Rockies, and Canada regions;

partially offset by decreases in our North Rockies and Texas Gulf Coast regions.

Sales for the SC segment increased by $136.4 million, or 11.0% for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Sales from recent acquisitions contributed $56.2 million during the twelve months ended December 31, 2025 compared to $36.9 million in the corresponding period.

Total sales excluding recent acquisitions increased $117.1 million from the prior year's corresponding period.

This sales increase was primarily due to an increase in larger projects with our customers within our Ohio River Valley, Southwest, Texas Gulf Coast, and California regions as well as metal working and air compressors division.

Innovative Pumping Solutions Segment.

Sales for the IPS segment increased by $81.4 million, or 26.4% for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Sales from acquisitions for the IPS segment increased $47.8 million during the twelve months ended December 31, 2024.

Total sales for the IPS segment excluding acquisitions increased $56.5 million from the prior year's corresponding period.

This sales increase was primarily due to increase in sales within our water and wastewater division, our international division, and overall increases in project related jobs due to increased capital spending by oil and gas producers and the renewables sector.

Sales from recent acquisitions contributed $39.9 million during the twelve months ended December 31, 2025 compared to $61.6 million in the corresponding period.

Total sales excluding recent acquisitions increased $103.1 million from the prior year's corresponding period.

The sales increase was primarily due to larger projects with customers.

Additionally, the sales increase was also due to continuing diversification efforts into the water and wastewater end markets.

Supply Chain Services Segment.

Sales for the SCS segment decreased by $3.5 million, or 1.4%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The decrease in sales was primarily the result of decreases in sales in our oil & gas, resin, and power end-markets.

The decrease in sales was primarily due to a decrease in business activity amongst our oil and gas customers.

GROSS PROFIT.

Gross profit as a percentage of sales for the twelve months ended December 31, 2025 increased by approximately 67 basis points from the prior year's corresponding period.

The primary driver was an increase in contribution from IPS sales, going from 13.0% of consolidated sales in 2023 to 17.9% of sales in 2024.

While IPS overall gross profit percentage decreased 148 basis points from 2023 to 2024, the decrease did not impact consolidated gross profit percentage due to IPS’ overall relative higher gross margins.

Additionally, the increase in the gross profit percentage is primarily the result of an approximate 83 basis points and 114 basis points increase in the gross profit percentage in our SC and SCS segments, respectively, partially offset by an approximate 148 basis points decrease in our IPS segment.

The increase during the period was primarily attributable to IPS sales, going from 17.1% of consolidated sales in 2024 to 19.4% of sales in 2025.

Additionally, the increase in the gross profit percentage during the period was primarily attributable to IPS and SCS segments basis points increasing 166 basis points and 121 basis points, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”).

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SG&A attributable to acquisitions during the period increased by $4.6 million.

Excluding acquisitions, the increase in SG&A is primarily the result of increased professional fees, payroll expenses, incentive compensation and 401(k) expenses as a result of an increase in headcount during the period.

Excluding acquisitions, the increase in SG&A is primarily the result of increased payroll, building expenses, depreciation, amortization, and IT expenses.

INCOME FROM OPERATIONS.

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INTEREST EXPENSE.

Interest expense for the year ended December 31, 2024 increased $10.8 million compared to the prior year's corresponding period, primarily due to an increase outstanding borrowings on the Term Loan B.

Interest expense for the year ended December 31, 2025 decreased $3.4 million compared to the prior year's corresponding period, primarily due to the Company refinancing its Senior Secured Term Loan B.

Both of the Company's facilities are subject to a variable interest rate for the twelve months ended December 31, 2025.

PROVISION FOR INCOME TAX EXPENSE.

Our effective tax rate from continuing operations was a tax expense of 17.0 percent for the twelve months ended December 31, 2024, compared to a tax expense of 20.8 percent for the twelve months ended December 31, 2023.

Our effective tax rate from continuing operations was a tax expense of 25.6% for the twelve months ended December 31, 2025, compared to a tax expense of 17.0% for the twelve months ended December 31, 2024.

Compared to the U.S.

statutory rate for the twelve months ended December 31, 2024, 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 was partially offset by research and development tax credits and other tax credits.

statutory rate for the twelve months ended December 31, 2025, the effective tax rate increased primarily due to return-to-provision adjustments related to the research and development credit, nondeductible expenses, limitations on executive compensation, and state income taxes, and was partially offset by discrete items, including the release of a reserve related to a historical acquisition method change and a tax-basis balance-sheet adjustment related to intangibles and goodwill.

Year Ended December 31, 2024 compared to Year Ended December 31, 2023

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“Acquisition Sales” are sales from acquisitions that have been under our ownership for less than twelve months and are excluded in our calculation of Organic Sales.

The following table sets forth the reconciliation of Acquisition Sales and Organic Sales to the most comparable U.S.

The following table sets forth the reconciliation of Acquisition Sales and Organic Sales to the most directly comparable U.S.

GAAP financial measure (in thousands) :

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EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin

We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization, less non-controlling interest.

We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, amortization plus stock-based compensation expense, non-controlling interest before taxes and all other non-cash charges, adjustments, and non-recurring items.

We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization.

We identify the impact of all other non-cash charges, adjustments and non-recurring items because we believe these items do not directly reflect our underlying operations.

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$ 88,677 $ 70,489 $ 68,812

Net loss attributable to non-controlling interest (NCI)

Interest expense

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EBITDA $ 218,602 $ 182,304 $ 170,182

NCI income before tax

stock compensation expense 5,708 4,714 3,072

other non-recurring items (1)

992 4,292 1,051

stock compensation expense 4,714 3,072 1,850

Adjusted EBITDA $ 225,302 $ 191,310 $ 174,305

Operating Income Margin 8.8 % 8.1 % 8.3 %

Net Income Margin 4.4 % 3.9 % 4.1 %

EBITDA Margin 10.8 % 10.1 % 10.1 %

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We continue to generate adequate cash from operating activities.

We believe that our operating cash flow, cash on hand, and other sources of liquidity 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.

We believe that our operating cash flow, cash on hand, and other sources of liquidity 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 managing our capital structure on a short-term and long-term basis.

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.

As a distributor of MRO products and services, we require certain amounts of working capital to primarily fund inventories and accounts receivable.

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.

As of December 31, 2024 and 2023, we had cash of $148.3 million and $173.1 million, respectively.

The decrease in cash was primarily due to less cash flow from operating activities and an increase in acquisitions and capital expenditures from 2023 to 2024, partially offset by increased borrowings under the Company’s Amended Senior Secured Term Loan B and lower volume of share repurchases compared to 2023.

As of December 31, 2025, we had cash of $303.8 million and credit facility availability of $153.5 million.

We have a $185.0 million asset-backed line of credit (the "ABL Revolver"), partially offset by letters of credit of $31.5 million.

We had no borrowings outstanding on our ABL Revolver as of December 31, 2025.

The following table summarizes our net cash flows provided by (used in) operating activities, investing activities, financing activities for the periods presented ( in thousands, except percentages ):

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Operating Activities

The Company generated $102.2 million of cash in operating activities during the year ended December 31, 2024 compared to generating $106.2 million of cash during the prior year's corresponding period.

The $4.0 million decrease in the amount of cash generated between the two periods was primarily driven by an increase in operating assets including trade accounts receivable partially offset by decreased inventory purchases and accrued expenses as compared to the prior period.

We generated $94.3 million of cash in operating activities during the year ended December 31, 2025 compared to generating $102.2 million of cash during the prior year's corresponding period.

Investing Activities

For the year ended December 31, 2025, net cash used in investing activities was $99.2 million compared to $181.7 million used in the corresponding period in 2024.

The increase of $159.0 million was primarily driven by an increase in acquisition activities during 2024 compared to 2023.

The $82.4 million decrease was primarily driven by less significant acquisitions during the twelve months ended December 31, 2025.

Total cash paid for acquisitions, net of cash acquired, was $61.7 million compared to $156.6 million for the twelve months ended December 31, 2024.

Additionally, purchases of property and equipment was $15.2 million higher compared to the prior corresponding period.

Financing Activities

For the year ended December 31, 2025, net cash generated in financing activities was $158.9 million, compared to net cash generated in financing activities of $56.8 million for the corresponding period in 2024.

For the year ended December 31, 2024, the Company repurchased approximately $29.0 million worth of outstanding shares compared to $56.2 million worth of outstanding shares for the year ended December 31, 2023.

The net inflow of cash from financing activities in 2024 was a benefit driven by the refinancing of our existing Senior Secured Term Loan B.

Debt issuance costs associated with the amendment of our new Term Loan B was $1.8 million for the year ended December 31, 2024.

The net inflow of cash from financing activities in 2025 was primarily driven by the refinancing of our existing Senior Secured Term Loan B and raising an incremental $205.0 million.

Deferred financing costs associated with refinancing activity was $3.2 million for the year ended December 31, 2025.

During the twelve months ended December 31, 2025 we repurchased 0.2 million shares of the Company's common stock for approximately $17.0 million compared to 0.6 million shares of the Company's stock for approximately $28.8 million for the twelve months ended December 31, 2024.

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The following table summarizes the Company’s credit ratings as of December 31, 2025:

Senior Secured

Corporate Senior Secured

Free Cash Flow

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Working Capital

Working capital as of December 31, 2024 was $296.3 million, an increase of $20.9 million compared to $275.4 million as of December 31, 2023.

We monitor net working capital, which excludes cash and restricted cash, short-term debt obligations, and short-term operating leases.

Net working capital as of December 31, 2025 was $361.7 million, an increase of $70.7 million compared to $291.0 million as of December 31, 2024.

The increase was primarily due to sustained sales growth and acquisitions.

For a discussion of the Company’s acquisitions refer to Note 16 to the Consolidated Financial Statements.

In 2024 and 2023, the Company invested $156.6 million and $10.4 million, respectively, in acquisitions.

For a discussion of the Company’s acquisitions refer to Note 16 - Business Acquisitions .

In 2025 and 2024, the Company invested $61.7 million and $156.6 million, respectively, in acquisitions, net of cash acquired.

Capital Expenditures

In fiscal 2024, the Company's capital expenditures were $25.1 million and $12.3 million for the years ended December 31, 2024 and 2023, respectively.

Capital expenditures for 2025 is expected to be in the range of $15.0 and $25.0 million.

The Company's capital expenditures were $40.3 million and $25.1 million for the years ended December 31, 2025 and 2024, respectively.

This includes continued facility enhancements, tools and equipment, software and technology enhancements across the Company.

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Contractual and Other Obligations

On December 16, 2025, the Company amended its Senior Secured Term Loan B.

The Company under our Amended Senior Secured Term Loan B is required to make equal quarterly principal payments of 0.25%, with the remaining balance being payable on October 13, 2030.

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The interest rate for the Senior Secured Term Loan B was 8.32% as of December 31, 2024.

For Fiscal Year 2024 and 2023, the Company made cash interest payments of $59.8 million and $49.0 million, respectively.

See Note 9 to the Consolidated Financial Statements.

For Fiscal Year 2025 and 2024, the Company made cash interest payments of $53.7 million and $67.0 million on its outstanding debt, respectively.

See Note 9 - Long-Term Debt to the Consolidated Financial Statements.

In the ordinary course of business, the Company enters into contractual arrangements under which the Company may agree to indemnify customers from any losses incurred relating to the services we perform.

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While credit losses have historically been within expectations and the provisions established, should actual write-offs differ from estimates, revisions to the allowance would be required.

Impairment of Goodwill, Other Intangible Assets, and Long-Lived Assets

The Company tests goodwill and other intangible assets for impairment annually on October 1 st and when events or changes in circumstances indicate that the carrying amount may not be recoverable.

Valuation of Goodwill

Our methodology for allocating the purchase price relating to business acquisitions is determined through established valuation techniques.

Goodwill represents a residual value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred over the fair value of net assets acquired, including contingent consideration.

The Company tests goodwill for impairment annually on October 1 st and when events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company assigns the carrying value of these intangible assets to its “reporting units” and applies the test for goodwill at the reporting unit level.

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Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s net assets including goodwill exceeds its estimated fair value.

For the periods presented herein, a quantitative assessment was not required based on the qualitative assessment.

The Company determines fair value using widely accepted valuation techniques, including discounted cash flows and market multiples analyses.

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Contract costs may be incurred over a period of several months, and the estimation of these costs requires judgment based upon the acquired knowledge and experience of program managers, engineers, and finance professionals.

Estimated costs are based primarily on purchase contract terms and assumptions relating to terms such as estimated cost of materials, labor productivity and cost, and overhead.

Estimated costs are based primarily on purchase contract terms and assumptions relating to terms such as

estimated cost of materials, labor productivity and cost, and overhead.

The uncertainty as to the future availability of materials and labor resources could affect the Company's ability to accurately estimate future contract costs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis