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Adjusted net income and adjusted diluted EPS decreased 9%, respectively, driven by higher SG&A expenses and taxes, offset by higher gross profit.
And so, the path to improve SG&A for this next will be really good, because we've kind of delayered the organization, we've streamlined, we've gotten some of these non-recurring items out of the way.
As a percent of net revenue SG&A expense would've been 47.5% compared to 47.4% in the third quarter of 2022 and 48.8% in the fourth quarter of 2021.
As mentioned in our Q2 call, we are seeing the results of our efforts to reduce overheads, which produced SG&A, including depreciation and amortization of $30 million in Q3 2023, a decrease of 9.7% compared to Q3 2022.
As we head into 2023, we will continue to focus on controlling our SG&A costs and investing in our electric drive technology, capitalizing on the growing number of electrification opportunities that are before us.
But one other very important internal factor as you can see we made significant strides in improving our SG&A, which was 8% in Q1 2022, 7% in Q4 2022 and now 6% in Q1 2023.
Controlling SG&A costs: The Achilles' heel of many low-margin companies is an elevated SG&A cost level, particularly if that level permanently decouples from revenues and gross margins.
Controlling SG&A costs: The Achilles' heel of many low-margin companies is an elevated SG&A cost level, particularly if that level permanently decouples from revenues and gross margins.
Despite lower sales than last year, total SG&A as a percentage of net sales decreased 240 basis points in the fourth quarter, primarily due to supply chain expense efficiencies.
EPS of a $1.07 was up 9% from Q3 2022, operating margins were solid and SG&A as a percentage of net revenue was below 17% in the quarter.
Finally, we expect SG&A to decrease by a low single-digit percentage compared to 2022.
For example, our headcount is actually down 5% from where we were kind of mid-2022, we have been very cautious and careful in SG&A and will continue.
For the quarter, adjusted SG&A as a percentage of net sales was 21.4% as compared with 20.4% a year ago.
From a cadence standpoint, we expect the timing dynamics I mentioned earlier to ship approximately $1 million of Q1 SG&A expense favorability into Q3 with mid-30s adjusted EBITDA margins resulting for Q2 and Q4.
However, the improvements in gross margins have been overshadowed by the high SG&A expenses.
I know you mentioned the investments in the strategic growth areas that drove the elevated SG&A in the quarter.
In each of these SG&A areas, we have driven sequential improvement in the year-over-year deleverage as a percentage of sales from Q2 to Q4 2022.
In the fiscal fourth quarter of 2023, the company's SG&A included $700,000 in legal and corporate expenses related to negotiations with shareholder activists and associated compliance matters.
Non-GAAP R&D expenses were $150 million for the third quarter of 2022, while Non-GAAP SG&A expenses were $67 million.
Non-GAAP SG&A expense declined 3% year-over-year in the fourth quarter to $37 million, representing 23% of revenue, which is 320 basis points lower than the 26.2% in Q4 of last year.