STATEMENT OF OPERATIONS HIGHLIGHTS:
The statement of operations highlights are supported by the quarterly segment results schedules included in this press release. The following comments relate to our results for the current quarter as compared to the same quarter in the prior year, unless otherwise noted.
Net sales: Net sales increased $5.3 million or 2.3%. Significant increases in revenue in our Energy Services segment were offset by decreased sales in each of the other segments.
Performance Materials: Sales in this segment decreased 4.7% to $114.6 million due to a $7.1 million decrease in our domestic market ($11.8 million of decreased volumes offset by $4.7 million of selling price increases).
Construction Technologies: Sales in this segment decreased 7.6%, or $4.1 million, to $50.1 million. Contracting services revenue decreased $1.8 million, reflective of our strategy to reduce our participation in this market. Volume declines in lining technology and drilling product sales comprise the remaining decrease.
Energy Services: Revenues increased $18.0 million to $71.8 million, of which 63% of the increase occurred in our domestic market. Domestically, our well test and coil tubing services increased due to both increased demand and growth in our service capacity. Internationally, our Malaysian operations increased revenues by $5.5 million largely as a result of winning several large contracts for the sale of service equipment.
Transportation: Revenues decreased primarily due to lower shipment volumes. Revenues continue to suffer from decreased supply of carriers and owner operators who are being recruited to oil and gas opportunities within the Bakken shale region.
Gross profit: Gross profit remained stable at $62.2 million. However, gross profit margin improvements in our Construction Technologies segment were offset by decreases in our Performance Materials and Energy Services segments. This led to an overall 60 basis points decrease in gross profit margin to 26.0%.
Selling, general and administrative expenses (SG&A): SG&A expenses increased $1.8 million, or 4.3%. Excluding the one-time benefit of $1.1 million relating to the recovery of certain compensation related expenses, SG&A expenses would have increased by 6.9%, or $2.9 million. The increase is largely reflective of $1.9 million of increased medical costs arising from several large claims within our domestic employee group. In addition, approximately $1.2 million of the increase arises in our Energy Services segment and relates to certain expenses, such as travel and compensation expenses, which increased in support of increased sales growth activities.
Other, net: Other, net decreased by approximately $0.9 million from the prior year quarter. The current period includes $0.6 million of receivable write-offs related to the sale of our domestic contracting business that occurred in Q3 2011.
Income tax expense: The current period's effective tax rate is 24.7% or 980 basis points lower than the prior year's quarter. The two rates are different mostly due to changes in estimates concerning the geographical distribution of earnings that occurred in each quarter. However, the effective tax rate for the year ending December 31, 2012 was comparable to the prior year's rate.
FINANCIAL POSITION AND CASH FLOW HIGHLIGHTS:
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