Results in the fourth quarter of 2012 were a record for revenues and earnings on a continuing operations basis.
Revenues were 6% higher in the fourth quarter of 2012 compared to the same period last year on a 70% increase in revenues at CIMCO, partially offset by a 1% decline in Equipment Group revenues.
Gross profit increased 15% in the fourth quarter over last year on the higher sales volumes and an improved sales mix. Gross profit margin was 27.6% in 2012 compared to 25.4% in 2011. Equipment Group margins improved on sales mix, with a higher proportion of product support revenues to total, as well as improved rental margins on higher utilization. Lower margins were reported at CIMCO on sales mix, with a lower proportion of product support revenues to total.
Selling and administrative expenses increased $1.6 million or 3% versus the comparable period of the prior year. Compensation was higher by $2.3 million on annual increases, higher staffing levels and higher profit sharing accruals on the higher income. Bad debt expense was $2.4 million higher in the fourth quarter of 2012 compared to last year on higher allowance for doubtful accounts. Expenses in 2012 included a $0.3 million insurance recovery related to a fire at CIMCO's Mobile, Alabama office. Certain marketing related costs including non-charge rentals and allowances were lower in the fourth quarter of 2012 compared to 2011. Selling and administrative expenses as a percentage of revenues were 13.3% versus 13.6% in the comparable period last year.
Interest expense was $2.7 million in the fourth quarter of 2012, up $0.6 million from the similar period last year on higher debt balances required to support increased inventory levels and investments in rental fleet.
Interest income was $1.9 million in the fourth quarter of 2012, up $0.5 million from last year on higher interest on conversions of rental equipment with purchase options.
The effective income tax rate in the quarter was 26.3% compared to 27.9% in the same period last year. The lower tax rate reflects lower statutory rates.
Net earnings in the quarter were $44.9 million, up 31% from 2011. Basic earnings per share were $0.59, up 34% from the fourth quarter of 2011.
Fourth Quarter Results of Operations in the Equipment Group
Three months ended December 31($ thousands) 2012 2011 $ change % change----------------------------------------------------------------------------Equipment sales and rentals New $151,436 $187,677 $(36,241) (19%) Used 41,539 46,763 (5,224) (11%) Rental 57,234 45,259 11,975 26%----------------------------------------------------------------------------Total equipment sales and rentals 250,209 279,699 (29,490) (11%)Power generation 2,816 2,720 96 4%Product support 114,377 88,627 25,750 29%----------------------------------------------------------------------------Total revenues $367,402 $371,046 $ (3,644) (1%)--------------------------------------------------------------------------------------------------------------------------------------------------------Operating income $ 57,449 $ 46,690 $ 10,759 23%--------------------------------------------------------------------------------------------------------------------------------------------------------Bookings ($ millions) $ 156 $ 157 $ (1) (1%)--------------------------------------------------------------------------------------------------------------------------------------------------------Key ratios:Product support revenues as a % of total revenues 31.1% 23.9%Group total revenues as a % of consolidated revenues 85.2% 90.8%Operating income as a % of revenues 15.6% 12.6%
