"In summary, as we enter the middle part of the year, we continue to be confident in the fundamentals for our business. We will continue to execute our strategy for investment in growth opportunities while reorganizing or exiting those business units that do not fit our strategic and performance objectives," he concluded.
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 $1.2 million as increases in our energy services segment were dampened by decreases in our performance materials and construction technologies segments.
Performance Materials: Sales decreased 6.4% mostly due to activities in our domestic and European markets. Domestically, we experienced sales declines principally in our drilling fluid additives and specialty materials products as previously highlighted. In Europe, our largest fabric care customer purchased less product, resulting in the decrease in specialty materials product line sales.
Construction Technologies: Sales in this segment decreased 16.1% mainly due to activities in our domestic and European markets, especially in our lining technologies and contracting services product lines. Lining technologies sales suffered from unfavorable weather patterns. Contracting services revenues continue to decline in line with our strategy to reduce our participation in this market.
Energy Services: Revenues increased 32.2% to $73.1 million, 84% of which was derived in our domestic market. Domestically, our coil tubing, water treatment, well testing, and nitrogen services are benefitting from increased demand as well as capacity due to equipment and related personnel we recently put into service. Revenues from our international operations increased 25% largely due to increased revenues to construct service equipment under contract with certain customers of our Malaysian operations.
Gross profit: Gross profit decreased $1.6 million due to the decrease in gross profit margin in our performance materials and energy services segments. In our energy services segment, gross profit margins decreased as a result of increased concentration of land based revenues, especially in our coil tubing operations, and decreased profitability of certain services where we added equipment and personnel but have not yet generated increased revenues. In our performance materials segment, the decrease in sales, especially in our domestic market, was the overriding factor leading to the lower gross profit margins for this segment.
Selling, general and administrative expenses (SG&A): SG&A expenses increased $3.5 million, or 8.1%. Notable increases include $2.2 million of reorganization expenses, mostly within our construction technologies segment, and $1.0 million of expenses associated with amending certain SEC filings. In addition, the 2012 period includes unusual expenses of $0.7 million to write off certain information technology assets in our corporate segment as well as $1.3 million of bad debt expenses for one customer in our energy services segment. Excluding all these aforementioned expenses, SG&A expenses increased $2.3 million from $41.3 million in 2012 to $43.6 million in 2013. The $2.3 million increase is mostly comprised of increased compensation and benefit expenses.
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