Peter J. Gundermann, President and Chief Executive Officer, commented, "Operationally, we had solid results in the second quarter. Shipments were strong at $70.8 million, our second highest quarterly total in our history. And, we achieved net income of $5.2 million, even after incurring significant expenses related to acquisitions and financing. We had healthy bookings in the quarter of over $66 million. Our markets remain robust, and we continue to see strong demand for our products."
Mr. Gundermann continued, "Although we closed our Peco acquisition on July 18 after our second quarter ended, results for the second quarter included about $900,000 of expenses related to the acquisition and its financing. We expect the positive aspects of the acquisition will begin to become apparent in our third quarter results."
Sales in the second quarter of 2013 were $70.8 million, up $5.8 million, or 9.0%, from the prior year period. Aerospace sales, which represented 97.0% of total second quarter sales, increased 10.0%, or $6.3 million, over the prior year period to $68.7 million. Test Systems sales decreased
$0.4 million to $2.2 million for the second quarter 2013 compared with last year's second quarter.
Year-to-date sales in 2013 were $144.8 million, up $14.7 million, or 11.3%, from the prior year-to-date sales of $130.1 million. Aerospace sales of $140.3 million increased 12.8% over the prior year-to-date period to $124.4 million. Test Systems year-to-date sales decreased $1.2 million to
$4.5 million compared with the prior-year period.
Consolidated operating margin in the 2013 second quarter was 11.3% compared with 12.0% in the prior-year period. Excluding costs associated with the Peco acquisition and financing, consolidated operating margin for the 2013 second quarter was 12.5%. Year-to-date consolidated operating margin was 13.2% compared with 13.1% in the prior year period.
Year-to-date and second quarter increases in engineering and development (E&D) costs, which are included in cost of products sold, offset leverage gained from increased aerospace sales. E&D costs were $13.3 million and $26.1 million in the 2013 second quarter and year-to-date periods, respectively, compared with $11.1 million and $21.1 million in the 2012 second quarter and year-to-date periods, respectively. E&D spending for 2013 is expected to be in the range of $53 million to $56 million, including $1 million to $2 million from the addition of Peco, Inc. Excluding Peco, expected E&D spending is up $2 million to $4 million from previous expectations, as a result of increased opportunities for product design and development for customers and additional requirements with ongoing projects.
Consolidated selling, general and administrative expenses ("SG&A") in the 2013 second quarter were $10.7 million, up $1.4 million when compared with $9.3 million in the prior year's second quarter. The increase was due primarily to higher legal and professional expenses related to acquisition and related financing activity that added approximately $0.9 million in the second quarter of 2013. Additionally, the incremental SG&A costs of Max-Viz, acquired in July of 2012, added $0.6 million compared with the second quarter of 2012. SG&A expenses for the first six months of 2013 were approximately $19.9 million, or 13.7% of sales, compared with $18.1 million, or 13.9% of sales, in the same period last year. The increase was due primarily to the acquisition of Max-Viz, which incrementally added $1.2 million to SG&A in the first half of 2013, and $1.0 million in legal and professional expenses related to acquisition and related financing activity when compared with the prior year.