Second Quarter Net Sales Rise 16.5% to $563.0 Million
Second Quarter Net Income Increases 20.9% to $60.1 Million
Second Quarter Diluted Earnings per Share Increase 21.8% to $0.95
For the fiscal 2012 second quarter, net sales rose 16.5% to $563.0 million, compared with $483.4 million in the prior year period. Operating income in the fiscal 2012 second quarter increased 19.8% to $96.5 million, or 17.1% of net sales, compared with $80.6 million, or 16.7% of net sales, in the prior year period. For the second quarter of fiscal 2012, the Company reported net income of $60.1 million, an increase of 20.9% over net income of $49.7 million in the second quarter of fiscal 2011. Diluted earnings per share in the fiscal 2012 second quarter were $0.95 (based on 63.0 million diluted shares outstanding), compared to $0.78 (based on 63.3 million diluted shares outstanding) in the same period a year ago, an increase of 21.8%.
Net sales for the first half of fiscal 2012 were $1,108.7 million, compared with net sales of $956.2 million in the first half of fiscal 2011. Operating income for the first half of fiscal 2012 was $193.4 million, or 17.4% of net sales, versus $157.7 million, or 16.5% of net sales, in the first half of fiscal 2011. Net income for the first half of fiscal 2012 was $119.9 million, compared with $97.2 million in the prior year period. Diluted earnings per share for the first half of fiscal 2012 were $1.89 (based on 62.8 million diluted shares outstanding), compared to $1.53 (based on 63.1 million diluted shares outstanding) a year ago.
David Sandler, Chief Executive Officer, said, "I am extremely pleased with the progress of our growth initiatives and our performance in the quarter. With each passing quarter, it becomes increasingly clear that the industry consolidation we foresaw almost four years ago is entering the next phase. There is no doubt that the industrial market place is now rewarding the narrowing field of distributors who are capable of consolidating customers' spend across multiple locations, and providing the technology and technical expertise required to improve productivity and reduce supply chain costs."
Erik Gershwind, President and Chief Operating Officer, stated, "Our strong top and bottom-line performance in the second quarter was driven by the success of our growth initiatives, including the growth of our highly customized vending program and recent acquisitions. We believe the time has never been better for us to continue building on our momentum to consolidate our lead in metalworking and grow our business in adjacent product categories. Our gross margins remain strong despite near-term headwinds from our growth initiatives, including our recent acquisitions. However, we expect those headwinds to abate over time as the acquisitions mature and our vending program drives broader relationships with those customers. At the same time, we are maintaining highly efficient operating levels and record productivity as evidenced by the leverage within our SG&A."
Mr. Sandler concluded, "Our investments are clearly paying off as we take share, outgrow the market by a significant margin and successfully position the business for the future. We believe we are now firmly in a moderate growth environment and are excited about our outlook as we execute on our strategic plan."
Based on current market conditions, for the fiscal 2012 third quarter the company expects net sales to be between $610 million and $622 million, and expects diluted earnings per share for the third quarter of fiscal 2012 to be between $1.08 and $1.12. This guidance primarily reflects continued growth in the company's core business, expected cyclical increases in product costs, dilution from our recent acquisition and planned increases in investment spending.