"We made tremendous strides improving our performance during the second quarter, reflected by our increased sales, gross margin and earnings," said Daniel T. Hendrix, Chairman and Chief Executive Officer of the Company.
"We're very pleased with our surge in the Americas business, with sales up 12% year-over-year and well ahead of the overall commercial market. Gross margin in the Americas dramatically improved on a sequential basis, putting us on track to return to historical peak levels.
“Our Asia-Pacific business also saw growth in the quarter, with solid results out of Southeast Asia and China and with Australia's top line pulling near the pre-fire second quarter last year. In Europe, we saw modest sales improvement sequentially versus the first quarter and the region continues to maintain profitability, outperforming the industry in a challenging economy and business environment."
Second Quarter 2013 Financial Summary & Highlights
SALES: Sales for the second quarter of 2013 were up 6.1% to $243.5 million, compared with $229.5 million in the second quarter of 2012.
The strength of the quarter was, once again, the Americas business, with sales increasing 11.6% year-over-year and hitting an all-time quarterly record within the U.S. commercial business. The growth occurred across nearly all market segments, led by the corporate office segment (up 11%) and the non-office segments of hospitality (up 63%), government (up 16%) and healthcare (up 13%). FLOR consumer business sales were up 65% versus the prior year period, due primarily to the larger FLOR store footprint and increased web traffic, each of which were buoyed by a June summer sale that had occurred in July last year.
Sales in the Asia-Pacific region were up 4.1%, with the Australia business off only 3.4% (1.2% in local currency) versus the pre-fire results in the second quarter last year. Shipments increased substantially in China, where improved business with local customers greatly outpaced a decline in spending by multinational companies. Southeast Asia also continued to grow at a robust level.
While the European business improved modestly on a sequential basis versus the first quarter, sales were down 3.2% year-over-year as reported in U.S. dollars, or 5.3% in local currencies. The decline occurred mainly in the U.K., which is the Company's largest market in the region. Emerging markets in Eastern Europe, Russia and India produced strong year-over-year growth, albeit on a smaller sales base.
OPERATING INCOME: Second quarter 2013 operating income was $21.8 million, or 9.0% of sales, down from $22.5 million, or 9.8% of sales, in the second quarter last year. Gross margin improved by 110 basis points against the prior year period as a result of higher volumes and improved manufacturing efficiencies.
SG&A expenses were $64.4 million, or 26.5% of sales, in the second quarter of 2013, versus $56.2 million, or 24.5% of sales, in the second quarter of 2012. The year-over-year SG&A expansion was mostly due to budgeted sales and marketing initiatives, including new product introductions, FLOR store openings, and the addition of sales personnel.
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