The Company had expected to receive recertification of a prior concessionary tax rate in Asia Pacific, which would have increased earnings an additional $0.08 per share in the third quarter, but the approval was delayed until earlier this month and is expected to be recognized in the fourth quarter.
For the first nine months of 2013, the Company reported net sales of $545.1 million, compared to the first nine months of 2012 net sales of $535.4 million. Earnings per diluted share for the first nine months of 2013 were $3.21 compared to earnings per diluted share of $2.63 for the first nine months of 2012.
Third Quarter of 2013 Summary
Net sales for the third quarter of 2013 of $184.1 million increased approximately 2% from net sales of $180.9 million in the third quarter of 2012, which primarily related to an increase in product volumes.
Gross profit increased approximately $6.9 million, or approximately 12%, from the third quarter of 2012. The increase in gross profit was primarily driven by an improvement in gross margin to 35.9% from 32.7% in the third quarter of 2012. The increase in gross margin reflects the return of the Company's product margins to more acceptable levels.
Selling, general and administrative expenses ("SG&A") increased $3.9 million from the third quarter of 2012, which was primarily driven by higher selling related costs on improved Company performance and higher labor related costs on general year-over-year merit increases.
In addition, non-operating related SG&A expenses increased due to certain uncommon costs. For instance, the third quarter of 2013 SG&A includes approximately $0.7 million, or $0.04 per diluted share, of costs related to streamlining certain operations in the Company's Europe, Middle East and Africa ("EMEA") region.
The increase in other expense in the third quarter of 2013 was primarily driven by foreign exchange transaction losses of approximately $0.6 million and a charge of approximately $0.2 million, or $0.01 per diluted share, related to the cost streamlining initiative, noted above, compared to foreign exchange transaction losses of $0.2 million in the third quarter of 2012.
The decrease in interest expense was primarily due to lower average borrowings and lower interest rates experienced in the third quarter of 2013 as compared to the third quarter of 2012.
The increase in equity in net income of associated companies from the third quarter of 2012 was primarily due to higher earnings related to the Company's equity interest in a captive insurance company. Earnings from this affiliate were $1.2 million, or $0.09 per diluted share, in the third quarter of 2013 compared to $0.4 million, or $0.03 per diluted share, in the third quarter of 2012.
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