Net sales for the 2012 second quarter of $97.0 million increased 12.0 percent from the 2011 second quarter of $86.6 million due to higher shipment volumes and higher prices. Net sales were higher across all of Anvil’s businesses, especially oil & gas and fire protection.
Adjusted operating income for the 2012 second quarter of $10.0 million increased 44.9 percent compared to adjusted operating income for the 2011 second quarter of $6.9 million. Adjusted operating margin for the 2012 second quarter was 10.3 percent, a 230 basis point improvement over the 2011 second quarter adjusted operating margin of 8.0 percent. The higher shipment volumes and higher sales prices mentioned above helped drive this improvement.
Interest Expense, NetInterest expense, net for the 2012 second quarter was $15.6 million, which included $1.6 million of noncash costs for terminated interest rate swap contracts, compared to $16.3 million for the 2011 second quarter, which included $2.0 million for such contracts. Although these contracts were terminated prior to 2011, the related costs are being amortized over the original term of the swap contracts. Income Taxes During the 2012 second quarter, the Company recorded income tax expense of $3.9 million on the pre-tax loss from continuing operations. This expense consists principally of a tax benefit of $2.0 million, or an effective tax benefit rate of 40.0 percent, offset by a $5.9 million valuation allowance charge related to deferred tax assets at September 30, 2011. Overall, the Company recorded $34.4 million in valuation allowance charges during the 2012 second quarter primarily due to operating losses from discontinued operations. The Company’s net operating loss carry forwards remain available to offset future taxable earnings. Discontinued Operations Discontinued operations for the 2012 second quarter included a pre-tax loss of $116.5 million from the sale of U.S. Pipe. U.S. Pipe’s net sales and operating loss were $100.9 million and $2.8 million, respectively, for the 2012 second quarter. During the 2012 second quarter, the Company recorded a net income tax benefit of $18.6 million representing a tax benefit of $47.1 million offset by a $28.5 million valuation allowance charge.