Second Quarter Results
Second quarter 2013 sales increased $4.8 million or 3% over the prior year period to a record $171.3 million. When adjusting 2012 for the divestiture of certain non-core orthopaedic product lines at the beginning of 2013 ($4.4 million), sales increased $9.2 million or 6% organically. Foreign currency exchange rate fluctuations did not have a material impact on the current quarter in comparison to the prior year period. This 6% organic constant currency growth was primarily due to above market growth (5% growth) from our cardiac/neuromodulation product line, implant market share gains, which helped drive 14% orthopaedics product line organic growth, and strength in our portable medical product line, which is benefitting from new product launches into this higher growth market. This growth was partially offset by the timing of orthopaedic plant validations in connection with the closing of our Swiss facilities. For the remainder of 2013, we expect revenue to continue to be strong as orthopaedic backlog continues to be relieved, and new product introductions are commercialized in our cardiac and portable medical product lines.
Gross profit increased $5.4 million to $57.3 million in the second quarter of 2013, compared to $51.9 million for the comparable 2012 period. This improvement was driven by the increased sales discussed above, as well as cost savings and production efficiencies, including savings realized from the consolidation of our Swiss orthopaedic facilities and product line rationalizations, which totaled approximately $1.3 million. Gross profit as a percentage of sales for the current quarter increased 220 basis points to 33.4% from 31.2% for the prior year second quarter due to these production efficiencies and consolidations, as well as a better mix of higher margin products.
Selling, general and administrative (“SG&A”) expenses increased $1.5 million to $22.2 million for the second quarter 2013 compared to $20.7 million for the same period of 2012, and includes the additional cost from the Company’s investment in sales and marketing resources to drive core business growth as well as increased performance based compensation. These increases were partially offset by synergies realized from our Swiss orthopaedic facility consolidation of approximately $0.5 million.
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