Both had elevated manufacturing costs
"Steel Processing had a great quarter with increased volume as they continued to perform well," said John McConnell, Chairman and CEO. "However, while we had strong revenue growth across the Company, we were disappointed we did not meet our own Company-wide expectations for results this quarter. We have a couple areas needing attention, particularly one operation in our oil and gas equipment business and one in Engineered Cabs. Both had elevated manufacturing costs and the oil and gas equipment business facility had a product miss on the commercial side. These are isolated issues and v so that we continue our Company's forward momentum."
Consolidated Quarterly Results
Net sales for the second quarter ended November 30, 2014, were $871.0 million, up 13% from the comparable quarter in the prior year, when net sales were $769.9 million. The increase was driven largely by higher volume in Steel Processing and the impact of recent acquisitions in Pressure Cylinders.
Gross margin declined $3.0 million from the prior year quarter to $125.2 million. Higher manufacturing expenses in all three business units combined with the unfavorable impact of inventory holding losses in Steel Processing in the current quarter, compared to inventory holding gains in the prior year quarter, more than offset the impact of higher volume.
Operating income increased $13.7 million in the current quarter to $33.2 million as impairment charges in the current quarter were down $16.5 million from the prior year. Impairment charges in the current quarter include $6.3 million related to the Company's 60%-owned consolidated joint venture in India, $3.2 million related to the Company's aluminum high-pressure cylinder business in New Albany, Miss., $2.4 million related to the Advanced Component Technologies business in Engineered Cabs, $1.2 million related to the military construction business and $1.1 million related to certain non-core Steel Processing assets. The prior year included a $30.7 million impairment charge related to the write-off of certain trade name assets.
Interest expense was $9.7 million for the current quarter, compared to $6.3 million in the comparable period in the prior year. The increase was due to the impact of higher average debt levels resulting from the issuance of $250.0 million of notes in April 2014.