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Net income totaled $18.7 million compared to $18.5 million in the prior year's second quarter. Earnings per diluted share were $0.80 on approximately 23.3 million shares outstanding, compared to $0.78 per diluted share in the prior year quarter.
Net sales for the six months ended Aug. 1, 2003 were $1.6 billion compared to $1.56 billion last year. For the first six months, net income was $30.5 million versus $30.9 million last year, and earnings per diluted share were $1.31 this year, compared to $1.30 last year.
"To deliver higher earnings we had to overcome several revenue challenges this quarter," said Tom Morgan, president and CEO. "The Industrial PVF segment continues to operate in a very tough environment, important construction markets in Texas and Colorado remain soft, and a large customer was lost to a different alliance in our Electric Utilities business.
"Our Water and Sewer business had to overcome two major setbacks. We took a hit with the record wet weather, particularly in May and June, and could not recover completely, despite a strong July. In addition, PVC and Ductile Pipe pricing was down double digits and resulted in lower sales pricing passed through to customers. The combination of these two factors resulted in negative rather than positive comparable branch sales growth in the quarter.
"Not every quarter is going to be smooth and we must manage through these rough times. The most important issue is that we believe our strategy is right and will deliver future growth in sales, earnings and cash flow," concluded Morgan.
Earnings and Cash Flow
In terms of earnings and cash flow, David Bearman, Chief Financial Officer, commented, "Despite the revenue challenges this quarter, we improved our overall operating expense ratio and increased diluted earnings per share over last year's quarter. I am particularly encouraged by the improvement we made in operating cash flow. Our focus on inventory management, along with other working capital improvements, resulted in $45.9 million of cash flow from operations in the second quarter."
Electrical and Plumbing revenues for the second quarter were $409 million, an increase of $55 million, or 15% over last year's second quarter. This increase includes $55 million in Utiliserve revenues. Comparable branch sales were flat compared to last year's second quarter. Year-to-date revenues for the Electrical and Plumbing segment were $802 million, an increase of $73 million over last year, or 10%. Utiliserve contributed $107 million to this year's sales, and last year's Electrical and Plumbing sales included $27 million for the extra week in the fiscal first quarter.
Water and Sewer / Building Materials revenues for the second quarter were $339 million, a decrease of $5 million, or 1% compared to last year's second quarter. Comparable branch sales were also down 1% compared to last year's second quarter. Year-to-date revenues were $655 million, a decrease of $19 million, or 3% to last year. The extra week in the fiscal first quarter of last year added $21 million to Water and Sewer / Building Materials sales.
Industrial PVF revenues for the second quarter were $67 million, a decrease of $10 million, or 12% as compared to last year's second quarter. Comparable branch sales were down 13% to last year's second quarter. Year-to- date revenues