Cost of Products and Services Sold
Cost of products and services sold increased $249,000 or 1% to $40,915,000 for the quarter ended February 28, 2021, compared to $40,666,000 in the prior year quarter. Cost of products and services sold decreased $1,929,000 or 2% to $80,520,000 in the first six months of fiscal 2021, compared to $82,449,000 in the comparative year-to-date period.
The following table summarizes the cost of products and services sold as a percentage of revenue for each of Chase Corporation’s reportable operating segments:
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Three Months Ended
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Six Months Ended
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Cost of products and services sold
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February 28, 2021
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February 29, 2020
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February 28, 2021
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February 29, 2020
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Adhesives, Sealants and Additives
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54
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%
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58
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%
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55
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%
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57
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%
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Industrial Tapes
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66
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67
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65
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69
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Corrosion Protection and Waterproofing
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61
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56
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58
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55
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Total Company
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60
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%
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62
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%
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59
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%
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62
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%
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Cost of products and services sold in the Adhesives, Sealants and Additives segment was $16,998,000 and $33,611,000 in the current quarter and year-to-date period compared to $14,255,000 and $28,787,000 in the comparable periods in the prior year. Cost of products and services sold in the Industrial Tapes segment was $18,693,000 and $35,810,000 in the current quarter and year-to-date period compared to $20,203,000 and $41,522,000 in the same periods in the prior year. Cost of products and services sold in the Corrosion Protection and Waterproofing segment was $5,224,000 and $11,099,000 for the quarter and year-to-date period ended February 28, 2021, compared to $6,208,000 and $12,140,000 in the comparable periods of the prior year.
As a percentage of revenue, cost of products and services sold was reduced for both the Adhesives, Sealants and Additives and Industrial Tapes segments and increased for the Corrosion Protection and Waterproofing segment as compared to the second quarter and first six months of the prior year. These changes in relative gross margin were primarily due to: (a) more favorable sales mixes in the Adhesives, Sealants and Additives and Industrial Tapes segments, as higher margin products and offerings constituted a comparatively higher portion of total sales, and a less favorable sales mix for the Corrosion Protection and Waterproofing segment; and (b) production and operational efficiencies realized in the current quarter and year-to-date period, including those gained in part through the facility rationalization and consolidation initiative.
With the composition of the Company’s finished goods and the markets it serves, the costs of certain commodities (including petroleum-based solvents, films, yarns, polymers and nonwovens, aluminum and copper foils, specialty papers, and various resins, adhesives and inks) directly and indirectly affect both the purchase price of the raw materials and market demand for its product offerings. The Company diligently monitors raw materials and commodities pricing across all its product lines in its efforts to preserve margins.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $277,000 or 2% to $12,331,000 for the quarter ended February 28, 2021 compared to $12,608,000 in the prior year quarter. Selling, general and administrative expenses decreased $639,000 or 3% to $24,591,000 in the fiscal year-to-date period compared to $25,230,000 in the same period in fiscal 2020. As a percentage of revenue, selling, general and administrative expenses represented 18% for both the current year second quarter and fiscal year-to-date period, compared to 19% for both the comparable periods in the prior year.
Research and Product Development Costs
Research and Product Development Costs decreased $43,000 or 4% to $1,026,000 during the second quarter of fiscal 2021, compared to $1,069,000 in fiscal 2020. Research and Product Development Costs decreased $10,000 or less than one percent to $2,077,000 during the first six months of fiscal 2021, compared to $2,087,000 in the same period of fiscal 2020. Research and development stayed relatively consistent from fiscal 2020 to 2021 as the Company continued focused development work on strategic product lines.