"During the second quarter, we continued on our growth trajectory with solid year-over-year increases in revenue and net income. Our dyeing machine segment was the main driver behind our performance, as textile manufacturers continue to phase out obsolete equipment and reduce pollution from the dyeing process in keeping with the policies of local PRC governments," said Mr. Jianhua Wu, Chairman and CEO of Cleantech Solutions. "We also saw a healthy increase in sales of forged products to customers outside the wind power industry.”
Second Quarter 2013 Results
Revenue for the second quarter of 2013 increased 34.1% to $17.2 million, compared to $12.8 million for the same period of 2012.
Revenue growth was primarily driven by sales of dyeing and finishing equipment due to demand for the Company's low-emission airflow dyeing machines, which meet the policies of local PRC governments to phase out obsolete equipment and reduce pollution from the dyeing process. In addition, demand for forged rolled rings and related products for industries other than the wind power industry rose considerably due to increasing market demand for capital equipment, which was offset by a decline in demand for forged products from customers in the wind power industry.
The increase in revenue is summarized as follows:
Gross profit for the second quarter of 2013 increased 47.5% to $4.0 million, compared to $2.7 million for the same period in 2012. Gross margin increased to 23.1% during the second quarter of 2013 compared to 21.0% for the same period a year ago.
The increase in gross margin for the second quarter was primarily attributable to (i) the increased operational and cost efficiencies for forged rolled rings and related products segment, including the allocation of fixed costs primarily consisting of depreciation, to cost of revenues as the Company operated at higher production levels in response to higher revenues, and (ii) the significant portion of revenue for the dyeing and finishing equipment segment generated from the sale of airflow dyeing machinery, which generates a higher gross margin than the Company's traditional dyeing machinery. The principal source of dyeing revenue in the second quarter of 2012 was traditional dyeing machinery.
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