Revenue for the third quarter of 2013 increased 5.0% to $18.2 million, compared to $17.3 million for the same period of 2012.
The increase in revenue is summarized as follows:
Revenue from the dyeing and finishing equipment segment increased 26.2% to $9.5 million, compared to $7.5 million for the third quarter of 2012.
Revenue from the sale of forged rolled rings to other industries decreased 24.4% to $5.0 million, compared with $6.6 million for the comparable period of the prior year.
Revenue from the sale of forged rolled rings for the wind power industry rose 16.0% to $3.7 million, compared to $3.2 million for the comparable period last year.
Gross profit for the third quarter of 2013 increased 7.3% to $4.6 million, compared to $4.3 million for the same period in 2012. Gross margin increased to 25.5% during the third quarter of 2013 compared to 24.9% for the same period a year ago.
The increase in gross margin for the third quarter was primarily attributable to (i) 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 and (ii) a slight decrease in raw materials costs in both the forged rolled rings and related products and dyeing equipment segments.
Operating expenses rose 28.1% to $1.4 million, compared to $1.1 million in the comparable period last year. The increase was primarily due to bad debt expense, partially offset by lower depreciation expenses resulting from the classification of certain equipment as held for sale in the fourth quarter of 2012, on which depreciation was taken in the third quarter of 2012 but not in the third quarter of 2013.
Selling, general and administrative expenses for the three months ended September 30, 2013 rose 78.1% to $1.3 million, primarily due to a $0.4 million bad debt expense, an increase in stock based compensation expenses and an increase in research and development expense related to the Company's new dyeing equipment.
Operating income was $3.2 million, unchanged from the same period of 2012. Operating margin was 17.6% compared to 18.5% in the third quarter last year.
Adjusted EBITDA, a non-GAAP measurement, which adds back to net income interest expense, income tax, depreciation and amortization, was $4.9 million, which is the same as for the third quarter last year.
Net income for the third quarter of 2013 was $2.1 million, or $0.61 per diluted share, compared to $2.4 million, or $0.88 per diluted share, in the third quarter of 2012. Diluted earnings per share were calculated using diluted weighted average shares of 3,479,646 and 2,667,017 for the three months ended September 30, 2013 and 2012, respectively. All share and per share information has been adjusted to reflect a one-for-ten reverse stock split effective March 6, 2012.
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