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Cleantech Solutions International Management Discusses Q2 2012 Results - Earnings Call Transcript

Our total revenue for the second quarter of 2012 was $12.8 million 1.8% increased compared to the same period last year. Our gross margin was $2.7 million, a 11.7% decrease compared to the same year period over last year. Gross margin decline to 21% during the second quarter compared to 24.2% for the same quarter a year ago.

Despite the growth in revenue, gross margin declined to 21% to 24% a year ago. The decline in gross margin was mainly attributable to the forged rolled rings and related product segments and was primarily due to lower operational cost efficiencies including the allocation of fixed costs s depreciation to cost of revenues the operated lower production levels.

Gross margin for our dyeing and finishing equipment segment reflected a slight decrease due to increase in labor cost. Now I want to discuss recent development and our growth strategy for each business segments.

Let’s begin with forged rolled ring and related components. Within the segment, we had experienced continued decline in sales to wind power industry which was in line with our expectations. In the short-term, we continue to expect wind power industry to face challenges due to our capacity and rapid growth.

We are experiencing weak market demand from the wind power industry over the past several quarters and therefore how strategically focus our efforts on diversifying our revenue base. Sales to wind power industry had now declined to 36% of our total revenue in the second quarter of 2012 compared to 50% a year ago. We had executed on our revenue diversification strategy with great success and hope to continue to modify our product portfolio to cater to other heavy equipment industries, the solar industry, LED lighting industry and other clean technology industries.

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