As a reminder that we will facilitate questions and answers at the end of management’s prepared remarks and in order for all participants to be heard. We ask for two, no more than two questions from each participant at a time during the Q&A session.Now, I’d like to turn the call over to President, Mr. Phil Fan to start with an overview for the second quarter ended June 30, 2012. Phil Fan Thank you, Ian. Let’s begin with an overview of the key financial figures for the second quarter and Mr. Gavin Cheng our joint CEO will then give you a summary of our growth strategy going forward and our operation in the second quarter. Our revenue for the second quarter was $19.2 million, an increase of $9.5 million over the same period in 2011. Our gross profit for the quarter two was $5.8 million, a slight increase from $5.3 million in Q2 2011. Our gross margin decreased from $26.3 million in the same period of 2011, to 25.3% in Q2 2012. Operating income totaled $1.6 million, up 44.3% of decrease from $2.9 million in Q2 2011, and diluted earnings per share was $0.17 based on the net income of $1.4 million, which was 22.2% of decrease over the net income of $1.8 million in second quarter of 2011. The decrease in net income and the EPS was due to several combined factors in the second quarter. Such substantial increase in the operating expenses mainly due to a 50% of increase of employees accounted for the business development and the project execution. And there’s a one-time stock option cost expenses approximately $250,000 for this year’s management team stock option at about fund dollars striking price early this year, there’s a book in this expenses for this quarter. Last year, we begin the contract award to the implementation and slower revenue recognition from two of the company’s largest project, the expansion phase of Ordos water processing plant and the India wastewater treatment system project.
I would continue to accomplish our moderated growth in the second quarter of 2012. Although we reported stronger than expected results from our water resource management and industrial pollution control and safety segment, our municipal water and wastewater treatment business declined due to the slow progress on several key projects. The impact from the macroeconomic environment, including rising finance, labor and raw material cost, as well as the weakened market demand presented unprecedented challenges for our sales in the second quarter.To address the challenge we are improving our profitability through enhanced corporate governance and cost efficiency. On the other hand, we also emphasize strategic market development where our core technological advantage allowed us a competitive edge over our competitors. In addition, we will grow our market share in the water and the wastewater treatment segment overseas in order to diversify our revenue stream portfolio. Here, I would like to give you some color, give you more color of our financial performance for the second quarter. Revenue from the operating segment Water, Wastewater Treatment and the Municipal Infrastructure was $8.4 million, a decrease of $8.4 million, or 50.2% from $16.8 million in the same period of 2011. This decrease was mainly due to slow revenue recognition from the expansion phase of the Ordos drinking water plant project and the Indian Bihar municipal wastewater treatment projects, which collectively contributed 25.4% of the total revenue of Q2 of 2012. By comparison, the Ordos project contributed 79.5% of the total revenue in the same period in 2011. The Indian Bihar municipal wastewater projects was well completed 25%, contributing $0 million, or 17.3% of the company’s revenue as the end of this reporting period. Read the rest of this transcript for free on seekingalpha.com