Shengkai Innovations, Inc. announced unaudited consolidated earnings results for the second quarter and six months ended December 31, 2012. For the quarter, revenues were $3,920,943 against $10,293,828 for the same period a year ago. Loss from operations was $1,947,704 against income from operations of $1,262,807 for the same period a year ago. Loss before income taxes $1,800,456 against profit before income taxes of $2,314,200 for the same period a year ago. Net loss was $1,768,413 or $0.10 diluted per share against net profit of $1,782,084 or $0.10 diluted per share for the same period a year ago. Non-GAAP net loss was $1,579,098 or $0.09 diluted per share against Non-GAAP net income of $1,973,467 or $0.11 diluted per share for the same period a year ago, the decrease was primarily due to the decline in revenues resulting from slowdown in PRC economy, loss of customers and operational transition, coupled with lower margin product mix and higher selling and research and development expenses for new potential markets.

For the six months, revenues were $8,595,228 against $21,304,955 for the same period a year ago, the decrease in revenue was due to loss of business resulting from unsolicited investigations, the transition into the petrochemical and chemical segment, and the general economic slowdown in the PRC. Loss from operations was $1,819,436 against income from operations of $1,619,768 for the same period a year ago. Loss before income taxes $1,564,074 against profit before income taxes of $3,777,213 for the same period a year ago. Net loss was $1,715,636 or $0.10 diluted per share against net profit of $2,726,422 or $0.15 diluted per share for the same period a year ago. Non-GAAP net loss was $1,311,758 or $0.08 diluted per share against Non-GAAP net income of $4,138,136 or $0.23 diluted per share for the same period a year ago, the decrease was primarily due to the decline in revenues resulting from loss of business resulting from unsolicited investigations, operational transition, and slowdown in PRC economy, coupled with lower margin product mix and higher selling and research and development expenses for new potential markets. Net cash provided by operating activities was $156,207 against $7,693,277 for the same period a year ago. Purchase of property, plant and equipment was $286,214 against $176,591 for the same period a year ago. The decrease in net cash flow provided by operating activities was primarily attributable to the net loss incurred in the first six months of fiscal year 2013 as compared to a net income for the same period in fiscal year 2012, as well as advance payments totaling approximately $2.5 million incurred during the first six months of fiscal year 2013.

For the quarter ending March 31, 2013, the company expects total revenues would slightly decrease on a quarter-over-quarter basis as usually experience due to long holidays in China during that quarter, such as the New Year and the Lunar Spring Festival; and major contribution to sales would continue to be from the petrochemical and chemical industry.