Lihua International Reports Third Quarter 2012 Financial Results

       Lihua International Reports Third Quarter 2012 Financial Results

Third Quarter 2012 Revenue Increased 53.5% to $238.8 Million

Non-GAAP Net Income Increased 30.1% to $16.8 Million

Reiterates 2012 Guidance to Reflect 11-15% and 8-14% Gross Profit and Non-GAAP
Net Income Growth Over 2011, Respectively

PR Newswire

DANYANG, China, Nov. 9, 2012

DANYANG, China, Nov. 9, 2012 /PRNewswire/ -- Lihua International, Inc.
(NASDAQ: LIWA) ("Lihua" or the "Company"), a leading Chinese developer,
designer, and manufacturer of low cost, high quality alternatives to pure
copper products, including refined copper products, copper wire and copper
clad aluminum ("CCA") wire, today announced financial results for the third
quarter ended September 30, 2012.

Third Quarter 2012 Financial Highlights

  oSales increased 53.5% year-over-year to $238.8 million.
  oGross profit increased 29.8% year-over-year to $25.3 million.
  oNet income was $17.2 million, or $0.58 per diluted share, compared with
    $13.5 million, or $0.45 per diluted share in the third quarter of 2011.
  oNon-GAAP net income(1) was $16.8 million, or $0.56 per diluted share,
    compared with $12.9 million, or $0.43 per diluted share in the third
    quarter of 2011.
  oAdjusted EBITDA(2) was $23.6 million, compared with $17.6 million in the
    third quarter of 2011.
  oStrong balance sheet with $130.5 million in cash and cash equivalents, or
    $4.37 per diluted share, as of September 30, 2012, compared with $105.6
    million, or $3.52 per diluted share, as of December 31, 2011.
  oCash flow from operations of $7.0 million, compared with cash flow from
    operations of $8.7 million in the third quarter of 2011.

Third Quarter and Recent Business Highlights

  oAs of September 30, 2012, production on the Company's second and third
    copper anode smelters had reached nearly 4,200 metric tons per month. This
    is an increase of approximately 50% over approximately 2,800 metric tons
    in August and is at or near designed capacity of 50,000 metric tons on an
    annualized basis.
  oLaid foundation for fourth 25,000-ton copper anode smelter, with
    construction expected to begin in the first half of 2013.
  oCompleted build-out of five factories and three warehouses on the
    Company's 30-acre plant site, with the remainder of the site to be
    completed in 2013.
  oCompleted trial production in third quarter and achieved industry
    qualification of new CCA cable and wire products in the fourth quarter;
    planned commercial launch in 2013.

"We are pleased with the growth we achieved in the third quarter, as well as
the strategic progress we have made throughout 2012. We are approaching the
end of the year with solid momentum and are on track to see even greater
strategic and operational growth in the years to come," said Mr. Jianhua Zhu,
Lihua's founder, chairman and CEO. "Copper anode production is near full
capacity while demand for our anode, wire and rod products remains strong and
continues to grow, supporting strong financial performance in spite of ASP
pressure related to a decline in copper prices.

"Our broader expansion initiatives are proceeding according to plan, as we
have completed five new factories and three warehouses on the 30-acre plant
site and maintain our expectation that the site will be fully developed,
including an additional copper anode smelter, next year. In addition, we are
planning to transfer our first copper anode smelter to the anode production
facility on the new plant site to optimize anode production efficiency. We
recently completed test production of our forthcoming CCA cable and wire
product and had it qualified for its intended application. We look forward to
the commercial launch of this revolutionary product in the second half of
2013. Demand from the end markets we currently serve and those we plan to
serve continues to accelerate, putting Lihua in an ideal position for
long-term growth and success. We have a clear vision for the future of the
Company, as well as a solid plan and the financial resources necessary to
achieve our growth objectives. We are excited about the opportunities that lie
ahead and look forward to sharing our accomplishments with the investment
community along the way," concluded Mr. Zhu.

Third Quarter 2012 Financial Results

Sales for the third quarter of 2012 increased 53.5% to $238.8 million,
compared with sales of $155.6 million in the third quarter of 2011. The
increase in revenue resulted from higher sales across all of our product
categories due to increased production volume as a result of strong market
demand for the Company's products; the copper rod smelter production capacity
increase was completed in October 2011, along with completing the addition of
two copper anode smelters in June 2012. The increased sales volume was
partially offset by a decline in copper prices during the third quarter of
2012 relative to the same period last year. Lihua's CCA and copper wire
products, copper anode and copper rod accounted for sales of $101.2 million,
$118.2 million and $19.3 million, respectively, in the third quarter of 2012.
This compares with CCA and copper wire sales of $77.2 million, and copper
anode sales of $78.4 million in the third quarter of 2011. During the third
quarter of 2012, the average selling price of Lihua's products was $7,981 per
metric ton, compared with $9,491 per metric ton in the same period last year,
reflecting a decrease of 15.9% year-over-year.

Gross profit for the third quarter of 2012 was $25.3 million, an increase of
29.8% from gross profit of $19.5 million for the third quarter of 2011. As a
percentage of total sales, gross margin declined to 10.6% in the third quarter
of 2012 from 12.5% for the same period last year. The decrease was primarily
due to the additional production and sales of lower margin products including
copper anode, copper rod, and fine copper wire.

Selling, general and administrative ("SG&A") expenses for the third quarter of
2012 were $2.8 million, up 31.3%, compared with $2.1 million in the same
period of 2011. The rise in SG&A was related to higher product distribution
and insurance costs, higher shipping and handling costs directly related to
our increased business volume and scale of operations, as well as our
continued investment in new technology and research and development.

The Company recorded no interest expense in the third quarter of 2012,
compared with interest expense of $0.04 million in the third quarter of 2011.

For the three months ended September 30, 2012, provision for income tax
expense was $5.9 million, compared with $4.4 million for the three months
ended September 30, 2011. The effective tax rate for the third quarter of 2012
was 25.4%, compared to 24.6% for the third quarter of 2011.

Net income for the third quarter of 2012 was $17.2 million, or $0.58 per
share, based on 29.9 million weighted average diluted shares outstanding,
compared with net income of $13.5 million, or $0.45 per share, based on 30.0
million weighted average diluted shares outstanding during the same period in
2011.

Non-GAAP net income for the third quarter of 2012 was $16.8 million, or $0.56
per diluted share, compared with non-GAAP net income of $12.9 million, or
$0.43 per diluted share, for the third quarter of 2011. Non-GAAP net income
excludes the impact of a gain of $0.45 million and a gain of $0.63 million,
related to the change in the fair value of warrants, in the third quarters of
2012 and 2011, respectively.

Adjusted EBITDA for the three months ended September 30, 2012 was $23.6
million, compared with $17.6 million for the same period in the prior year.

Balance Sheet

As of September 30, 2012, Lihua had $130.5 million, or $4.37 per diluted
share, in cash and cash equivalents, compared with $105.6 million, or $3.52
per diluted share, as of December 31, 2011. As of September 30, 2012, Lihua
had working capital of $195.2 million and no debt.

Outlook

The Company began production on its two new copper anode smelters on June 1,
2012, increasing copper anode capacity to 85,000 tons per year. Additional
construction on the Company's 30-acre plant site is scheduled for completion
in 2013. The Company has completed construction of five factory buildings and
three warehouse and storage facilities. The remainder of the site, which
includes a new R&D center, office space and employee facilities, will be
completed in 2013.

The Company reiterates its full-year 2012 guidance of gross profit in the
range of $84-87 million, and non-GAAP net income in the range of $54-57
million for the full year 2012, representing year-over-year growth of 11-15%
and 8-14%, respectively. The Company expects the growth in 2012 will be
largely the result of the additional copper anode capacity and continued
strong demand in China for recycled copper and copper alternative products in
end markets that include household appliances, consumer white goods and
infrastructure.

Conference Call and Webcast

Management of Lihua International will host a conference call today, November
9, 2012 at 8:00 a.m. Eastern time to discuss the third quarter 2012 financial
results.

Individuals interested in participating in the conference may do so by dialing
1-877-941-8418 in the U.S. and Canada, or 1-480-629-9809 internationally.

Those interested in listening to the conference call live via the Internet may
do so by visiting the Investor Relations section of the Company's Web site at:
http://www.lihuaintl.com/Investor_Relations/Events_Presentations.html.

For those unable to participate, an audio replay of the call will be available
beginning approximately one hour after the conclusion of the live call through
November 16, 2012. The audio replay can be accessed by dialing 1-800-406-7325
from the U.S or Canada, or 1-303-590-3030 internationally, and entering access
ID No. 4573779#. Following the live webcast, an online archive will be
available for 90 days.

About Non-GAAP Financial Measures

The Company uses non-GAAP net income and other non-GAAP metrics such as
Adjusted EBITDA to provide information about its operating trends. Investors
are cautioned that non-GAAP net income and Adjusted EBITDA are not measures of
liquidity or of financial performance under Generally Accepted Accounting
Principles ("GAAP").

The Company defines non-GAAP net income as net income excluding the change in
fair value of warrants and other one-time or non-recurring items that are
evaluated on an individual basis. The Company defines Adjusted EBITDA as net
income before depreciation and amortization, interest income/expense, income
taxes, change in fair value of warrants and non-cash share-based compensation
expenses. The non-GAAP net income and Adjusted EBITDA numbers presented may
not be comparable to similarly titled measures reported by other companies.
Non-GAAP net income and Adjusted EBITDA, while providing useful information,
should not be considered in isolation or as an alternative to net income or
cash flows as determined under GAAP. Consistent with Regulation G under the
U.S. federal securities laws, the non-GAAP measures in this press release have
been reconciled to the nearest GAAP measure, and this reconciliation is
located under the headings "Non-GAAP Net Income Calculation" and "Adjusted
EBITDA Calculation" below.

Non-GAAP Net Income Calculation

                                                  For the Three Months

                                                  Ended September 30,
                                                  2012         2011
                                                              
Net income                                      $            $
                                                  17,226,638   13,528,083
 Gain on Extinguishment of Warrant Liabilities   -            -
                                                              
 Change in fair value of warrants
                                                  (451,000)    (629,000)
                                                              
Non-GAAP Net Income                             $
                                                  16,775,638   12,899,083



Adjusted EBITDA Calculation

                                                       For the Three Months

                                                       Ended September 30,
                                                       2012         2011
                                                                   
Net income                                           $            $
                                                       17,226,638   13,528,083
 Depreciation and amortization                        1,035,925    294,080
 Share-based compensation expense                     98,834       112,204
 Gain on Extinguishment of Warrant                  -             -
Liabilities
                                                                   
 Change in fair value of warrants
                                                       (451,000)    (629,000)
                                                                   
 Interest income
                                                       (138,081)    (135,276)
                                                                    
 Interest expenses                                    -
                                                                    38,694
                                                                   
 Provision for income tax
                                                       5,858,831    4,418,812
Adjusted EBITDA                                      $ 23,631,147 $ 17,627,597

About Lihua International, Inc.

Lihua, through its two wholly owned subsidiaries, Lihua Electron and Lihua
Copper, is a leading value-added manufacturer of copper replacement products
for China's rapidly growing copper wire and copper replacement product market.
Lihua is one of the first vertically integrated companies in China to develop,
design and manufacture lower cost, high quality alternatives to pure copper
magnet wire and pure copper alternative products. Lihua's products include CCA
and refined copper products. Current product offerings include CCA and pure
copper wire, copper rod and copper anode. Except for CCA wire, all other
products are produced from recycled scrap copper. Lihua's products are sold in
China either directly to manufacturers or through distributors in the wire and
cable industries and manufacturers in a wide variety of industries including
the consumer electronics, white goods, automotive, utility, telecommunications
and specialty cable industries. Lihua's corporate and manufacturing
headquarters are located in the heart of China's copper industry in Danyang,
Jiangsu Province. For more information, visit: http://www.lihuaintl.com.

To be added to the Company's email distribution for future news releases,
please send your request to lihua@tpg-ir.com.

Safe Harbor Statement

This press release contains certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements, other than statements of historical
facts, that address activities, events or developments that the Company
expects, projects, believes or anticipates will or may occur in the future,
including, without limitation, statements about its business or growth
strategy, general industry conditions including availability of copper or
recycled scrap copper, future operating results of the Company, capital
expenditures, expansion and growth opportunities, bank borrowings, financing
activities and other such matters, are forward-looking statements. Although
the Company believes that its expectations stated in this press release are
based on reasonable assumptions, actual results may differ from those
projected in the forward-looking statements.

Please note that information in this press release reflects management views
as of the date of issuance.

(1) Lihua defines non-GAAP net income as net income excluding the change in
fair value of warrants, gain on extinguishment of warrant liabilities, and
other one-time or non-recurring items that are evaluated on an individual
basis. Lihua uses non-GAAP net income and other non-GAAP metrics to provide
information about its operating trends.


(2) Adjusted EBITDA is a non-GAAP measurement. Lihua defines Adjusted EBITDA
as net income before depreciation and amortization, interest income/expense,
income taxes, gain on extinguishment of warrant liabilities, change in fair
value of warrants and non-cash share-based compensation expenses.

Contact:
The Piacente Group, Inc.
Investor Relations
Brandi Floberg or Lee Roth
+1-212- 481-2050
lihua@tpg-ir.com



LIHUA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)


                                                                                    September 30,   December 31,
                                                                                    2012            2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                           $ 130,485,201   $ 105,637,627
Accounts receivable, net                                                              42,380,509      31,082,460
Prepayments for raw material purchases                                                16,896,047      21,882,977
Other receivables, deposits and prepayments                                           1,050,111       1,882,864
Prepaid land use right – current portion                                              402,472         405,034
Deferred income tax assets                                                            24,540          200,588
Inventories                                                                           22,163,524      15,502,246
Total current assets                                                                  213,402,404     176,593,796
OTHER ASSETS
Property, plant and equipment, net                                                    47,086,905      20,565,875
Construction in progress                                                             -              18,794,910
Deposits for plant and equipment                                                      -               3,428,082
Prepaid land use right – long-term portion                                            18,484,925      18,906,280
Intangible assets                                                                     -               170
Total non-current assets                                                              65,571,830      61,695,317
Total assets                                                                        $ 278,974,234   $ 238,289,113
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable                                                                    $ 7,185,703     $ 6,066,261
Other payables and accruals                                                           4,917,883       6,370,833
Income taxes payable                                                                  5,893,096       4,607,533
Dividend payable                                                                      -               992,846
Warrant liabilities                                                                   253,000         615,000
Total current liabilities                                                             18,249,682      18,652,473
Total liabilities                                                                     18,249,682      18,652,473
STOCKHOLDERS' EQUITY
Preferred stock: $0.0001 par value, 10,000,000 sharesauthorized, none issued and                    
 outstanding
                                                                                      -               -
Common stock, $0.0001 par value: 75,000,000 shares authorized,
30,084,883 shares issued and 29,820,836 shares outstanding as of September 30,                       
 2012(December31, 2011: 30,036,481 shares issued and 29,772,434 shares
 outstanding)                                                                      3,008           3,003
Additional paid-in capital                                                            79,189,141      78,564,128
Treasurystock,atcost,264,047sharesasofSeptember30,2012andDecember31,                    
 2011                                                                              (2,126,597)
                                                                                                      (2,126,597)
Statutory reserves                                                                    13,362,964      10,418,476
Retained earnings                                                                155,573,315     116,369,487
Accumulated other comprehensive income                                                14,722,721      16,408,143
Total stockholders' equity                                                            260,724,552     219,636,640
Total liabilities and stockholders' equity                                          $ 278,974,234   $ 238,289,113





LIHUA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME AND COMPREHENSIVE INCOME

(AMOUNTS EXPRESSED IN US DOLLARS)


                                                For the Three Months Ended

                                               September 30,
                                               2012             2011
NET REVENUE                                    $ 238,793,030    $ 155,570,657
Cost of sales                                    (213,536,628)    (136,113,727)
GROSS PROFIT                                     25,256,402       19,456,930
Selling expenses                                 (741,135)        (633,584)
General and administrative expenses              (2,059,027)      (1,498,306)
Income from operations                           22,456,240       17,325,040
Other income (expenses):
Interest income                                  138,081          135,276
Interest expenses                               -                (38,694)  
Exchange expenses                                40,686           (104,397)
Gain on extinguishment of warrant liabilities    -                - 
Change in fair value of warrants                 451,000          629,000
Other income (expense)                          (538)            670
Total other income (expenses), net               629,229          621,855
Income before income taxes                       23,085,469       17,946,895
Provision for income taxes                       (5,858,831)      (4,418,812)
NET INCOME                                     $ 17,226,638     $ 13,528,083
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustments         (683,771)        3,648,643
COMPREHENSIVE INCOME                           $ 16,542,867     $ 17,176,726
Net income per share
Basic                                          $ 0.58           $ 0.45
Diluted                                        $ 0.58           $ 0.45
Weightedaveragenumberofsharesoutstanding
Basic                                            29,820,836       29,768,403
Diluted                                          29,891,994       29,976,702





LIHUA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)


                                                                               Nine Months Ended September 30,
                                                                               2012            2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                     $ 42,148,316    $ 40,406,145
Adjustmentstoreconcilenetincometocashprovidedbyoperatingactivities:
Depreciation and amortization                                                    2,374,465       1,583,729
Share-based compensation                                                         313,309         379,278
Gain on extinguishment of warrant liabilities                                    (73,291)        (87,255)
Change in fair value of warrants                                                 23,000          (3,183,252)
Deferred income tax benefits                                                     175,444         79,515
(Increase) decrease in assets:
Accounts receivable                                                              (11,538,283)    8,490,664
Bills receivable                                                                 -               538,761
Prepayments for raw material purchases                                           4,866,964       (24,627,478)
Other receivables, deposits and prepayments                                      823,965         (438,156)
Inventories                                                                      (6,784,994)     (2,335,047)
Increase (decrease) in liabilities:
Accounts payable                                                                 1,162,203       2,181,287
Other payables and accruals                                                      224,537         (900,961)
Income taxes payable                                                             1,319,696       (659,145)
Net cash provided by operating activities                                        35,035,331      21,428,085
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment                                        (2,357,375)     (795,554)
Addition to construction in progress                                             (5,942,533)     (13,133,784)
Net cash used in investing activities                                            (8,299,908)     (13,929,338)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock                                                       -               (2,126,597)
Proceeds from exercise of warrants                                               -               1,898,049
Dividend paid                                                                    (992,846)       -
Net cash used in financing activities                                            (992,846)       (228,548)
Foreign currency translation adjustment                                          (895,003)       4,075,010
INCREASE IN CASH AND CASH EQUIVALENTS                                            24,847,574      11,345,209
CASH AND CASH EQUIVALENTS, at the beginning of the period                        105,637,627     90,609,340
CASH AND CASH EQUIVALENTS, at the end of the period                            $ 130,485,201   $ 101,954,549







SOURCE Lihua International, Inc.

Website: http://www.lihuaintl.com
 
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