Lihua International Reports Record Fourth Quarter and Full-Year 2012 Financial Results

Lihua International Reports Record Fourth Quarter and Full-Year 2012 Financial
                                   Results

2012 Revenue Increases 34% to $853.8 Million

Exceeds Guidance: Gross Profit of $89.5 Million and Non-GAAP Net Income of
$58.0 Million

Introduces 2013 Guidance of $95 - 98 Million Gross Profit and $62 - 65 million
Non-GAAP Net Income

PR Newswire

DANYANG, China, March 15, 2013

DANYANG, China, March 15, 2013 /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 fourth
quarter and full-year ended December 31, 2012.

Fourth Quarter and Full-Year 2012 Financial Highlights (USD in Millions,
except per-share data):

                    ThreeMonthsEnded             Twelve Months Ended
                    December 31,                   December 31
                    2012        2011               2012      2011       %
                                         % Change                       Change
                                                          
Revenue             $ 254.9    $ 177.6  43.5      $853.8    $637.1     34.0
                                                   
Gross Profit        $ 24.9      $ 19.7   26.6                $75.7      18.3
                                                   $89.5
Net Income          $ 15.8      $ 12.7   24.1      $57.9     $53.1      9.0
Earnings Per Share  $ 0.52      $ 0.43   20.9      $1.93     $1.77      9.0
(Diluted)
Non-GAAP Net Income $ 15.9      $ 12.8   23.7      $58.0     $50.0      16.0
Non-GAAP Earnings   $ 0.52      $ 0.43   23.3      $1.94     $1.66      16.9
Per Share (Diluted)
Adjusted EBITDA     $ 22.9      $ 18.0   27.2      $82.2     $69.7      17.9

As of December 31, 2012, Lihua had a strong balance sheet with $144.3 million
in cash and cash equivalents, or $4.82 per diluted share, compared with $105.6
million, or $3.52 per diluted share, as of December 31, 2011. Cash flow from
operations for 2012 was $48.7 million, compared with cash flow from operations
of $33.4 million in 2011.

2012 and Recent Business Highlights

  oDecommissioned and dismantled its original copper anode smelter located in
    the Company's old plant site and completed construction of a new smelter
    at the Company's expanded anode production site located on its new
    corporate campus. The Company expects to improve copper anode production
    efficiency by consolidating manufacturing within the new plant.
  oIn June 2012, Lihua began production on two new copper anode smelters. As
    of December 31, 2012, production on the Company's copper anode smelters
    had reached capacity of 50,000 – 60,000 tons annually. The smelter
    completed in January 2013 is expected to reach designed annual capacity of
    25,000 – 30,000 tons in the second quarter of 2013.
  oBegan construction of the Company's fourth copper anode smelter in January
    2013 with expected completion in the second quarter of 2013. Once
    complete, the Company's annual scrap copper refinery capacity will reach
    150,000 – 170,000 tons.
  oCompleted trial production and industry qualification of new CCA cable and
    wire product and began marketing and customer targeting efforts.
  oSigned agreement with a new copper anode customer to supply a minimum
    volume of 1,600 tons of anode per month.

"2012 was a year of record performance for Lihua, in which we exceeded our
full-year guidance for both gross profit and non-GAAP net income, while
advancing our capacity expansion and new product development initiatives. The
strength with which we completed 2012 has carried over to 2013, and we are
poised to achieve even greater success in the coming years," said Mr. Jianhua
Zhu, Lihua's founder, chairman and CEO. "Although margins were impacted during
the year by ASP pressure for our wire products, we were able to increase
revenues and profitability based on strong demand from key customers,
efficiency improvement and further capacity expansion.

"Our expansion initiatives are proceeding according to plan, and we remain on
track to complete the development of our 30-acre plant site this year. The
consolidation of the production and warehousing facilities of copper anode and
copper rod products is expected to further improve production efficiency. We
have completed trial production and passed quality testing of our new CCA
cable and wire product and began introducing this product to prospective
customers. We expect to commercialize this product in the next 6 to 12
months. Additionally, we further strengthened our financial position in 2012,
completing the year with over $144 million in cash, providing us with the
resources necessary to fund our future growth through continued investment in
capacity expansion, efficiency improvement, new market penetration and product
development, and positioning us to lead the next wave of industry growth,"
concluded Mr. Zhu.

Fourth Quarter 2012 Financial Results

Sales for the fourth quarter of 2012 increased 43.5% to $254.9 million,
compared with sales of $177.6 million in the fourth quarter of 2011. The
increase in revenue resulted from additional production and sales of copper
anode and copper rod as a result of capacity expansion. Lihua's CCA and copper
wire products, copper anode and copper rod accounted for sales of $102.5
million, $129.7 million and $22.7 million, respectively in the fourth quarter
of 2012. This compares with CCA and copper wire sales of $94.0 million, copper
anode sales of $69.4 million and cooper rod sales of $14.3 million in the
fourth quarter of 2011. During the fourth quarter of 2012, the average selling
price of Lihua's products was $8,087 per metric ton, compared with $8,328 per
metric ton in the same period last year, reflecting a decrease of 2.9%
year-over-year.

Gross profit for the fourth quarter of 2012 was $24.9 million, an increase of
26.6% from gross profit of $19.7 million for the fourth quarter of 2011. As a
percentage of total sales, gross margin declined to 9.8% in the fourth quarter
of 2012 from 11.1% for the same period last year. The decrease was primarily
due to a shift in product mix as we increased the production and sales of
lower margin refined copper products.

Selling, general and administrative ("SG&A") expenses for the fourth quarter
of 2012 were $3.4 million, up 17.8%, compared with $2.9 million in the same
period of 2011. The rise in SG&A was related to increased costs related to
product distribution and insurance as a result of expanded business volume,
and increased staffing costs as the Company continue to expand the sales and
production force during the period.

The Company recorded no interest expense in the fourth quarter of 2012,
compared with interest expense of $34,605 in the fourth quarter of 2011.

For the three months ended December 31, 2012, provision for income tax expense
was $5.7 million, compared with $4.4 million for the three months ended
December 31, 2011. The effective tax rate for the fourth quarter of 2012 was
26.7%, compared to 25.6% for the fourth quarter of 2011.

Net income for the fourth quarter of 2012 was $15.8 million, or $0.52 per
share, based on 30.0 million weighted average diluted shares outstanding,
compared with net income of $12.7 million, or $0.43 per share, based on 30.0
million weighted average diluted shares outstanding during the same period in
2011.

Non-GAAP net income for the fourth quarter of 2012 was $15.9 million, or $0.52
per diluted share, compared with non-GAAP net income of $12.8 million, or
$0.43 per diluted share, for the fourth quarter of 2011. Non-GAAP net income
excludes the net impact of warrant-related charges of $0.1 million and $0.1
million in the fourth quarters of 2012 and 2011, respectively.

Adjusted EBITDA for the three months ended December 31, 2012 was $22.9
million, compared with $18.0 million for the same period in the prior year.

Balance Sheet

As of December 31, 2012, Lihua had $144.3 million, or $4.82 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 December 31, 2012, Lihua had
working capital of $213 million and no debt.

Outlook

The Company began production on its two new copper anode smelters on June 1,
2012, and completed construction of a third copper anode smelter in January
2013.As a result, the total scrap copper refinery capacity increased to
125,000 – 140,000 tons per year. The Company has begun construction of a
fourth copper anode smelter in January 2013 and expects to complete
construction in the second quarter of 2013.Once complete, the aggregate scrap
copper refinery capacity will increase to 150,000 – 170,000 per year. The
Company has completed construction of all factory buildings and warehouse and
storage facilities on a new 30-acre plant site. The remainder of the site,
which includes a new R&D center, office space and employee facilities, will be
completed in 2013.

The Company expects full-year 2013 gross profit in the range of $95 - 98
million, and non-GAAP net income in the range of $62 - 65 million for the full
year 2013, representing year-over-year growth of 6.1 – 9.4% and 6.9 – 12.1%,
respectively. The Company expects the growth in 2013 will be largely the
result of copper anode capacity expansion.

Conference Call and Webcast

Management of Lihua International will host a conference call today, March 15,
2013 at 8:00 a.m. Eastern time to discuss the fourth quarter and full-year
2012 financial results.

Individuals interested in participating in the conference may do so by dialing
1-877-941-1427 in the U.S. and Canada, or 1-480-629-9664 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
March 29, 2013. 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. 4606962#. 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      For the Twelve Months
                            Ended December 31,        Ended December 31,
                            2012         2011         2012         2011
Net income                $ 15,793,687 $ 12,727,388 $ 57,942,003 $ 53,133,533
Gain on Extinguishment of   -            (1,522)      (73,291)     (88,777)
Warrant Liabilities
Change in fair value of
warrants                    101,000      120,677      124,000      (3,062,575)
Non-GAAP Net              $            $            $            $
Income                      15,894,687   12,846,543   57,992,712   49,982,181



Adjusted EBITDA Calculation
                       For the Three Months      For the Twelve Months
                       Ended December 31,        Ended December 31,
                       2012         2011         2012         2011
Net income           $ 15,793,687 $ 12,727,388 $ 57,942,003 $ 53,133,533
Depreciation and       1,294,612    710,430      3,669,077    2,294,159
amortization
Share-based
compensation           68,780       118,934      382,089      498,212
expense
Gain on
Extinguishment of      -            (1522)       (73,291)     (88,777)
Warrant Liabilities
Change in fair value
of warrants            101,000      120,677      124,000      (3,062,575)
Interest income        (129,444)    (117,400)    (547,679)    (522,722)
Interest expenses      -            34,605       -            143,779
Provision for income
tax                    5,745,058    4,390,287    20,730,844   17,323,700
Adjusted EBITDA      $ 22,873,693 $ 17,983,399 $ 82,227,043 $ 69,719,309

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.

Contact:

The Piacente Group, Inc.
Investor Relations
Brandi Floberg or Lee Roth
(212) 481-2050
lihua@tpg-ir.com







LIHUA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLARS)
                                             As of December 31,
                                               2012            2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents                    $ 144,300,290   $ 105,637,627
Accounts receivable, net                       45,284,923      31,082,460
Prepayments for raw material purchases         19,569,239      21,882,977
Other receivables, deposits and prepayments    559,955         1,882,864
Prepaid land use rights – current portion      406,026         405,034
Deferred income tax assets                     24,948          200,588
Inventories                                    17,844,405      15,502,246
Total current assets                           227,989,786     176,593,796
OTHER ASSETS
Property, plant and equipment, net             47,197,115      20,565,875
Construction in progress                       175,006         18,794,910
Deposits for plant and equipment               -               3,428,082
Prepaid land use rights – long-term portion    18,546,658      18,906,280
Intangible assets                              3,332           170
Total non-current assets                       65,922,111      61,695,317
Total assets                                 $ 293,911,897   $ 238,289,113
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable                             $ 3,891,110     $ 6,066,261
Other payables and accruals                    4,937,404       6,370,833
Income taxes payable                           5,797,188       4,607,533
Dividend payable                               -               992,846
Warrant liabilities                            354,000         615,000
Total current liabilities                      14,979,702      18,652,473
Total liabilities                              14,979,702      18,652,473
STOCKHOLDERS' EQUITY
Preferred stock: $0.0001 par value,
10,000,000 shares authorized, 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 December 31,
 2012 (2011: 30,036,481 shares issued                      
and 29,772,434 shares outstanding),
 respectively                               3,008           3,003
Additional paid-in capital                     79,257,921      78,564,128
Treasury stock, at cost, 264,047 shares and                   
264,047 as of December 31, 2012
 and 2011, respectively                     (2,126,597)     (2,126,597)
Statutory reserves                             14,566,846      10,418,476
Retained earnings                              170,163,120     116,369,487
Accumulated other comprehensive income         17,067,897      16,408,143
Total stockholders' equity                     278,932,195     219,636,640
Total liabilities and stockholders' equity   $ 293,911,897   $ 238,289,113







LIHUA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLARS)
                             Year Ended December 31,
                             2012             2011             2010
NET REVENUE                  $ 853,766,541    $ 637,093,439    $ 370,531,685
Cost of sales                  (764,218,167)    (561,379,767)    (308,429,530)
GROSS PROFIT                   89,548,374       75,713,672       62,102,155
Selling expenses               (2,954,460)      (2,485,978)      (2,058,323)
General and administrative     (8,621,494)      (6,650,142)      (5,747,178)
expenses
Income from operations         77,972,420       66,577,552       54,296,654
Other income (expenses):
Interest income                547,679          522,722          253,964
Interest expenses              -                (143,779)        (131,106)
Foreign exchange               109,638          234,763          (112,443)
differences
Gain on extinguishment of      73,291           88,777           186,897
warrant liabilities
Change in fair value of        (124,000)        3,062,575        (1,448,819)
warrants
Other income (expenses)        93,819           114,623          (79,596)
Total other income             700,427          3,879,681        (1,331,103)
(expenses)
Income before income taxes     78,672,847       70,457,233       52,965,551
Provision for income taxes     (20,730,844)     (17,323,700)     (14,499,576)
NET INCOME                   $ 57,942,003     $ 53,133,533     $ 38,465,975
OTHER COMPREHENSIVE INCOME:
Foreign currency               659,754          9,152,577        4,626,336
translation adjustments
COMPREHENSIVE INCOME         $ 58,601,757     $ 62,286,110     $ 43,092,311
Net income per share
Basic                        $ 1.94           $ 1.78           $ 1.38
Diluted                      $ 1.93           $ 1.77           $ 1.34
Weighted average number of
shares outstanding
Basic                          29,815,943       29,816,871       27,956,451
Diluted                        29,965,811       30,076,130       28,671,363







LIHUA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLARS)
                              Year Ended December 31,
                              2012            2011            2010
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income                    $ 57,942,003    $ 53,133,533    $ 38,465,975
Adjustments to reconcile net
income to cash provided by
operating
 activities:
Depreciation and                3,669,077       2,294,159       2,171,961
amortization
Loss on disposal of
property, plant and             -               -               124,196
equipment
Share-based compensation        382,089         498,212         408,772
Gain on extinguishment of       (73,291)        (88,777)        (186,897)
warrant liabilities
Change in fair value of         124,000         (3,062,575)     1,448,819
warrants
Deferred income tax benefits    175,379         (65,136)        (25,638)
(Increase) decrease in
assets:
Accounts receivable             (14,065,887)    3,487,873       (21,166,870)
Bills receivable                -               541,989         (517,114)
Prepayments for raw material    2,357,227       (21,347,998)    -
purchases
Other receivables, deposits     1,321,844       (1,814,309)     475,790
and prepayments
Inventories                     (2,294,323)     1,442,579       1,880,784
Increase (decrease) in
liabilities:
Accounts payable                (2,180,647)     (246,640)       915,611
Other payables and accruals     198,772         (782,013)       2,433,980
Income taxes payable            1,173,326       (612,900)       3,275,329
Net cash provided by            48,729,569      33,377,997      29,704,698
operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant
and equipment and               (9,365,100)     (16,965,626)    (2,258,580)
construction in
 progress
Deposits for plant and          -               (3,344,274)     -
equipment
Proceeds from disposal of       -               -               153,095
fixed assets
Payments for land use rights    -               -               (9,938,585)
Net cash used in investing      (9,365,100)     (20,309,900)    (12,044,070)
activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Payment of common stock         (992,846)       -               -
dividend
Repayments of short-term        -               (2,322,413))    -
bank loans
Release of restricted cash      -               -               575,000
related to private placement
Repurchase of common stock      -               (2,126,597)     -
Proceeds from exercise of       -               1,898,050       3,226,300
warrants
Proceeds from public
offering of common stock,       -               -               32,069,517
net of expenses
Net cash (used in) provided     (992,846)       (2,550,960)     35,870,817
by financing activities
Foreign currency translation    291,040         4,511,150       2,463,057
adjustment
INCREASE IN CASH AND CASH       38,662,663      15,028,287      55,994,502
EQUIVALENTS
CASH AND CASH EQUIVALENTS,      105,637,627     90,609,340      34,614,838
at the beginning of the year
CASH AND CASH EQUIVALENTS,    $ 144,300,290   $ 105,637,627   $ 90,609,340
at the end of the year
MAJOR NON-CASH TRANSACTION:
 Share-based compensation   $ 382,089       $ 498,212       $ 408,772
to employees and directors
 Issuance of common stock
to settle warrant               311,709         4,916,088       6,854,964
liabilities
SUPPLEMENTAL DISCLOSURE
INFORMATION
 Cash paid for interest     $ -             $ 143,779       $ 131,106
 Cash paid for income       $ 19,569,241    $ 18,056,035    $ 11,198,079
taxes

SOURCE Lihua International, Inc.

Website: http://www.lihuaintl.com
Website: http://www.lihuaintl.com/Investor_Relations/Events_Presentations.html