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 email@example.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 firstname.lastname@example.org 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
Lihua International Reports Record Fourth Quarter and Full-Year 2012 Financial Results
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