Lihua International Reports First Quarter 2013 Financial Results

       Lihua International Reports First Quarter 2013 Financial Results

First Quarter Revenue Increases 29.1% Year-over-Year to $218.2 Million

PR Newswire

DANYANG, China, May 10, 2013



DANYANG, China, May 10, 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 first
quarter ended March 31, 2013.

First Quarter 2013 Financial Highlights (USD in Millions, except per-share
data):

                                      Three Months Ended March 31,
                                      2013             2012         % Change
Revenue                               $ 218.2          $ 169.1      +29.1%
Gross Profit                          $ 21.1           $ 18.6       +13.0%
Net Income                            $ 13.3           $ 11.5       +16.0%
Earnings Per Share (Diluted)          $ 0.44           $ 0.38       +18.4%
Non-GAAP Net Income                   $ 13.4           $ 11.8       +13.4%
Non-GAAP Earnings Per Share (Diluted) $ 0.45           $ 0.39       +15.4%
Adjusted EBITDA                       $ 19.1           $ 16.7       +14.2%

As of March 31, 2013, Lihua had a strong balance sheet with $168.9 million in
cash and cash equivalents, or $5.64 per diluted share, compared with $144.3
million, or $4.82 per diluted share, as of December 31, 2012. Cash flow from
operations for the first quarter was $24.7 million, compared with cash flow
from operations of $6.7 million in the first quarter of 2012.

First Quarter 2013 and Recent Business Highlights

  oIn January 2013, completed construction of and launched production on the
    Company's third dedicated copper anode smelter. This smelter produced over
    1,200 tons of copper anode in March 2013, and is expected to reach
    designed annual capacity of 25,000-- 30,000 tons in the second quarter.
  oAlso in January 2013, began construction of its fourth copper anode
    smelter. The Company expects to complete construction of this smelter by
    the end of the second quarter, bringing annual scrap copper refinery
    capacity to 150,000-- 170,000 tons from 125,000-- 140,000 tons.
  oCompleted construction of all production, warehousing and storage
    facilities on 30-acre campus; construction of the remaining facilities
    will be completed this fiscal year.
  oContinued pre-commercial marketing activities for CCA cable and wire
    product.

"In the first quarter of 2013, we achieved record quarterly shipments of
copper anode as a result of our ongoing capacity expansion efforts, which
helped offset the typical seasonal weakness due to the Chinese Spring
Festival," said Mr. Jianhua Zhu, Lihua's founder, chairman and CEO. "Although
margins continued to be impacted by product mix and ASP pressure, we increased
net income 16% over the first quarter of 2012 based on continued strong demand
from our customers."

"Construction of our fourth dedicated copper anode smelter is on track to be
completed by the end of the second quarter and is expected to commence volume
production shortly thereafter. We are making substantive progress toward the
commercial launch of our new CCA cable and wire product for the power
transmission market. In the first quarter, we began discussions with several
potential customers for the new product, and their initial reactions have been
very positive. We are confident that these investments will further strengthen
our leadership position in the markets we serve and contribute to sustainable
growth in our business over the long-term. Our strong balance sheet, with $169
million in cash as of March 31, gives us the financial resources necessary to
fund these exciting initiatives, which we believe will help Lihua build
incremental shareholder value over time," concluded Mr. Zhu.

First Quarter 2013 Financial Results

Sales for the first quarter of 2013 increased 29.1% to $218.2 million,
compared with sales of $169.1 million in the first quarter of 2012. The
increase in revenue was primarily driven by additional production and sales of
copper anode and copper rod as a result of the Company's capacity expansion.
Lihua's CCA and copper wire products, copper anode and copper rod accounted
for sales of $87.0 million, $114.0 million and $17.3 million, respectively in
the first quarter of 2013. This compares with CCA and copper wire sales of
$89.6 million, copper anode sales of $63.0 million and cooper rod sales of
$16.5 million in the first quarter of 2012. During the first quarter of 2013,
the average selling price of Lihua's products was $8,133 per ton, compared
with $8,362 per ton in the same period last year.

Gross profit for the first quarter of 2013 was $21.1 million, an increase of
13.0% from gross profit of $18.6 million for the first quarter of 2012. As a
percentage of total sales, gross margin declined to 9.6% in the first quarter
of 2013 from 11.0% 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, and the narrowing spread between scrap
copper cost and copper prices in the first quarter of 2013.

Selling, general and administrative ("SG&A") expenses for the first quarter of
2013 were $3.1 million, compared with $2.8 million in the same period of
2012.

The Company recorded no interest expense in the first quarter of 2013,
compared with interest expense of $143,779 in the first quarter of 2012.

For the three months ended March 31, 2013, provision for income tax expense
was $4.7 million, compared with $4.3 million for the three months ended March
31, 2012. The effective tax rate for the first quarter of 2013 was 26.2%,
compared to 27.2% for the first quarter of 2012.

Net income for the first quarter of 2013 was $13.3 million, or $0.44 per
share, based on 30.0 million weighted average diluted shares outstanding,
compared with net income of $11.5 million, or $0.38 per share, based on 30.1
million weighted average diluted shares outstanding during the same period in
2012.

Non-GAAP net income for the first quarter of 2013 was $13.4 million, or $0.45
per diluted share, compared with non-GAAP net income of $11.8 million, or
$0.39 per diluted share, for the first quarter of 2012. Non-GAAP net income
excludes the net impact of warrant-related non-cash charges of $0.1 million
and $0.4 million in the first quarters of 2013 and 2012, respectively.

Adjusted EBITDA for the three months ended March 31, 2013 was $19.1 million,
compared with $16.7 million for the same period in the prior year.

Balance Sheet

As of March 31, 2013, Lihua had $168.9 million, or $5.64 per diluted share, in
cash and cash equivalents, compared with $144.3 million, or $4.82 per diluted
share, as of December 31, 2012. As of March 31, 2013, Lihua had working
capital of $227.6 million and no debt.

Outlook

The Company began construction of a fourth copper anode smelter in January
2013 and expects to complete construction by the end of the second quarter of
2013. Once complete, Lihua's aggregate scrap copper refinery capacity will
increase to 150,000 – 170,000 tons per year. The Company has completed
construction of all factory buildings and warehouse and storage facilities on
its 30-acre plant site. The remainder of the site, which includes a new R&D
center, office space and employee facilities, will be completed this fiscal
year.

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,
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, May 10,
2013 at 8:00 a.m. Eastern time to discuss the first quarter 2013 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. 4618350#. 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 Three Months Ended March 31,
                                              2013             2012
Net income                                  $ 13,311,187   $      11,475,012
 Gain on Extinguishment of Warrant           -                   -73,291
Liabilities
 Change in fair value of warrants            108,000             430,000
Non-GAAP Net Income                         $ 13,419,187   $   11,831,721



Adjusted EBITDA Calculation
                                              For Three Months Ended March 31,
                                              2013                2012
Net income                                  $ 13,311,187   $   11,475,012
 Depreciation and amortization               1,044,563        657,320
 Share-based compensation expense            81,464           112,875
 Gain on Extinguishment of Warrant           -                -73,291
Liabilities
 Change in fair value of warrants          108,000          430,000
 Interest income                           -170,751         -163,136
 Interest expenses                         -                -
 Provision for income tax                    4,714,688        4,277,346
Adjusted EBITDA                             $ 19,089,151   $      16,716,126

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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLARS)
                                                                                    March 31,     December31,
                                                                                    2013          2012
ASSETS
CURRENT ASSETS
 Cash and cash equivalents                                                      $168,932,279  $144,300,290
 Accounts receivable, net                                                      42,024,583    45,284,923
 Prepayments for raw material purchases                                        14,255,297    19,569,239
 Other receivables, deposits and prepayments                                    193,302       559,955
 Prepaid land use right – current portion                                      407,101       406,026
 Deferred income tax assets                                                    24,919        24,948
 Inventories                                                                   21,531,298    17,844,405
 Total current assets                                                    247,368,779   227,989,786
OTHER ASSETS
 Property, plant and equipment, net                                            46,419,651    47,197,115
 Construction in progress                                                      614,143       175,006
 Prepaid land use right-- long-term portion                                   18,494,015    18,546,658
 Intangible assets                                                             2,863         3,332
 Total non-current assets                                                65,530,672    65,922,111
 Total assets                                                        $312,899,451  $293,911,897
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Accounts payable                                                              9,573,476     3,891,110
 Other payables and accruals                                                   5,017,519     4,937,404
 Income taxes payable                                                         4,759,903     5,797,188
 Warrant liabilities                                                           462,000       354,000
 Total current liabilities                                                     19,812,898    14,979,702
  Total liabilities                                                        19,812,898    14,979,702
STOCKHOLDERS' EQUITY
Preferredstock:$0.0001parvalue,10,000,000sharesauthorized,
 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
  March 31, 2013 (December 31, 2012: 30,084,883 shares issued and
  29,820,836 shares outstanding), respectively                                  3,008         3,008
 Additional paid-in capital                                                   79,339,385    79,257,921
 Treasury stock, at cost, 264,047 shares and 264,047 as of March
 31, 2013 and December 31, 2012, respectively                                 (2,126,597)   (2,126,597)
 Statutory reserves                                                        15,540,605    14,566,846
 Retained earnings                                                         182,500,548   170,163,120
 Accumulated other comprehensive income                                       17,829,604    17,067,897
 Total stockholders' equity                                                   293,086,553   278,932,195
Total liabilities and stockholders' equity                                 $312,899,451  $293,911,897



LIHUA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLARS)
                                              For the Three Months Ended
                                              March 31,
                                              2013           2012
NET REVENUE                                   $ 218,229,539  $ 169,086,267
Cost of sales                                 (197,174,187)  (150,451,275)
GROSS PROFIT                                  21,055,352     18,634,992
Selling expenses                              (680,680)      (686,006)
General and administrative expenses           (2,405,784)    (2,097,834)
Income from operations                        17,968,888     15,851,152
Other income (expenses):
Interest income                               170,751        163,136
Gain on extinguishment of warrant liabilities -              73,291
Change in fair value of warrants              (108,000)      (430,000)
Other income (expenses)                       (5,764)        94,779
Total other income (expenses)                 56,987         (98,794)
Income before income taxes                    18,025,875     15,752,358
Provision for income taxes                    (4,714,688)    (4,277,346)
NET INCOME                                    $ 13,311,187   $ 11,475,012
OTHER COMPREHENSIVE INCOME:
Foreigncurrencytranslationadjustments     761,707        208,402
COMPREHENSIVE INCOME                          $ 14,072,894   $ 11,683,414
Net income per share
 Basic                                       $ 0.45         $ 0.39
 Diluted                                     $ 0.44         $ 0.38
Weightedaveragenumberofsharesoutstanding
 Basic                                       29,820,836     29,800,624
 Diluted                                     29,952,867     30,080,154



LIHUA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)
                                                                                              ThreeMonthsEndedMarch31,
                                                                                              2013            2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                $ 13,311,387    $ 11,475,012
Adjustmentstoreconcilenetincometocashprovidedbyoperatingactivities:
 Depreciation and amortization                                                          1,044,563       657,320
Share-based compensation                                                               81,464          112,875
 (Gain) on extinguishment of warrant liabilities                                        -               (73,291)
 Change in fair value of warrants                                                       108,000         430,000
 Deferred income tax benefits                                                           95              179,426
 (Increase) decrease in assets:
 Accounts receivable                                                                    3,375,085       2,829,666
 Prepayments for raw material purchases                                                 5,352,699       (6,020,960)
 Other receivables, deposits and prepayments                                            372,431         879,411
 Inventories                                                                            (3,634,076)     (2,056,628)
 Increase (decrease) in liabilities:
 Accounts payable                                                                       5,663,389       (889,271)
 Other payables and accruals                                                            44,734          (371,130)
 Income taxes payable                                                                   (1,051,026)     (467,079)
 Net cash provided by operating activities                                              24,668,545      6,685,351
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment and construction in progress                    (457,225)       (146,645)
 Deposits for plant and equipment                                                          -               (3,754,080)
 Net cash used in investing activities                                                   (457,225)       (3,900,725)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid                                                                             -               (496,423)
 Net cash used in financing activities                                                   -               (496,423)
Foreign currency translation adjustment                                                       420,669         68,258
INCREASE IN CASH AND CASH EQUIVALENTS                                                         24,631,989      2,356,461
CASH AND CASH EQUIVALENTS, at the beginning of the period                                     144,300,290     105,637,627
CASH AND CASH EQUIVALENTS, at the end of the period                                           $ 168,932,279   $
                                                                                                              107,994,088
MAJOR NON-CASH TRANSACTION:
 Share-based compensation to employees and directors                                      $ 81,464        $ 112,875
 Issuance of common stock to settle warrant liabilities                                   -               311,704
SUPPLEMENTAL DISCLOSURE INFORMATION
 Cash paid for income taxes                                                               $ 5,765,619     $ 4,564,999

SOURCE Lihua International, Inc.

Website: http://www.lihuaintl.com
 
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