Lihua International Reports Third Quarter 2013 Financial Results

       Lihua International Reports Third Quarter 2013 Financial Results

Company Reports Third Quarter Revenue of $219.4 Million and Net Income of
$13.9 Million

PR Newswire

DANYANG, China, Nov. 12, 2013

DANYANG, China, Nov. 12, 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") cable and wire, today announced financial results for
the third quarter ended September 30, 2013.

"During the third quarter, we continued our operational transformation with
critical upgrades to our facilities," said Mr. Jianhua Zhu, founder, chairman
and CEO. "Importantly, we relocated machinery from the old plant to our new
factory, which resulted in approximately 10 fewer production days. The
associated reduction in sales and production of our wire products were
essentially in-line with our expectations. In addition, narrower spreads
between the purchase price of our raw materials and the average copper market
price persisted, resulting in lower selling prices for our products. While not
adequately reflected in our financial results for the period, we made
substantive operational progress during the third quarter. In addition to
relocating key machinery, we also purchased approximately $4 million of new
production equipment for our new CCA cable and wire product, and made progress
on the modifications to the dust collection system in our existing smelters,
as well as on the construction of our fourth smelter. The conversion process
remains on track and we expect it to be completed in early 2014.

"We are excited to commence production and broad commercialization of our new
higher technology, higher quality CCA superfine wire product next year, and
are pleased to say we recently signed contracts for initial orders. In
addition, we have submitted 16 patent applications related to our new CCA
product because of the significant technological advantage compared to
existing CCA products. As a result, we expect higher margins from this new CCA
product offering. We believe the changes we are making to our infrastructure
and product mix, along with our strong cash position provide a solid
foundation on which to continue to grow our business, capture further market
share in the copper and copper replacement product industry and generate value
for our investors over the long term."

Third Quarter 2013 Financial Results

Sales for the third quarter of 2013 were $219.4 million, compared with sales
of $238.8 million in the third quarter of 2012. The decrease in revenue was
primarily due to overall reduced sales volume that resulted from approximately
10 days of suspended production for Lihua's drawing machine to be relocated
from the old plant to the new factory, as well as lower average selling prices
for all Lihua products as a result of the decline in copper prices.

Lihua's CCA and copper wire products, copper anode and copper rod accounted
for sales of $85.6 million, $116.7 million and $17.0 million, respectively in
the third quarter of 2013. This compares with CCA and copper wire sales of
$101.2 million, copper anode sales of $118.2 million and copper rod sales of
$19.3 million in the third quarter of 2012. During the third quarter of 2013,
the average selling price of Lihua's products was $7,470 per ton, compared
with $7,981 per ton in the same period last year. The decline in average
selling price was primarily related to the overall decline in copper prices.

Gross profit for the third quarter of 2013 was $21.1 million, a decrease of
16.5% from gross profit of $25.3 million for the third quarter of 2012. As a
percentage of total sales, gross margin declined to 9.6% in the third quarter
of 2013 from 10.6% for the same period last year. The decrease was primarily
due to reduced profitability of Lihua's products, resulting from a narrower
spread between the Company's raw material cost and the product selling price,
as well as the declining copper price environment.

Selling, general and administrative ("SG&A") expenses for the third quarter of
2013 were $2.6 million, compared with $2.8 million in the same period of 2012.


For the three months ended September 30, 2013, provision for income taxes was
$4.7 million, compared with $5.9 million for the three months ended September
30, 2012. The effective tax rate for the third quarter of 2013 was 25.2%,
compared to 25.4% for the third quarter of 2012.

Net income for the third quarter of 2013 was $13.9 million, or $0.46 per
share, compared with net income of $17.2 million, or $0.58 per share. Per
share figures for both the 2013 and 2012 periods are based on 30.0 million
weighted average diluted shares outstanding.

Non-GAAP net income for the third quarter of 2013 was $14.0 million, or $0.47
per diluted share, compared with non-GAAP net income of $16.8 million, or
$0.56 per diluted share, for the third quarter of 2012. Non-GAAP net income
excludes the net impact of warrant-related non-cash gain / (charge) of $(0.03)
million and $0.45 million in the third quarters of 2013 and 2012,
respectively.

Adjusted EBITDA for the three months ended September 30, 2013 was $19.7
million, compared with $23.6 million for the same period in the prior year.

Balance Sheet

As of September 30, 2013, Lihua had $188.3 million, or $6.28 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 September 30, 2013, Lihua
had working capital of $260.3 million and no debt.

Outlook

Lihua continues to implement changes to its production facilities to make them
more streamlined, efficient and environmentally friendly. The Company's
current estimated completion time for this process is early 2014.
Additionally, Lihua is pursuing production permits for the new CCA power
transmission cable and wire product, which has superior electric conductivity
for 1000 voltage and under power transmission. The Company is currently in
the test production and commercialization stage for the new CCA superfine wire
product that is ideally suited for more diversified and higher-end
applications such as computers, cell phones, medical equipment, automobiles,
communication and audio-visual products. As a result of the superiority of
the product quality and conductivity, Lihua expects its new CCA product
offering to have higher margins than its existing products.

"2013 is an important transition year for Lihua as we prepare for the next
stage of organic growth through capacity additions and new product offerings
that our research and development team have created. Given the continued
infrastructure changes and narrower spreads between the purchase price of our
raw materials and the average copper market price, we continue to expect
full-year 2013 gross profit and non-GAAP net income to be in-line with our
2012 financial results. We believe the investments we are making to our
infrastructure and product mix position us for growth including top- and
bottom-line improvement in 2014," Mr. Zhu concluded.

Conference Call and Webcast

Management of Lihua International will host a conference call today, November
12, 2013 at 8:00 a.m. Eastern time to discuss the third quarter 2013 financial
results. Individuals interested in participating in the conference may do so
by dialing 1-888-846-5003 in the U.S. and Canada, or 1-480-629-9856
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 and
through November 19, 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. 4648376#. 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
                                                     September 30,
                                                     2013           2012
Netincome $ 13,938,895  $  17,226,638
Change in fair value of warrants                     30,000         (451,000)
Non-GAAP Net Income                                $ 13,968,895  $  16,775,638



Adjusted EBITDA Calculation
                                     For Three Months Ended September 30,
                                     2013                       2012
Net income                         $ 13,938,895     $    17,226,638
 Depreciation and amortization      1,100,793           1,035,925
 Share-based compensation expense   93,797              98,834
 Change in fair value of warrants   30,000              (451,000)
 Interest income                    (165,533)           (138,081)
 Provision for income tax           4,689,657           5,858,831
Adjusted EBITDA                    $ 19,687,609     $    23,631,147

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 cable and 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
Kathy Price
(212) 481-2050 / lihua@tpg-ir.com



LIHUA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)
                                         September30,      December31,
                                         2013                2012
ASSETS
CURRENT ASSETS
 Cash and cash equivalents            $ 188,266,350      $  144,300,290
 Accounts receivable, net               48,985,839          45,284,923
 Prepayments for raw material           20,146,389          19,569,239
purchases
 Other receivables, deposits and        766,247             559,955
prepayments
 Prepaid land use right – current       415,023             406,026
portion
 Deferred income tax assets             28,625              24,948
 Inventories                            23,651,074          17,844,405
 Total current assets            282,259,547         227,989,786
OTHER ASSETS
 Property, plant and equipment, net     49,287,684          47,197,115
 Construction in progress               626,220             175,006
 Prepaid land use right – long-term     18,650,270          18,546,658
portion
 Intangible assets                      44,534              3,332
 Total non-current assets        68,608,708          65,922,111
 Total assets              $ 350,868,255      $  293,911,897
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Accounts payable                       12,238,648          3,891,110
 Other payables and accruals            4,675,960           4,937,404
 Income taxes payable                   4,709,231           5,797,188
 Warrant liabilities                    355,000             354,000
 Total current liabilities       21,978,839          14,979,702
 Total liabilities           21,978,839          14,979,702
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,
30,095,383 shares
 issued and 29,831,336 shares
outstanding as of September 30, 2013
(December 31,                                               

2012: 30,084,883 shares issued and     3,009               3,008
29,820,836 shares outstanding),
respectively
 Additional paid-in capital             79,568,117          79,257,921
 Treasury stock, at cost, 264,047
shares and 264,047 as of September 30,                      
2013 and
                                         (2,126,597)         (2,126,597)
 December 31,2012, respectively
 Statutory reserves                     17,765,472          14,566,846
 Retained earnings                      209,890,386         170,163,120
 Accumulated other comprehensive        23,789,029          17,067,897
income
 Total stockholders' equity      328,889,416         278,932,195
 Total liabilities and    $ 350,868,255      $  293,911,897
stockholders' equity



LIHUA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(AMOUNTS EXPRESSED IN US DOLLARS)
                                         For the Three Months Ended         For the Nine Months Ended
                                         September 30,                      September 30,
                                         2013             2012              2013            2012
NET REVENUE                              $ 219,359,379    $ 238,793,030   $ 683,393,531   $ 598,887,183
Cost of sales                              (198,261,030)    (213,536,628)   (617,469,949)   (534,284,755)
GROSS PROFIT                               21,098,349       25,256,402      65,923,582      64,602,428
Selling expenses                           (796,945)        (741,135)       (2,279,486)     (2,168,129)
Generalandadministrativeexpenses        (1,807,615)      (2,059,027)     (6,219,526)     (5,991,326)
Income from operations                     18,493,789       22,456,240      57,424,570      56,442,973
Other income (expenses):
Interest income                            165,533          138,081         491,196         418,235
Foreign exchange differences               (917)            40,686          (1,575)         128,362
Gain on extinguishment of warrant          -                -               3,520           73,291
liabilities
Change in fair value of warrants           (30,000)         451,000         (65,000)        (23,000)
Other income                               147              (538)           35,011          94,241
Total other income (expenses)              134,763          629,229         463,152         691,129
Income before income taxes                 18,628,552       23,085,469      57,887,722      57,134,102
Provision for income taxes                 (4,689,657)      (5,858,831)     (14,961,830)    (14,985,786)
NET INCOME                               $ 13,938,895     $ 17,226,638    $ 42,925,892    $ 42,148,316
OTHER COMPREHENSIVE INCOME:
Foreigncurrencytranslationadjustments   1,594,504        (683,771)       6,721,132       (1,685,422)
COMPREHENSIVE INCOME                     $ 15,533,399     $ 16,542,867    $ 49,647,024    $ 40,462,894
Net income per share
Basic                                    $ 0.47           $ 0.58          $ 1.44          $ 1.41
Diluted                                  $ 0.46           $ 0.58          $ 1.43          $ 1.41
Weighted average number of shares
outstanding
Basic                                      29,831,336       29,820,836      29,825,874      29,814,300
Diluted                                    29,972,453       29,891,994      29,972,559      29,996,507



LIHUA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)
                                             Nine Months Ended September 30,
                                             2013           2012
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                 $ 42,925,892   $ 42,148,316
 Adjustments to reconcile net income to
cash provided by operating activities:
 Depreciation and amortization            3,200,871      2,374,465
 Share-based compensation                 249,717        313,309
 Gain on extinguishment of warrant        (3,520)        (73,291)
liabilities
 Change in fair value of warrants         65,000         23,000
 Deferred income tax benefits             (3,085)        175,444
 (Increase) decrease in assets:
 Accounts receivable                      (2,659,054)    (11,538,283)
 Prepayments for raw material             (151,700)      4,866,964
purchases
 Other receivables, deposits and          (177,948)      823,965
prepayments
 Inventories                              (5,349,111)    (6,784,994)
 Increase (decrease) in liabilities:
 Accounts payable                       8,171,198      1,162,203
 Other payables and accruals            (381,549)      224,537
 Income taxes payable                   (1,204,446)    1,319,696
 Net cash provided by operating      44,682,265     35,035,331
activities
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property, plant and equipment    (3,913,886)    (2,357,375)
 Deposits for plant and equipment and         (428,765)      (5,942,533)
construction in progress
 Net cash used in investing           (4,342,651)    (8,299,908)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
 Dividend paid                                -              (992,846)
 Net cash used in financing            -              (992,846)
activities
Foreign currency translation adjustment        3,626,446      (895,003)
INCREASE IN CASH AND CASH EQUIVALENTS          43,966,060     24,847,574
CASH AND CASH EQUIVALENTS, at the beginning    144,300,290    105,637,627
of the period
CASH AND CASH EQUIVALENTS, at the end of     $ 188,266,350  $ 130,485,201
the period
MAJOR NON-CASH TRANSACTION:
 Share-basedcompensation to employees  $ 249,717      $ 313,309
and directors
 Issuance of common stock to settle       60,480         311,709
warrant liabilities
SUPPLEMENTAL DISCLOSURE INFORMATION
 Cash paid for income taxes             $ 16,169,361   $ 13,490,647

SOURCE Lihua International, Inc.

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