Longwei Petroleum Earnings Call to Discuss Record Revenue and Earnings Results for Fiscal 2010

Management to Host Fiscal 2010 Earnings Conference Call Today, Thursday, September 30, 2010 at 11 a.m. EST

TAIYUAN CITY, China, Sept. 30 /PRNewswire-Asia-FirstCall/ -- Longwei Petroleum Investment Holding Ltd. (NYSE Amex: LPH) ("Longwei" or the "Company"), an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China ("PRC"), will host an earnings call to discuss its record financial results for the fiscal year ended June 30, 2010. Summary financial data is provided below (in millions, except EPS and share data):

Fiscal Year June 30, 2010 Financial Highlights (Year-Over-Year Results)

--  Revenues increased 74% to $343.2 million, compared with $196.8 million

--  Operating income increased 103% to $64.4 million, compared with $31.8 million

--  Net income increased 131% to $50.2 million, compared with $21.8 million

--  EPS increased 39% to $0.39 per diluted share, compared with $0.28 per diluted share

--  Adjusted EPS increased 61% to $0.45 per diluted share, compared with $.28 per diluted share (Adjusted net of derivative and financing costs)

--  Working Capital increased 72% or $56.0 million to $134.2 million

--  Inventories and Advances to Suppliers increased by 119% or $58.7 million to $108.0 million, up from $49.3 million at the end of 2009

"We have continued to stay the course with our business model and further develop our markets," stated Michael Toups, CFO of Longwei. "We have improved our operational efficiency and closely monitor our inventory levels and advances to suppliers to utilize our capacity to take advantage of pricing, demand and supply fluctuations in the marketplace. We are looking forward to another record year based on our proven success."

Fiscal 2010 Year-End Results of Operations

Revenues – During the fiscal year ended June 30, 2010, Longwei's sales increased approximately 74% to $343.2 million, up from $196.8 million in the 2009 fiscal year. The sales increase was mainly a result of new customer contracts and organic growth within the Company's existing customer base due to solid domestic petroleum demand from both industrial and consumer customers. In January 2010, the Company also commenced operations at its Gujiao facility, which contributed sales of $74 million, or roughly 22% of total sales, during its first six months of operations.

For the year ended June 30, 2010, gasoline sales comprised 47% of Longwei's total revenue, followed by diesel fuel at 44%. Agency fees, fuel oil, and solvents made up 5%, 2%, and 2%, respectively, of total sales for the year. Industrial users in the coal mining and power generation sectors accounted for approximately 55% of total sales, up from 45% in fiscal 2009.

Cost of Sales – Costs of sales increased by $116.7 million or 59%, from $157.3 million for the year ended June 30, 2009 to $274.0 million for the year ended June 30, 2010.  As a percentage of total revenues the Company's average product cost of sales remained flat at 80% of revenues. The weighted average cost basis per metric ton of finished petroleum product sold increased 5% to $712/mt from $676/mt during the years ended June 30, 2010 and 2009, respectively.  

The cost basis of finished petroleum products fluctuates during the year due to the pricing mechanism in place in the PRC. The price of finished petroleum products is established by a PRC regulatory body under a formula based on the movement of international prices over a look-back period of 22 working days and is reset when the price increases or decreases by 4%. The Company attempts to manage its costs by utilizing its storage capacity to adjust inventory levels based on the anticipated movement of industry pricing to take advantage of pricing, supply and demand fluctuations within the marketplace. The Company's inventory turnover is approximately 30 days to correspond to the 22 working day pricing reset period. Longwei's supplier advance balance with refineries allows it to lock in supply so that management can react quickly to purchases based on the timing of the PRC pricing level adjustments.

Operating Expenses - Operating expenses for the 2010 fiscal year amounted to $4.8 million as compared to $7.7 million for the 2009 fiscal year. The 37% decrease was primarily due to lower stock-based compensation in 2010, as well as lower maintenance and repair expenditures since both facilities were upgraded in fiscal 2009. Operating income increased 103% to $64.4 million during fiscal 2010.

Net Income - Net income increased by $28.5 million or 131% from $21.8 million for the year ended June 30, 2009 to $50.2 million for the year ended June 30, 2010.  For the year ended June 30, 2010, net income attributable to common shareholders reduced net income by $9.2 due to cash dividends paid on the preferred stock and the adjustment for the allocation of the fair value of the preferred stock deemed a dividend of $8.6 million, both related to the October 2009 financing. Net income attributable to common shareholders increased by $19.3 million or 89% to $41.1 million for the year ended June 30, 2010, up from $21.8 million for the year ended June 30, 2009.

In accordance with GAAP, the Company recorded certain noncash and cash adjustments to income to account for derivative and financing costs associated with its October 2009 preferred stock financing. Net income adjusted net of these derivatives and financing costs was $47.7 million, an increase of $25.9 million or 119% over net income of $21.8 million for the year ended June 30, 2009. (The adjustments to net income attributable to common shareholders of $41.1 million included adding back preferred stock deemed dividends of $8.6 million, less derivative income of $2.6 million, plus preferred stock dividends of $0.5 million.)

EPS - The Company's basic and diluted GAAP earnings per share ("EPS") for the fiscal year ended June 30, 2010 were $0.48 and $0.39, respectively, representing growth of 71% and 39% over basic and diluted GAAP EPS of $0.28 and $0.28, respectively, for the 2009 fiscal year.

Adjusted basic and diluted EPS for fiscal year ended June 30, 2010 were $0.55 and $0.45, respectively, representing growth of 96% and 61% over basic and diluted EPS of $.028 and $0.28, respectively, for the 2009 fiscal year. The Company had no derivative or financing costs during fiscal year 2009.

Liquidity and Capital Resources

As of June 30, 2010 the Company's current assets increased $60.6 million or 73% from $83.4 million at year-end June 30, 2009 to $144.0 million at year end June 30, 2009.  Cash and cash equivalents totaled $10.1 million at June 30, 2010. Overall, the Company had an increase in cash flows of $2.8 million during the year ended June 30, 2010 resulting from $(6.9 million) of cash used in operating activities, cash used in financing activities of $(7.6 million), offset by cash provided by investing activities of $17.7 million.

Longwei's current ratio is approximately 15:1 (current assets to current liabilities) and the Company has no long-term debt as of June 30, 2010. The Company has improved its asset turnover ratios during the period from 50 days to 32 days for inventory turnover, and from 49 days to 27 days for accounts receivable turnover during at year ended June 30, 2009 and 2010, respectively. It has continued to improve working capital management to enhance its flexibility on inventory management and purchasing capability to react to changes in market prices.

2011 Financial Outlook

The Company maintains its current guidance for fiscal 2011. The Company projects revenues to exceed $500 million for the fiscal year ending June 30, 2011 and adjusted net income to exceed its forecasted $73 million (adjusted net of derivative and financing costs).

Conference Call and Webcast

Management will host a conference call to discuss these financial results on Thursday, September 30, 2010 at 11:00 a.m. Eastern time (8:00 a.m. Pacific).

To participate in the call please dial (888) 389-5992, or (719) 785-9444 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found via the Company's website at http://www.longweipetroleum.com, or alternately at http://ViaVid.net.

A replay of the call will be available for two weeks from 2:00 p.m. EST on September 30, 2010, until 11:59 p.m. EST on October 14, 2010. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the pin number for the replay is 5854581. In addition, a recording of the call will be available via the company's website at http://www.longweipetroleum.com for one year.

About Longwei Petroleum Investment Holding Limited

Longwei Petroleum Investment Holding, Limited is an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China. The Company's oil and gas operations consist of transporting, storage and selling finished petroleum products, entirely in the PRC. The Company's headquarters are located in Taiyuan City, Shanxi Province. The Company has a storage capacity for its Products of 120,000 metric tons located at storage facilities in Taiyuan and Gujiao, Shanxi. The Company's Taiyuan and Gujiao facilities can store 50,000 metric tons and 70,000 metric tons, respectively. The Company is 1 of 3 licensed intermediaries in Taiyuan and the sole licensed intermediary in Gujiao that operates its own large scale storage tanks. The Company has the necessary licenses to operate and sell Products not only in Shanxi but throughout the entire PRC. The Company's storage tanks have the largest storage capacity of any non-government operated entity in Shanxi.

The Company seeks to earn profits by selling its products at competitive prices with timely delivery to coal mining operations, power supply customers, large-scale gas stations and small, independent gas stations. The Company also earns revenue under an agency fee by acting as a purchasing agent for other intermediaries in Shanxi, and through limited sales of diesel and gasoline at two retail gas stations, each located at the Company's facilities. The sales price and the cost basis of the Company's products are largely dependent on regulations and price control measures instituted and controlled by the PRC government as well as the price of crude oil. The price of crude oil is subject to fluctuation due to a variety of factors, all of which are beyond the Company's control.

For further information on Longwei Petroleum Investment Holding Limited, please visit http://www.longweipetroleum.com. You may register to receive Longwei Petroleum Investment Holding Limited's future press releases or request to be added to the Company's distribution list by contacting Dave Gentry at info@redchip.com.  

Forward-Looking Statements

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about Longwei's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Longwei's operations are conducted in the PRC and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. Other potential risks and uncertainties include but are not limited to the ability to procure, properly price, retain and successfully complete projects, and changes in products and competition. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Readers should review carefully reports or documents the Company files periodically with the Securities and Exchange Commission.

Contact:      

At the Company:

Michael Toups, Chief Financial Officer
U.S. Office +1 727-641-1357
P.R.C. Tel. +86 186 0125 0891

Investor Relations:

Dave Gentry
RedChip Companies, Inc.
407-644-4256, Ext. 104
info@redchip.com
http://www.redchip.com