Noble International Posts Diluted EPS of $0.36 in First Quarter 2004
Company Raises 2004 EPS Guidance to $1.38 to $1.42 per Diluted Share
WARREN, Mich., April 20 -- Noble International, Ltd. ("Noble" or the "Company"), announced its operating results for the first quarter of 2004. For the quarter ended March 31, 2004, Noble posted net income from continuing operations of $3.3 million versus net income from continuing operations of $1.9 million in the first quarter of 2003. Net income from continuing operations for the first quarter of 2004 was $0.36 per diluted share versus net income from continuing operations of $0.24 per diluted share in the year-ago quarter.
Christopher L. Morin, Noble's President and Chief Executive Officer commented on the quarter, "Our results for the first quarter of 2004 reflect Noble's ongoing growth and the Company's focus on its operations. During the first quarter, we opened and started production in our Australian production facility, our first outside North America. We also proceeded with our study of the Chinese laser welding market and expect to reach a decision on whether to enter this market before year-end.
"North American light vehicle production and sales continue to be generally robust, especially of newer vehicles on which Noble has content. We are seeing revenue gains from new vehicle programs, the acquisition of LWI and the continued transition of the majority of our programs to Tier One status, which includes steel sales in addition to the processing revenue. As we have previously mentioned, we continue to focus on our Five Strategies to enable Noble to grow and improve its profitability."
First Quarter Results
Revenue for the first quarter of 2004 was $81.6 million, up 106% from $39.6 million in the year-ago first quarter. Revenue growth came from higher production volumes on certain vehicles, higher steel content in sales and the addition of revenue from the acquisition of LWI. Gross profit for the quarter rose nearly 69% to $10.2 million from $6.0 million a year ago. The higher growth rate of steel content in sales relative to processing revenue caused the gross margin for the first quarter of 2004 to decline as a percentage of sales to 12.4% of total sales from 15.2% in the first quarter of 2003.
Selling, general and administrative expense for the first quarter of 2004 was approximately $4.3 million, or 5.2% of sales, compared to $3.0 million, or 7.5% of sales in the first quarter of 2003. Net operating income was $5.9 million in the most recent quarter versus $3.0 million a year ago. Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") for the first quarter of 2004 was $8.5 million versus $4.8 million a year ago. Interest expense rose to $1.1 million in the first quarter of 2004, including a $0.4 million write-off of deferred financing fees related to the repayment of the term loan portion of Noble's bank facility. Interest expense in the first quarter of 2003 was $0.3 million. Included in Noble's first quarter 2003 earnings from continuing operations is a pre-tax restructuring charge of approximately $0.7 million, or $0.05 per diluted share.
Jay J. Hansen, Noble's Chief Financial Officer, commented on the first quarter, stating "At the end of the first quarter, our issuance of the three- year, 4% convertible notes reduced our exposure to potentially rising interest rates and allowed us to restructure our balance sheet to maximize financial flexibility and support Noble's growth. The proceeds from the notes allowed us to pay off substantially all of our bank debt while retaining our $35 million bank revolver.
"During the first quarter of 2004, Noble charged off a receivable of approximately $0.25 million related to the bankruptcy of a Canadian steel company. We have nearly completed the conversion of steel companies to our customers' steel resale program. Taking this step avoids price risk on substantially all of our steel purchases and greatly reduces our credit risk from financially troubled steel mills."
Updated 2004 Financial Guidance
Noble expects to post earnings of approximately $0.38 to $0.40 per diluted share for the second quarter of 2004 and earnings for the full year between $1.38 and $1.42 per diluted share. The Company is raising its 2004 revenue guidance to $320 - $330 million and expects a gross margin for the year in the 11 - 12% range. EBITDA for 2004 is expected to be between $32 million and $34 million. For 2004, Noble projects an average diluted share count of approximately 10.3 million common shares.
Conference Call
Noble will host a conference call to discuss third quarter results at 10 a.m. EDT, April 21, 2004. The dial-in number is 800-821-1449 or 973-409- 9256. If you are unable to participate in the conference call, you may listen to a digital replay of the conference call through April 28, 2004 by dialing 877-519-4471 or 973-341-3080. The password for the replay is 4705626.
Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included throughout this news release, the Company has provided information regarding "EBITDA" (a non-GAAP financial measure). EBITDA represents earnings from continuing operations before income tax, plus interest expense, depreciation and amortization.
EBITDA is not presented as, and should not be considered an alternative measure of operating results or cash flows from operations (as determined in accordance with generally accepted accounting principles), but are presented because they are widely accepted financial indicators of a company's ability to incur and service debt. While widely used, however, EBITDA is not identically calculated by companies presenting EBITDA and is, therefore, not necessarily an accurate means of comparison and may not be comparable to similarly titled measures disclosed by other companies.
Management believes that EBITDA is useful to both management and investors in their analysis of the Company's ability to service and repay its debt. Further, management uses EBITDA for planning and forecasting in future periods.
For a reconciliation of EBITDA to net income from continuing operations, see the attached financial information and supplemental data.
SAFE HARBOR STATEMENT
Noble International, Ltd. is a leading supplier of automotive parts, component assemblies and value-added services to the automotive industry. As an automotive supplier, Noble provides design, engineering, manufacturing, complete program management and other services to the automotive market. Noble delivers integrated component solutions, technological leadership and product innovation to original equipment manufacturers (OEMs) and Tier I automotive parts suppliers thereby helping its customers increase their productivity while controlling costs.
Certain statements made by Noble International, Ltd. in this presentation and other periodic oral and written statements, including filings with the Securities and Exchange Commission, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, as well as statements which address operating performance, events or developments that we believe or expect to occur in the future, including those that discuss strategies, goals, outlook or other non- historical matters, or which relate to future sales or earnings expectations, cost savings, awarded sales, volume growth, earnings or a general belief in our expectations of future operating results, are forward-looking statements. The forward-looking statements are made on the basis of management's assumptions and estimations. As a result, there can be no guarantee or assurance that these assumptions and expectations will in fact occur. The forward-looking statements are subject to risks and uncertainties that may cause actual results to materially differ from those contained in the statements. Some, but not all of the risks, include our ability to obtain future sales; our ability to successfully integrate acquisitions; changes in worldwide economic and political conditions, including adverse effects from terrorism or related hostilities including increased costs, reduced production or other factors; costs related to legal and administrative matters; our ability to realize cost savings expected to offset price concessions; inefficiencies related to production and product launches that are greater than anticipated; changes in technology and technological risks; increased fuel costs; work stoppages and strikes at our facilities and that of our customers; the presence of downturns in customer markets where the Company's goods and services are sold; financial and business downturns of our customers or vendors; and other factors, uncertainties, challenges, and risks detailed in Noble's public filings with the Securities and Exchange Commission. Noble does not intend or undertake any obligation to update any forward-looking statements. For more information see www.nobleintl.com .
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended
March 31
2004 2003
Net sales $81,604 $39,625
Cost of sales 71,449 33,610
Gross margin 10,155 6,015
Selling, general and administrative expenses 4,252 2,968
Operating profit 5,903 3,047
Interest income 96 154
Interest expense (1,117) (321)
Other, net 128 (2)
Earnings from continuing operations
before income taxes 5,010 2,878
Income tax expense 1,702 959
Earnings on common shares from
continuing operations 3,308 1,919
Discontinued operations:
(Loss) from discontinued operations - (692)
(Loss) on sale of discontinued operations - (677)
Net earnings on common shares $3,308 $550
Basic earnings (loss) per common share:
Earnings per share from continuing
operations $0.37 $0.25
(Loss) from discontinued operations - (0.09)
(Loss) on sale of discontinued operations - (0.09)
Basic earnings per common share $0.37 $0.07
Diluted earnings (loss) per common share:
Earnings per share from continuing
operations $0.36 $0.24
(Loss) from discontinued operations - (0.08)
(Loss) on sale of discontinued operations - (0.08)
Diluted earnings per common share $0.36 $0.08
Dividends declared and paid $0.10 $0.08
Basic weighted average common shares
outstanding 8,915,350 7,722,877
Diluted weighted average common
shares outstanding 9,491,177 8,910,859
EBITDA from continuing operations
Earnings on common shares from
continuing operations $3,308 $1,919
Income tax expense 1,702 959
Depreciation 2,303 1,562
Amortization 54 50
Interest expense 1,117 321
EBITDA from continuing operations $8,484 $4,811
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
March 31 December 31
2004 2003
ASSETS
Current Assets:
Cash and cash equivalents $1,770 $715
Accounts receivable, trade, net 55,041 34,030
Note receivable 1,778 1,799
Inventories 20,604 14,543
Income taxes refundable - 5,920
Prepaid expenses 1,600 3,909
Total Current Assets 80,793 60,916
Property, Plant & Equipment, net 48,959 47,119
Other Assets:
Goodwill, net 21,056 11,839
Covenants not to compete, net 133 183
Other assets, net 13,688 12,890
Total Other Assets 34,877 24,912
Assets Held for Sale 4,328 10,036
Total Assets $168,957 $142,983
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $51,197 $29,517
Accrued liabilities 4,976 4,967
Income taxes payable 1,515 -
Current maturities of long-term debt 1,217 9,999
Deferred income taxes 54 54
Total Current Liabilities 58,959 44,537
Long-Term Liabilities:
Deferred income taxes 3,858 3,860
Convertible subordinated debentures 41,242 7,026
Long-term debt, excluding current
maturities 1,507 35,974
Total Long-Term Liabilities 46,607 46,860
Liabilities Held for Sale - 775
Stockholders' Equity
Common stock 10 9
Additional paid-in capital 48,405 38,161
Retained earnings 14,902 12,490
Accumulated comprehensive income,
net 74 151
Total Stockholders' Equity 63,391 50,811
Total Liabilities & Stockholders' Equity $168,957 $142,983