Noble International Posts First Quarter 2006 EPS of $0.22
WARREN, Mich., April 26 -- Noble International, Ltd. ("Noble" or the "Company") posted earnings of $3.1 million, or $0.22 per diluted share, for the first quarter ended March 31, 2006. These results are in line with management's guidance provided at the end of 2005. Noble's results for the quarter include the costs of launching three new facilities and seven new laser welding programs. In the first quarter of 2005, Noble reported earnings of $3.8 million, or $0.27 per diluted share.
First Quarter Results
Revenue in the first quarter of 2006 increased 15.7% to $100.4 million compared to $86.8 million last year. The launch and production ramp-up of newer laser welding programs generated most of the increase in revenue in the first quarter of 2006.
Gross margin for the first quarter increased to $9.9 million from $9.7 million last year. Gross margin as a percentage of sales for the first quarter of 2006 was 9.9% compared to 11.2% in the first quarter of 2005. The gross margin percentage was impacted by expenses related to the launch of three production facilities and seven new laser welding programs, as well as a mix shift toward larger blanks with higher steel content as a percentage of total revenue.
Selling, general and administrative expenses ("SGA") increased to $4.8 million in the first quarter of 2006 from $3.2 million in the first quarter of 2005. SGA increased as a percentage of sales to 4.8% from 3.7% year over year. Growth in SGA expense compared to 2005 is due to higher growth-related spending, including higher costs for expanded staffing and compensation expense, additional research and development costs and expenses related to new production facilities. For 2006 overall, management expects SGA expense to be consistent with 2005 levels as a percentage of sales.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") in the first quarter of 2006 were $7.5 million versus $9.3 million in the year-ago first quarter. Net interest and other expense for the first quarter of 2006 was $0.6 million compared to $0.3 million last year.
Pre-tax income for the first quarter of 2006 was $4.5 million versus $6.2 million in the year-ago first quarter. Income tax expense for the first quarter of 2006 was $1.5 million versus $2.4 million in the first quarter of 2005.
Management Commentary and Guidance
Thomas L. Saeli, Noble's Chief Executive Officer, commented, "First quarter results met our expectations and guidance. Our manufacturing operations performed better than we projected due to our focus on continuous improvement and manufacturing excellence. This positive performance offset delays in some new customer programs and expenses incurred to support growth. As we stated in our year-end 2005 press release, we expected the timing of growth-related expenses incurred prior to new program launches to result in first quarter 2006 earnings coming in below last year's first quarter results. We are now in production at all three of our new facilities. This sets the stage for additional launches of new business during the second half of this year."
Noble's Chief Financial Officer, David J. Fallon, commented on the Company's first quarter financial results, "Our performance in the first quarter of 2006 was very much in line with the outlook we communicated to shareholders during our last conference call. With more laser welding programs entering production throughout the year, we are beginning to leverage the costs we incurred to support growth and are on track to meet our revenue and earnings targets for the year."
Financial Guidance
Management guidance for 2006 is unchanged, with projected earnings from continuing operations expected of $1.11 - $1.16 per diluted share on revenue of $415 - $425 million. This guidance is based on a forecast for 2006 North American light vehicle production of approximately 15.8 million units.
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share data)
Three Months Ended
March 31
2006 2005
Net sales $100,435 $86,750
Cost of sales 90,488 77,064
Gross margin 9,947 9,686
Selling, general and administrative
expenses 4,802 3,177
Operating profit 5,145 6,509
Interest income 285 108
Interest expense (733) (678)
Other, net (175) 294
Earnings before income taxes 4,522 6,233
Income tax expense 1,497 2,441
Earnings before minority interest 3,025 3,792
Minority interest 115 -
Net earnings $3,140 $3,792
Basic earnings per share $0.22 $0.27
Diluted earnings per share $0.22 $0.27
Dividends declared and paid per
share $0.07 $0.07
Basic weighted average shares
outstanding 14,031,358 13,894,391
Diluted weighted average shares
outstanding 14,079,629 14,036,774
Reconciliation of EBITDA to Earnings
before Income Taxes
Earnings before income taxes $4,522 $6,233
Depreciation 2,440 2,490
Amortization 64 52
Net interest expense 447 570
EBITDA $7,473 $9,345
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
March 31 December 31
2006 2005
ASSETS
Current Assets:
Cash and cash equivalents $18,876 $21,978
Accounts receivable trade, net 71,733 78,659
Inventories, net 25,285 21,952
Other current assets 4,216 5,044
Total Current Assets 120,110 127,633
Property, Plant & Equipment, net 58,507 57,253
Other Assets:
Goodwill 21,131 20,972
Other intangible assets, net 2,299 2,303
Other assets, net 989 1,158
Total Other Assets 24,419 24,433
Total Assets $203,036 $209,319
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $60,180 $69,797
Accrued liabilities 5,795 5,853
Income taxes payable 921 666
Current maturities of long-term
debt 8 10
Total Current Liabilities 66,904 76,326
Long-Term Liabilities:
Convertible subordinated
debentures, net of discount 39,275 39,094
Long-term debt, excluding current
maturities 2,560 2,176
Deferred income taxes 5,242 5,308
Other long-term liabilities 17 -
Total Long-Term Liabilities 47,094 46,578
Minority interest 3,436 3,551
Stockholders' Equity
Common stock 9 9
Additional paid-in capital 55,671 54,988
Retained earnings 27,748 25,551
Accumulated other comprehensive
income, net 2,174 2,316
Total Stockholders' Equity 85,602 82,864
Total Liabilities & Stockholders'
Equity $203,036 $209,319