Noble International Announces First Quarter Financial Results

TROY, Mich., May 7 /PRNewswire-FirstCall/ -- Noble International, Ltd.
(Nasdaq: NOBL) ("Noble" or the "Company") reported financial results for the
first quarter ended March 31, 2008. The highlights are as follows:
FINANCIAL RESULTS
The Company posted net sales of $314.1 million in the first quarter of
2008, an increase of 96.2% compared to net sales of $160.1 million reported in
the first quarter of 2007. For the first quarter of 2008, the Company posted a
net loss of $2.0 million, or $0.08 per diluted share, compared to a net loss
of $0.2 million, or $0.01 per diluted share, in the first quarter of 2007.
FIRST QUARTER FINANCIAL COMMENTARY
Net sales increased $154.0 million to $314.1 million in the first quarter
of 2008 from $160.1 million in the first quarter of 2007. Revenues at
facilities acquired from ArcelorMittal ("the Arcelor Business") accounted for
$148.4 million of this net sales increase. An increase in tooling sales
related to launched or launching programs accounted for $11.5 million of the
revenue increase and an increase in steel pricing accounted for approximately
$1.3 million of incremental revenue. These increases were partially offset by
a $1.7 million sales decrease due to the resolution of commercial pricing
negotiations with certain customers and $5.5 million of revenue decline due to
lower North American light vehicle production, a majority of which was caused
by the strike at American Axle. Compared to the first quarter of 2007, total
North American light vehicle production in the first quarter of 2008 was down
7.8%; the "Detroit Three" production was down 13.3%.
Gross margin increased $10.3 million to $23.9 million in the first quarter
of 2008 from $13.6 million in the first quarter of 2007. The Arcelor Business
acquisition provided for $14.0 million of gross margin and the Company
realized an incremental $2.0 million of tooling margin in the first quarter of
2008 compared to the first quarter of 2007. The Company had a $1.7 million
reduction in gross margin due to commercial pricing negotiations with certain
customers as well as a $1.2 million reduction of gross margin related to
the volume declines in North America. In addition, the Company reported $0.4
million of additional direct labor health costs, $0.9 million of additional
fixed overhead costs and $1.1 million of additional variable costs, primarily
related to new program launches in our Mexican roll-forming operations. As a
result of the foregoing, gross margin as a percentage of sales decreased from
8.5% in the first quarter of 2007 to 7.6% in the first quarter of 2008.
Selling, general and administrative ("SG&A") expenses increased $13.4
million to $20.9 million in the first quarter of 2008 from $7.5 million in the
first quarter of 2007. SG&A costs in the Arcelor Business accounted for $8.5
million of this increase, of which $2.1 million were professional service fees
related to establishing the standalone accounting and finance function in
Europe. The remaining increase is primarily attributable to a $1.9 million
increase in salaries and health benefits as the Company hired additional
employees over the past year to support the larger, global organization and
$2.4 million of increased expenses related to audit and tax services as well
as legal fees and other expenses associated with the convertible debt
transaction with ArcelorMittal and certain on-going litigation. As a
percentage of sales, SG&A costs increased from 4.7% in the first quarter of
2007 to 6.6% in the first quarter of 2008.
As a result of the aforementioned items, Noble reported operating profit
of $3.0 million in the first quarter of 2008 compared to $6.1 million in the
first quarter of 2007.
Interest expense (net of interest income) increased $3.0 million to $5.9
million in the first quarter of 2008 from $2.9 million in the first quarter of
2007. Additional debt incurred pursuant to the Arcelor Business acquisition
drove $2.9 million of this increase with the remaining $0.1 million increase
in North America. In the first quarter of 2008, the Company recognized other
income of $0.5 million comprised of $0.2 million of foreign currency gains and
$0.3 million of management fees and income related to the Company's joint
venture investment in Shanghai, China. In the first quarter of 2007, the
Company recognized other expense of $0.3 million comprised of $0.7 million of
foreign currency losses offset by $0.4 million of management fees related to
the Company's investment in SET Enterprises, Inc. In the first quarter of
2007, the Company also recorded a $3.3 million loss on extinguishment of debt.
The Company recorded an income tax benefit of $0.7 million in the first
quarter of 2008 compared to an income tax benefit of $0.6 million in the first
quarter of 2007.
As a result of the foregoing, the Company recognized a net loss of $2.0
million in the first quarter of 2008 compared to a net loss of $0.2 million in
the first quarter of 2007.
MANAGEMENT COMMENTS
Noble's Chief Executive Officer, Thomas L. Saeli, commented, "The
operating environment in the first quarter presented many challenges to Noble.
Extreme volume reductions in North America across all customers, but
especially General Motors due to the American Axle strike, caused a reduction
in gross margin despite closely managing and adjusting variable costs such as
labor to account for fluctuations in production volumes. In addition,
disappointing volumes in Western Europe hampered results there as our ability
to make short term adjustments to variable costs including production labor is
far more limited when compared to North America. In light of these economic
conditions, we continue to assess the Company's manufacturing footprint in
order to balance the short-term economic realities with the expected long-term
positive growth of the business. Economic challenges aside, by continuing to
focus on integrating our recent acquisitions and executing on the plant floor,
we will emerge a stronger Company when the operating environment returns to a
more normalized level."
REVISED EXPECTATIONS FOR 2008
Due to the volatility of full year North American light vehicle production
forecasts and uncertainties related to European integration and operating
costs, which continue to be higher than initially expected, we believe the
guidance previously issued on March 27, 2008 is not achievable. While we do
expect the Company to be profitable in 2008, we will not update guidance until
there is better visibility related to the 2008 operating environment.
Management continues to take actions to support the growth of the Company and
improve its manufacturing cost structure to drive the efficiencies necessary
to compete effectively in this very challenging economy.
The Company affirms that it will pay its regularly scheduled dividend of
$0.08 per share in the second quarter. As is historically the case, Noble's
dividend policy will be evaluated during the Company's board of directors
meeting scheduled for July, with future dividends dependent on global economic
factors and the Company's performance and expected cash flows.
CONFERENCE CALL INFORMATION
Noble will host a conference call to discuss its operating results for the
first quarter ended March 31, 2008 at 10 AM ET, Thursday, May 8, 2008. The
dial-in numbers for the call are (800) 690-3108 or (973) 935-8753 and the
conference ID number is 45385844. A replay of the conference call will be
available through May 15, 2008 by dialing (800) 642-1687 or (706) 645-9291.
The passcode for the replay is 45385844.
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 adjusted for other non-cash items ("Adjusted EBITDA") and "Free Cash
Flow," both non-GAAP financial measures. Adjusted EBITDA represents earnings
from continuing operations before income tax, plus interest expense,
depreciation and amortization as well adjustments for other non-cash items.
Free Cash Flow represents cash from operations less capital expenditures.
Adjusted 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 operating performance. While widely used, however, Adjusted EBITDA
is not identically calculated by companies presenting Adjusted 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 Adjusted EBITDA is useful to both management and
investors in their analysis of the Company's operating performance. Further,
management uses Adjusted EBITDA for planning and forecasting in future periods
and Free Cash Flow is useful in analyzing the company's ability to service
and repay its debt. For a reconciliation of Adjusted 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,
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
(Unaudited, in thousands, except share and per share data)

Three Months Ended
March 31
2008 2007

Net sales $314,098 $160,070
Cost of sales 290,203 146,480
Gross margin 23,895 13,590
Selling, general and administrative
expenses 20,870 7,512
Operating profit 3,025 6,078
Interest income 85 87
Interest expense (6,010) (2,947)
Loss on extinguishment of debt - (3,285)
Other income (expense), net 520 (331)
Loss before income taxes, minority
interest and equity loss (2,380) (398)
Income tax benefit (716) (607)
(Loss) income before minority interest
and equity loss (1,664) 209
Minority interest, net of tax (292) (175)
Equity loss, net of tax (28) (220)
Net loss $(1,984) $(186)

Basic loss per common share $(0.08) $(0.01)

Diluted loss per common share $(0.08) $(0.01)

Dividends declared and paid per share $0.08 $0.08

Basic weighted average common shares
outstanding 23,607,366 14,126,951
Diluted weighted average common
shares outstanding 23,607,366 14,126,951

Reconciliation of Adjusted EBITDA to
loss before income taxes, minority
interest and equity loss:
Loss before income taxes, minority
interest and equity loss $(2,380) $(398)
Depreciation expense 11,748 4,130
Amortization expense 1,428 569
Net interest expense 5,925 2,860
Stock compensation expense 212 30
Loss on extinguishment of debt - 3,285
Adjusted EBITDA $16,933 $10,476

SOURCE Noble International, Ltd.

Scott A. Kehoe, Treasurer of Noble International, Ltd., +1-248-519-0700