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Noble International Announces Second Quarter Financial Results


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TROY, Mich., Aug. 6, 2008 -- Noble International, Ltd. ("Noble" or the "Company") reported financial results for the second quarter ended June 30, 2008.

  SECOND QUARTER HIGHLIGHTS:

  -- Diluted earnings per share of $0.35 versus $0.13 a year ago
  -- Net sales of $314.9 million, up 72.4% versus a year ago
  -- Operating profit of $11.9 million versus $6.3 million a year ago
  -- Free Cash Flow of $31.2 million versus $11.6 million a year ago
  -- Inventory levels were reduced by $13.7 million since March 31, 2008
  -- Net debt levels were reduced by $26.5 million since March 31, 2008

For the second quarter of 2008, Noble reported net sales of $314.9 million and net earnings of $9.0 million, or $0.35 per diluted share. The results reflect the negative impact of a $1.0 million after-tax charge, or $0.03 per diluted share, related to severance for certain executives who departed the Company. These financial results compare with net sales of $182.7 million and net earnings of $1.8 million, or $0.13 per diluted share, for the second quarter of 2007.

"In the second quarter, we realized the benefits of our geographic and customer diversification efforts," stated Thomas L. Saeli, Noble's Chief Executive Officer. "Despite the challenging North American operating environment which was exacerbated by the UAW strike of American Axle in April and May, we were still able to deliver solid earnings in the second quarter due to the strong performance of our overseas operations."

Total North American light vehicle production in the second quarter of 2008 was down 14.2% versus the second quarter of 2007. Total "Detroit 3" North American light vehicle production was down 19.9% over the same time period. This negative market environment was primarily responsible for net sales in North America decreasing by $37.1 million, a 20.9% decrease versus the second quarter of 2007. However, the North American sales decrease was more than offset by $166.2 million of revenue at facilities acquired from ArcelorMittal ("the Arcelor Business") and a $3.2 million increase in sales at the Company's Australian operations.

The North America segment reported operating profit of $1.5 million on $143.7 million of sales in the second quarter of 2008 versus operating profit of $8.3 million on sales of $177.5 million in the second quarter of 2007. The decrease in operating profit was primarily driven by the large reduction in light vehicle production in North America. Corporate and central costs contributed an operating loss of $4.4 million in the second quarter of 2008 versus an operating loss of $2.2 million in the second quarter of 2007. The larger loss was attributable in part to severance costs for certain departed executives as well as increased professional costs.

The Europe/Rest of World segment reported operating profit of $14.8 million on $170.3 million of sales in the second quarter of 2008. In the first quarter of 2008, the Europe/Rest of World segment reported operating profit of $5.9 million on $145.3 million of sales. The increase in sales was driven by higher production volumes and an increase in steel and scrap pricing. The increase in operating profit was driven by margin on higher volumes, operational efficiencies, scrap pricing, timing of steel price increases and a reduction in professional fees.

Noble's Chief Financial Officer, David J. Fallon commented, "Given the drastic reduction in North American light vehicle production, management across the Company focused on cost reductions, managing capital spending and reducing working capital. The results of these efforts are demonstrated by our strong Free Cash Flow figures for the second quarter."

Free Cash Flow in the second quarter of 2008 was $31.2 million. These figures compare with Free Cash Flow of $11.6 million in the second quarter of 2007. The Free Cash Flow realized in the second quarter of 2008 was primarily utilized to pay down net indebtedness by $26.5 million and distribute approximately $1.9 million of dividends to common shareholders.

In the second quarter, management implemented cost saving strategies primarily related to scrap, quality and labor which should yield $12.0 million of annual cost savings in 2009. In addition, the Company progressed on its rationalization efforts related to the closure of two North American facilities and the restructuring of two contract manufacturing operations in Europe. These initiatives, once completed, will result in approximately $11.0 million of cost savings in 2009. In light of the current and forecasted economic conditions, management will continue to assess the appropriateness of the Company's manufacturing footprint, and is ready to implement further restructuring efforts should they be necessary.

In addition to the above cost reductions, management initiated other cash generating activities in the second quarter in response to the decreasing light vehicle production. Management spent significant time decreasing working capital levels and scrutinizing capital expenditure requirements. In the second quarter, the Company generated $15.9 million of cash from reducing its working capital needs, which included a $13.7 million reduction of inventory levels. Capital expenditures in the second quarter were $8.1 million, and the Company's year-to-date capital spending through the second quarter was $16.3 million. Management originally had estimated full year capital expenditures of $35 million but now anticipates a significantly lower figure.

Noble's Chief Executive Officer, Thomas L. Saeli commented, "Despite the headwinds of the North American light vehicle production environment, we delivered strong results in the second quarter. The cost savings initiatives and working capital discipline we implemented in the past six months will make the Company much stronger when economic conditions provide for a better operating environment. That being said, there is still significant uncertainty regarding short term economic conditions and fuel prices and their impact on global light vehicle production. Given this uncertainty, we are choosing not to update our previous full year 2008 guidance that we will be profitable for the full year."

CONFERENCE CALL INFORMATION

Noble will host a conference call to discuss its operating results for the second quarter ended June 30, 2008 at 10 AM ET, Thursday, August 7, 2008. The dial-in numbers for the call are (800) 690-3108 or (404) 665-9934 and the conference ID number is 57728525. A replay of the conference call will be available through August 14, 2008 by dialing (800) 642-1687 or (706) 645-9291. The passcode for the replay is 57728525.