March 30, 2008

Knobias Clip Report (03-28-2008)

By admin

NOBL: Shares Plummet on Larger Losses and Cut FY08 View

Noble International, Ltd. (NOBL) 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.

The Company recently completed new financing with ArcelorMittal. The proceeds of the financing transaction were utilized to pay down senior indebtedness as well as provide additional liquidity to the Company. In connection with the financing, Noble executed an amendment with its senior lenders in North America providing greater financial covenant flexibility. The convertible debt has a five year term, a 6% coupon with quarterly interest payments and an initial share conversion price of $15.75.

On Thursday, the Company reported its fourth quarter results for the fourth quarter and the year end. Fourth quarter loss was $4.97 million, or 21 cents a share versus $2.22 million, or 16 cents a share, in the prior-year period.

The Company noted acquisition costs of $2.3 million and a non cash equity loss of $1.5 million as reasons for the losses.

Net sales increased $179.2 million to $317.4 million in the fourth quarter of 2007 from $138.2 million in the fourth quarter of 2006. The Arcelor Business accounted for $143.0 million of this net sales increase. Net sales, excluding the Arcelor Business, increased by $36.2 million, or 26.2%, over the fourth quarter of 2006 despite “Detroit Three” light vehicle production decreasing 1.6% over the same period.

For the year, the net sales increased $430.7 million to $872.1 million in 2007 from $441.4 million in 2006. This increase in net sales was driven primarily by the acquisition of Pullman Industries, Inc. in the fourth quarter of 2006 and the Arcelor Business in the third quarter of 2007. Incremental 2007 net sales from the Pullman and Arcelor Business acquisitions were $218.3 million and $190.3 million, respectively. The remaining $22.1 million increase in 2007 net sales was driven primarily by $25.0 million of increased steel pass-through pricing for several laser welding programs.

But looking forward, the Company revised estimates downward due to the anticipated lower North American volume in light vehicle production. 2008 earnings guidance is now 45 cents to 55 cents. Analysts had called for $1.45. The Company guided for revenue of $1.15 billion to $1.2 billion. Analysts were expecting $1.22 billion.

Following the announcement, shares continued their slide and fell some 15.5% on heavy volume, reaching a new 52 week low.

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