Noble Iron Inc.

TSX VENTURE : NIR


Noble Iron Inc.

August 29, 2014 09:24 ET

Noble Iron Announces Q2 & Year-To-Date 2014 Results

HOUSTON, TEXAS--(Marketwired - Aug. 29, 2014) - Noble Iron Inc. (TSX VENTURE:NIR) announced its unaudited interim financial results for the period ended June 30, 2014.

  • Total consolidated revenues for the three months ended June 30, 2014 were $5.2 million, versus $5.6 million during the same period in 2013. Total revenue for the six months ended June 30, 2014 was $10.4 million, versus $10.1 million over the same period in 2013.

  • The Company's Construction and Industrial Equipment Rental and Distribution segment revenues were $4.1 million for the three month periods ended June 30, 2014, versus $4.1 million for the three month period ended June 30, 2013. Segment revenues totaled $8.2 million for the six months ended June 30, 2014, versus $7.5 million over the same period in 2013.

  • Software segment revenues were $1.1 million for the three month period ended June 30, 2014 and $1.5 million for the three month period ended June 30, 2013. Segment revenues were $2.2 million for the six months ended June 30, 2014, versus $2.5 million over the same period in 2013.
Comparative Financial Results (000's) - Consolidated Company Six Months Ended Three Months Ended
June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013
Revenue $ 10,374 100 % $ 10,086 100 % $ 5,164 100 % $ 5,567 100 %
Cost of Revenue (4,282 ) (41 %) (4,005 ) (40 %) (2,190 ) (42 %) (2,275 ) (41 %)
Summary Expenses
Support, Maintenance and Delivery (4,156 ) (40 %) (3,167 ) (31 %) (2,165 ) (42 %) (1,617 ) (29 %)
Research and Development (359 ) (3 %) (400 ) (4 %) (185 ) (4 %) (179 ) (3 %)
Sales and Marketing (778 ) (7 %) (692 ) (7 %) (397 ) (8 %) (314 ) (6 %)
General and Administration (3,564 ) (34 %) (3,819 ) (38 %) (1,917 ) (37 %) (2,062 ) (37 %)
Deferred Income Tax / Recovery 578 6 % 101 1 % 56 1 % 0 0 %
Stock Based Compensation (74 ) (1 %) (129 ) (1 %) (36 ) (1 %) (34 ) (1 %)
Interest Expense (450 ) (4 %) (443 ) (4 %) (250 ) (5 %) (216 ) (4 %)
Foreign Exchange Gain / Loss (7 ) (0 %) (17 ) (0 %) 35 1 % (16 ) (0 %)
Net Earnings (Loss) (2,718 ) (26 %) (2,485 ) (25 %) (1,885 ) (37 %) (1,146 ) (21 %)
Add Back:
Depreciation / Amortization 3,612 35 % 2,903 29 % 1,717 33 % 1,509 27 %
Deferred Income Tax / Recovery (578 ) (6 %) (101 ) (1 %) (56 ) (1 %) 0 0 %
Stock Based Compensation 74 1 % 129 1 % 36 1 % 34 1 %
Interest Expense 450 4 % 443 4 % 250 5 % 216 4 %
Foreign Exchange Gain / Loss 7 0 % 17 0 % (35 ) (1 %) 16 0 %
Adjusted EBITDA $ 847 8 % $ 906 9 % $ 27 1 % $ 629 11 %

The Company's total revenue over the three month period ended June 30, 2014 was 7% lower than that of the same period in 2013. Over the six month period ended June 30, 2014 revenues increased 3% versus the same six month period in 2013. For the three months ended June 30, 2014, the total revenue decrease was largely due to significantly less ancillary revenue derived from equipment disposals, which decreased by $0.4 million, or 58%, as compared to the same period in 2013. The disposal of rental equipment does not occur evenly throughout the year and is contingent on factors including equipment age, market values of used equipment, and utilization. In addition to repair and refurbishment initiatives already underway, the Company plans to dispose of, and replenish, a larger volume of equipment fleet over the balance of the year. Rental revenue increased $0.4 million, or 12% over the three month period ended June 30, 2014 and by $1.1 million, or 17%, over the six month period ended June 30, 2014. The increase in rental revenue was driven by increased fleet, sales and marketing initiatives and fleet diversification. The year over year total revenue difference was also largely attributed to a significant one-time software license sale, totaling $0.5 million, to a single large customer that occurred during the three month period ended June 30, 2013. Recurring revenues within the software segment increased 12% year over year for the six months ended June 30, 2014 and 13% during Q2 2014.

Net loss over the three and six months period ended June 30, 2014 was 64% and 9% higher than that of Q2 2013 and the six month period in 2013 respectively. The Company's net loss was driven in part by increased depreciation due to a higher volume of rental equipment fleet, and increased expenditures on repair and maintenance primarily incurred at the company's California operation. Depreciation expense increased $0.2 million and $0.7 million during Q2 2014 and the six month period ended June 2014 respectively. Support, Maintenance and Delivery expense increased by $0.5 million, or 34%, in Q2 2014 versus Q2 2013, and by $1 million, or 31%, year over year from the six month period ended June 30, 2013. The Company chose to increase spending on repairs and maintenance rather than pursuing more disposals and replenishment of rental equipment fleet over the first half of the year. These expenses are expected to remain at higher than normal levels through the balance of the year, albeit at a declining rate. The Company also increased its expenses for outside trucking, and sales and marketing initiatives.

Financial information indicated, as set out in this news release, is presented on a basis consistent with the accounting principles used to prepare Noble Iron's most recently filed financial statements. The consolidated financial statements are prepared by management in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. Readers are advised that the Company faces various risk factors with respect to its business and operations: for further information please see the Management Discussion and Analysis of Noble Iron Inc. at www.SEDAR.com.

About Noble Iron Inc. (TSX VENTURE:NIR)

Noble Iron Inc. operates in equipment rental, equipment sales, and enterprise asset management software for the construction and industrial equipment industry.

Noble Iron Inc.'s equipment rental and dealership business operates under the name "Noble Iron", and currently serves customers in California and Texas. Noble Iron offers construction and industrial equipment and accessories for rent and for sale, and is the exclusive distributor of LiuGong Construction Machinery equipment in Southeast Texas.

Noble Iron Inc.'s software division operates under the name "Texada Software". Texada Software develops software applications to manage the complete equipment ownership lifecycle: from equipment purchasing; rental & sales transactions; inventory management; maintenance & depreciation tracking; through to used equipment sales, disposal & inventory replenishment. Texada Software offers in-the-cloud or client-based software, and is scalable to meet the needs of any equipment rental company, dealership, construction company, contractor, and any customer who owns or uses construction or industrial equipment.

The company can be reached at 1-832-767-4424, or at www.nobleiron.com.

Non-IFRS Measures

References in this press release to Adjusted EBITDA are to earnings before interest expense, deferred income taxes, depreciation, amortization, share based compensation, gain on fair value increment on acquisition (net of deferred income taxes), acquisition expenses, accretion on convertible debt, interest on convertible debentures, severances and foreign exchange. Adjusted EBITDA is a measure used by investors to compare issuers on the basis of ability to generate cash flow from operations. Adjusted EBITDA is not an earnings measure recognized by International Financial Reporting Standards (IFRS), does not have standardized meanings as prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Noble Iron's management believes that Adjusted EBITDA is an important supplemental measure in evaluating Noble Iron's performance and in determining whether to invest in its common shares. Readers of this information are cautioned that Adjusted EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of Noble Iron's performance, or cash flows from operating, investing and financing activities as measures of Noble Iron's liquidity and cash flows. Noble Iron's method of calculating Adjusted EBITDA may differ from the methods used by other issuers and, accordingly, Noble Iron's Adjusted EBITDA may not be comparable to similar measures presented by other issuers.

This news release may contain forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "estimate", "expect", "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including the difficulty in predicting acceptance of and demands for new products, the impact of the products and pricing strategies of competitors, delays in developing and launching new products, fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements. Many risks are inherent in the industries in which the Company participates; others are more specific to the Company. The Company's ongoing quarterly filings should be consulted for additional information on risks and uncertainties relating to these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. Management assumes no obligation to update or alter any forward-looking statements whether as a result of new information, further events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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