New Century Expected to Continue Expansion Based on Recently Published Investor Profile


LOS ANGELES, Aug. 22, 2005 (PRIMEZONE) -- New Century Companies, Inc. (OTCBB:NCNC), a leading manufacturer and re-manufacturer of vertical boring mills and large lathes, today announced that the following "Investor Profile" will be distributed to the Company's existing and potential new investors beginning today. The Profile describes the ongoing expansion in the machine-tool industry and New Century's prospects for substantial growth in that business environment.

The text of the Investor Profile follows:

Rising Sales in a Resurgent Machine-Tool Market


  --  New Century Companies, Inc. (OTCBB:NCNC), a leading
      remanufacturer of vertical and horizontal boring machines,
      is poised for growth from rising durable-goods demand.

  -- NCNC stands to profit from two expanding markets: for vertical
     and horizontal boring machines and for lightweight sound-barrier
     products.

  --  The Company has a growing backlog, and plenty of U.S. production
      capacity.

  --  NCNC's combination of cost and quality are unsurpassed in its
      core specialty --  remanufacturing large-turn computer
      numerically controlled (CNC) boring machines.

  --  The potential market for NCNC's line of remanufactured tools
      has been put at more than $600 million. The sound-barrier
      market could be even larger.

  --  The Company expects a 67% increase in sales this year, with
      doubling in 2006.

About the Company

The machine-tool market is growing briskly after its severe slump of the early 2000s, and New Century Companies, Inc., (NCNC) is in an ideal position to profit from this trend.

Southern California-based New Century, under its brand name Century Turn, is a leading remanufacturer of high-precision large turning centers - automated boring mills used to produce machine components for aerospace, defense, energy, shipbuilding, medical, transportation, mining and other industries. Its customer list is a who's-who of durable-goods manufacturing, including General Electric, General Dynamics, Siemens and B.F. Goodrich.

In the remanufacturing process, New Century strips old machines down to their cast frame and remakes them as state-of-the art machines that can match or exceed the performance any new ones on the market. In addition, the heavy frames of the older machines, weighing up to 150,000 pounds, make remanufactured borers more sturdy than the newer lightweight machines.

New Century enjoys definite cost advantages over new-machine competitors, because the remanufactured machines cost much less to produce - generally, 40% to 60% less -- than new ones. They also carry two-year warranties in an industry where one year is standard.

The main remanufactured products are horizontal boring mills (HBMs), vertical boring mills (VBMs) and horizontal lathes. VBMs, the most heavy-duty of these machines, are capable of machining a true circle up to 14 feet in diameter with a precision of one 10,000th of an inch - one thirtieth the width of a human hair. Remanufacturing accounts for about 70% of New Century's machine-tool sales.

The remaining 30% in machine-tool revenue comes from new machines, mainly computer-controlled large horizontal turning lathes. These machines can produce metal rings up, to six feet in diameter, to extremely precise specifications. These are used high-precision setting such as jet engines and landing gear.

About the Market

The machining industry is recovering strongly from a deep recession that ran from 1997 to 2003. During that time, the value of machine-tool consumption in the U.S. fell from nearly $5.6 billion to less than $2 billion, according to figures from the American Machine Tool Distributors' Association (AMTDA) and the Association for Manufacturing Technology (AMT). Since then, however, the industry has been on a robust upswing. While monthly consumption is highly volatile, annual average machine tool consumption has been steadily climbing for the past two years.

In May 2005, the AMTDA and AMT reported that machine tool sales for the month were just under $250 million, up 22.7% from May 2004. For the first five months of 2005, sales totaled $1.2 billion, up 17.9% from 2004.

This upturn is marked by rising demand, absorption of excess capacity and higher prices. New Century, which suffered severely along with other small machine-tool firms in the downturn, is now profiting from these trends and stands to profit considerably more. In its latest reporting quarter, ending March 31, 2005, it recorded a 46% rise in sales (to $1.43 million) from the first quarter of 2004. It also returned to profitability at $0.02 per fully diluted share, for a swing of $0.13 from an $0.11 per share loss a year earlier. (See Financials and Outlook below for more details).

Another key indicator - durable goods orders - confirms the industry growth trend and strongly suggests it is far from over. The latest figures, for June 2005, showed an unexpected rise of 1.4%, following a 6.4% rise in May (the largest increase in three years). Durable-goods orders, for items designed to last more than three years, are an important measure of business demand for capital goods, including machine tools. Orders for machinery rose 3.7%.

Longer-term data also suggest that the machine-tool recovery has legs. First, sales in the industry are still running at only about half the annual rate seen at the last cyclical peak, in 1997. Second, the machine-tool cycle tends to be long - historically about 20 years - reflecting the typical replacement interval for capital equipment of this type. If past patterns hold, New Century's core market is just starting an expansion that could last well past 2010.

The $600 Million-Plus Market for New Century Machines

All this good economic news suggests that New Century can grow, but how much? Plenty, to judge from the size of its market and its production capacity. The latter is adequate for several years of rising sales volume, thanks to a major expansion the Company completed 2002 to triple its production capacity. The timing of that capital investment was regrettable. It came just after the 9/11 terror attacks virtually shut down aircraft building, a key source of customers for New Century. But the Company now has a near-new plant with room not only to expand production in the core machine-tool business but to add a potentially lucrative new product line, Quilite(r) brand blocks used for freeway noise walls and many other sound-absorbing structures.

As for the market, the latest (2005) Capital Spending Survey from metalworking authority Gardner Publications puts total expected U.S. spending on metal-cutting machinery this year at $5.8 billion. Of that, $1.66 billion is expected to be spent on used and rebuilt machines, New Century's specialty. Gardner further divides the metal-cutting category into sectors by machine type, size and function, such as drilling, grinding, machining, sawing, turning, horizontal or vertical, etc. The sectors into which New Century sells its products make up 37% of the category. For used and rebuilt machines, this share comes to $621 million - about 100 times New Century's projected 2005 machine-tool sales. If New Century can capture just 2% of this market, it can expect to double sales from their current levels.

New Century's machine-tool space is competitive, with a number of companies operating globally from Japan, Europe and Canada as well as the U.S. In the past, the strong dollar has favored the overseas competitors (such as Toshiba and O.E. in Japan) by holding down the price of their goods for U.S. customers and reducing the built-in cost advantage of New Century's remanufactured machines. The weakening of the dollar over the past two years against the euro and the yen has given New Century products a wider price advantage. The positive impact of this currency trend has combined with the rising machine-tool demand in the U.S. to give New Century's outlook a double boost.

Quiet Boom in Progress

Machine tools make up only one element, though a crucial one, in New Century's growth strategy. Making use of its ample spare production capacity, the Company has entered into an agreement with Los Angeles-based Quilite International to manufacture that firm's lightweight, plastic sound-absorbing blocks. Quilite is already being used in a number of different noise-proofing applications, including freeway noise walls and sound barriers around other noise sources, from sports stadiums to transformers.

Quilite is a polycarbonate material that is much lighter than concrete, about five times faster to install in wall form, with superior sound blocking. It's also graffiti-resistant. New Century currently plans to sell about $4 million in Quilite blocks this year, bringing its overall revenue to approximately $10 million.

The overall market for Quilite is less well-defined than machine-tool markets, since much of its growth will depend on finding new uses for the material. The most developed market, freeway noise walls, is global in scope and has plenty of growth left in it. One forecast, published in August 2003 by Freedonia Group, said the demand for outdoor noise barriers in the U.S. alone would reach $160 million in 2007. Even if concrete remains the dominant material, lighter and less labor-intensive materials such as Quilite can be expected to play a larger role. Among other things, Quilite's weight advantage makes it a prime candidate for walls on overpasses and other structures where a concrete wall may be too heavy. And the U.S. market for outdoor noise barriers is only a fraction of potential worldwide demand. The same factors that create a need for noise reduction in the U.S. - expanding road, rail and air transportation, growth in power generation, urban crowding - apply through the industrialized and developing world.

Financials and Outlook

As noted above, New Century returned to profitability in its latest reporting quarter, ending March 31, 2005, on a sharp rise in sales. The turnaround in net and operating income (more than $600,000 in both cases) was due not only to higher sales but also to cost-cutting. Consulting expenses were down 73%, while selling, general and administrative expenses fell 48%.

The most significant hurdle now faced by the Company is its working capital deficit, totaling $2.87 million on March 31, 2005. This is a serious liquidity concern, but the Company is moving to raise capital, move inventory and further cut costs to raise adequate cash and produce a working capital surplus. On April 25, 2005, New Century announced that it had received a signed commitment for a $5 million long-term senior debt facility from a private investor group. Terms of the agreement include 15 years' interest-only with principal pay down thereafter and a minority stock ownership in the Company.

In another recent positive development, New Century said on April 27, 2005, that it had received $1.8 million in new business, raising its total orders in process to $4.85 million.

These steps together - outside financing and continued robust growth in demand - suggest that the Company will succeed before long in restoring its balance sheet to health. Assuming that it does, its sales outlook is very bright. It currently projects machine-tool sales of about $6 million this year (up from $5 million in 2004), with Quilite adding another $4 million. Sales of Quilite in 2004 -- under a manufacturing arrangement that did not include New Century -- were about $1 million last year. On a pro forma basis, with Quilite sales treated as if they were booked by New Century in both years, overall revenue is projected to rise 67% in 2005, to $10 million from $6 million. In 2006, the Company projects a doubling of sales to $20 million, split evenly between machine tools and Quilite.

About New Century Companies Inc.

New Century, under its brand name Century Turn, specializes in manufacturing, remanufacturing and retrofitting machine tools, primarily vertical boring mills and large lathes. By offering remanufactured vertical boring mills, the Company saves or conserves millions of dollars per year in energy costs by reutilizing the major castings of each mill. These savings, generally in the range of 40% to 60%, allow New Century to be the most price-competitive manufacturer of vertical boring mills in the U.S. These cost savings are passed on to New Century customers and afford them the opportunity to manufacture rotating turbine components for power generation at lower cost. New Century machines are also used by manufacturers of jet engine components, airplane landing gear parts and oil and gas components, to name a few. New Century currently manufactures its machines in state-of-the-art facilities in Santa Fe Springs, Calif. New Century maintains a website at www.newcenturyinc.com

Forward-looking statement: Except for historical information, this press release contains forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time to time in the Company's ongoing quarterly filings, annual information form, and annual reports. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.



            

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