LOS ANGELES, Aug. 23, 2005 (PRIMEZONE) -- New Century Companies, Inc., (OTCBB:NCNC) a leading remanufacturer of vertical boring mills and large lathes, today announced that revenues for the first half of 2005 increased three percent to $2.63 million from $2.56 million in the first half of 2004. Gross profit for the first half increased by over 2,850 percent to $758,187 from $26,517. Net operating income for the first half increased to approximately $102,000 from a loss of approximately ($710,000) in the first half of 2004.
"The increase in revenues and return to profitability in the first half of 2005 is a direct reflection of the company's aggressive turnaround plan, which is beginning to gain momentum as we head into the second half of 2005," said David Duquette, president and chief executive officer of New Century. "We are particularly pleased to have earned $83,434 in net income from continuing operations of our manufacturing business during the second quarter, given that the summer is typically our slowest period for order bookings. Based on increased activity from our sales force, we are expecting a series of significant orders to follow shortly, which will ensure we maintain, and possibly expand on, our profitability going forward," said Mr. Duquette.
The company noted that its second-quarter net income was negatively impacted by approximately $297,000 in interest, dividend and stock compensation-related expenses. The company believes that most of these expenses are non-recurring and excluding these items, it will be able to grow its earnings on accelerated basis in the quarters ahead. This outlook is based on increasing demand for the company's products, the current backlog of orders at hand, expectations for favorable financing terms that will be used to eliminate some or all of its long-term debt, thereby removing future interest expenses and for general working capital to be able to meet its growing backlog of business.
Backlog of Business Reaches Millions for Third Quarter; Company Discusses Potential Capital Needs
New Century noted that the lack of foreign competition, improved market conditions and a series of new marketing efforts have helped the company reach a significant backlog of business that has already exceeded millions of dollars in new orders for the third quarter alone. The company also noted that, although it is in near-final negotiations with a number of debt and/or equity lenders to ensure that it has the necessary working capital to be able to deliver on this backlog, its need for additional capital is still uncertain, considering it might be able to internally finance its growth based on its return to profitability.
Bright Outlook Ahead
"Our return to profitability in the first half of 2005 and backlog of millions of dollars in new business for the third quarter alone, together with our recent announcement that we will be assembling Quilite(r) blocks, which alone should add an additional $0.05 per share in net earnings during 2005 for the company, provides us with a new platform from which to grow as we look ahead. These initiatives, together with a number of additional positive developments, should they transpire, should provide us with the necessary building blocks to return our business to its historical growth levels, and possibly to levels it has never experienced since our inception nearly 25 years ago," concluded Mr. Duquette.
The company last week announced that it will be manufacturing lightweight, sound-absorbing modules for transportation and other uses under the Quilite brand. As previously announced, Quilite expects to generate a minimum of $10 million in revenue in 2006, with gross margins of about 30 percent. To learn more about Quilite and its functionalities please visit the company's Web site at www.quilite.com.
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 40 percent to 60 percent range, 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 Web site 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, ability to maintain profitability, ability to fulfill its existing backlog of orders, need for additional working capital, 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.