SOURCE: New Century Companies, Inc.

November 14, 2006 14:55 ET

New Century Cos. Revenues Rise 24% in 3rd Quarter

Machine-Tool Firm Cites Continued Strong Demand, Pricing Power

LOS ANGELES, CA -- (MARKET WIRE) -- November 14, 2006 -- New Century Companies, Inc. (OTCBB: NCNC), a leading manufacturer and re-manufacturer of machine tools, today reported financial results for the third quarter ended September 30, 2006. Here are highlights of the report:

--  Sales rise 24.4% year-over-year in third quarter, 41.2% in first nine
    months of 2006.
--  Machine-tool demand leads to increase in customer orders, higher
    contract prices.
--  Cost of sales impacts gross margins and net income, resulting in loss
    per share of ($0.01).
--  Nine-month sales in 2006 near total for all of 2005.
    

Revenues for the third quarter of 2006 totaled $1.996 million, up 24.4% from $1.605 million in the third quarter of 2005. The company attributed the increase to growth in customer orders, based on an increased market demand for machine tools and on the company's ability to sell its products at higher contract amounts.

For the first nine months of 2006, revenues totaled $5.994 million, up 41.2% from $4.245 million in the first nine months of 2005. The nine-month sales total for 2006 is just below the $6.038 million in sales reported for all 12 months of 2005.

Net loss for the third quarter of 2006 was ($125,375), or ($0.01) per fully diluted share, compared to net income of $335,016, or $0.04 per fully diluted share, in the third quarter of 2005. The loss was due primarily to lower gross margins and an increase in selling, general and administrative expenses. It also reflected higher expenses for interest and for liquidated damages of $420,000 on $3.5 million convertible debt as a penalty for failure to have a registration statement effective as required by the company's previous financing. These charges were offset by a decrease in the fair value of derivative liability.

For the first nine months of 2006, the net loss was ($745,487), or ($0.07) per fully diluted share, compared to net income of $211,774, or $0.03 per fully diluted share, in the same period a year earlier. As with third quarter 2006 results, the loss was due primarily to lower gross margins, higher SG&A expenses and a combination of higher interest and liquidated damages offset by lower derivative liability valuation.

Training Costs Cause Short-Term Margin Pinch

Gross profit in the third quarter of 2006 was $368,900, or 18% of revenues, compared to $596,216, or 37% of revenues, a year earlier. In the first nine months of 2006, gross profit was $1.579 million, or 26% or revenues, compared to $1.354 million, or 31% of revenues, in the first nine months of 2005. The drop in gross margin for the latest quarter reflected an increase in cost of sales primarily for higher material costs and direct labor expense. The company said the sharp rise in customer orders has made it necessary to expand its labor force and train a significant number of new hires, leading to a temporary drop in productivity.

"The third quarter of 2006 saw a continuation of the strong demand for computer-controlled machine tools that has driven New Century's growth for the past two years," said New Century CEO David Duquette. "As in the prior quarter, signs of slowing in certain sectors of the economy, such as housing, do not seem to have impacted the robust growth in the capital goods spending. As before, we are seeing a healthy stream of orders from companies that manufacture components for industries such as aerospace, energy and transportation."

To be added to New Century's investor e-mail lists, please contact Haris Tajyar at htajyar@irintl.com.

About New Century Cos.

New Century Companies, Inc. (OTCBB: NCNC) is one of the leading U.S.-based makers of machine tools, primarily vertical boring mills and large lathes such as vertical turning centers (VTCs). It specializes in re-manufacturing, starting with existing major castings and fitting them with state-of-the-art, computer-controlled equipment. These products generally cost 40% to 60% less to make than new ones. New Century passes these savings on to its customers, which include such leading manufacturers as General Electric Co., General Dynamics Corp., Siemens AG and Gardner Denver. New Century machines are used to manufacture jet-engine components, airplane landing gear parts, power generation equipment, oil and gas production components and construction materials, to name just a few applications. New Century's production facility is in Santa Fe Springs, Calif.

Visit New Century's Web site at http://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.

Contact Information

  • Contact:
    David Duquette
    CEO
    New Century Companies, Inc.
    562-906-8455

    Haris Tajyar
    Investor Relations International
    818-382-9700