LOS ANGELES, CA -- (Marketwire) -- 10/29/09 -- New Century Companies, Inc. (OTCBB: NCNC) provides open letter to shareholders.
On October 9, 2009, New Century Companies, Inc. (OTCBB: NCNC) completed a merger with Precision Aerostructures, Inc. This is a transformative business development for our Company, adding to New Century a world class contract manufacturer in the aerospace industry. Given the magnitude of this transaction, I thought it would be helpful to provide additional details on Precision and the strategic benefits of the merger.
First and foremost, this merger immediately scales our business to positive EBITDA and provides a strong growth catalyst for our business. From a top line perspective, combined pro forma revenues should exceed $7 million this year, a significant increase over the $4.8 million that New Century reported in 2008. This enhanced scale should enable us to generate positive combined pro forma adjusted EBITDA in 2009. More importantly, looking into 2010 Precision's robust backlog, coupled with the stabilization that we are now seeing in our machinery business, positions us to drive considerable revenue growth, margin improvement and strong net income which we expect to reach $0.12 per share.
Background of Precision Aerostructures
Precision supplies structural aircraft components and assemblies designed to perform reliably in harsh environmental conditions, including high and low temperatures, severe shock and vibration. The Company specializes in engineering and manufacturing precision Computer Numerically Controlled (CNC) machined multiaxis structural components for many of the major aircraft builders in the United States and internationally. They service customers in the defense, government systems, aerospace and commercial markets.
The company was founded in 2006 with a single large customer, Eclipse Aviation. Beginning in 2008, Precision began broadening its customer base by providing machining services to GE under the Orion P3 refurbishment program. The P3 is used to hunt submarines and there are approximately 450 still in service. Subsequently, Precision was awarded contracts with Spirit Aerospace (formerly Boeing subassemblies) as well as Boeing itself for small parts on the 747-8 and 787 engines.
Benefits of the Merger
This merger brings together two very complementary businesses and has numerous synergies, including:
Strong Backlog: The current five year backlog for Precision is approximately $27 million, including orders from GE, Boeing, L-3 Communications and Spirit Aerosystems. Furthermore, we are also encouraged by the initial order we recently received from Sikorsky Aircraft. As our shareholders know, New Century has historically been very exposed to the capital equipment cycle. This increased and longer-term backlog enables us to plan our business better.
Fortuitous Timing: While we are not economists, it is evident to us based on the discussions we are having with customers that the economy is improving and there is strengthening demand for for our products and services. This acquisition positions us favorably to benefit from an improving economy.
Diversified Sales Channels Serving Multiple Sectors: The combination permits the Company to offer multiple services to customers. New Century will continue to sell large customized CNC equipment, while providing Precision's turnkey engineering and milling services to similar customers.
High Replacement Knowledge a Barrier to Entry: Both organizations have a significant amount of institutional engineering and manufacturing knowledge that combined create a much more valuable company. This knowledge, along with the invested infrastructure, on a combined basis forms a much stronger company that can compete more effectively.
We are now completely focused on executing on the growth opportunity before us. Precision has considerable capacity for growth with its current facilities and equipment, and we anticipate that we can begin executing on the backlog with modest capital expenditure. Furthermore, Precision's facility is located in close proximity to New Century, enhancing our ability to realize synergies as we scale the combined business.
In closing, we believe this merger is highly accretive to all of our shareholders and positions us favorably in a new high growth market. On behalf of our Company and Board of Directors, I would like to welcome the Precision team to New Century and I look forward to updating investors on our progress.
David Duquette Chairman, Chief Executive Officer New Century Companies, Inc.
About New Century Companies, Inc.
New Century Companies, Inc. is a supplier of structural aircraft components and assemblies, as well as a leading re-manufacturer of machine tools. New Century, through its wholly owned subsidiary Precision Aerostructures, specializes in engineering and manufacturing precision details for the aerospace industry that perform reliably in harsh conditions, including high and low temperatures, severe shock and vibration. New Century also is a leading domestic manufacturer of machine tools, primarily vertical boring mills and large lathes such as Vertical Turning Centers (VTC). Precision serves major aircraft builders such as General Electric, Boeing L3 Communications and Eclipse Aerospace. The Company has production facilities in Rancho Cucamonga, CA and Santa Fe Springs, CA.
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.