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My thoughts on Commerce Planet's
(OTC BB: CPNE) Q2 numbers are published in today's BLOG. I believe
I have identified the true reason the market hates this company now, and
discuss it at length. Unless this company starts embracing the markets
and the flow of information, I believe it is doomed to trade at this lousy
valuation or lower for some time. Read the BLOG for my thoughts.
The BLOG is your opportunity
to ask questions and offer comments. I will make an effort to answer every
legitimate question. If I don't know the answer, I will contact the management
and get the answer. Alternatively, if you have questions you don't want
publicly displayed, you can always email me directly at editor@otcjournal.com.
To use the BLOG, simply go
to the home page at www.otcjournal.com
- the BLOG scrolls down from the upper right hand corner. The most
current journal entries appear on the right hand side of you screen. Check
back frequently for updates particularly when stocks are moving to overbought
or oversold levels in volatile markets.
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New Century
(OTC BB: NCNC): Substantial Growth In the Numbers |
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New Century is going to climb
out along with the already hugely successful Boeing 787. Oops, there isn't
one in the air yet, yet customers have already ordered somewhere in the
neighborhood of 600 airplanes at about a cool $1/4 billion per plane. The
final FAA certification flight is scheduled for September. Tom Brokaw introduced
the first one off the assembly line. This is going to be a monster win
for Boeing.
So, just to refresh your memory-
how is NCNC in the middle of all this? They are in a joint venture
to manufacture one of the critical components to get this thing airborne.
There are a number of 12 ft rings
that go into the engine turbine, and those rings have to be machined to
1/10,000th of an inch. NCNC makes the machines that make things
round, and will be making the rings for this engine.
Orders for parts for the 787 Dreamliner
are expected to begin to flow in the Fall. In the meantime, you are probably
going to read about big order flow for the round components that make wind
turbines.
The demand for wind turbines is skyrocketing.
David Duquette, CEO of NCNC believes that by the end of the year,
GE will be manufacturing 50 new wind turbines daily. NCNC is expecting
big order flow in the immediate future for machines to make the components
for wind turbines.
New Century delivered its
Q2 financial results today, and the company is continuing to deliver great
growth and strong positive cash flow. However, they do have one of the
weirdest balance sheets I have ever seen.
Here's the short version. Q2 revs
came in at $2.6 million, up 13% from the same quarter one
year ago. Orders are up 60% from last year at the six month
mark- coming in at $5.3 million for the first half of '07.
The top line was down a bit from last quarter, which was very strong.
The profit picture is very weird
on this company thanks to some of the most Draconian accounting for convertible
debt I have ever seen. I'm not sure I completely understand it myself,
but the conversion feature of their debt has the accounting firm treating
their debt as if they paid about $750,000 in interest in the last quarter,
which is very far from what really happens.
I'm going to condense if for you
in a form we can all understand. NCNC carries about $2 million
in long term debt, down from $3.5 million two years ago. They make
their interest and principal payments in cash- there has never been a conversion.
They pay 12% interest on their debt. The bottom line- NCNC has made
about $1.2 million in cash this year off operations, which
translates to a whopping $.09 per share. Remember- there are only
13.5
million shares I&O on this company. The number is not going up
dramatically. Here's the chart:
NCNC has come down on very
light volume from a high of nearly $.90 since I introduced the company
in June at $.70. My ssl is $.45, so we're still in the clear.
In fact, I believe the stock is perfectly positioned for accumulation right
now.
Consider the following- do you know
what Warren Buffet was buying a year ago? He was buying railroads because
the Old Economy companies are just kicking butt right now, and they need
to ship their goods around.
Do you know what he's buying today?
He's buying the companies that make infrastructure components for railroads-
i.e. engine and parts manufacturers, and steel rail fabricators.
This company is going to have great
numbers on a go forward basis, and business will accelerate. In the interim,
the company will probably deliver at least $11 million in revs this year,
and generate $2.5 million in positive cash flow. This- against a backdrop
of a $6 million market cap. A real value in my book at the microcap level.
Moreover, the stock is camped on
a perfect 61.8% retracement level off the big move it made in the first
half of '07. Accumulate during the summer low during this climate of fear,
indifference, and vacations.
Here is the complete text of today's
news for your review:
| Press Release Source:
New Century Companies, Inc.
New Century Companies,
Inc. Announces Second Quarter 2007 Financial Results and Provides 2007
Financial Guidance
Wednesday August 15,
8:00 am ET
Six Month Revenues Increased 45%
to Approximately $5.8 Million; Gross Profit for the First Six Months Increased
58% to $1.9 Million; 2007 Year End Revenues Expected to Exceed $11.6 Million,
up 40%
SANTA FE SPRINGS, CA--(MARKET
WIRE)--Aug 15, 2007 -- New Century Companies, Inc. (OTC BB:NCNC.OB - News),
a leading manufacturer and re-manufacturer of machine tools, today announced
financial results for the second quarter ending June 30, 2007.
Second Quarter 2007 Financial
Results
New Century posted revenue
of approximately $2.6 million for the quarter ended June 30, 2007, an increase
of 13% compared to the approximately $2.3 million for the comparable period
of 2006. New Century ended the quarter with approximately $5.3 million
of new orders year-to-date, an increase of 60% over orders booked for the
same period in 2006. The number of orders in work process remains strong,
a trend management believes will continue throughout the year. Traditionally,
the second half of the year has generally been the higher revenue producing
quarters for New Century, and this year should be no exception. There is
a seasonal slow down during the summer months, which transitions to a ramp
up as the year closes out. The current increase in backlog and work order
flow should lessen the seasonality in quarterly revenues in the future.
Gross profit for the
quarter was approximately $711,002, or 27% of revenues, compared to $806,721,
or 35% of revenues for the same period the prior year. Operating income
for the quarter was approximately $192,616 compared to operating income
of $360,379 for the same period in the prior year. The decrease in gross
profit is due to the change in product mix for the types of machines in
process during the quarter, while the decrease in operating income can
be attributed to an increase in consulting related expenses and salary
increases. The Company believes that the best measure for gross profit
should be evaluated on a yearly basis due to the changes in product mix
and their accompanying margins on a quarterly basis.
New Century posted a
Net loss for the quarter ended June 30, 2007 of approximately ($497,578)
or ($0.04) loss per basic share, compared to net income of approximately
$304,393 or $0.02 per diluted share for the same period last year. The
second quarter of 2007 had approximately $860,000 in non-cash related expenses
related to consulting fees and interest expenses compared to approximately
$700,000 of similar expenses for the same period in 2006. The Company believes
that approximately $350,000 of these expenses will not be replicated during
the third quarter of 2007.
Shareholders Equity for
the Company improved to $1.54 million or an increase of $1.2 million compared
with approximately $335,000 for the same period for the prior year.
Six Months Financial
Results 2007
The Company posted revenues
of approximately $5.79 million for the six month period ended June 30,
2007, an increase of 45% compared to the approximately $3.99 million for
the same six month period of 2006. The increase is the result of higher
sales volumes coupled with higher margins and selling prices of New Century
machines as market conditions continue to improve.
Gross profit for the
six months was approximately $1.9 million, or 33% of revenues, compared
to $1.2 million, or 30% of revenues for the same period the prior year.
Operating income for the six months was approximately $658,582 compared
to operating income of $308,589 for the same period in the prior year.
The increase in operating income is due to the increase in revenues and
gross margins.
New Century posted a
Net loss for the six months ended June 30, 2007 of approximately ($508,541)
or ($0.04) loss per basic share, compared to a net loss of approximately
($620,112) or ($0.06) per diluted share for the same period last year.
The first six months of 2007 had approximately $1.6 million in non-cash
related expenses related to consulting fees and interest expenses compared
to approximately $1 million of similar expenses for the same period in
2006.
2007 Year End Financial
Guidance
The company expects to
realize yearend 2007 revenues of approximately $11.6 million, a 40% increase
when compared to year end 2006 revenues of approximately $8.3 million.
The Company expects the newly formed joint venture with WK Machine to contribute
additional revenues by year end 2007. The first machine tool is expected
to be delivered by September 1, at which time the JV can begin booking
orders and manufacturing jet engine parts per the previously announced
agreement.
David Duquette, President
and CEO of New Century, commented, "The first half of 2007 has been exciting
and rewarding for our entire team. Currently, we are operating at 70% capacity
with our strong backlog reaching record levels. We continue to see a generous
increase in bookings across all sectors of the industries we service. While
we are pleased with our financial results we will continue to increase
profit margins as we implement pricing increases for our high end products.
The demand for CNC products in the market continues to strengthen, while
inventory remains tight. This presents New Century with the opportunity
to further capitalize on our ability to timely deliver our products with
optimum gross margins to benefit the customers and New Century."
If you are interested
in being added to New Century's investor e-mail lists, please contact Mark
McPartland of Alliance Advisors at (910) 221-1827 or via email at markmcp@allianceadvisors.net
About New Century Co.
New Century Companies,
Inc. 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,
CA.
Visit New Century's Web
site at www.newcenturyinc.com.
Safe Harbor
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:
Contact for Investors:
Mark McPartland
Alliance Advisors, LLC
Markmcp@allianceadvisors.net
(910) 221-1827
Source: New Century Companies,
Inc. |
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