WHITSETT, NC--(Marketwire - January 15, 2009) - nCoat, Inc. (
"2008 saw significant accomplishments in operations to stabilize and grow the fundamental financials of nCoat," stated nCoat CEO Paul Clayson. "The entire management team worked long and hard hours with great determination to improve the company, even with a difficult economic climate."
Revenue
During the nine-month period, ended September 30, 2008, revenue reported by the company increased 60 percent over the same period in 2007. The exceptional world-class quality of nCoat products, combined with the introduction of innovative, new nano-coatings, significant increases in production through-put, and clear focus by the sales and marketing team, continue to expand nCoat's market share, even in economically declining markets. nCoat has secured several new customers and increased revenue with existing customers by leveraging its expanded line of innovative coating products and services.
Management expects to complete the year with revenue of approximately $10 million, and believes it is possible to continue its significant year-over-year revenue growth in 2009.
Gross Profit
The gross profit margins on revenue increased dramatically from 24 percent in 2007 to an average of over 38 percent in the first nine months of 2008 -- a 59 percent improvement. This progress is due to the implementation of manufacturing efficiencies and a focus on lean manufacturing processes, which reduced labor costs and eliminated waste in the company's production facilities, while increasing production output.
Loss From Operations
For the nine-month period, ended September 30, 2008, loss from operations was approximately $1.8 million, or a loss per share of $0.02, compared to a loss of $5.9 million, or a loss per share of $0.07, in the comparable quarter in 2007. Operating burn was reduced 99 percent year-over-year.
Following the February 2007 acquisition of Metallic Ceramic Coatings, Inc. (MMCI), which does business as JET-HOT, nCoat acquired or opened 10 operating, mixing and blending, and administrative facilities nationwide. All equipment from closed facilities was consolidated into remaining nCoat plants and offices, and production continued with no delays or loss of customer accounts. During the twelve months from September 2007 through September 2008, nCoat closed production and mixing and blending facilities in Arizona, Utah, Mississippi, and Pennsylvania, and closed the JET-HOT administrative offices in Pennsylvania, resulting in a 60 percent reduction in total operating facilities and an increase in capacity utilization of remaining facilities. Reduction and consolidation activities resulted in reduced rent and insurance expenses, elimination of redundant management and administrative positions.
Consolidation of the company's Utah and Mississippi operations into the Arizona, Oklahoma and North Carolina facilities will be completed in the first quarter of 2009. Senior management will continue to consider additional cost reductions, operating efficiencies and automation to continue expanding margins and increasing profitability.
nCoat also was able to reduce R&D expenses and increase R&D output, by signing a research agreement with North Carolina A&T State University to use their facilities and expertise. The agreement assures that nCoat will remain a leader in the development of nano-materials, while reducing expenses.
EBITDA
EBITDA, earnings before interest, taxes, deprecation and amortization, is an excellent tool to measure the fundamentals of a fast growing company. During the year, nCoat dramatically improved its EBITDA by 76 percent. EBITDA for 2008 was ($1.4) million, compared to ($5.9) million for the comparable period in 2007. Operating EBITDA (EBITDA with financing activities removed) was positive for both the second and third quarters of 2008.
"Though nCoat is technically still a start-up, we have improved revenue from $3.2 million, reported in the first year of our acquisition, to over $10.5 million three years later. Since becoming public, we have focused on continued development of leading-edge technology and high volume customer relationships to enhance shareholder value. These activities will continue during 2009," said Clayson. "The acquisition of MCCI was completed in mid 2007, and the company is fully integrated into the nCoat family. The integration process allowed management to consolidate and reduce infrastructure and associated expenses, while restructuring the sales and marketing group to leverage all products throughout the customer base, as projected in the original business plan. We leveraged our new, larger corporate size to reduce contractual expenses, such as health insurance premiums and liability insurance, and to improve our purchasing power with vendors.
"We expect to continue to work our business plan in 2009. Strategically, management will execute a business plan focused on maintaining a positive operations EBITDA and continuing strong organic growth," continued Clayson. "This plan will include a new OEM production line and a new aftermarket production line. Depending on economic and capital market conditions, we will consider additional acquisitions to further expand our product line, market penetration and geographical reach outside the US.
"Senior management continues to work regularly with existing debenture holders on a plan to restructure existing debt and find solutions for the heavy accrual of financing penalties from delayed payment of interest. In addition, we are working to provide the necessary capital to finance expected growth. Our goals include significant improvement of our balance sheet and capitalization structure. Since our actual debt without penalties is $14.5 million, and all long-term debt is convertible into stock at a future date, we have the opportunity to fashion an agreement that improves company financials and secures greater shareholder value."
We invite you to participate in today's conference call at 11 a.m. Eastern (EST) for an in depth shareholder update, including the achievements outlined in today's news release. The toll-free dial-in number for U.S. callers is 1-800-762-8795 and the number for international callers is 1-480-248-5085. Please dial in to the conference five minutes before the call is scheduled to begin and ask the operator for the nCoat Inc. conference call. An audio replay of the conference call will be available from January 15, at 2:00 p.m. Eastern to January 29, at 11:59 p.m. Eastern, and can be accessed by dialing toll-free 1-800-406-7325 in the U.S., and 1-303-590-3030 from outside the U.S., and entering replay pin number 3930160.
About nCoat, Inc. (
nCoat, Inc. is an emerging nanotechnology company with new nano-formulated and traditional coatings that make it an international leader in the development and marketing of coatings applied to metal, ceramics, fabric, and other materials. The company specializes in nanotechnology research, commercialization, licensing, and distribution and, through its subsidiary companies, develops and distributes commercially viable, proprietary, nanotechnology and traditional coatings products, applied by its subsidiary companies, HPC and JET-HOT. At nCoat, we invite the world to "Innovate with us..."
Notice Regarding Forward-Looking Statements
Except for statements of historical fact, the information presented herein may contain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations and changes in consumer and business consumption habits and other factors over which nCoat, Inc. has little or no control. Additionally, words such as "may," "will," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in this release may identify forward-looking statements. We disclaim any obligation or intention to revise or update any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement.
Contact Information: Contact: Paul Clayson CEO nCoat, Inc. 336.447.2000