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nCoat, Inc. (OTCBB: NCOA) ("nCoat" or the "Company") announced today it has completed the consolidation of the production plant of its subsidiary, High Performance Coating, Inc. (HPC) located in Chandler, Arizona, into the larger and more automated facility of sister company, JET-HOT located in Tempe, Arizona. The new joint facility increased production capacity for both operating companies, resulting in higher volume throughput and reduction in direct labor and product costs.
"Part of our acquisition strategy is to realize cost consolidations in all operating areas, particularly production and administration, and offer 'best of breed' technology and services from all operating entities," said Paul Clayson, Chairman and CEO of nCoat. "The target is to increase the capacity utilization of each plant to leverage the fixed costs. This plant consolidation is a prime example of our plan in action."
"Exhibit A of the synergies that can be realized in a consolidation can be shown through our pre and post consolidation analysis of plant revenue per labor hour numbers," said Terry Holmes, President and COO of nCoat. "Before the consolidation, the two Arizona plants typically ranged plus or minus $62.00 per labor hour. Since the consolidation the plant has been generating $82.00 per labor hour, those numbers directly affect our gross profit."
nCoat has estimated that the annual cost savings for direct costs will be in excess of $220,000 by combining or eliminating leases payments, plant management, direct labor forces, utilities, plant liability insurance, municipal disposal costs, building maintenance and facility expenses. In addition, there are many indirect costs which substantially increase the total expense reductions realized beyond direct expenses. Typical indirect cost savings and synergies include:
-- Consolidated marketing efforts;
-- Consolidated sales with broader and better product offerings;
-- Larger market presence with a bigger entity in a key market;
-- Reduced senior management oversight;
-- Smaller accounting structure;
-- Higher volume output in equal time;
-- Streamlined single processes; and procedures rather than operating
-- Reduced competition with less competitive price pressure;
-- Customer consolidation;
-- Cross selling joint products to the total customer base.
Consolidation of HPC equipment into the JET-HOT facility immediately created availability of HPC's lubritic (anti-abrasion/anti-friction) coatings to JET-HOT customers. Conversely, the HPC facility handled only aftermarket applications. The consolidation to the larger, more automated JET-HOT facility allows HPC OEM customers in closer proximity to Arizona to cut shipping cost by using the JET-HOT facility.
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.
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. At nCoat, we invite the world to "Innovate with us..."
About HPC, Inc.
High Performance Coatings, Inc. has been an integral part of the automotive motor sports industry since 1982. The company has coated parts for multiple Motorsport Hall of Fame inductees and land and air speed world record holders. This rich racing heritage has led HPC to be nicknamed "The Choice of World Champions." HPC develops, manufactures, and applies coating (surface treatment) solutions for thermal management, anti-corrosion, friction reduction, bond strength, and appearance. HPC is a particular market leader in internal and external engine parts coatings in automotive and diesel engines. "At HPC, there IS a difference... and the difference is superior performance." HPC is a wholly owned subsidiary of nCoat, Inc.
JET-HOT® Coatings offers thermal barrier, lubritic and corrosion resistance coating applied on autos and bikes -- from street rods and dragsters to classics and exotics -- snowmobiles and over-the-road trucks. JET-HOT® is a market leader in header coatings applications producing low emissivity and ceramic insulating characteristics which create thermal barriers on both the interior and exterior surface of headers. Founded in 1981, JET-HOT®'s products and customers include military applications on jet-fighter engines and submarine parts subjected to high temperatures, cyclical stress loads and corrosive environments and automotive products for performance racing and consumer applications. Racing teams use the coatings for safety factors by reducing header-surface temperatures, quick cool down and horsepower enhancements.
ON BEHALF OF THE BOARD
Paul S. Clayson, Chief Executive Officer
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