MotorVac Technologies Announces Estimates for 1999
23 November 1998
MotorVac Technologies Announces Estimates for 1999
SANTA ANA, Calif.--Nov. 20, 1998--MotorVac(R) Technologies Inc. has evaluated its business prospects for 1999.
Based on the response to the company's products at the recent Automotive Aftermarket Industry Week Show in Las Vegas and indications that there is market interest in the company's new products, MotorVac announced that it believes 1999 will show improved performance over 1998.
"We are guardedly optimistic that two of our new products will contribute to business growth in 1999," said Lee Melody, president and chief executive officer. "A significantly new and different transmission fluid machine will be available in early 1999; it features a fully-automated and computerized operating system, is easier to operate than the prior model, and, to our knowledge, none of the competitive products have these automated capabilities. We have applied for a patent for this product. Our Automotive Solutions division has recently introduced a low-cost machine that simplifies the process of cleaning an engine's air intake and combustion areas. We have also applied for a patent for this product," he continued.
Additional growth opportunities are hoped for from the company's Carbon Tune line of chemical products geared for the quick service industry. There is no assurance, however, that any of these products will realize significant sales levels.
In addition to these new product lines, the company expects growth in the diesel marketplace due to several factors, including the recent successful test of its diesel service system by Southwest Research Institute, which documents a 92% carbon removal on the test engine using the Cummins L-10 injector depositing test protocol. Based on this test result, the diesel system was rated "SUPERIOR," the highest rating under this test protocol. The company is not aware of any other diesel service system being rated "SUPERIOR."
In 1997, the company's largest customer accounted for 71% of sales. As communicated earlier, the company's loss of $0.12 per share for the nine months ended Sept. 30, 1998 was significantly attributable to a decline in machine purchases by this customer during the second and third quarters of 1998, together with the company's higher level of operating expenses which anticipated sales growth that did not materialize. Partially offsetting the decline has been an increase in detergent sales in 1998 over 1997; based on current market conditions and upon information available to the company at this time, the company estimates that 1998 detergent sales will increase approximately 30% over 1997. In addition, based on orders received to date from this customer, the company expects sales to this customer to be higher in the fourth quarter of 1998 than in each of the second and third quarters.
Regarding financial performance in 1999, the company is currently projecting that its total revenues will increase approximately 30% in 1999 as compared with 1998 revenues, which are expected to be approximately $10 million. In its 1999 budget, the company is budgeting that its income before tax margin will be approximately 10%, and that operating expenses, as a per cent of sales, will approximate 36%. The foregoing projections are estimates based on current market conditions and information available to the company at this time, but there is no assurance that any of these projected amounts will be realized. The company does not intend to update or correct these estimates if conditions or available information are to change.
MotorVac(R) Technologies designs, develops, assembles and markets unique technological solutions for the service and repair of automotive fluid systems. Product lines include specialty chemicals and shop equipment for servicing fuel systems and transmission systems. MotorVac(R)'s products are distributed to service shops, fleets and government agencies in more than 70 countries worldwide. For additional information, visit MotorVac(R)'s Web site at www.motorvac.com.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include the following statements: Projections that there will be market interest in the company's new products; projections that there will be growth in diesel system sales, detergent sales and/or sales to the company's major customer; and the projections of estimated 1999 revenue increases and of 1999 income before tax margin and operating expenses as a per cent of sales. The company intends that such forward-looking statements shall be protected by the safe harbor provided for in such sections. In particular, statements regarding future results are subject to the risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements.
The company may experience significant fluctuations in future operating results due to a number of economic, competitive, governmental and technological factors, including, among other things, changes in laws, the size and timing of customer orders, new or increased competition, unexpected increases in expenses, delays in acceptance of new products, product returns, seasonality in product purchases by distributors and end users, and pricing trends in the automotive after-market industry in general and in specific markets in which the company is active. Any of these factors, or others, could cause operating results to vary significantly from prior periods and those projected in the forward-looking statements. The making of these forward-looking statements shall not in any way obligate the company to update or correct the foregoing estimates or projections. Additional information with respect to these and other factors which could materially affect the company and its operations is included in the company's filings with the Securities and Exchange Commission, including its Annual Report or Form 10-KSB for the year ended Dec. 31, 1997 and any subsequent filings.