EX-99 2 ex9902242005.htm ex9902242005

EXHIBIT 99.1

Rock of Ages

FOR IMMEDIATE RELEASE

Investor Contact:
Neil G Berkman
Berkman Associates
(310) 277-5162
info@BerkmanAssociates.com

Company Contact:
Kurt Swenson
Chairman & CEO
(603) 225-8397
www.RockofAges.com

 

Rock of Ages Reports Fourth Quarter and 2004 Results

 

     CONCORD, NEW HAMPSHIRE, February 24, 2005 . . . Rock of Ages Corporation (NASDAQ/NMS:ROAC) today announced financial results for the fourth quarter and 2004, provided an update on progress in the implementation of the company's new retail strategy, and announced a 25% increase in the quarterly cash dividend.
 

Fourth Quarter Results

    For the three months ended December 31, 2004, net revenue decreased to $22,942,000 from $25,592,000 for the fourth quarter of 2003. The net loss for the fourth quarter of 2004 was $77,000, or $0.01 per share, compared to net income of $4,064,000, or $0.56 per diluted share, for the fourth quarter of 2003. Results for the fourth quarter of 2004 included a $260,000 severance charge and approximately $500,000 in additional expenses for the previously announced change from commission to salary-based compensation in the Company's Retail division, and a charge of $400,000 for impairment of a note receivable.

2004 Results

    For the twelve months ended December 31, 2004, net revenue increased 2.6% to $86,594,000 from $84,417,000 for 2003. The net loss for 2004 was $3,221,000, or $0.44 per diluted share, which included a net loss from discontinued operations of $0.01 per share. This compares to net income for 2003 of $1,447,000, or $0.20 per diluted share, which included net income of $0.05 per diluted share from discontinued operations. Results for 2004 included the severance and additional compensation expenses mentioned above, as well as pre-tax settlement costs for the Eurimex litigation of $6,500,000 and the $400,000 charge for impairment of a note receivable. Results for 2003 included pre-tax Eurimex legal costs of $2,441,000.

    At December 31, 2004, cash and equivalents amounted to $4,298,000, and shareholders' equity was $60,186,000, or $8.14 per outstanding share.

Non-GAAP Financial Measures

    Management believes that the expenses associated with the Eurimex litigation and the impairment of a note receivable are unusual, and that income excluding those expenses provides a better measure of Rock of Ages' operating performance for the fourth quarter and 2004. Excluding these items, income for 2004 was $2,112,000, or $0.28 per diluted share. For 2003, income excluding the Eurimex expenses was $3,341,000, or $0.46 per diluted share. The following table reconciles net income (loss) to income excluding the expenses associated with the Eurimex lawsuit:

   

Three Months Ended

  

Year Ended
   

December 31,

  

December 31,
   
 

($ In Thousands Except per Share Amounts)

  

2004

 

  

2003

 

2004

 

  

2003

 

  

 

  

 

 

  

Net income (loss)

 $

(77

)

 $

4,064

$

(3,221

)

 $

1,447

Impairment of note receivable, net of taxes

  

289

 

  

—

 

289

 

  

—

Eurimex expenses, net of taxes

  

—

 

  

—

 

5,044

 

  

1,894

 

  

 

  

 

 

  

Income excluding above charges

 $

212

 

 $

4,064

$

2,112

 

 $

3,341

 

  

 

 

  

 

 

 

 

  

 

Per Share - Diluted

  

 

 

  

 

 

 

 

  

 

  Net income (loss)

 $

(0.01

)

 $

0.56

$

(0.44

)

 $

0.20

  Eurimex and note impairment charges, net of taxes

  

0.04

 

  

—

 

0.72

 

  

0.26

 

  

 

  

 

 

  

  Net income excluding above charges

 $

0.03

 

 $

0.56

$

0.28

 

 $

0.46

Operations Review

     "Revenue in our Quarrying division increased to $29,927,000 for 2004 from $28,381,000 for 2003, and operating income rose 9.3% to a record $8,771,000. Manufacturing division revenue also increased, to $20,865,000 for 2004 from $20,373,000 for 2003, although operating income declined as we increased staffing to support the growth we expect in this division going forward. Operating income in the Manufacturing division also was adversely affected by the fact that more than $600,000 of fully completed private mausoleums we expected to ship during the quarter could

 

 

(more)

Rock of Ages Reports Fourth Quarter and 2004 Results
February 24, 2005
Page Two

not be shipped because of third-party delays in the installation of necessary foundations. We expect to ship these mausoleums this year. Demand for our granites and memorials remains strong, so we are optimistic about the outlook for our quarrying and manufacturing operations in 2005," said Chairman and CEO Kurt Swenson.

    "As we have previously discussed, the primary focus in our Retail division is to implement systems and procedures that will position the business for sustained growth in sales and improved operating margin in the years ahead. Our retail operations have been energized under the leadership of Rick Wrabel, President of our Memorials division, which includes our retail and manufacturing segments. Since joining Rock of Ages last May, Rick has developed an aggressive implementation schedule to enhance our marketing efforts, improve and simplify our branding program, and expand our retail distribution network beyond our traditional retail store-front model to include funeral homes and cemeteries selling our memorials directly or referring their customers to our local outlets. He also has assembled the management team required to implement this objective successfully.

   "We already have entered into agreements with 102 funeral homes and cemeteries since the retail program was rolled out in October 2004, which, based on our estimates, should project to approximately $2 million in additional revenue annually. In addition, we have opened an owned retail memorial sales office on the grounds of the Crown Hill Cemetery in Indianapolis, Indiana at their request. We expect this approach will be of interest to a number of the larger cemeteries around the country that wish to offer their customers the option of purchasing Rock of Ages-branded memorials sold by our professional memorial sales counselors.

    "Our new retail compensation plan is a crucial element of our strategy. By providing appropriate monetary incentives for our sales staff to expand distribution through partners in their regions, the new compensation system will play an important role in our program to expand our distribution capabilities. We plan to support our growing distribution capability with a new print program that will be launched in the second half of this year. We expect to see the benefits of this greatly improved execution by our Retail division beginning in 2005," Swenson said.

Cash Dividend Increased

    The Company also announced that its Board of Directors has declared a 25% increase in the quarterly cash dividend, to $0.025 per share. The new, higher dividend will be payable on March 15, 2005 to shareholders of record on February 21, 2005.

Management Succession

    Jon Gregory, 56, President of the Quarry division, has advised the Company that he will be retiring as of March 31, 2006 for health reasons. The Company designated Chief Financial Officer Douglas Goldsmith, 35, to assume Mr. Gregory's responsibilities as President and Chief Operating Officer of its quarry operations on December 31, 2005. Rock of Ages has retained Spencer Stuart to assist in the search for a new Chief Financial Officer. Further details will be announced when the new CFO is hired.

Conference Call

    Rock of Ages has scheduled a conference call at 11:00 a.m. ET. A live Webcast may be accessed from the Audio Presentations link at www.RockofAges.com/investor. A replay will be available at these same Internet addresses, or at (800) 633-8284, reservation #21231468.

About Rock of Ages

    Rock of Ages (www.RockofAges.com) is the largest integrated granite quarrier, manufacturer and retailer of finished granite memorials and granite blocks for memorial use in North America.

Forward-Looking Statements

This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about our business or expected events based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual events, results or outcomes may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: our ability to successfully execute our strategy to expand our business through acquisitions, opening new stores, maintaining our relationships with independent retailers, and forming and maintaining relationships with other death care professionals; changes in demand for the Company's product; product mix; the timing of customer orders and deliveries; the impact of competitive products and pricing; the success of the Company's branding programs; the excess or shortage of production capacity, difficulties encountered in the integration of acquired businesses; weather conditions; and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports including, but not limited to, the risks discussed in the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 2004. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

(tables attached)

ROCK OF AGES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts) (Unaudited)


   

Three Months Ended

  

Year Ended

  

December 31,

December 31,
   
 
 

 

  

2004

  

 

2003

 

2004

  

 

2003

  

 

  
 

 

 
 

 
 
Net revenue                      

  Quarrying

 $

7,889

$

9,656

$

29,927

$

28,381

  Manufacturing

  

4,982

  

 

5,394

 

20,865

  

 

20,373

  

  Retailing

  

10,071

  

 

10,542

 

35,802

  

 

35,663

  

 

  
 

 

 
 

 
 

      Total net revenue

  

22,942

  

 

25,592

 

86,594

  

 

84,417

  

 

  

 

  

 

 

 

 

  

 

 

  

Gross profit:

  

 

  

 

 

 

 

  

 

 

  

  Quarrying

  

3,415

  

 

5,157

 

12,327

  

 

11,178

  

  Manufacturing

  

1,137

  

 

1,568

 

5,572

  

 

5,774

  

  Retailing

  

5,770

  

 

6,247

 

20,354

  

 

20,388

  

 

  
 

 

 
 

 
 

     Total gross profit

  

10,322

  

 

12,972

 

38,253

  

 

37,340

  

 

  

 

  

 

 

 

 

  

 

 

  

Selling, general and administrative expenses

  

 

  

 

 

 

 

  

 

 

  

  Quarrying

  

985

  

 

891 

 

3,556

  

 

3,155

  

  Manufacturing

  

1,290

  

 

1,027

 

4,002

  

 

3,674

  

  Retailing

  

6,368

  

 

5,503

 

21,828

  

 

21,100

  

 

  
 

 

 
 

 
 

      Total SG&A expenses

  

8,643

  

 

7,421

 

29,386

  

 

27,929

  

 

  

 

  

 

 

 

 

  

 

 

  

Divisional operating income (loss)

  

 

  

 

 

 

 

  

 

 

  

  Quarrying

  

2,430

  

 

4,266

 

8,771

  

 

8,023

  

  Manufacturing

  

(153

 )

 

541

 

1,570

  

 

2,100

  

  Retailing

  

(598

 )

 

744

 

(1,474

 )

 

(712

 )

 

  
 

 

 
 

 
 

     Divisional operating income

  

1,679

  

 

5,551

 

8,867

  

 

9,411

  

 

  

 

  

 

 

 

 

  

 

 

  

Unallocated corporate overhead

  

1,129

  

 

998

 

5,087

  

 

4,692

  

Impairment of Note Receivable

  

400

  

 

—

 

400

  

 

—

  

Legal settlement and costs

  

—

  

 

—

 

6,500

  

 

2,441

  

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

Income (loss) from continuing operations before interest and income taxes

  

150

  

 

4,553

 

(3,120

 )

 

2,278

  

 

  

 

  

 

 

 

 

  

 

 

  

Foreign exchange (gain) loss

  

36

  

 

77

 

68

  

 

120

  

 

  

 

  

 

 

 

 

  

 

 

  

Interest expense

367

150

822

471

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

Income (loss) from continuing operations before taxes

  

(253

 )

 

4,326

 

(4,010

 )

 

1,687

  

 

  

 

  

 

 

 

 

  

 

 

  

Income tax expense (benefit)

  

(179

 )

 

739

 

(854

 )

 

578

  

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

Income (loss) from continuing operations 

  

(74

 )

 

3,587

 

(3,156

 )

 

1,109

  

 

  

 

  

 

 

 

 

  

 

 

  

Discontinued operations, net of income taxes

  

(3

 )

 

477

 

(65

 )

 

338

  

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

Net Income (loss)

 $

(77

 ) $

4,064

$

(3,221

 ) $

1,447

  

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

     Per share information:

  

 

  

 

 

 

 

  

 

 

  

Net Income (loss) per share — basic

  

 

  

 

 

 

 

  

 

 

  

Income (loss) from continuing operations

 $

(0.01

 ) $

0.50

$

(0.43

 ) $

0.15

  

Discontinued operations

  

0.00

  

 

0.07

 

(0.01

 )

 

0.05

  

 

  
 

 

 
 

 
 

    Net Income (loss) per share ‑ basic

 $

(0.01

 )

$

0.57

$

(0.44

 )

$

0.20

  

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

Net Income (loss) per share ‑diluted

  

 

  

 

 

 

 

  

 

 

  

Income (loss) from continuing operations 

 $

(0.01

 ) $

0.50

$

(0.43

 )

$

0.15

  

Discontinued operations

  

0.00

  

 

0.06

 

(0.01

 )

 

0.05

  

 

  
 

 

 
 

 
 

     Net Income (loss) per share — diluted

 $

(0.01

 ) $

0.56

$

(0.44

 )

$

0.20

 

  
 

 

 
 

 
 

 

  

 

  

 

 

 

 

  

 

 

  

Weighted average number of common shares outstanding:

  

 

  

 

 

 

 

  

 

 

  

Basic

  

7,395

  

 

7,188

 

7,318

  

 

7,182

  

 

  

 

  

 

 

 

 

  

 

 

  

Diluted

  

7,395

  

 

7,210

 

7,318

  

 

7,219

  
 

ROCK OF AGES CORPORATION
COMPARATIVE BALANCE SHEET
(US $ IN THOUSANDS) (Unaudited)


   

December 31,

  

 

  

2004

  

 

2003

  
   
   
 

ASSETS

  

 

  

 

 

  

CURRENT ASSETS

  

 

  

 

 

  

  Cash & Cash Equivalents

 $

4,298

   $

3,227

  

  Trade Receivables, net

  

15,017

  

 

15,587

  

  Inventories

  

23,858

  

 

21,152

  

  Other Current Assets

  

5,501

  

 

10,261

  

  Assets of Discontinued Operations ‑ Held for sale

  

—

  

 

817

  
   
   
 

     TOTAL CURRENT ASSETS

  

48,674

  

 

51,044

  

 

  

 

  

 

 

  

OTHER ASSETS

  

 

  

 

 

  

  C.S.V. Life Insurance

  

743

  

 

728

  

  Goodwill

  

163

  

 

—

  

  Other Intangibles

  

388

  

 

438

  

  Deferred Tax Assets ‑ Long Term

  

6,740

  

 

5,236

  

  Intangible Pension Asset

  

739

  

 

904

  

  Long—term Investments

  

4,112

  

 

501

  

  Other

  

888

  

 

1,115

  
   
   
 

     TOTAL OTHER ASSETS

  

13,773

  

 

8,922

  

 

  

 

  

 

 

  

FIXED ASSETS

  

 

  

 

 

  

  Property and Equipment

  

76,289

  

 

69,657

  

  Less Accumulated Depreciation

  

30,159

  

 

27,162

  
   
   
 

     NET FIXED ASSETS

  

46,130

  

 

42,495

  
   
   
 

          TOTAL ASSETS

 $;

108,577

   $

102,461

  
   
   
 

 

  

 

  

 

 

  

LIABILITIES AND EQUITY

  

 

  

 

 

  

CURRENT LIABILITIES

  

 

  

 

 

  

  Borrowings under Line of Credit

 $

7,287

   $

4,751

  

  Current Portion LTD

  

36

  

 

38

  

  Current Installments of Deferred Compensation

  

372

  

 

327

  

  Accounts Payable

  

2,433

  

 

1,651

  

  Accrued Expenses

  

4,234

  

 

4,312

  

  Customer Deposits

  

8,173

  

 

7,104

  

  Liabilities of Discontinued Operations 

  

—

  

 

17

  
   
   
 

     TOTAL CURRENT LIABILITIES

  

22,535

  

 

18,200

  

 

  

 

  

 

 

  

  Long—Term Debt, Excluding Current Portion

  

16,289

  

 

12,794

  

  Deferred Compensation

  

6,620

  

 

5,999

  

  Accrued Pension Cost

  

1,993

  

 

1,491

  

  Deferred Tax Liability

  

30

  

 

107

  

  Other Liabilities

  

924

  

 

901

  
   
   
 

     TOTAL LIABILITIES

  

48,391

  

 

39,492

  

 

  

 

  

 

 

  

STOCKHOLDERS' EQUITY

  

 

  

 

 

  

  Common Stock

  

74

  

 

72

  

  Additional Paid In Capital

  

66,267

  

 

65,878

  

  Accumulated Deficit

  

(5,288

 )

 

(2,067

 )

  Other Comprehensive Loss

  

(867

 )

 

(914

 )
   
   
 

     TOTAL EQUITY

  

60,186

  

 

62,969

  
   
   
 

          TOTAL LIABILITIES & EQUITY

 $

108,577

   $

102,461