EX-99 2 ex99103106.htm ex99103106

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 2006 Third Quarter Results

 

Retail Operating Profit Improved to $226,000 Versus A Loss of $2.1 Million
Same-Store Sales Increased 11%
Pre-tax Income Increased to $41,000 Versus A Loss of $1.6 Million
Net Loss Decreased to $0.01 Per Share Compared to Net Loss of $0.23 Per Share

  

    CONCORD, NEW HAMPSHIRE, October 31, 2006 . . . Rock of Ages Corporation (NASDAQ:ROAC) today announced financial results for the third quarter and first nine months of 2006.

    "The restructuring of our retail business and our successful efforts to reduce costs throughout our organization are beginning to deliver the improved bottom-line performance we anticipated," said Chairman and CEO Kurt Swenson. "On a same-store basis, retail sales in this year's third quarter increased 11% from the third quarter of 2005. At the same time, retail SG&A expenses in this year's third quarter declined by more than $2,500,000 (or 38%) from the third quarter of 2005. Although overall retail revenue for this year's third quarter declined compared to the third quarter of 2005 (due to the loss of revenue from twelve unprofitable stores that we closed or sold in late 2005 and early 2006), retail operating income improved to $226,000 versus a loss of $2,134,000 last year. We expect our retail business to about break even on an operating basis in seasonally weaker fourth quarter, which would compare to an operating loss of $550,000 for the fourth quarter of 2005."

    Swenson continued, "Operating income in manufacturing for this year's third quarter was down from the third quarter of 2005, due solely to the timing of shipment of certain large mausoleum orders. Because several of these orders are scheduled to ship before year-end, we expect fourth quarter operating income in manufacturing to exceed this year's third quarter result.

    "In the quarries, demand for our granites remains strong. However, quarry revenue and operating income for this year's third quarter were adversely affected by low yields at our Bethel and Gardenia quarries as compared to the third quarter of 2005. We can sell every export grade block we quarry in Bethel and Gardenia, so the outlook for the fourth quarter is highly dependent on the progress we make in working through these low-yield areas. We are optimistic that quarry operating income in the fourth quarter will improve compared to the depressed third quarter pace."

    "Overall, we currently expect net income for the fourth quarter of 2006 to exceed net income reported for the fourth quarter of 2005," Swenson said.

    Swenson added that the Company expects to report a gain in the fourth quarter of 2006 of approximately $0.08 per diluted share on the closing of the previously announced sale of the Kershaw quarries.
 

Third Quarter Results

    For the three months ended September 30, 2006, revenue declined 14% to $20,564,000 from $23,796,000 for the third quarter of 2005.

    SG&A expense declined 34% to $5,801,000 for the third quarter of 2006. This compares to SG&A expense of $8,852,000 for the third quarter of 2005.

    Divisional operating income increased nearly seven-fold to $1,873,000 for the third quarter of 2006 compared to $270,000 for the same period last year.

    Unallocated corporate overhead declined to $1,167,000 for the third quarter of 2006 versus $1,358,000 for the same period last year.

    Pre-tax income from continuing operations for this year's third quarter was $41,000. This compares to a loss of $1,616,000 for the third quarter of 2005.

 

(more)


 Rock of Ages Reports 2006 Third Quarter Results
October 31, 2006
Page Two

    The net loss for the third quarter of 2006 was $111,000, or $0.01 per share, including income tax expense of $206,000 as a result of profits in the Company's Canadian operations. This compares to a net loss for the third quarter of 2005 of $1,718,000, or $0.23 per share.

Nine Months Results

    For the nine months ended September 30, 2006, revenue declined 10% to $56,929,000 compared to $63,493,000 for the first nine months of 2005. The net loss for this year's first nine months was $7,466,000, or $1.01 per share, which included a non-recurring charge of $1,685,000 for the restructuring of the retail group. This compares to a net loss for the first nine months of 2005 of $16,817,000, or $2.27 per share, which includes a charge to tax expense of $9,194,000 to fully reserve for the Company's entire net U.S. deferred tax asset.

    Results for the third quarter and first nine months of 2005 are shown as restated for the freight expense change the Company reported at year-end 2005 to reflect freight in cost of goods sold rather than as a deduction in reporting net sales.

Amendment to Financing Covenants

    The Company has signed an amendment to its credit facility which modifies the calculation of the trailing four quarters Cash Flow-to-Debt Service covenant by allowing the Company to exclude the $1,685,000 retail restructuring charge taken by the Company in the second quarter of 2006. The amendment also modifies the calculation of the Total Liabilities-to-Net Worth covenant by excluding from that calculation any amount arising from the implementation of FASB 158, Employers' Accounting for Defined Benefit Pension and Other Post-Retirement Plans, which requires all companies to place on their books certain unrecognized and unfunded retirement liabilities as of December 31, 2006. In consideration of this amendment, the Company has agreed to pay an additional 0.25% interest on the facility, resulting in a rate spread effective as of October 1, 2006 of 0.25% over prime or 2.25% over LIBOR on the Company's revolving debt and 0.25% higher in each case on its term debt.

    The Company's credit facility with CIT expires in accordance with its terms on October 27, 2007, and, in accordance with GAAP, the entire amount due under the credit facility will be classified as current as of December 31, 2006 unless the Company enters into a new financing arrangement with CIT before the release of the Company's fourth quarter and year end results. The Company and CIT plan to begin discussions on the renewal of the facility in the first quarter of 2007.

Conference Call

Rock of Ages has scheduled a conference call at 11:00 a.m. EDT today. A live webcast may be accessed from the Audio Presentations link at www.RockofAges.com/investor. A replay will be available after 1:00 p.m. EDT at this same Internet addresses, or at (800) 633-8284, reservation #21305088.

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 staff productivity improvements and sales and marketing programs; our ability to form and maintain relationships with funeral directors and other death care professionals; our ability to maintain compliance with our covenants in our credit facility; our ability to maintain and expand our relationships with independent retailers; changes in demand for our products; the timing of customer orders and deliveries; the impact of competitive products and pricing; the success of our branding programs; the excess or shortage of production capacity, 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 Annual Report on Form 10-K for the year ended December 31, 2005, and the Company's Quarterly Report on Form 10-Q for the period ending July 2, 2006. 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
CONSOLIDATED STATEMENTS OF OPERATIONS
 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS
(Unaudited)

 

 Three Months Ended

 

Nine Months Ended

 

  

 

  

 

 

 

  

 

 

  

 

  

 

  

Sep. 30,

  

 

Oct. 1,

 

  

Sep. 30,

 

  

Oct. 1,

  

 

  

2006

  

 

2005

 

  

2006

 

  

2005

  

 

  

 

  

 

(Restated)

 

  

 

 

  

(Restated)

  

Net revenue:

  

 

  

 

 

 

  

 

 

  

 

  

  Quarry

$

6,582

 $

8,351

 

$

17,379

 

$

19,289

  Manufacturing

  

5,834

  

 

6,973

 

  

17,398

 

  

17,569

  

  Retail

  

8,148

  

 

8,472

 

  

22,152

 

  

26,635

  
   
   
   
   
 

     Total net revenue

  

20,564

  

 

23,796

 

  

56,929

 

  

63,493

  

 

  

 

  

 

 

 

  

 

 

  

 

  

Gross profit:

  

 

  

 

 

 

  

 

 

  

 

  

  Quarry

  

1,717

  

 

2,354 

 

  

2,811

 

  

3,175

  

  Manufacturing

  

1,674

  

 

2,312

 

  

4,677

 

  

5,137

  

  Retail

  

4,283

  

 

4,456

 

  

11,435

 

  

14,116

  
   
   
   
   
 

     Total gross profit

  

7,674

  

 

9,122

 

  

18,923

 

  

22,428

  

 

  

 

  

 

 

 

  

 

 

  

 

  

Selling, general and administrative expenses

  

 

  

 

 

 

  

 

 

  

 

  

  Quarry

  

736

  

 

957

 

  

2,198

 

  

2,703

  

  Manufacturing

  

1,008

  

 

1,305

 

  

3,144

 

  

3,788

  

  Retail

  

4,058

  

 

6,590

 

  

13,195

 

  

19,448

  

  Retail restructuring costs

  

(1

 )

 

—

 

  

1,685

 

  

—

  
   
   
   
   
 

     Total SG&A expenses

  

5,801

  

 

8,852

 

  

20,222

 

  

25,939

  

 

  

 

  

 

 

 

  

 

 

  

 

  

Divisional operating income (loss)

  

 

  

 

 

 

  

 

 

  

 

  

  Quarry

  

981

  

 

1,397

 

  

613

 

  

472

  

  Manufacturing

  

666

  

 

1,007

 

  

1,533

 

  

1,349

  

  Retail

  

226

  

 

(2,134

) 

  

(3,445

) 

  

(5,332

 )
   
   
   
   
 

     Divisional operating income (loss)

  

1,873

  

 

270

 

  

(1,299

) 

  

(3,511

 )

 

  

 

  

 

 

 

  

 

 

  

 

  

Unallocated corporate overhead

  

1,167

  

 

1,358

 

  

3,768

 

  

4,153

  

Impairment of long‑lived assets

  

—

  

 

—

 

  

100

 

  

—

  

Foreign exchange (gain) loss

  

—

  

 

—

 

  

16

 

  

—

  
   
   
   
   
 

Income (loss) from continuing 

  

 

  

 

 

 

  

 

 

  

 

  

  operations before interest and taxes

  

706

  

 

(1,088

) 

  

(5,183

) 

  

(7,664

 )

 

  

 

  

 

 

 

  

 

 

  

 

  

Interest expense

  

665

  

 

528

 

  

1,932

 

  

1,273

  
   
   
   
   
 

 

  

 

  

 

 

 

  

 

 

  

 

  

Income (loss) from continuing operations before taxes

  

41

  

 

(1,616

) 

  

(7,115

) 

  

(8,937

 )

 

  

 

  

 

 

 

  

 

 

  

 

  

Income tax expense

  

206

  

 

70

 

  

377

 

  

7,810

  
   
   
   
   
 

 

  

 

  

 

 

 

  

 

 

  

 

  

Loss from continuing operations

  

(165

 )

 

(1,686

) 

  

(7,492

) 

  

(16,747

 )

Discontinued operations, net of income taxes

  

54

  

 

(32

) 

  

26

 

  

(70

 )
   
   
   
   
 

 

  

 

  

 

 

 

  

 

 

  

 

  

     Net loss

$

(111

 )

$

(1,718

) 

$

(7,466

) 

$

(16,817

 )

 

  
 
  

 
 

 

  
 

 

  
 
  

     Per share information:

  

 

  

 

 

 

  

 

 

  

 

  

Net income (loss) per share ‑basic and diluted

  

 

  

 

 

 

  

 

 

  

 

  

  Loss from continuing operations

$

(0.02

 )

$

(0.23

) 

$

(1.01

) 

$

(2.26

 )

  Discontinued operations

  

0.01

  

 

—

 

  

—

 

  

(0.01

 )
   
   
   
   
 

     Net loss per share ‑ basic and diluted

$

(0.01

 )

$

(0.23

) 

$

(1.01

) 

$

(2.27

 )

 

  
 
  

 
 

 

  
 

 

  
 
  

 

  

 

  

 

 

 

  

 

 

  

 

  

Weighted average number of common

  

 

  

 

 

 

  

 

 

  

 

  

  shares outstanding ‑ basic and diluted

  

7,399

  

 

7,399

 

  

7,399

 

  

7,398

  
 

ROCK OF AGES CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(Unaudited)

 

 

 

 

  

September 30,

  

 

December 31,

  

Assets

  

2006

  

 

2005

  

Current assets:

  

 

  

 

 

  

 

Cash and cash equivalents

$

3,171

$

2,824

 

Trade receivables, net

  

12,408

  

 

14,720

  

 

Inventories

  

25,504

  

 

24,478

  

 

Other current assets

  

1,540

  

 

2,686

  

 

Assets of discontinued operations ‑ held for sale

  

295

  

 

—

  
     
   
 

 

 

Total current assets

  

42,918

  

 

44,708

  
     
   
 

 

 

 

  

 

  

 

 

  

 

Property, plant, and equipment, net

  

47,256

  

 

49,634

  

 

Cash surrender value of life insurance

  

782

  

 

731

  

 

Intangibles, net

  

523

  

 

598

  

 

Goodwill

  

387

  

 

387

  

 

Intangible pension asset

  

574

  

 

574

  

 

Long term investments

  

798

  

 

728

  

 

Other

  

1,113

  

 

1,252

  
     
   
 

 

 

Total assets

$

94,351

  

$

98,612

  
   
 
    
 
  

Liabilities and Stockholders' Equity

  

 

  

 

 

  

Current liabilities:

  

 

  

 

 

  

 

Borrowings under line of credit

$

12,515

  

 $

10,499

  

 

Current installments of long‑term debt 

  

650

  

 

661

  

 

Current installments of salary continuation

  

463

  

 

469

  

 

Trade payables

  

1,975

  

 

2,006

  

 

Accrued expenses

  

3,711

  

 

3,443

  

 

Customer deposits

  

8,268

  

 

7,059

  
     
   
 

 

 

Total current liabilities

  

27,582

  

 

24,137

  

 

 

 

  

 

  

 

 

  

 

Long‑term debt, excluding current installments

  

20,490

  

 

21,445

  

 

Salary continuation

  

6,061

  

 

6,070

  

 

Accrued pension cost

  

3,542

  

 

3,550

  

 

Deferred tax liability

  

73

  

 

70

  

 

Other

  

2,157

  

 

1,864 

  
     
   
 

 

 

Total liabilities

59,905

57,136
     
   
 

 

 

 

  

 

  

 

 

  

Commitments

  

 

  

 

 

  

 

 

 

  

 

  

 

 

  

Stockholders' equity:

  

 

  

 

 

  

 

Preferred stock - 0.01 par value.  Authorized

  

 

  

 

 

  

 

 

2,500,000 shares; issued and outstanding no shares

  

—

  

 

—

  

 

Common stock - Class A, 0.01 par value. Authorized 

  

 

  

 

 

  

 

 

30,000,000 shares; 4,660,800 issued and outstanding

  

 

  

 

 

  

 

 

as of September 30,  2006 and December 31, 2005

  

47

  

 

47

  

 

Common stock -- Class B, 0.01 par value. Authorized

  

 

  

 

 

  

 

 

15,000,000 shares; 2,738,596 issued and outstanding

  

 

  

 

 

  

 

 

as of September 30, 2006 and December 31, 2005

  

27

  

 

27

  

 

Additional paid‑in capital

  

65,551

  

 

65,551

  

 

Accumulated deficit

  

(28,896

 )

 

(21,431

 )

 

Accumulated other comprehensive loss

  

(2,283

 )

 

(2,718

 )
     
   
 

 

 

34,446

41,476
     
   
 

 

 

$

94,351

  

$

98,612