EXHIBIT 99.1
Rock of Ages FOR IMMEDIATE RELEASE | Investor Contact: | Company Contact: |
Rock of Ages Reports Fourth Quarter and 2005 Results
Fourth Quarter Net Income is $0.09 Per Share Versus A Loss of $0.01 Per Share
CONCORD, NEW HAMPSHIRE, March 1, 2006 . . . Rock of Ages Corporation (NASDAQ/NMS:ROAC) today announced financial results for the three months and twelve months ended December 31, 2005, highlighted by higher revenue and net income for the fourth quarter of 2005 versus the same period of the prior year.
"2005 was a transition year for Rock of Ages as we took the steps necessary to deliver consistent growth and profitability in our Retail group. We began to see some of the benefits of this effort in the fourth quarter, and we remain optimistic that the steps we have implemented will support a sustained increase in retail revenue and profit in the future," said Chairman and Chief Executive Officer Kurt Swenson.
"Our Manufacturing segment turned in another solid performance. This is an encouraging sign, as is the continued recovery in our Quarry segment, which was affected by a decline in shipments to China in 2005. With the improved performance we anticipate in every segment this year, we expect Rock of Ages to be profitable in 2006," Swenson added.
Fourth Quarter Results
For the three months ended December 31, 2005, revenue increased to $23,745,000 from $22,942,000 for the fourth quarter of 2004. Reflecting the continued recovery of shipments to customers in China, Quarry revenue was $7,820,000 for the fourth quarter of 2005 compared to $7,889,000 for the fourth quarter of 2004. Manufacturing revenue rose to $5,920,000 from $4,982,000, as the Company continued to focus on sales of mausoleums and higher-end memorials. Retail revenue was roughly flat at $10,005,000 versus $10,071,000 for the prior year.
"The changes in our Retail group during 2005 are particularly significant. We closed or sold ten underperforming stores, reduced headcount, launched our new outreach and branding programs, and implemented other operational enhancements which we estimate will reduce selling, general and administrative expenses at the retail store level by approximately $3.5 million annually, and reduce expenses at the retail overhead level by an additional $1.5 million annually. We believe that we now have positioned our Retail group to come very close to delivering our store level target of 15% EBIT margin in 2006," Swenson said.
Gross profit in the Quarry segment declined to 37.0% from 43.3% for the fourth quarter of 2005, primarily due to a mechanical failure of a derrick in the company's Barre quarries that caused a $500,000 reduction in block production compared to the prior year. Gross profit in Manufacturing increased to 27.6% from 22.8%, reflecting the improved sales mix. Gross profit in Retail declined to 49.8% from 57.3%. "In the total overhaul of our Retail operation in 2005, we made certain assumptions in our pricing model that proved to be incorrect and led to the reduced gross margin for the year. We have adjusted our pricing model to reflect our actual experience, and introduced a new price schedule effective on all sales after January 9, 2006. As a result, we expect gross margin to improve in 2006," Swenson explained.
Selling, general and administrative expenses declined 10.4%, to $7,743,000 for the fourth quarter of 2005 compared to $8,643,000 for the fourth quarter of 2004. Retail SG&A declined 13.0% to $5,538,000. "Retail SG&A in the fourth quarter of 2005 included severance and other costs in connection with the store closures during the period. Retail SG&A is expected to average approximately $5,000,000 or less per quarter beginning in 2006," Swenson said.
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Rock of Ages Reports Fourth Quarter and 2005 Results
March 1, 2006
Page Two
Unallocated corporate overhead declined to $937,000 for the fourth quarter of 2005 from $1,129,000 for the fourth quarter of 2004. This was due to a number of one-time items. Swenson said that the company expects unallocated corporate overhead to average approximately $1,350,000 per quarter in 2006.
Rock of Ages recorded a gain of $350,000 on the previously announced sale of the Company's shares in FFS Holdings, Inc. ("FFS"), the parent company of Forethought Financial Services, Inc., a provider of pre-need insurance currently marketed through funeral homes and cemeteries, to the existing stockholders of FFS for an aggregate price of $3.85 million.
Net income for the fourth quarter of 2005 was $672,000, or $0.09 per diluted share. This compares to a net loss for the fourth quarter of 2004 of $77,000, or $0.01 per share.
2005 Results
For the twelve months ended December 31, 2005, revenue was $84,086,000. This compares to revenue of $86,594,000 for 2004. The net loss for 2005 was $16,143,000, or $2.18 per share. This compares to a net loss for 2004 of $3,221,000, or $0.44 per share. Results for 2005 included 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 2004 included pre-tax settlement costs for the Eurimex litigation of $6,500,000.
At December 31, 2005, cash and cash equivalents were $2,824,000, and stockholders' equity was $41,476,000, or $5.61 per outstanding share.
As previously disclosed, the Company may not pay dividends without the prior consent of its lenders. The Company's Board of Directors did not consider a dividend for the first quarter of 2006 at its recent regularly scheduled quarterly meeting in February and is not expected to do so until the Company returns to levels of profitability and cash flow sufficient to support the payment of dividends.
Conference Call
Rock of Ages has scheduled a conference call at 11:00 a.m. EST. 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. EST at this same Internet addresses, or at (800) 633-8284, reservation #21282112.
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 1, 2005. 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 | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
| 2005 |
| 2004 |
| 2005 |
| 2004 | |||||
Net revenue: | ||||||||||||
Quarrying | $ | 7,820 |
| $ | 7,889 |
| $ | 24,023 |
| $ | 29,927 | |
Manufacturing | 5,920 |
| 4,982 |
| 23,423 |
| 20,865 | |||||
Retailing | 10,005 |
| 10,071 |
| 36,640 |
| 35,802 | |||||
Total net revenue | 23,745 |
| 22,942; |
| 84,086 |
| 86,594 | |||||
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|
|
|
|
|
|
| |||||
Gross profit: |
|
|
|
|
|
|
| |||||
Quarrying | 2,890 |
| 3,415 |
| 5,995 |
| 12,327 | |||||
Manufacturing | 1,633 |
| 1,137 |
| 6,770 |
| 5,572 | |||||
Retailing | 4,983 |
| 5,770 |
| 19,099 |
| 20,354 | |||||
Total gross profit | 9,506 |
| 10,322 |
| 31,864 |
| 38,253 | |||||
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|
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|
|
|
| |||||
Selling, general and administrative expenses |
|
|
|
|
|
|
| |||||
Quarrying | 802 |
| 985 |
| 3,505 |
| 3,556 | |||||
Manufacturing | 1,403 |
| 1,290 |
| 5,191 |
| 4,002 | |||||
Retailing | 5,538 |
| 6,368 |
| 24,986 |
| 21,828 | |||||
Total SG&A expenses | 7,743 |
| 8,643 |
| 33,682 |
| 29,386 | |||||
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| |||||
Divisional operating income (loss) |
|
|
|
|
|
|
| |||||
Quarrying | 2,088 |
| 2,430 |
| 2,490 |
| 8,771 | |||||
Manufacturing | 230 |
| (153 | ) | 1,579 |
| 1,570 | |||||
Retailing | (555 | ) | (598 | ) | (5,887 | ) | (1,474 | ) | ||||
Divisional operating income (loss) | 1,763 |
| 1,679 |
| (1,818 | ) | 8,867 | |||||
|
|
|
|
|
|
|
| |||||
Unallocated corporate overhead | 937 |
| 1,129 |
| 5,090 |
| 5,087 | |||||
Gain on sale of investments | (350 | ) | — |
| (350 | ) | — | |||||
Impairment of note receivable | — |
| 400 |
| — |
| 400 | |||||
Legal settlement and costs | — |
| — |
| — |
| 6,500 | |||||
Foreign exchange losses | 50 |
| 36 |
| 50 |
| 68 | |||||
Income (loss) from continuing operations before interest and taxes | 1,126 |
| 114 |
| (6,608 | ) | (3,188 | ) | ||||
|
|
|
|
|
|
|
| |||||
Interest expense | 651 |
| 367 |
| 1,924 |
| 822 | |||||
Income (loss) from continuing operations before taxes | 475 |
| (253 | ) | (8,532 | ) | (4,010 | ) | ||||
Income tax expense (benefit) | (199 | ) | (179 | ) | 7,611 |
| (854 | ) | ||||
Income (loss) from continuing operations | 674 |
| (74 | ) | (16,143 | ) | (3,156 | ) | ||||
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|
|
|
|
|
|
| |||||
Discontinued operations, net of income taxes | — |
| (3 | ) | — |
| (65 | ) | ||||
Net Income (loss) | $ | 674 |
| $ | (77 | ) | $ | (16,143 | ) | $ | (3,221 | ) |
Per share information: |
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|
| |||||
Net income (loss) per share - basic |
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations | $ | 0.09 |
| $ | (0.01 | ) | $ | (2.18 | ) | $ | (0.43 | ) |
Discontinued operations | 0.00 |
| 0.00 |
| 0.00 |
| (0.01 | ) | ||||
Net income (loss) per share - basic | $ | 0.09 | $ | (0.01 | ) | $ | (2.18 | ) | $ | (0.44 | ) | |
Net income (loss) per share - diluted |
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations | $ | 0.09 |
| $ | (0.01 | ) | $ | (2.18 | ) | $ | (0.43 | ) |
Discontinued operations | 0.00 |
| 0.00 |
| 0.00 |
| (0.01 | ) | ||||
Net income (loss) per share - diluted | $ | 0.09 | $ | (0.01 | ) | $ | (2.18 | ) | $ | (0.44 | ) | |
Weighted average number of common shares outstanding |
|
|
|
|
|
|
| |||||
Basic | 7,399 |
| 7,395 |
| 7,399 |
| 7,318 | |||||
Diluted | 7,399 |
| 7,395 |
| 7,399 |
| 7,318 |
ROCK OF AGES CORPORATION
COMPARATIVE BALANCE SHEET
(US $ IN THOUSANDS)(Unaudited)
December 31, | ||||||
| 2005 |
| 2004 | |||
ASSETS | ||||||
Current Assets |
|
|
| |||
Cash and cash equivalents | $ | 2,824 |
| $ | 4,298 | |
Trade receivables, net | 14,720 |
| 15,017 | |||
Inventories | 24,478 |
| 23,858 | |||
Deferred tax assets | — |
| 708 | |||
Other current assets | 3,469 |
| 4,274 | |||
Total Current Assets | 45,491 |
| 48,155 | |||
|
|
|
| |||
Property, plant and equipment, net | 49,634 |
| 46,130 | |||
C.S.V. Life Insurance | 731 |
| 743 | |||
Goodwill | 387 |
| 163 | |||
Other Intangibles | 599 |
| 388 | |||
Deferred Tax Assets - Long Term | — |
| 6,740 | |||
Intangible Pension Asset | 574 |
| 739 | |||
Long-term Investments | 728 |
| 4,112 | |||
Other | 468 |
| 888 | |||
Total Assets | $ | 98,612 | $ | 108,058 | ||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
| |||
Current Liabilities |
|
|
| |||
Borrowings under line of credit | $ | 10,499 |
| $ | 7,287 | |
Current installments of long-term debt | 662 |
| 35 | |||
Current installments of deferred compensation | 469 |
| 372 | |||
Accounts payable | 2,006 |
| 2,433 | |||
Accrued expenses | 3,442 |
| 3,716 | |||
Customer deposits | 7,059 |
| 8,173 | |||
Total Current Liabilities | 24,137 |
| 22,016 | |||
|
|
|
| |||
Long-term debt, excluding current installments | 21,445 |
| 16,289 | |||
Deferred compensation | 6,070 |
| 6,620 | |||
Accrued pension cost | 3,550 |
| 1,993 | |||
Deferred tax liability | 70 |
| 30 | |||
Other | 1,864 |
| 924 | |||
Total Liabilities | 57,136 |
| 47,872 | |||
|
|
|
| |||
Stockholders' Equity |
|
|
| |||
Preferred stock - $.01 par value; 2,500,000 |
|
|
| |||
shares authorized, no shares issued or outstanding | — |
| — | |||
Common stock - Class A, $.01 par value; 30,000,000 shares |
|
|
| |||
authorized, 4,660,800 and 4,694,800 shares issued and |
|
|
| |||
outstanding as of December 31, 2005 and 2004, respectively | 47 |
| 47 | |||
Common stock - Class B, $.01 par value; 15,000,000 shares |
|
|
| |||
authorized, 2,738,596 and 2,700,596 shares issued and |
|
|
| |||
outstanding as of December 31, 2005 and 2004, respectively | 27 |
| 27 | |||
Additional paid-in capital | 65,551 |
| 66,267 | |||
Accumulated Deficit | (21,431 | ) | (5,288 | ) | ||
Accumulated other comprehensive loss | (2,718 | ) | (867 | ) | ||
Total stockholders' equity | 41,476 |
| 60,186 | |||
Total liabilities and stockholders' equity | $ | 98,612 |
| $ | 108,058 | |