| Rock of Ages FOR IMMEDIATE RELEASE | Company Contacts: Laura Plude, CFO (802) 476‑2208 www.RockofAges.com | Kurt Swenson Chairman (603) 225-8397 |
Rock of Ages Reports 2008 Results |
BARRE, VERMONT, March 10, 2009 . . . Rock of Ages Corporation (NASDAQ:ROAC) today reported a net loss from continuing operations for 2008 of $2,054,000, or $0.28 per share, which included a $3,930,000 charge for the write-off of second-grade granite block inventory at its three export quarries, the result of increased ocean and inland freight rates and changing economic conditions, and a $1,348,000 write-down of the Company's former headquarters building that was taken out of service when the Company consolidated its offices in Barre. Excluding these non-cash charges, income from continuing operations for 2008 would have been $3,224,000, or $0.43 per share. For 2007, the loss from continuing operations was $1,332,000, or $0.18 per share, which included a non-cash impairment charge of $1,361,000 for the write-down of the Company's investment in a granite quarry in Europe. Excluding this charge, income from continuing operations for 2007 would have been $29,000, or $0.00 per share. Revenue for 2008 was $55,869,000 compared to revenue of $55,545,000 for 2007.
Chief Executive Officer Donald Labonte said that no additional inventory write-downs related to second-grade granite block inventory at its export quarries or the Company's former headquarters building are anticipated in the future.
For the fourth quarter of 2008, the loss from continuing operations was $2,677,000, or $0.36 per share. Excluding the write-downs of inventory and the Company's former headquarters building, income from continuing operations would have been $2,601,000, or $0.35 per share. For the fourth quarter of 2007, the loss from continuing operations was $317,000, or $0.04 per share. Excluding the non-cash impairment charge, income from continuing operations for the fourth quarter of 2007 would have been $1,044,000, or $0.14 per share. Revenue for the fourth quarter of 2008 was $16,560,000 compared to revenue of $17,791,000 for the fourth quarter of 2007.
A reconciliation of GAAP to non-GAAP financial measures is provided in the reconciliation table attached to this press release.
Rock of Ages generated approximately $2.2 million of cash from operations in 2008, and reduced its total debt by approximately $8 million during the year to $21.8 million at December 31, 2008 compared to $29.8 million at December 31, 2007.
"We achieved our primary operating goals for 2008," said Chief Executive Officer Donald Labonte. "Despite a $3 million decrease in sales of higher-margin mausoleums in 2008 versus 2007 due to the recession (partially offset by sales of $2.5 million to formerly owned retail outlets), we delivered an 11% increase in divisional operating earnings (net of the inventory write-down), lowered unallocated corporate overhead by 30%, and reduced total interest expense by 45% compared to 2007.
"Looking forward, we remain focused on reducing operating costs and improving productivity in both our quarrying and manufacturing operations. Planned capital spending this year will be below depreciation expense. While the recession makes it difficult to project 2009 revenue, we expect meaningful additional debt reduction in 2009," Labonte said. |
Rock of Ages Reports 2008 Results
March 10, 2009
Page Two
Balance Sheet Item The decrease in shareholders' equity at December 31, 2008 compared to December 31, 2007 primarily reflected the decrease in the market value of pension assets during the year and the resulting increase in the unfunded pension liability of approximately $5.7 million. |
Waiver of Financial Covenants As a result of the non-cash charges, at December 31, 2008 the Company was not in compliance with certain covenants of its lending agreement with CIT. The Company has obtained a waiver from CIT. In connection with the wavier the Company's interest rate structure has been changed. The prime election of the revolver and term loans of the credit agreement increased by 3% and 3.25%, respectively, and the Libor elections are increasing by 2% on the revolver and 2.25% on the term, with a Libor floor of 2%. |
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About Rock of Ages Rock of Ages (www.RockofAges.com) is the largest integrated granite quarrier and manufacturer 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 challenge of successfully implementing our strategic plan intended to enhance our overall profitability; unanticipated overhead or other expenses; changes in demand for our products due to general economic 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, 2007. 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.
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(tables attached)
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ROCK OF AGES CORPORATION | |||||||
Consolidated Statements Of Operations | |||||||
(In Thousands Except Per Share Amounts)(Unaudited) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2008 | 2007 | 2008 | 2007 | ||||
Net revenue | |||||||
Quarry | $ 9,920 | $ 10,183 | $ 28,686 | $ 29,292 | |||
Manufacturing | 6,640 | 7,608 | 27,183 | 26,253 | |||
Total net revenue | 16,560 | 17,791 | 55,869 | 55,545 | |||
Cost of goods sold | |||||||
Quarry | 6,643 | 7,318 | 21,333 | 22,889 | |||
Quarry inventory write-down | 3,930 | -- | 3,930 | -- | |||
Manufacturing | 4,670 | 5,439 | 19,715 | 18,036 | |||
Total cost of goods sold | 15,243 | 12,757 | 44,978 | 40,925 | |||
Gross profit | |||||||
Quarry | (653) | 2,865 | 3,423 | 6,403 | |||
Manufacturing | 1,970 | 2,169 | 7,468 | 8,217 | |||
Total gross profit | 1,317 | 5,034 | 10,891 | 14,620 | |||
Selling, general and administrative expenses | |||||||
Quarry | 520 | 827 | 2,267 | 3,061 | |||
Manufacturing | 1,325 | 1,172 | 4,383 | 4,214 | |||
Total SG&A expenses | 1,845 | 1,999 | 6,650 | 7,275 | |||
Divisional operating income | |||||||
Quarry | (1,173) | 2,038 | 1,156 | 3,342 | |||
Manufacturing | 645 | 997 | 3,085 | 4,003 | |||
Divisional operating income (loss) | (528) | 3,035 | 4,241 | 7,345 | |||
Unallocated corporate overhead | 637 | 1,437 | 3,636 | 5,187 | |||
Insurance recovery - quarry asset | -- | -- | -- | (212) | |||
Impairment of long-lived assets | 1,348 | 1,361 | 1,348 | 1,361 | |||
Other (income) expense, net | (273) | 62 | (452) | (39) | |||
Income (loss) from continuing operations before interest and taxes | (2,240) | 175 | (291) | 1,048 | |||
Interest expense | 322 | 413 | 1,368 | 1,844 | |||
Loss from continuing operations before income taxes | (2,562) | (238) | (1,659) | (796) | |||
Income tax expense | 115 | 79 | 395 | 536 | |||
Loss from continuing operations | (2,677) | (317) | (2,054) | (1,332) | |||
Income (loss) from discontinued operations | -- | 797 | (119) | 1,358 | |||
Interest allocated to discontinued operations | -- | (150) | (23) | (674) | |||
Impairment charge on discontinued operations | -- | (5,816) | -- | (5,908) | |||
Net loss | $ (2,677) | $ (5,486) | $ (2,196) | $ (6,556) | |||
Per share information: | |||||||
Net loss per share -basic and diluted | |||||||
Loss from continuing operations | $ (0.36) | $ (0.04) | $ (0.28) | $ (0.18) | |||
Loss from discontinued operations | -- | (0.70) | (0.02) | (0.70) | |||
Net loss per share | $ (0.36) | $ (0.74) | $ (0.30) | $ (0.88) | |||
Weighted average number of common shares outstanding | |||||||
Basic and diluted | 7,416 | 7,416 | 7,416 | 7,416 |
ROCK OF AGES CORPORATION | |||
Consolidated Balance Sheets | |||
( in thousands, except share amounts) (Unaudited) | |||
December 31, | |||
Assets | 2008 | 2007 | |
Current assets: | |||
Cash and cash equivalents | $ 888 | $ 1,961 | |
Trade receivables, net | 13,314 | 11,713 | |
Inventories | 16,839 | 21,680 | |
Other current assets | 1,561 | 1,867 | |
Assets held for sale | 477 | -- | |
Assets of discontinued operation | -- | 14,266 | |
Total current assets | 33,079 | 51,487 | |
Property, plant and equipment, net | 29,998 | 31,786 | |
Cash surrender value of life insurance | 132 | 186 | |
Intangibles, net | 571 | 383 | |
Goodwill | 387 | 387 | |
Long-term investments | 25 | 242 | |
Other | 250 | 174 | |
Total assets | $ 64,442 | $ 84,645 | |
Liabilities and Stockholders' Equity |
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Current liabilities: | |||
Borrowings under line of credit | $ 7,428 | $ 10,498 | |
Current installments of long-term debt | 40 | 5,191 | |
Current installments of retirement benefits | 567 | 584 | |
Trade payables | 1,334 | 1,794 | |
Accrued expenses | 2,226 | 2,303 | |
Customer deposits | 454 | 747 | |
Liabilities of discontinued operation | -- | 6,748 | |
Total current liabilities | 12,049 | 27,865 | |
Long-term debt, excluding current installments | 14,381 | 14,158 | |
Salary continuation | 5,382 | 5,531 | |
Accrued pension cost | 9,026 | 3,668 | |
Deferred tax liabilities | 27 | 55 | |
Other | 3,146 | 2,897 | |
Total liabilities | 44,011 | 54,174 | |
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; 4,812,342 | |||
and 4,677,467 issued as of December 31, 2008 and 2007, respectively | 48 | 47 | |
Common stock Class B, $0.01 par value; authorized 15,000,000 shares; 2,603,721 | |||
and 2,738,596 issued as of December 31, 2008 and 2007, respectively | 26 | 27 | |
Additional paid-in capital | 65,688 | 65,657 | |
Accumulated deficit | (35,548) | (33,352) | |
Accumulated other comprehensive loss | (9,783) | (1,908) | |
Total stockholders' equity | 20,431 | 30,471 | |
Total liabilities and stockholders' equity | $ 64,442 | $ 84,645 |
ROCK OF AGES CORPORATION RECONCILIATION OF NON-GAAP MEASURES ($ in thousands) (Unaudited) Non-GAAP Measures |
The Company utilizes certain non-GAAP measures to evaluate its performance and considers these measures important indicators of its success. The non-GAAP financial measures should not be considered a substitute for any measure derived in accordance with GAAP. The non-GAAP financial measures may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management believes that the presentation of such non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provides additional useful information concerning the Company's operating performance. |
The following sets forth a reconciliation of the Company's loss from continuing operations to income from continuing operations before Quarry inventory write-down and impairment of long‑lived assets. |
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31 | ||||||
2008 | 2007 | 2008 | 2007 | ||||
Loss from continuing operations - GAAP | $ (2,677) | $ (317) | $ (2,054) | $ (1,332) | |||
Quarry inventory write-down | 3,930 | -- | 3,930 | -- | |||
Impairment of long-lived assets | 1,348 | 1,361 | 1,348 | 1,361 | |||
Income from continuing operations before Quarry | |||||||
inventory write-down and impairment of long-lived assets | $ 2,601 | $ 1,044 | $ 3,224 | $ 29 |
The following sets forth a reconciliation of the Company's divisional operating income to the divisional operating income before the Quarry inventory write-down: |
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31 | ||||||
2008 | 2007 | 2008 | 2007 | ||||
Divisional operating income (loss) - GAAP | $ (528) | $ 3,035 | $ 4,241 | $ 7,345 | |||
Quarry inventory write-down | 3,930 | -- | 3,930 | -- | |||
Divisional operating income before Quarry inventory write-down | $ 3,402 | $ 3,035 | $ 8,171 | $ 7,345 |