Rock of Ages Corporation CEO feels “very strongly” FY07 will be profitable

During a midday conference call, Rock of Ages Corporation (Nasdaq: ROAC) CEO Kurt Swenson said the company, which makes tombstones and runs granite quarries, expects fiscal 2007 to be profitable, following a loss in 2006.

“It’s very tough because of the seasonal variations, so you get into a real box if you try to project exactly what it’s going to be for the year so we’ve been reluctant to do that,” Swenson said. “All I can say is it’s going to improve. We feel very strongly about that.”

Based on stronger demand and improved efficiencies, the company expects quarry performance during the second half of 2007 to top that of the year-ago period,  Swenson said.

Before the opening bell, the firm announced second-quarter net income of $3.9 million, or $0.53 per share, compared with a loss of $0.3 million, or $0.04 per share, a year earlier. For the three months ended June 30, Rock of Ages posted revenue of $27.3 million, up from $25.1 million during the same period of 2006. During the second quarter, the company’s gross profit increased more than 19% to $11.6 million, from $9.7 million a year earlier.

At the end of June, Rock of Ages’ retail backlog was about $6.8 million, up from $5.8 million a year earlier, Swenson said.

During the quarter, the tombstone maker’s sales, administrative and general expenses fell to $5.9 million, from $7.9 million in 2006.

The company's credit facility with the CIT Group expires on October 27. Rock of Ages’ executives have been authorized by the board of directors to negotiate a renewal of the CIT contract, Swenson said.
 
“We had a positive meeting with CIT in late July,” he said. “We’ve had a very long and mutually beneficial relationship with CIT and we expect that relationship to continue in the future.”

The company’s second-quarter operating margin improved to 20.8% from 6.9%. The company achieved this through improved pricing and manufacturing efficiencies related to new equipment, Swenson said.

---You can read the FULL article when you register (registration is free!) or sign-in to SmallCapInvestor.com---