VLG Valley Natl Gases

Valley National Gases Reports Record Quarter Earnings WASHINGTON, Pa., Oct. 29 /PRNewswire-FirstCall/ -- Valley National Gases Incorporated (AMEX:VLG) reported today that net earnings for the first quarter of fiscal year 2005 were $0.16 per diluted share, as compared to $0.07 per diluted share for the same period last year. Sales for the first quarter were $36.2 million, an 11.6% increase over the same quarter last year. Valley National Gases' Vice Chairman and Chief Executive Officer, William A. Indelicato, commented, "Our record performance for the quarter has been a result of our continuing efforts to improve product margins and better manage operating expenses. Aggregate first quarter hard-goods sales were 17.0% higher than last year's comparable quarter. We attribute the majority of the increase to volume growth and a portion of the increase to price changes driven off of vendor increases. Along with volume growth, we were able to increase hard- goods margins to 32.8% from 30.9% in the comparable period last year. Mr. Indelicato further commented: "Our operating expense leverage continues to show improvement. For the quarter just completed, operating expenses for the Valley segment were at 38.2% of sales, as compared to 41.6% for the same quarter last year and 42.3% in fourth quarter last year. We believe we are on track to achieve our goal of 36.0% for this fiscal year." Net sales increased $3.8 million or 11.6% compared to the prior year quarter. Hard-goods sales provided $2.1 million of the increase, a 17.0% increase over comparable prior year sales. Propane sales increased $1.2 million or 22.9% primarily resulting from higher costs and pricing. Propane volume increased 1.6% over the comparable prior year quarter. Industrial gases, cylinder rent and other sales increased 2.8% or $.4 million. Gross Profit increased $1.5 million or 8.6% compared to prior year first quarter. Hard-goods gross profit increased $0.9 million or 23.3%, while gross profit on Industrial gases, cylinder rent and other increased $0.5 million or 4.3%. Propane gross profit increased $0.1 million or 4.5%. Operating and administrative expenses decreased $0.1 million for the quarter compared to prior year first quarter. Operating expense within the Valley segment increased $0.4 million due to increased professional and legal services and other expenses offset by decreased personnel costs and $0.5 million in rent expense, as a result of consolidating under FIN46R, Variable Interest Entities owned by a related party that leases property to Valley. Interest expense was lower by $0.3 million or 19.0% for the quarter due to reduced outstanding debt and lower interest rates which resulted from the new bank debt agreement which reduces rates as performance and financial ratios improve. Minority interest earnings reflect the elimination of net pre-tax income earned during the quarter by the Variable Interest Entities since Valley has no direct ownership interest in these entities. The amount eliminated is primarily the reduction in rent expense and other income noted above, partially offset by expenses incurred by the entities. The Company's effective tax rate for the three months ended September 30, 2004 was 38.0% compared to 39.0% for the three months ended September 30, 2003. Net earnings totaled $1.6 million, an increase of $1.0 million or 155% compared to net earnings of $0.6 million for the first quarter last year. Valley National Gases, with headquarters in Wheeling, West Virginia, is a leading packager and distributor of industrial, medical and specialty gases, welding equipment and supplies, propane and fire protection equipment. Valley National Gases operates sixty-four locations in eleven states, with eight production and distribution centers in the eastern United States. The Company will host a conference call on November 1, 2004 at 11:00 a.m. Information about the conference call is available on the Company's website at http://www.vngas.com/ . VALLEY NATIONAL GASES INCORPORATED CONSOLIDATED STATEMENT OF EARNINGS (Amounts in thousands except per share data) (unaudited) Three Months Ended September 30, 2004 2003 Net Sales $36,201 $32,434 Cost of products sold (excluding depreciation and amortization) 16,914 14,678 Gross Profit 19,287 17,756 Operating and administrative expenses(1) 13,411 13,502 Depreciation and amortization 1,916 1,849 Total expenses 15,327 15,351 Income from operations 3,960 2,405 Interest expense 1,200 1,481 Other income 84 82 Earnings before minority interest elimination 2,844 1,006 Minority interest earnings 323 -- Net income before taxes 2,521 1,006 Provision for income taxes 958 392 Net earnings $1,563 $614 Basic earnings per share $0.16 $0.07 Diluted earnings per share $0.16 $0.07 Weighted average shares Basic 9,489 9,357 Diluted 9,604 9,388 (1) Operating and administrative expenses for the three months ended September 30, 2004 include a reduction of $0.5 million in rent expense, partially offset by other expenses as a result of consolidating under FIN46R, Variable Interest Entities owned by a related party that leases property to Valley. DATASOURCE: Valley National Gases Incorporated CONTACT: James P. Hart of Valley National Gases, +1-724-228-3000, or Web site: http://www.vngas.com/

Copyright