Valley National Gases (AMEX:VLG)
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Valley National Gases Reports Record Earnings; Declares One-Time
Dividend
WASHINGTON, Pa., Aug. 10 /PRNewswire-FirstCall/ -- Valley National Gases
Incorporated (AMEX:VLG) reported today that net earnings for the fourth quarter
and year ended June 30, 2004 were $.13 and $.81 per diluted share,
respectively, compared to $(.37) and $.03 per diluted share for the same
periods last year. Sales for the fourth quarter were $35.0 million, a 5.1%
increase over the same quarter last year. Sales for the year were $154.5
million, a 2.1% increase over last year. Positive cash flow, provided primarily
from operating activities, resulted in a reduction of Valley's line of credit,
term note and seller notes in the amount of $5.7 million for the quarter.
Valley National Gases' Vice Chairman and Chief Executive Officer, William A.
Indelicato, commented, "Our record performance for the fiscal year has been a
result of a focused effort to improve product margins and better manage
operating expenses. The quarter just completed provided evidence of an economy
that continues to improve. Aggregate fourth quarter sales were more than 5%
higher than last year's comparable quarter, while hard goods sales were more
than 8% higher. Our strong cash flow for the year facilitated a reduction of
Valley's line of credit, term note and seller notes in the amount of $15.2
million."
Mr. Indelicato further commented: "As a result of our record earnings
performance, significant debt reduction and the planned moratorium on
acquisitions last year, our Board of Directors has authorized a one-time
dividend of $.09 per share to be paid on October 1st, to shareholders of record
September 1, 2004. This dividend payment currently is not intended to be a
periodic or regular event. Any future dividend payments will be governed by
earnings quality, debt level and acquisition funding."
Net sales increased $1.7 million for the quarter, compared to the prior year,
with acquisitions affecting neither quarter. Hard goods sales increased by $1.1
million or 8.4% for the quarter while industrial gases, cylinder rent and other
increased by $0.2 million or 1.3%. Propane sales increased $0.4 million, or
7.5% for the quarter. Net sales for the twelve months ended June 30, 2004
increased $3.2 million, as compared to the prior fiscal year. The year-to-year
change reflected a decrease of 1.5% for hard goods and an increase of 1% for
industrial gases, cylinder rent and other. Propane sales increased $3.7
million, or 10% compared to the prior year on a same store basis, reflecting
$3.3 million in price increases and $0.4 million increase in volume, with
warmer than normal temperatures during the past heating season.
Sales mix for the fourth quarter of 2004 consisted of 43% from gases and
cylinder income and 41% from hard goods, consistent with the same period last
year. Sales mix for fiscal year 2004 consisted of 39% from gases and cylinder
income and 35% from hard goods, compared to 39% from gases and cylinder income
and 36% from hard goods for the same period last year.
Gross profit increased $3.1 million for the fourth quarter of 2004 and $4.8
million for fiscal year 2004, compared to prior year fourth quarter and year
end results. As a percentage of net sales, gross profit was 55.3% for the
fourth quarter 2004 and 53.7% for fiscal year 2004, compared to 48.8% and 51.6%
respectively for the prior year periods. Gross profit for the prior year
fourth quarter and fiscal year was negatively impacted by the disposal of $1.4
million of slow moving inventory recorded in the fourth quarter of fiscal 2003.
The remaining increase in gross profit of $1.7 million for the fourth quarter
2004 and $3.4 million for the fiscal year was primarily due to increased prices
resulting from initiatives implemented during the current year for both propane
and hard goods.
Operating expenses decreased $3.4 million for the fourth quarter of 2004 and
$5.1 million for fiscal year 2004. Approximately $0.7 million of this decrease
is due to a net reduction in expenses resulting from the consolidation under
FIN 46R, of Variable Interest Entities owned by a related party that leases
property to Valley as of March 31, 2004. In addition, the fourth quarter and
fiscal year 2003 results included charges associated with the company's
repositioning and strengthening program totaling $2.6 million for the quarter
and $3.3 million for the year. The remaining operating expense reductions,
which total $0.7 million for the quarter and $1.8 million for the year, are
primarily the result of current year cost reduction initiatives.
Depreciation and amortization expense decreased $1.1 million and $1.4 million
for the fourth quarter of 2004 and fiscal year 2004 respectively, compared to
the prior year period. The prior year comparable periods included charges
totaling $1.1 million for the quarter and year relating to the previously
mentioned strengthening program.
Interest expense decreased $0.4 million and $1.0 million for the fourth quarter
of 2004 and fiscal year 2004, respectively. Reflected in interest expense was a
decrease of $0.1 million and $0.2 million for the current quarter and current
year respectively, to record changes in the fair market value of the Company's
interest rate swap agreements under SFAS No. 133.
Other income increased $0.3 million for the quarter and $0.4 million year to
date compared to prior year comparable periods primarily due to income earned
by the Variable Interest Entities, which was not related to the leasing of
properties to Valley.
Minority interest earnings reflect the elimination of net pre-tax income earned
during the quarter by the Variable Interest 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 fiscal year 2004 decreased from 39.0% for
the prior year to 37.0% for the current year.
Valley National Gases, with headquarters in Washington, Pennsylvania, 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 August 11, 2004 at 11:00 a.m. The teleconference
will be available by calling 800-746-1483. Ask to be connected to the Valley
National Gases conference call. A replay of the teleconference will be
available for one week. To listen, call 800-633-8284 and enter reservation
number 21203861. The fourth quarter and fiscal year earnings release will be
available on the Investor Information page on the Company's website at
http://www.vngas.com/
VALLEY NATIONAL GASES INCORPORATED
STATEMENT OF EARNINGS (Loss)
(Amounts in thousands except per share data)
Three Months Ended Twelve Months Ended
June 30, June 30,
2004 2003 (1) 2004 2003 (1)
Net Sales $34,975 $33,285 $154,456 $151,232
Cost of products sold (excluding
depreciation) 15,641 17,052 71,558 73,143
Gross Profit 19,334 16,233 82,898 78,089
Operating and administrative
expenses (2) 14,084 17,528 57,230 62,369
Depreciation and amortization 1,893 2,994 7,474 8,900
Total expenses 15,977 20,522 64,705 71,269
Income from operations 3,357 (4,289) 18,192 6,820
Interest expense 1,292 1,663 5,657 6,623
Other income 415 74 544 190
Earnings (loss) before minority
interest 2,480 (5,878) 13,079 387
Minority interest 880 -- 880 --
Net income before taxes 1,600 (5,878) 12,199 387
(Benefit) provision for income
taxes 386 (2,449) 4,520 151
Net (loss) earnings $1,214 ($3,429) $7,679 $236
Basic (loss) earnings per share $0.13 ($0.37) $0.82 $0.03
Diluted (loss) earnings per share $0.13 ($0.37) $0.81 $0.03
Weighted average shares
Basic 9,378 9,357 9,364 9,350
Diluted 9,500 9,392 9,427 9,393
(1) Includes the effect of charges associated with the Company's
repositioning initiatives of $5.3 million of which $1.4 million was
associated with disposal of slow-moving inventory, $.7 million related to
changes in medical accrual, $2.1 million related to severance, benefit and
lease expense and remaining $1.1 million related to the write-off of non-
compete agreements and accelerated depreciation for certain assets. $4.7
of these charges were reflected in fourth quarter earnings.
(2) Operating and administrative expenses for the three months and twelve
months ended June 30, 2004 include a reduction of $0.8 million in rent
expense, partially offset by other expenses, as a result of consolidating
under FIN 46R, Variable Interest Entities owned by a related party that
leases properties to Valley as of March 31, 2004.
DATASOURCE: Valley National Gases Incorporated
CONTACT: James P. Hart of Valley National Gases Incorporated,
+1-724-228-3000, or
Web site: http://www.vngas.com/