Valley National Gases Reports Record Quarter Earnings

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, [phone], or

 



Web site:  http://www.vngas.com/ 

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