Valley National Gases Reports Record Quarter & Six Month Earnings

Valley National Gases Reports Record Quarter & Six Month Earnings



WASHINGTON, Pa., Feb. 2  /PRNewswire-FirstCall/ -- Valley National Gases
Incorporated  (AMEX:VLG) reported today that net earnings for the second
quarter and six months ended December 31, 2004 were $0.36 and $0.53 per diluted
share, respectively, compared to $0.22 and $0.29 per diluted share for the same
periods last year. Sales for the second quarter were $43.2 million, a 10.4%
increase over the same quarter last year. Sales for the first half of the year
were $79.4 million, an 11% increase over last year.

Valley National Gases' Vice Chairman and Chief Executive Officer, William A.
Indelicato, commented, "Our ability to leverage operating expenses and further
improve margins in virtually all of our product lines has resulted in another
record earnings quarter for us. Both the quarter and the six months just
completed provide evidence of improved industrial activity in most of our
markets."

Mr. Indelicato further commented: "Hard goods increased 16% and industrial
cylinder gases increased 4% in this year's second quarter over the comparable
quarter last year.  Propane sales increased $1.9 million, or 16%, although
propane volume was lower than the prior year quarter by approximately 9%.  We
believe the decrease in propane volume is due to a warmer second quarter in our
markets and heightened conservation by some customers due to significantly
higher energy costs."

Net sales for the six months ended December 31, 2004 increased $7.8 million, as
compared to the prior year period. Hard goods sales increased by $4.2 million
or 16% while industrial cylinder gases cylinder rent and other sales increased
by $1.0 million or 4%.  Propane sales increased $3.1 million, or 18% reflecting
$4.3 million in price escalation offset by $1.2 million decrease in volume.

Gross profit increased $1.8 million or 8% and was 52.2% of net sales for the
quarter, compared to 53.2% for the same quarter last year. Year to date total
gross profit increased $3.3 million or 9% and was 52.7% of net sales, compared
to 53.9% last year.  The increase in gross profits reflects increases in gross
margins in all three of our product areas, with hard goods gross profit
increasing 22% during the quarter and 23% during the six months against the
comparable periods last year, industrial cylinder gases, cylinder rent and
other gross profit increasing 4% during both the quarter and the six months,
and propane gross profit increasing 8% during the quarter and 7% during the six
months. The decrease in margin percent during both the quarterly and six month
periods reflects an increase in margin percent for both hard goods and
industrial gases offset by a decline in propane margin as a percent of sales.

Operating and administrative expenses decreased $0.4 million for both the
quarter and year to date, compared to the same period last year.  The current
quarter and year to date consolidated operating expense includes a reduction of
$0.5 million and $1.0 million respectively in rent expense partially offset by
other expenses of $0.2 million and $0.4 million, respectively, as a result of
consolidating under FIN46R, Variable Interest Entities owned by a related party
that leases property to Valley.

Within the Valley segment, operating and administrative expense decreased $0.1
million for the quarter. Year to date operating expense within the Valley
segment totaled $27.8 million, an increase of $0.2 million over the prior year
period. As a percent of sales, operating and administrative expense within the
Valley segment was 32.4% for the quarter and 35.1% year to date.

Depreciation and amortization expense increased $0.1 million and $0.2 million
for the quarter and fiscal year to date respectively, compared to the prior
year period.

Interest expense decreased $0.3 million for the quarter and $0.6 million year
to date, due to lower outstanding debt and reduced rates resulting from the
improvement in the Company's operating performance.

The Company's effective tax rate for the current quarter and year to date was
38% compared to 39% for the prior year periods.

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 February 3, 2005 at 11:00 a.m.  Information
about the conference call is available on the Company's website at
http://www.vngas.com/

Cautionary Statement: All statements other than historical facts included in
this release regarding future operations are subject to the risks inherent in
predictions and "forward looking statements." These statements are based on the
beliefs and assumptions of management of Valley National Gases and on
information currently available to management. Nevertheless, these forward-
looking statements should not be construed as guarantees of future performance.
They involve risks, uncertainties, and assumptions identified in Valley's
filings with the SEC, including risks related to Valley's ability to evaluate,
negotiate, complete, and integrate acquisitions, to the debt agreements of
Valley that are outstanding or may be negotiated, to Valley's ability to
maintain supply and customer relationships, and to the prices and markets for
gases, including propane.

                    VALLEY NATIONAL GASES INCORPORATED
                    CONSOLIDATED STATEMENT OF EARNINGS
               (Amounts in thousands except per share data)
                               (Unaudited)

                                 Three Months Ended     Six Months Ended
                                     December 31,          December 31,
                                  2004        2003       2004      2003

  Net Sales                      $43,203     $39,120    $79,404   $71,555
  Cost of products sold
   (excluding depreciation
   and amortization)              20,635      18,314     37,549    32,993
  Gross Profit                    22,568      20,806     41,855    38,562
  Operating and administrative
   expenses (1)                   13,672      14,096     27,208    27,597
  Depreciation and amortization    2,030       1,889      3,946     3,738
  Total expenses                  15,702      15,985     31,154    31,335
  Income from operations           6,866       4,821     10,701     7,227
  Interest expense                 1,148       1,446      2,348     2,928
  Other income                        95          46        179       129
  Earnings before minority
   interest elimination            5,813       3,421      8,532     4,428
  Minority interest earnings         179          --        377        --
  Net income before taxes          5,634       3,421      8,155     4,428
  Provision for income taxes       2,141       1,334      3,099     1,727
  Net earnings                   $ 3,493     $ 2,087    $ 5,056   $ 2,701


  Basic earnings per share         $0.37       $0.22      $0.53     $0.29
  Diluted earnings per share       $0.36       $0.22      $0.53     $0.29
  Weighted average shares
    Basic                          9,493       9,357      9,489     9,357
    Diluted                        9,655       9,402      9,631     9,394

  (1) Operating and administrative expenses for the three and six months
      ended December 31, 2004 include a reduction of $0.5 million and $1.0
      million, respectively in rent expense, partially offset by other
      expenses of $0.2 million and $0.4 million, respectively, 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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