Exhibit 99.1
Blue Rhino Fiscal Year Earnings Exceed Consensus;
Fiscal Year Net Income Doubles
Highlights:
-- Fiscal Year pre-tax diluted EPS of $0.98, excluding litigation
proceeds and non-cash debt refinancing charges
-- Fiscal Year revenues up 25% to $258.2 million, despite record rainfall
in parts of U.S.; Diluted EPS of $0.86 vs Year-Ago $0.55
-- Q4 Gross margin improves 430 basis points driven by company-owned
distributors
-- Sub-Debt paid off as company reduces debt
-- SkeeterVac(R) contributes $8.4 million to revenue in first year of
sales
-- Long-term annual earnings growth target of 25%; FY'04 guidance
provided
WINSTON-SALEM, N.C., Sept. 16 /PRNewswire-FirstCall/ -- Blue Rhino
Corporation (Nasdaq: RINO), a leading national provider of branded propane
cylinder exchange and complementary propane-fueled products, today reported
record financial results for the fourth quarter and fiscal year ended July 31,
2003.
In addition to reporting its fourth quarter and full year earnings in
accordance with generally accepted accounting principles (GAAP), the company
has included non-GAAP comparisons of its fourth quarter and full year
earnings, excluding certain items, in this release to present the underlying
financial performance of the business and to enable investors to make
meaningful comparisons between fiscal periods. A schedule reconciling non-
GAAP and GAAP financial results is included under "Supplemental Information"
in the attached financial tables. Results for the fourth quarter contained an
expected $1.7 million non-cash charge related to the early payment of
subordinated debt, as well as a $2.2 million deferred income tax charge
reflecting a transition to fully-taxed for reporting income taxes in
accordance with GAAP. See "Income Tax Effect."
Pre-tax net income for the fourth quarter, before non-cash charges, nearly
doubled to $13.9 million from $7.0 million in the fourth quarter of last year.
Pre-tax diluted earnings per share for the fourth quarter before the non-cash
charges totaled $0.70 compared with $0.40 a year ago. Net income including
the non-cash charges for the fourth quarter was $10.1 million versus $6.8
million and diluted earning per share was $0.50 versus $0.40 for the fourth
quarter of fiscal 2002.
Net revenues for the fourth quarter totaled $85.5 million, a 20% increase
from $71.3 million for the same period a year ago. Consolidated gross margins
improved to 29.1% from 24.8% for the year-earlier quarter, primarily the
result of margin improvements from the company-owned distributors as well as
decreased costs on valves and cylinders related to the inventory program
initiated this past season. The revenue increase was comprised of a 12% gain
in cylinder exchange revenue to $67.9 million and a 64% rise in products
revenue to $17.6 million. The products segment improvement for the fourth
quarter included a $5.2 million sales contribution from the company's
SkeeterVac(R) propane-powered mosquito eliminator.
"Blue Rhino executed its plan during our fourth quarter, despite
extraordinarily wet weather in many of our major markets," said Billy D. Prim,
chairman and chief executive officer. "Revenue growth also was strong at 20
percent, but slightly below plan as cylinder exchange same store units
decreased 1% from a year ago. We believe the decrease was as a result of
adverse weather conditions across much of the country during the quarter. At
the same time, we paid down debt, improving our debt-to-equity ratio to 37% at
July 31, 2003, compared with 53% a year earlier. We are well-positioned for
future growth."
"While weather historically has not been a factor in our business, the
magnitude and persistence of the unseasonably wet summer in many of our
markets negatively impacted our overall revenues, and same-store sales," Prim
continued. "We consider this an extraordinary event, and yet we still nearly
doubled net income from a year ago, excluding non-cash charges. We were able
to achieve these results largely due to management's ability to improve gross
margins through company-owned operations and decreased material costs achieved
from our inventory program implemented earlier in the year. We achieved a
$3.5 million margin improvement from the company-owned distributors acquired
last fall, which was well ahead of our projected $2.9 million. We also
effectively managed our selling, general and administrative expenses, which
decreased as a percent of sales to 8.5% from 10.1% in the prior year's fourth
quarter."
For the full year, pre-tax net income, before non-cash charges and
litigation proceeds, increased over two-fold to $18.8 million from $8.1
million for fiscal 2002. Pre-tax diluted earnings per share before non-cash
charges and litigation proceeds, for the fiscal year rose to $0.98 from $0.55
in the prior year. The results for the fiscal year contained a $2.6 million
non-cash charge related to the early payment of subordinated debt and a $2.2
million deferred income tax charge for transitioning to reporting income taxes
for GAAP measures. Non-cash charges were partially offset by $2.5 million in
net proceeds from a litigation settlement. Net income for the fiscal year,
including the non-cash charges and litigation proceeds, more than doubled to
$16.5 million from $8.0 million, and diluted earnings per share increased to
$0.86 from $0.55 for the 2002 fiscal year.
Note: Analysts' earnings per share (EPS) estimates for fourth-quarter and
full year 2003 were based on earnings before non-cash charges and income
taxes. The consensus estimate for the full fiscal year, as reported by First
Call, based on earnings before non-cash charges and income taxes, was $0.97,
and Blue Rhino today reported EPS of $0.98 calculated on that basis. The
fiscal fourth quarter of 2003 is the first quarter in which Blue Rhino is
transitioning to income tax reporting under GAAP. See "Income Tax Effect."
Net revenues for the full year rose 25% to $258.2 million from $205.6
million a year ago. Gross margins improved to 24.1% from 22.4% for the prior
year, primarily due to margin improvements from the company-owned distributors
and decreased costs on valves and cylinders related to the inventory program
initiated this past season. The revenue increase was comprised of a 33% gain
in cylinder exchange to $170.9 million and a 13% increase in products revenue
to $87.3 million. Cylinder exchange growth was driven by a 23% same-store
units increase and the products segment growth was driven by the successful
launch of the SkeeterVac(R) product.
"We continued to achieve strong growth by executing on a sound plan," Prim
said. "This plan is based on capitalizing on the continuing growth of
cylinder exchange within the overall propane refill market, using our retail
relationships to cross merchandise cylinder exchange with our complementary
propane-related products, and leveraging our established infrastructure. We
believe our infrastructure is one of the most advanced and efficient direct-
store delivery system servicing retailers."
Successful Launch of SkeeterVac(R)
Blue Rhino's SkeeterVac(R) product, which was launched in the third
quarter of fiscal 2003, produced sales of $8.4 million for fiscal 2003. The
mosquito eradication appliance, which is powered by propane and does not
require electricity or batteries, was marketed through major retailers
including Sam's Club, Target.com and Wal-Mart.com. The company has continued
to develop the technology and expects to offer additional models at reduced
retail price points for fiscal 2004.
"We are excited about the potential represented in the mosquito
eradication category," Prim said. "We believe the category will continue to
experience strong growth in the foreseeable future, and we are confident that
the growing popularity of these devices will benefit Blue Rhino cylinder
exchange, since the products use about three times more propane per season
than an average gas grill."
Subordinated Debt Eliminated
In the fourth quarter of fiscal 2003, Blue Rhino pre-paid the remaining
$10 million of its 13% subordinated debt and incurred a $1.7 million non-cash
refinancing charge that is reflected in interest expense. As a result,
interest expense increased to $2.8 million from $1.5 million for the fourth
quarter a year ago.
"During the second half of fiscal 2003, we totally eliminated $15 million
of 13% subordinated debt," Prim said. "This both improves our balance sheet
and reduces borrowing costs, which provides a strong foundation for growing
Blue Rhino's business in 2004 and beyond."
Income Tax Effect
Blue Rhino has $43 million in net operating loss carryforwards for federal
income tax purposes, which it expects will eliminate cash payments for income
taxes until fiscal 2006 - other than minimal income taxes in some states and
the alternative minimum tax. Income tax reporting under GAAP requires the
company to transition to reporting income taxes at a full tax rate, which is
estimated at 39%. The fourth quarter of fiscal 2003 represents the only
quarter in which the company expects to report on the basis of a partial
income tax rate, which resulted in an effective tax rate of 12% for the 2003
fiscal year and a $2.2 million deferred income tax charge for the fourth
quarter of fiscal 2003. When adjusted to reflect fully-tax effected earnings
at an assumed 39% rate, excluding the non-cash refinancing charges and
litigation proceeds, fourth-quarter EPS increased by 75% to $0.42 per share,
compared with $0.24 a year ago, and full-year EPS doubled to $0.59 per share,
compared with $0.29 the prior year. The pro forma fully tax effected EPS
numbers set forth in the preceding sentence compare with fourth quarter EPS
numbers of $0.50 and $0.40 for fiscal 2003 and 2002, respectively, and full
year EPS numbers of $0.86 and $0.55 for fiscal 2003 and 2002, respectively, as
calculated in accordance with GAAP.
Long Term Growth Targets Increased
"Looking at 2004 and beyond, we currently believe our double-digit revenue
growth objectives remain achievable and have raised our earnings growth
targets to 25% per year," Prim said. "We currently believe these are
attainable objectives for the next three to five years. Blue Rhino is the
market leader with first-mover advantage in our core cylinder exchange
business, we have a committed and experienced management team, and we have
demonstrated we can grow this business."
"As revenues continue to increase, we anticipate revenue growth to
moderate from the 49% compounded annual rate achieved over the past three
years," Prim continued. "Based on our current business plan, we expect to
increase revenue in the 10% to 15% range over the next three to five years.
The use of cylinder exchange as a safe, convenient alternative to traditional
refill continues to grow rapidly, but we estimate that it still represents
less than 40% of the $1 billion propane refill market. Plenty of room remains
for growth and Blue Rhino's leadership position will help drive the conversion
to exchange."
Guidance for Fiscal 2004
Blue Rhino currently expects revenue growth for the fiscal year ending
July 31, 2004 to be approximately 15%, or in a range of $290 million to $300
million. Fully taxed earnings per share is expected to grow approximately
25%, or to between $0.73 and $0.81, which compares to pro forma fully taxed
earnings per share of $0.59 for fiscal 2003 excluding non-cash charges and
litigation. The increases are based on the company's expectations of
accelerating cylinder exchange location growth by 2,000 - 4,000 new locations,
same-store unit increases near 10% for the year, increased revenues from
SkeeterVac(R), expense leverage and lower interest expense.
Because of Blue Rhino's seasonal business and other factors, the company's
projected results for fiscal 2004 are not spread evenly throughout the
quarters. The following are the company's current quarter-by-quarter
financial projections and factors influencing them:
Cylinder Exchange
FY Revenue Range EPS Range FY % of total
2004 2003 EPS* revenue
Q1 $48 - $50 million $0.06 - $0.08 $0.04 80%
Q2 $65 - $68 million $0.04 - $0.06 $0.03 45%
Q3 $77 - $80 million $0.13 - $0.15 $0.09 50%
Q4 $100- $102 million $0.50 - $0.52 $0.42 75%
FY $290- $300 million $0.73 - $0.81 $0.59 ** 62%
* -- Prior year EPS is pro forma for comparison purposes to exclude
litigation proceeds of $2.5 million or $0.13 per share in Q3, and exclude non-
cash debt refinancing charges of $0.9 million or $0.06 per share and $1.7
million or $0.08 per share in Q3 and Q4, respectively, and is adjusted for a
fully tax effected basis using a 39% tax rate. Quarter-by-quarter EPS for
fiscal 2003, as calculated in accordance with GAAP, were as follows:
FY 2003 FY 2003 EPS (GAAP)
Q1 $0.07
Q2 $0.05
Q3 $0.22
Q4 $0.51
FY $0.86 **
** - Quarterly earnings per share for fiscal year 2003 on a fully taxed
and GAAP basis do not add to the full year totals due to rounding.
Revenues in the first quarter are expected to decrease from the prior year
primarily due to timing of grill shipments in the product segment, which are
expected to occur in the second and third quarters due to generally high
inventories at retail. Additionally, we expect cylinder exchange revenues to
extraordinary 75% and 58% growth in the first and second quarters,
respectively. We also expect sales, general and administrative expenses to be
down approximately 1% as a percentage of sales from the prior year reflecting
leverage in our model.
"We believe there are significant growth opportunities in our core
business, and we will be focusing on those opportunities in fiscal 2004," said
Prim. "We are therefore reviewing our investment in Quickship, our in-store
retail shipping business. We acquired Quickship with a goal of leveraging our
existing infrastructure to generate a new source of revenue, and we continue
to believe there is a market for Quickship's services. We are beginning to
review strategic alternatives for this business unit."
Conference Call
Blue Rhino's conference call to discuss fourth-quarter and full-year
results and future guidance is scheduled for 10:30 a.m. Eastern Time today,
September 16, 2003. This call will be available live and by replay over the
Internet at www.streetevents.com and at the Blue Rhino website at
www.bluerhino.com.
About Blue Rhino
Blue Rhino is a leading national provider of branded propane cylinder
exchange and complementary propane-fueled products to consumers. Blue Rhino
cylinder exchange is offered at leading home center/hardware, mass merchants,
grocery and convenience stores, with branded cylinder displays at more than
28,000 retail locations in 48 states plus Puerto Rico. Cylinders are delivered
to retailers through a national network of both independent and affiliated
distributors. The company's stock is quoted on The Nasdaq Stock Market, Inc.
under the symbol RINO. For further information regarding Blue Rhino, visit the
Blue Rhino website at www.bluerhino.com.
This press release contains forward-looking statements that relate to Blue
Rhino's plans, objectives and estimates. The terms "should," "believe,"
"plan," "expect," "anticipate," "estimate," "intend" and "project" and similar
words or expressions are intended to identify forward-looking statements.
These statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and speak only as of the date
of this release. Blue Rhino's business is subject to numerous risks and
uncertainties, including: that its significant retail relationships are
generally nonexclusive and terminable at will; that it relies on a limited
number of distributors; its ability to manage growth; its ability to place
Blue Rhino cylinder exchange at additional retail locations; its ability to
successfully defend certain lawsuits; its ability to protect its intellectual
property and strengthen its brand; its ability to obtain an adequate supply of
cylinders that comply with applicable guidelines; its ability to mitigate the
effects of high propane commodity prices successfully; its ability to launch
new products and services successfully and the effect of new safety guidelines
on consumer demand for cylinder exchange. These and other risks and
uncertainties detailed in its most recent Annual Report on Form 10-K and in
other filings with the Securities and Exchange Commission could cause actual
results and experience to differ materially from those expressed or implied by
any of these forward-looking statements. To the extent permitted by applicable
law, Blue Rhino makes no commitment to update any forward-looking statement or
to disclose any facts, events, or circumstances after the date of this release
that may affect the accuracy of any forward-looking statement.
Blue Rhino Corporation
Condensed Consolidated Statements of Operations
For the Three and Twelve Months Ended July 31, 2003 and 2002
(in thousands, except per share data)
Three Months Ended Fiscal Year Ended
July 31, July 31,
2003 2002 2003 2002
(unaudited)
Net revenues $85,452 $71,347 $258,222 $205,585
Operating costs and expenses:
Cost of sales 60,553 53,632 196,084 159,440
Selling, general and
administrative 7,300 7,199 28,404 21,886
Depreciation and amortization 2,495 2,076 9,261 7,888
------- ------- -------- --------
Total operating costs and
expenses 70,348 62,907 233,749 189,214
------- ------- -------- --------
Income from operations 15,104 8,440 24,473 16,371
Interest and other expenses
(income):
Interest expense 2,841 1,481 7,784 6,217
Loss on investee 0 25 455 714
Other, net 27 (56) (2,513) (422)
------- ------- -------- --------
Income before income
taxes 12,236 6,990 18,747 9,862
Income taxes 2,172 11 2,217 47
------- ------- -------- --------
Net income 10,064 6,979 16,530 9,815
Preferred dividends -- 145 71 1,789
------- ------- -------- --------
Income available to
common stockholders $10,064 $6,834 $16,459 $8,026
======= ======= ======== ========
Earnings per common share:
Basic $0.57 $0.49 $1.00 $0.63
======= ======= ======== ========
Diluted $0.50 $0.40 $0.86 $0.55
======= ======= ======== ========
Shares used in per share
calculations:
Basic 17,787 13,875 16,430 12,658
======= ======= ======== ========
Diluted 19,980 17,177 19,239 14,701
======= ======= ======== ========
Supplemental Information
Three Months Ended Fiscal Year Ended
July 31, July 31,
2003 2002 2003 2002
(unaudited) (unaudited)
Net income (GAAP) $10,064 $6,979 $16,530 $9,815
Income taxes 2,172 11 2,217 47
------- ------ ------- ------
Pre-tax earnings 12,236 6,990 18,747 9,862
Noncash subordinated debt charge 1,657 -- 2,589 --
Net proceeds from litigation
settlement 1 -- (2,465) --
------- ------ ------- ------
Pre-tax net income before non-
cash charges
and litigation proceeds 13,894 6,990 18,871 9,862
Preferred dividends -- 145 71 1,789
------- ------ ------- ------
Pro Forma pre-tax income
available to common
stockholders before non-
cash charges
and litigation proceeds $13,894 $6,845 $18,800 $8,073
======= ====== ======= ======
Pro Forma pre-tax earnings per
share before non-cash
charges and litigation
proceeds $0.70 $0.40 $0.98 $0.55
======= ====== ======= ======
Pro Forma pre-tax net income before
non-cash charges
and litigation proceeds $13,894 $6,990 $18,871 $9,862
Proforma fully taxed 5,419 2,726 7,360 3,846
------- ------ ------- ------
Net income 8,475 4,264 11,511 6,016
Preferred dividends -- 145 71 1,789
------- ------ ------- ------
Income available to common
stockholders $8,475 $4,119 $11,440 $4,227
======= ====== ======= ======
Proforma fully taxed earnings
per share $0.42 $0.24 $0.59 $0.29
======= ====== ======= ======
Cylinder Transactions 4,185 3,794 10,551 8,267
======= ====== ======= ======
Reconciliation of pro forma fully taxed earnings per share for Q1,
Q2, Q3 and Q4 of Fiscal 2003:
Three Months Ended
10/31/02 1/31/03 4/30/03 7/31/03
Pro forma fully taxed earnings per
share (non-GAAP) $0.04 $0.03 $0.09 $0.42
Adjustments:
Noncash subordinated debt
charge (per share) -- -- ($0.06) ($0.08)
Net proceeds from litigation
settlement (per share) -- -- $0.13 $0.00
Additional tax amount at an
assumed 39% rate (per share) $0.03 $0.02 $0.06 $0.16
----- ----- ----- -----
Diluted earnings per share (GAAP) $0.07 $0.05 $0.22 $0.50
===== ===== ===== =====
BLUE RHINO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of July 31, 2003 and July 31, 2002
(In thousands)
July 31, July 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $2,495 $1,563
Accounts receivable, net 25,809 25,329
Inventories 20,372 11,035
Prepaid expenses and other
current assets 7,055 3,081
Deferred tax asset 2,266 --
-------- --------
Total current assets 57,997 41,008
Cylinders, net 50,917 37,004
Property, plant and equipment, net 37,765 30,477
Intangibles, net 62,862 31,988
Other assets 1,264 2,896
-------- --------
Total assets $210,805 $143,373
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $19,193 $19,969
Current portion of long-term debt
and capital lease obligations 6,433 2,013
Accrued liabilities 5,679 3,770
-------- --------
Total current liabilities 31,305 25,752
Long-term debt and capital lease
obligations, less current
maturities 42,800 39,259
Deferred income taxes 4,232 --
-------- --------
Total liabilities 78,337 65,011
Stockholders' equity 132,468 78,362
-------- --------
Total liabilities and
stockholders' equity $210,805 $143,373
======== ========