Exhibit 99.1

 

			NEWS RELEASE
			Contacts:	Steven J. Janusek
				Executive Vice President & CFO
				sjanusek@reddyice.com
				800-683-4423

 

REDDY ICE REPORTS FIRST QUARTER 2008 RESULTS

 

Annual Guidance for 2008 Lowered

 

APRIL 30, 2008 - DALLAS, TEXAS - Reddy Ice Holdings, Inc. (NYSE:FRZ) today reported financial results for the first quarter ended March 31, 2008.

 

Revenues for the first quarter of 2008 were $43.0 million, compared to $45.4 million in the same quarter of 2007.  The Company’s net loss was $3.3 million in the first quarter of 2008, compared to a net loss of $10.2 million in the same period of 2007.  Net loss per share was $0.15 in the first quarter of 2008 compared to a net loss per share of $0.47 in the first quarter of 2007.  Included in the 2008 results are a gain of $17.0 million related to the termination of the merger agreement between the Company and affiliates of GSO Capital Partners LP (“GSO”) on January 31, 2008, $0.8 million of costs related to the GSO transaction and the related stockholder litigation and $1.2 million of costs related to the ongoing antitrust investigations and related litigation.

 

Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and the effects of certain other items, was negative $4.3 million in the first quarter of 2008, compared to negative $0.7 million in the first quarter of 2007.  Available Cash for the first quarter of 2008 was negative $9.1 million compared to negative $9.2 million in the first quarter of 2007.  A discussion regarding the presentation of Adjusted EBITDA and Available Cash in this press release, including reconciliations of Adjusted EBITDA to EBITDA and net loss and the calculation of Available Cash, is set forth below in the section titled, “SUPPLEMENTAL DISCLOSURE REGARDING NON-GAAP FINANCIAL INFORMATION.”

 

“Results for the first quarter of 2008 were challenging,” commented Chairman, Chief Executive Officer and President William P. Brick.  “Weather conditions during the quarter were below our expectations, especially in the month of March.  Furthermore, we are being negatively affected by the recent sharp increases in energy prices, especially in regards to fuel.  We are receiving some benefits from the various cost savings initiatives begun in 2007 and are reviewing opportunities for additional cost savings.  Although the antitrust investigations are ongoing, we are continuing to operate normally and are serving all of our customers without interruption.”

 

 

Five acquisitions were completed during the first quarter of 2008.  One additional acquisition was completed during April 2008.  These six acquisitions had an aggregate acquisition cost of approximately $3.8 million.  Annual revenue and Adjusted EBITDA associated with these acquisitions are approximately $2.6 million and $0.7 million, respectively.  The Company is continuing to evaluate acquisition opportunities, although the pace of acquisitions is expected to slow through the summer selling season.

 

OUTLOOK

 

The following statements are based on current expectations.  These statements are forward-looking, and actual results may differ materially.  These statements do not include the potential impact of any mergers, acquisitions or other business combination, or divestitures that may be completed after April 30, 2008.  The projections for 2008 include the effects of the acquisitions completed through the date of this press release.  The projections for 2008 do not include any costs in connection with the stockholder litigation related to the GSO transaction or the ongoing antitrust investigations and related litigation other than actual costs incurred through March 31, 2008, although these costs are expected to be ongoing and could be significant.

 

Management is revising its guidance for 2008 primarily due to lower than expected results in the first quarter of 2008, month-to-date trends in April 2008, recent increases in energy-related expenses and expenses incurred in the first quarter of 2008 related to the ongoing antitrust investigations and related litigation.  Revenues in 2008 are now expected to range between $344 million and $354 million and net income is expected to range from $21.0 million to $25.2 million.  Diluted net income per share is expected to be in the range of $0.95 to $1.14.  Adjusted EBITDA for 2008 is expected to be in the range of $82 million to $87 million.  Available Cash, as defined in the Company’s credit agreement, is expected to range from $60.1 million to $69.1 million in 2008, with Available Cash per diluted share ranging from $2.71 to $3.11.  Capital expenditures for the full year 2008 are expected to range between $17 million and $19 million and dispositions to total $2 million to $4 million, for net capital expenditures of $13 million to $17 million. Capital expenditures, net of the reinvested proceeds from the sale of our non-ice operations and other dispositions, for purposes of calculating Available Cash under our credit agreement, is expected to range from $0.5 million to $3.0 million in 2008.

 

CONFERENCE CALL

 

The Company has scheduled a conference call for today, Wednesday, April 30, 2008 at 10:00 a.m. Eastern time.  To participate, dial (800) 341-2312 ten minutes prior to the start time, referencing confirmation code 40070823 or the Reddy Ice conference call.  A telephonic replay will be available through May 7, 2008 and may be accessed by calling (866) 891-3570 and using the confirmation code 98189675.  A live webcast and archived replay of the conference call can also be accessed on the Company’s website at www.reddyice.com.

 

ABOUT REDDY ICE

 

Reddy Ice Holdings, Inc. is the largest manufacturer and distributor of packaged ice in the United States. With over 2,000 year-round employees, the Company sells its products primarily under the widely

 

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known Reddy Ice® brand to approximately 82,000 locations in 31 states and the District of Columbia.  The Company provides a broad array of product offerings in the marketplace through traditional direct store delivery, warehouse programs and its proprietary technology, The Ice Factory®.  Reddy Ice serves most significant consumer packaged goods channels of distribution, as well as restaurants, special entertainment events, commercial users and the agricultural sector.

 

This press release contains various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s belief as well as assumptions made by and information currently available to management.   Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.  Such statements contain certain risks, uncertainty and assumptions. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.

 

– Financial Tables Follow –

 

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REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Three Months Ended
		March 31,
		2008			2007
		(in thousands, except
		per share amounts)
Revenues		$	43,035		$	45,438
Cost of sales (excluding depreciation)		37,288			36,724
Depreciation expense related to cost of sales		5,150			4,849
Gross profit		597			3,865
Operating expenses		10,837			10,372
Depreciation and amortization expense		1,641			1,462
Cost of antitrust investigations and related litigation		1,187			—
Transaction costs related to merger agreement		811			—
Loss (gain) on dispositions of assets		(4		)	123
Loss from operations		(13,875		)	(8,092		)
Interest expense		(7,896		)	(7,533		)
Interest income		283			216
Gain on termination of merger agreement		17,000			—
Loss before income taxes		(4,488		)	(15,409		)
Income tax benefit		1,177			5,439
Net loss from continuing operations		(3,311		)	(9,970		)
Loss from discontinued operations, net of tax		—			(238		)
Net loss		$	(3,311	)	$	(10,208	)
Basic and diluted net loss per share:
Loss from continuing operations		$	(0.15	)	$	(0.46	)
Loss from discontinued operations		—			(0.01		)
Net loss		$	(0.15	)	$	(0.47	)
Weighted average common shares outstanding		22,000			21,686
Cash dividends declared per share		$	0.4200		$	0.4000

 

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

OTHER SUPPLEMENTAL INFORMATION

(Unaudited)

 

		Three Months Ended
		March 31,
		2008			2007
		(in thousands)
Packaged ice revenues		$	40,885		$	43,134
Other revenues		2,150			2,304
Total revenues		$	43,035		$	45,438

 

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REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited)

 

		March 31,			December 31,
		2008			2007
		(in thousands)
Cash and cash equivalents and restricted cash		$	34,651		$	34,445
All other current assets		41,529			43,793
Total assets		605,141			607,560
Accounts payable and accrued expenses		$	29,952		$	34,665
Dividends payable		9,240			9,240
Total current and non-current debt (including revolving credit facility)		392,559			378,258
Total stockholders’ equity		126,410			139,982
Total liabilities and stockholders’ equity		605,141			607,560

 

SUPPLEMENTAL DISCLOSURE REGARDING NON-GAAP FINANCIAL INFORMATION

 

EBITDA represents the Company’s consolidated net loss before income taxes, interest and depreciation and amortization.  Adjusted EBITDA represents EBITDA as further adjusted to give effect to unusual items, non-cash items, Reddy Ice Holdings, Inc. (“Reddy Holdings”) gains and expenses and other adjustments set forth below, such additional adjustments being required to calculate covenant ratios and compliance under the Company’s credit facility.  EBITDA and Adjusted EBITDA are not presentations made in accordance with generally accepted accounting principles (“GAAP”) and are not measures of financial condition or profitability. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for “net loss”, the most directly comparable GAAP financial measure, as an indicator of operating performance.

 

By presenting Adjusted EBITDA, the Company intends to provide investors with a better understanding of its core operating results to measure past performance as well as prospects for the future.  The Company evaluates operating performance based on several measures, including Adjusted EBITDA, as the Company believes it is an important measure of the operational strength of its business.  Furthermore, the additional adjustments included in the calculation of Adjusted EBITDA are required to calculate covenant ratios and compliance under the Company’s credit facility, including its ability to pay dividends.

 

Adjusted EBITDA as we have presented it, may not be comparable to similarly titled measures used by other companies.  Adjusted EBITDA is not necessarily a measure of the Company’s ability to fund its cash needs, as it excludes certain financial information when compared to “net loss”.  Users of this financial information should consider the types of events and transactions which are excluded.

 

As a result of the sale of substantially all of the Company’s non-ice businesses during the third quarter of 2007, the results of operation of those businesses, as well as the gain on their sale, are presented as “discontinued operations” in the accompanying condensed consolidated statements of operations.  Adjusted EBITDA, as defined in the Company’s credit facility, includes the results of operations of discontinued operations through their date of sale.  Adjusted EBITDA associated with discontinued operations is eliminated to calculate pro forma Adjusted EBITDA.  Therefore, in the following reconciliation of net loss to EBITDA and Adjusted EBITDA, the following line items are calculated as the total of continuing and discontinued operations and therefore differ from the amounts set forth in the accompanying condensed consolidated statement of operations:  depreciation expense related to cost of sales, depreciation and amortization expense and income tax benefit.

 

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		Three Months Ended
		March 31,
		2008			2007
		(in thousands, unaudited)
Net loss		$	(3,311	)	$	(10,208	)
Depreciation expense related to cost of sales		5,150			5,091
Depreciation and amortization expense		1,641			1,530
Interest expense		7,896			7,533
Interest income		(283		)	(216		)
Income tax benefit		(1,177		)	(5,597		)
EBITDA		9,916			(1,867		)
Other non-cash charges:
Stock-based compensation expense		832			1,086
Loss (gain) on dispositions of assets		(4		)	123
Reddy Holdings items:
Cost of antitrust investigations and related litigation (a)		1,187			—
Transaction costs related to merger agreement (a)		811			—
Gain on termination of merger agreement (a)		(17,000		)	—
Adjusted EBITDA		$	(4,258	)	$	(658	)

 

(a)          Represents the elimination of the (i) gain recognized in connection with the termination of the merger agreement with affiliates of GSO on January 31, 2008, (ii) costs related to the GSO transaction and the related stockholder litigation, and (iii) the costs incurred in connection with the ongoing antitrust investigations and related litigation.  The gain related to the termination of the merger agreement is excluded from Adjusted EBITDA for purposes of the Company’s credit facility as the proposed acquisition was of Reddy Holdings.  The costs related to GSO merger agreement and the antitrust investigations and related litigation are excluded from the calculation of Adjusted EBITDA as these costs have been or will be paid by Reddy Holdings.  Reddy Holdings is currently paying these costs with the excess cash remaining from the initial public offering of its common stock in August 2005 and the funds paid to Reddy Holdings by affiliates of GSO in February 2008 in connection with the termination of the merger agreement.

 

The Company’s credit agreement requires that pro forma effect be given to certain items, such as acquisitions and dispositions of businesses and the purchase of leased assets, when calculating Adjusted EBITDA.  The following table sets forth the calculation of pro forma Adjusted EBITDA:

 

		Three Months Ended
		March 31,
		2008			2007
		(in thousands, unaudited)
Adjusted EBITDA		$	(4,258	)	$	(658	)
Disposition adjustments (a)		—			85
Adjusted EBITDA from continuing operations		(4,258		)	(573		)
Acquisition adjustments (b)		19			154
Elimination of lease expense (c)		—			15
Pro forma Adjusted EBITDA		$	(4,239	)	$	(404	)

 

(a)   Represents the elimination of the historical negative Adjusted EBITDA associated with discontinued operations.

 

(b)   Represents the incremental Adjusted EBITDA of acquired businesses as if each acquisition had been consummated on the first day of the period presented.  All acquisitions included herein were consummated on or before March 31, 2008.

 

(c)   Represents the elimination of historical lease expense resulting from the purchase of certain leased real estate in the fourth quarter of 2007.

 

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Available Cash is a defined term in the Company’s credit agreement and is a key measure in evaluating the Company’s ability to pay dividends.  Available Cash for the three months ended March 31, 2008 and 2007 was as follows:

 

		Three Months Ended
		March 31,
		2008			2007
		(in thousands, unaudited)
Adjusted EBITDA		$	(4,258	)	$	(658	)
Less:
Cash paid for interest expense, net		4,028			3,927
Cash paid for income taxes		15			15
Capital expenditures, net of applied proceeds from dispositions		800			4,576
Principal repayments of indebtedness		15			13
Available Cash		$	(9,116	)	$	(9,189	)

 

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

RECONCILIATION OF PROJECTED NET INCOME TO

PROJECTED ADJUSTED EBITDA AND PROJECTED AVAILABLE CASH

(Unaudited)

 

		Projected
		Year Ending
		December 31,
		2008			2008
		Lower Range			Upper Range
		(in millions)
Net income		$	21.0		$	25.2
Depreciation expense related to cost of sales		21.1			20.5
Depreciation and amortization expense		6.8			6.4
Interest expense, net		29.5			28.7
Income tax expense		15.0			17.8
EBITDA		93.4			98.6
Other non-cash charges:
Stock-based compensation expense		3.6			3.4
Reddy Holdings items:
Cost of antitrust investigations and related litigation (a)(b)		1.2			1.2
Transaction costs related to merger agreement (a)(b)		0.8			0.8
Gain on termination of merger agreement, net (a)		(17.0		)	(17.0		)
Adjusted EBITDA		$	82.0		$	87.0
Cash paid for interest expense, net		(16.7		)	(15.9		)
Cash paid for income taxes		(2.2		)	(1.5		)
Capital expenditures, net of applied proceeds from dispositions		(3.0		)	(0.5		)
Available Cash		$	60.1		$	69.1

 

(a)          Represents the elimination of the (i) gain recognized in connection with the termination of the merger agreement with affiliates of GSO on January 31, 2008, (ii) costs related to the GSO transaction and the related stockholder litigation, and (iii) the costs incurred in connection with the ongoing antitrust investigations and related litigation.  The gain related to the termination of the merger agreement is excluded from Adjusted EBITDA for purposes of the Company’s credit facility as the proposed acquisition was of Reddy Holdings.  The costs related to the antitrust investigations and related litigation are excluded from the calculation of Adjusted EBITDA as these costs have been or will be paid by Reddy Holdings. 

 

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Reddy Holdings is currently paying these costs with the excess cash remaining from the initial public offering of its common stock in August 2005 and the funds paid to Reddy Holdings by affiliates of GSO in February 2008 in connection with the termination of the merger agreement.

 

(b)         The projections for 2008 do not include any costs in connection with stockholder litigation related to the GSO transaction or the ongoing antitrust investigations and related litigation other than actual costs incurred through March 31, 2008, although these costs are expected to be ongoing and could be significant.

 

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