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Noland's 2002 earnings up 34.3 percent

NEWPORT NEWS, Va., February 18, 2003--Noland Company today reported 2002 net income of $9,561,000,or $2.70 per share (diluted), 34.3 percent greater than 2001's $7,121,000, or $1.99 per share.

Offsetting much of these gains was a 13.1 percent decline in electrical/industrial sales, due to a combination of sluggish manufacturing activity and a shift away from the integrated supply business. "We cancelled several unprofitable integrated supply accounts in 2002," said Noland, "as we moved to eliminate these as a source of future profit drains."

Overall, full-year 2002 company sales totaled $488,715,000, or 2.3 percent more than 2001's $477,911,000.

The company's gross profit was 3.6 percent higher than the prior year due to the combination of higher sales and slightly higher gross margins.

Operating expenses rose by $1,823,000, or two percent, in part due to a decline in non-cash pension credits and increases in casualty insurance, additional bad debts, and personnel-related costs. "From an operations standpoint, we continued to hold down the cost of doing business through aggressive expense-control measures we implemented in the second half of 2001," said Noland.

The sale of surplus property produced a $1,192,000 pre-tax gain. Excluding gains from the sale of property in both years, 2002 operating profit rose 26 percent over 2001.

Noland said lower interest rates and reduced borrowings resulted in a $569,000, or 33 percent, drop in interest expense. "Borrowings were down, in part, because of lower average inventory investments," said Noland. "We continued to improve the management of our inventories last year, achieving the highest inventory turns in 20 years."

Fourth-quarter 2002 sales totaled $117,191,000, or 3.6 percent greater than the year-earlier period's $113,173,000. Net income totaled $3,586,000, or $1.02 per share (diluted), 36.3 percent more than the $2,630,000, or 74 cents per share, for the fourth quarter of 2001.

Noland said the uncertain economy, coupled with rising unemployment and concerns about a potential war in Iraq, make it difficult to predict market conditions in 2003. "But we enjoyed a very solid year in 2002," said Noland, "and we are confident that the fundamental improvements we have made in our business in recent years will allow us to compete effectively for the available business."

Noland operates 98 branches in 13 states, and distributes products in the plumbing, HVAC, water systems, electrical, and industrial fields. The company's stock is traded on NASDAQ's National Market System. Its trading symbol is NOLD.

UNAUDITED FINANCIAL HIGHLIGHTS

For the Three Months Ended December 31	2002	2001
Merchandise Sales	$117,191,271	$113,173,260
Net Income ⁽¹⁾	$3,586,085	$2,630,115
Basic Earnings Per Share ⁽²⁾	$1.03	$0.74
Diluted Earnings Per Share ⁽³⁾	$1.02	$0.74

For the Twelve Months December 31	2002	2001
Merchandise Sales	$488,715,025	$477,911,172
Net Income ⁽¹⁾	$9,561,260	$7,120,656⁽⁶⁾
Basic Earnings Per Share ⁽⁴⁾	$2.72	$2.01⁽⁶⁾
Diluted Earnings Per Share ⁽⁵⁾	$2.70	$1.99⁽⁶⁾

Net income benefited in both years from noncash pension credits, net of tax, as follows: $300,000 (9 cents per share) and $914,000 (26 cents per share) for 2002's fourth quarter and twelve months, respectively; and $549,000 (15 cents per share) and $1,749,000 (49 cents per share) for the comparable 2001 periods.

Based on 3,487,334 shares outstanding in 2002 and 3,561,148 shares outstanding in 2001.

Based on 3,521,232 shares outstanding in 2002 and 3,561,148 shares outstanding in 2001.

Based on 3,509,554 shares outstanding in 2002 and 3,541,113 shares outstanding in 2001.

Based on 3,541,362 shares outstanding in 2002 and 3,571,752 shares outstanding in 2001.

Based on 3,550,034 shares outstanding in 2002 and 3,577,423 shares outstanding in 2001.

Note: Included in this news release are forward-looking management comments and other statements which reflect management's current outlook for the future. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements. Such risks and uncertainties include, but are not limited to, general business and economic conditions, climatic conditions, competitive pricing pressures, and product availability.