Reddy Ice Reports Fourth Quarter and Full Year 2005 Results

February 24 2006

Reddy Ice Holdings, Inc. (NYSE: FRZ), today reported financial results for the fourth quarter and year ended December 31, 2005.

Revenues for the fourth quarter of 2005 were $60.8 million, compared to $53.3 million in the same quarter of 2004. The Company's net loss available to common stockholders was $4.2 million in the fourth quarter of 2005, compared to net loss available to common stockholders of $4.6 million in the fourth quarter of 2004. Net loss per diluted share was $0.20 in the fourth quarter of 2005 compared to net loss per diluted share of $0.34 in the fourth quarter of 2004. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and the effects of certain other items, was $8.8 million in the fourth quarter of 2005, compared to $7.9 million in the fourth quarter of 2004. Available Cash generated in the fourth quarter of 2005 was $5.1 million. A discussion regarding the presentation of Adjusted EBITDA and Available Cash in this press release, including reconciliations of Adjusted EBITDA to EBITDA and net income (loss) and the calculation of Available Cash, is set forth below in the section titled, "SUPPLEMENTAL DISCLOSURE REGARDING NON-GAAP FINANCIAL INFORMATION."

"The fourth quarter brought us many of the same opportunities and challenges that we encountered in the third quarter," commented Chairman and Chief Executive Officer William P. Brick. "Revenues and volume sales were positively impacted primarily by favorable weather conditions across most of our markets. Offsetting those factors were continued increases in energy costs, especially in regards to fuel and plastic bags."

Revenues in the full year 2005 were $319.8 million, compared to $285.7 million in 2004. The Company's net loss available to common stockholders was $12.1 million in 2005, compared to net income available to common stockholders of $6.0 million in 2004. Net loss per diluted share was $0.72 in 2005 compared to earnings per diluted share of $0.44 in 2004. Adjusted EBITDA was $84.4 million in 2005, compared to $78.2 million in 2004.

The results for the full year 2005 include $6.2 million of expenses associated with the Company's recent initial public offering and related transactions and a $28.1 million loss on extinguishment of debt related to the redemption of the Company's 8 7/8% senior subordinated notes and the refinancing of its senior credit facility. Also included is a $5.7 million non-cash goodwill impairment charge related to the Company's non-ice business segment. All of these charges were incurred in the second and third quarters of 2005.

Reddy Ice did not complete any acquisitions during the fourth quarter of 2005. During January 2006, two acquisitions were closed for an aggregate cash purchase price of approximately $1.4 million. Annual revenue and Adjusted EBITDA associated with these acquisitions is approximately $1.0 million and $0.3 million, respectively.

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 combinations, or divestitures that may be completed after February 23, 2006. The projections for 2006 include the effects of the acquisitions completed through the date of this press release.

Management expects revenues in 2006 to range between $315 million and $325 million and net income available to common stockholders to range from $14.6 million to $18.6 million. Diluted net income per share is expected to be in the range of $0.67 to $0.86. Adjusted EBITDA for 2006 is expected to be in the range of $84 million to $89 million. Available Cash, as defined in the Company's credit agreement, is expected to range from $51.7 million to $60.1 million in 2006, with Available Cash per diluted share ranging from $2.38 to $2.77. Capital expenditures for the full year 2006 are expected to range between $16 million and $18 million and dispositions to total $2 million to $3 million, for net capital expenditures of $13 million to $16 million.

CONFERENCE CALL

Reddy Ice has scheduled a conference call for today, Thursday, February 23, 2006 at 10:00 a.m. eastern time. To participate, dial (888) 321-8161 ten minutes prior to the start time, referencing confirmation number 5044635 or the Reddy Ice conference call. A telephonic replay will be available through March 2, 2006 and may be accessed by calling (800) 642-1687 and using the above confirmation number. A live webcast and archive of the conference call can also be accessed on the Company's website at http://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 known Reddy Ice(R) brand to more than 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(R). 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 -

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended Year Ended

December 31, December 31,

2005 2004 2005 2004

(in thousands, except per share amounts)

Revenues $60,843 $53,311 $319,772 $285,727

Cost of sales

(excluding depreciation) 42,372 36,019 196,223 173,066

Depreciation expense

related to cost of sales 4,647 3,999 18,838 17,850

Gross profit 13,824 13,293 104,711 94,811

Operating expenses 10,785 11,103 42,030 36,928

Depreciation and

amortization expense 1,411 2,084 5,691 5,335

Loss on disposition

of assets 857 398 1,848 398

Impairment of assets --- --- 5,725 ---

Initial public offering

and related transaction

expenses --- --- 6,171 ---

Income (loss) from

operations 771 (292) 43,246 52,150

Other income, net --- 12 --- ---

Loss on extinguishment

of debt --- --- 28,189 ---

Interest expense 6,895 5,264 34,421 25,105

Income (loss) before

income taxes (6,124) (5,544) (19,364) 27,045

Income tax benefit

(expense) 1,886 1,890 7,248 (10,494)

Net income (loss) (4,238) (3,654) (12,116) 16,551

Preferred dividends --- 986 --- 10,583

Net income (loss) available

to common stockholders $(4,238) $(4,640) $(12,116) $5,968

Basic net income (loss)

per share:

Net income (loss)

available to common

stockholders $(0.20) $(0.34) $(0.72) $0.44

Weighted average common

shares outstanding 21,229 13,686 16,760 13,675

Diluted net income

(loss) per share:

Net income (loss)

available to common

stockholders $(0.20) $(0.34) $(0.72) $ 0.44

Weighted average common

shares outstanding 21,229 13,686 16,760 13,703

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

OTHER SUPPLEMENTAL INFORMATION

(Unaudited)

Three Months Ended Year Ended

December 31, December 31,

2005 2004 2005 2004

(in thousands)

Packaged ice revenues $54,703 $46,494 $296,368 $258,737

Other ice revenues 2,162 3,141 8,387 9,582

Total ice revenues 56,865 49,635 304,755 268,319

Non-ice revenues 3,978 3,676 15,017 17,408

Total revenues $60,843 $53,311 $319,772 $285,727

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited)

December 31, December 31,

2005 2004

(in thousands)

Cash and cash equivalents $33,997 $4,478

All other current assets 38,559 36,911

Total assets 603,764 588,620

Accounts payable and accrued expenses $31,111 $31,507

Dividends payable 8,297 ---

Total current and non-current debt

(including revolving facility) 352,960 437,066

Total stockholders' equity 183,183 82,933

Total liabilities and

stockholders' equity 603,764 588,620

SUPPLEMENTAL DISCLOSURE REGARDING NON-GAAP FINANCIAL INFORMATION

EBITDA represents net income (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 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 income (loss)," the most directly comparable GAAP financial measure, as an indicator of operating performance.

By presenting Adjusted EBITDA, Reddy Ice intends to provide investors with a better understanding of its core operating results to measure past performance as well as prospects for the future. Reddy Ice evaluates operating performance based on several measures, including Adjusted EBITDA, as Reddy Ice 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 Reddy Ice's ability to fund its cash needs, as it excludes certain financial information when compared to "net income (loss)." Users of this financial information should consider the types of events and transactions which are excluded. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA follows:

Three Months Ended Year Ended

December 31, December 31,

2005 2004 2005 2004

(in thousands)

Net income (loss) $(4,238) $(3,654) $(12,116) $16,551

Depreciation expense

related to costs of sales 4,647 3,999 18,838 17,850

Depreciation and

amortization expense 1,411 2,084 5,691 5,335

Interest expense 6,895 5,264 34,421 25,105

Income tax expense

(benefit) (1,886) (1,890) (7,248) 10,494

EBITDA 6,829 5,803 39,586 75,335

Other non-cash charges:

Stock-based

compensation expense 1,125 177 2,471 302

Loss on disposition

of assets 857 398 1,848 398

Loss on extinguishment

of debt --- --- 28,189 ---

Impairment of assets --- --- 5,725 ---

Terminated financing

costs (A) --- --- --- 233

Monitoring fees (B) --- 141 394 615

Transaction expenses (C) --- 1,351 6,171 1,351

Adjusted EBITDA $8,811 $7,870 $84,384 $78,234

(A) Represents costs incurred in connection with a proposed financing

transaction that terminated prior to consummation.

(B) Represents the elimination of monitoring fees paid to the Company's

majority owners prior to August 12, 2005.

(C) Represents (i) costs incurred in connection with the Company's

initial public offering and related transactions in August 2005 and

includes $0.5 million of non-cash stock-based compensation expense

related to a grant of common stock to certain employees and (ii) the

payment of transaction bonuses in connection with the October 27,

2004 offering of the Company's 10 1/2% senior discount notes and

other expenses related to that transaction.

The Company's credit agreement requires that pro forma effect be given to certain items, such as acquisitions 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 Year Ended

December 31, December 31,

2005 2004 2005 2004

(in thousands)

Adjusted EBITDA $8,811 $7,870 $84,384 $78,234

Acquisition adjustments (A) --- 12 167 2,147

Elimination of lease

expense (B) --- 100 273 398

Pro forma adjusted EBITDA $8,811 $7,982 $84,824 $80,779

(A) 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 December 31, 2005.

(B) Represents the elimination of historical lease expense resulting from

the purchase of certain leased real estate in the third quarter of

2005.

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 fourth quarter of 2005 is calculated as follows (in thousands):

Adjusted EBITDA $8,811

Less:

Cash paid for interest expense 435

Income tax refund (114)

Capital expenditures, net of proceeds from

dispositions 3,335

Principal repayments of indebtedness 43

Available Cash $5,112

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,

2006 2006

Lower Range Upper Range

(in millions)

Net income $14.6 $18.6

Depreciation expense related to cost

of sales 19.6 19.0

Depreciation and amortization expense 6.3 5.9

Interest expense 28.8 28.4

Income tax expense 9.8 12.4

EBITDA 79.1 84.3

Other non-cash charges - stock-based

compensation expense 4.9 4.7

Adjusted EBITDA 84.0 89.0

Cash paid for interest expense (15.2) (14.9)

Cash paid for income taxes (1.0) (0.9)

Capital expenditures, net of proceeds

from dispositions (16.0) (13.0)

Principal payments on debt (0.1) (0.1)

Available Cash $51.7 $60.1