Bad Weather Blocks Edelbrock

TORRANCE, Calif.--Bad weather has blocked Edelbrock Corp. from reaching its financial goals for the first quarter of its 2001 fiscal year, but the firm expects to be at full-throttle following a positive response to its product line last week in Las Vegas.

Sales for the 2001 quarter were adversely affected by unseasonable extremes in weather through much of the nation, which reduced demand for product from performance enthusiasts and, to a lesser extent, by an increase in fuel prices nationwide, according to the company.

“This quarter...much of the nation was beset by extremely adverse weather--triple-digit heat throughout the middle of the country and torrential rain up and down the Eastern seaboard. The reason why weather impacts our sales is very simple. If an enthusiast either can’t work in the garage because of intense heat, or go out and drive his or her vehicle after upgrading it because the streets are slick, it eliminates the great sense of excitement that attracts them to the hobby in the first place. That’s exactly what took place this quarter,” said Chairman and Chief Executive Officer Vic Edelbrock.

The company’s stock price has remained flat at 27 cents per share. Per-quarter sales as of Sept. 25 were $25.7 million, compared to $25.6 million in the first quarter of fiscal 2000. Net income was about $1.37 million, compared to $1.41 million last year.

“We’re pleased to have been able to deliver again consistent quarterly earnings, despite the presence of some abnormal external influences that exaggerated the slowing in sales we historically expect to see this time of year,” said Edelbrock.

“Some softening of sales in the first and second fiscal quarters is quite normal for us because the enthusiasts who comprise the bulk of our customer base prefer to perform the majority of their discretionary upgrades when the weather is good during the warmer spring and summer months,” Edelbrock explained.

“In the months ahead, we will continue to aggressively pursue the same proven strategy that has enabled us to grow sales consistently since we first opened our doors in 1938,”' Edelbrock said. “That includes maintaining the trust of our customers by guaranteeing that each Edelbrock product delivers superior performance and reliability; supporting our products with what I believe is one of the industry’s most effective marketing programs; and by continuing to capitalize on opportunities to expand into new market niches where we can use the power of the Edelbrock brand name to establish new sales channels,” he said.

“The scope of those opportunities is most evident in the breadth of new products we’re now rolling-out,” Edelbrock said. “Just a few days ago, at the annual SEMA (Specialty Equipment Market Association) convention in Las Vegas, we distributed an eight-page brochure featuring twice the number of new products or new applications of existing products than we generally introduce at this event,” he noted.

“One of the most exciting of the products we unveiled at SEMA was an oil-filled, twin-tube version of our revolutionary Performer IAS shock absorber,” Edelbrock said. “Like our other Performer IAS shocks, the twin-tube will deliver exceptional handling and stability, but it will be mass-marketed, under the Edelbrock name, at a price virtually anyone can afford,” he said.

“Along with our highly positive reception at the SEMA show, we also were very pleased to be recently selected, for the second consecutive year, by Forbes magazine as one of the ‘200 Best Small Companies’ in America. This is a tremendous honor for each hard-working Edelbrock employee and another highly positive milestone for us as a company,” Edelbrock added.

Over the past fiscal quarter, sales of Edelbrock’s line of Performer IAS shock absorbers improved 24.8 percent; sales of the company’s electronic fuel injection systems were up 41.5 percent; camshafts and camshaft kits increased 21.1 percent; water pumps improved 11.8 percent; and tubular exhaust product sales rose 7 percent versus the first quarter of fiscal 2000.

Among more established lines, sales of automotive carburetors manufactured to Edelbrock specifications by Magneti Marelli USA Inc. increased 4.3 percent for the fiscal 2001 quarter.

The company reported that selling, general and administrative expenses, as a percentage of sales, increased during the first quarter of fiscal 2001 to 27.7 percent, up from 26.6 percent last year.

“The year-to-year increase in SG&A is primarily attributable to increased advertising and promotional activities in support of Edelbrock’s growing base of products, expansion of the company’s operations, and higher utility costs,” he said.