Edelbrock Reports Results for Q3 and First Nine Months of Fiscal 2001
TORRANCE, Calif.--May 9, 2001--Edelbrock Corp. today reported sales and earnings for its fiscal 2001 third quarter and first nine months ended March 25, 2001.Edelbrock said that consumer concerns about the nation's overall economy, extended inclement weather across many areas of the country, and a sharp increase in operating costs related to California's energy crisis, combined to impact sales and earnings for the quarter and nine-month periods.
For the third quarter of fiscal 2001, revenues declined 13.2 percent to $26.0 million from revenues of $29.9 million in the third quarter of last year. Net income for the fiscal 2001 quarter totaled $54,000, or $0.01 per basic and diluted share, compared to net income of $1.9 million, or $0.37 per basic and diluted share, in the third quarter of fiscal 2000.
For the first nine months of fiscal 2001, revenues decreased 5.6 percent to $79.3 million from revenues of $84.1 million for the same period of fiscal 2000. Net income for the fiscal 2001 nine months was $2.7 million, or $0.53 per basic and diluted share, compared to net income of $5.1 million, or $0.97 per basic share and diluted share, in the first nine months of fiscal 2000. Edelbrock said that the reduction in sales and the absorption of excess manufacturing and distribution capacity that resulted, together with substantially higher costs for natural gas and electricity, were the chief factors underlying the company's weakened bottom line results for the quarter.
Despite the overall decline in sales, Edelbrock continued to receive meaningful sales contributions in the third quarter from a mix of new and established product lines. These included automotive carburetors, aluminum cylinder heads and intake manifolds, computer-controlled fuel injection systems, tubular exhaust system products, and the company's Performer IAS shock absorbers. Edelbrock also received first-time contributions during the quarter from its new line of performance-enhancing nitrous-oxide systems. Toward the end of the quarter, the company also started shipping its new line of crate engines, a product introduced at the SEMA show in Las Vegas.
In addition, Edelbrock reported a contribution of sales from its new Russell Performance Products division, which the company acquired in late December 2000. Russell is a leading manufacturer of performance plumbing and brake lines whose current product offering of over 2,800 parts includes street-legal brake lines, oil lines, fuel lines, and filters for both automotive aftermarket and motorcycle use. Edelbrock said that plans to relocate the operation to Southern California from its current location in Daytona Beach, Fla. are on schedule, and that the move should be completed toward the end of fiscal 2001.
Selling, general and administrative expenses for the third quarter increased 7.4 percent overall, from $7.4 million in the third quarter of fiscal 2000 to $8.0 million this year, as Edelbrock experienced an increase in operating costs attributable largely to California's ongoing energy crisis and depreciation on assets associated with its recent expansion as well as an increase in advertising expenditures related to Edelbrock's continual need to reinforce consumer desire for its product. For the quarter, SG&A increased to 30.6 percent of sales from 24.8 percent of sales a year ago. For the first nine months of fiscal 2001, SG&A expenses increased 3.9 percent from the year-ago period to 28.4 percent of sales from 25.8 percent of sales in the same period of the prior year.
Research and development expenses for the third quarter decreased 2.3 percent over the fiscal 2000 quarter as Edelbrock continued to develop new applications of existing products as a cost-effective way of re-establishing sales momentum. For the quarter, R&D expenses decreased to $867,000, or 3.3 percent of sales, from $887,000, or 3.0 percent of sales, a year ago. For the first nine months of fiscal 2001, R&D expenses increased to 3.1 percent of sales from 3.0 percent of sales in the same period of the prior year.
Commenting on the company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said: "In our business, three key things must be present in order for us to achieve the sales growth we look for each quarter - stable economy, favorable weather and consumer desire. For this quarter, two of those three were missing.
"First, a customer needs the means to purchase product," Mr. Edelbrock said. "When an individual is uncertain about a job or outlook for the economy, he or she is far more likely to put off the purchase of a performance product that uses discretionary dollars. Right now, there's a tremendous amount of uncertainty about the nation's economy, and people everywhere are putting off discretionary purchases that they would otherwise make today.
"Second, a customer needs the opportunity to install and enjoy the product, and excessive cold, rain, snow and flooding, takes that right away. As we have mentioned before, weather plays a major role in our industry.
"And finally, a customer must want to buy the product," Mr. Edelbrock added. "I'm very pleased to say that this was not an issue during the third quarter, nor will it likely be in the future, regardless of the weather or the state of the economy.
"The reason why is that enthusiasts all over the world know that Edelbrock products, arguably more than any others on the market today, truly enable them to experience for themselves the great thrills of motorsports," he said. "As economic and climatic conditions improve, we look forward to enthusiasts returning in great numbers to the products they know they can count on to deliver the superior performance they desire."
EDELBROCK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
March 25, March 25,
2001 2000 2001 2000
Revenues $25,968,000 $29,900,000 $79,337,000 $84,066,000
Cost of sales 16,955,000 18,570,000 50,094,000 51,967,000
Gross profit 9,013,000 11,330,000 29,243,000 32,099,000
Operating expenses
Selling,
general
and
administrative 7,959,000 7,414,000 22,569,000 21,716,000
Research and
development 867,000 887,000 2,451,000 2,541,000
Total operating
expenses 8,826,000 8,301,000 25,020,000 24,257,000
Operating income 187,000 3,029,000 4,223,000 7,842,000
Interest expense 111,000 49,000 206,000 148,000
Interest income 9,000 41,000 219,000 341,000
Income before taxes
on income 85,000 3,021,000 4,236,000 8,035,000
Taxes on income 31,000 1,118,000 1,567,000 2,973,000
Net income $ 54,000 $ 1,903,000 $ 2,669,000 $ 5,062,000
Basic net income
per share $0.01 $0.37 $0.53 $0.97
Diluted net income
per share $0.01 $0.37 $0.53 $0.97
Basic weighted
average number of
shares outstanding 5,077,000 5,174,000 5,077,000 5,196,000
Effect of
diluted stock
options
and warrants - - - 23,000
Diluted weighted
average number of
shares outstanding 5,077,000 5,174,000 5,077,000 5,219,000
-0-
EDELBROCK CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 25, June 30,
2001 2000
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 513,000 $ 9,883,000
Accounts receivable, net 30,949,000 27,228,000
Inventories 22,421,000 17,157,000
Prepaid expenses and other 2,736,000 1,576,000
Total current assets 56,619,000 55,844,000
Property, plant and equipment, net 41,468,000 42,156,000
Other 3,189,000 2,247,000
Total assets $101,276,000 $100,247,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 11,092,000 $ 15,076,000
Accrued expenses 4,404,000 4,574,000
Line of Credit 4,100,000 -
Current portion of long-term debt 98,000 1,921,000
Total current liabilities 19,694,000 21,571,000
Long-term debt 540,000 148,000
Deferred income taxes 3,035,000 3,085,000
Shareholders' equity 78,007,000 75,443,000
Total liabilities and
shareholders' equity $101,276,000 $100,247,000