Edelbrock Corporation Reports Sales and Earnings
TORRANCE, Calif.--Sept. 5, 2001--Edelbrock Corporation today reported financial results for its fiscal 2001 fourth quarter and year ended June 30, 2001.Edelbrock said that sales of its popular automotive and motorcycle performance products remained strong but declined slightly for the quarter and the year due to continued weakness in the national economy and that this, combined with sharply increased costs for energy, as well as workers' compensation and health insurance, impacted earnings for both periods.
For the fourth quarter of fiscal 2001, Edelbrock generated revenues of $36.3 million as compared to revenues of $37.1 million in the fourth quarter of fiscal 2000. Net income for the fiscal 2001 quarter was $2.1 million, or $0.42 per basic and diluted share, versus net income of $3.0 million, or $0.58 per basic and diluted share, for the fourth quarter of fiscal 2000.
For fiscal 2001 the company achieved revenues of $115.6 million compared to revenues of $121.2 million in fiscal 2000. Net income for fiscal 2001 was $4.8 million, or $0.94 per basic and diluted share, versus net income of $8.0 million, or $1.55 per basic and diluted share, a year ago.
Both new and established lines contributed to Edelbrock's sales in the fourth quarter. For example, the company derived almost immediate benefit from the integration of its newly acquired Russell Performance Products division, which is a leading manufacturer of performance plumbing and brake lines that produces more than 2,800 street-legal aftermarket brake lines, oil lines, fuel lines, and filters for automotive and motorcycle applications. Edelbrock completed that acquisition in December 2000 and subsequently relocated the facility to Torrance in May 2001. Sales for the fourth quarter of fiscal 2001 include revenue from the Russell Division of approximately $1.3 million.
Among more established lines, Edelbrock saw meaningful gains in automotive carburetors for Q-Jet applications, sales of which improved 23.0 percent from the fourth quarter of fiscal 2000. Additionally, sales of automotive cylinder heads improved 6.7 percent; sales of component kit parts increased 8.6 percent; sales of exhaust and suspension products rose 8.1 percent; and sales of aftermarket cylinder heads and manifolds for Harley-Davidson motorcycles increased 89.4 percent over last year.
Selling, general and administrative expenses for the fourth quarter remained virtually unchanged from the year-ago period as Edelbrock continued to control costs while aggressively promoting its products to enthusiasts. For both the current and year-ago quarter SG&A totaled $9.0 million, or approximately 24.9 percent of sales in the current quarter versus 24.4 percent in fiscal 2000.
Research and development expenses for the fourth quarter increased 4.6 percent over fiscal 2000 as Edelbrock continued to develop new applications of a broad range of products in order to remain abreast of consumer buying trends. For the quarter, R&D expenses increased to $1.2 million, or 3.3 percent of sales, from $1.1 million, or 3.1 percent of sales, a year ago.
In order to reduce its selling expenses, Edelbrock elected in August 2001 to eliminate its minimum purchase requirements under its 1996 license agreement with Ricor Racing and Development, L.P. As a result, Edelbrock will not be the exclusive seller of certain Ricor products, but currently will continue to use these products in its Edelbrock Performer IAS shock absorbers.
Commenting on the company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "Edelbrock held its own against an array of formidable challenges throughout fiscal 2001 and we believe we had a reasonably good year in spite of them.
"Throughout the year, a weakened national economy and an extended period of inclement weather dissuaded enthusiasts from participating in the hobby they love, and that in turn reduced demand for our products," he said. "At the same time, Edelbrock, like other companies based in California, was also hit hard by sharply increased costs for electricity and natural gas, along with significant increases in the cost of health and workers' compensation insurance. The combined effect of these forces had a predictable impact on our earnings.
"With that said, however, while sales did decline, the demand for Edelbrock products among performance enthusiasts remained strong throughout fiscal 2001," Edelbrock noted. "In addition to the performance of those lines referenced earlier, we received a great boost this fiscal year from our newly acquired Russell Performance Products division, which made a very meaningful contribution to our revenue stream in spite of having production temporarily interrupted by the relocation of its operations from Florida to the West Coast, a process that was completed smoothly and on schedule in May 2001. As we've already seen, Russell is a great compliment to our existing operations and we look for continued growth from this segment in the future.
"Looking ahead, I believe that the market for Edelbrock products remains exceptional going forward," Edelbrock said. "One of the best gauges of that is the level of excitement generated nationwide by motorsports, which remains at all-time highs.
"It's important to understand that just because the economy has been soft and the weather has been harsh doesn't mean that our customers have in any way lost their enthusiasm for performance and the products they know are the best in the world at delivering it," Edelbrock concluded. "We have a strategy for success that's been thoroughly tested through both good times and bad over the last sixty-three years. We designed that strategy specifically to maximize growth when conditions are good and to minimize the downside when conditions are less than optimal, as they are today. As the national and regional economic situations improve, and our energy costs stabilize, as now seems to be taking place, Edelbrock will be very well positioned to continue to capitalize on the opportunities before it going forward."
Founded in 1938, Torrance-based Edelbrock Corp. is recognized as one of the nation's premier designers, manufacturers and distributors of performance replacement parts for the automotive and motorcycle aftermarkets. In addition to three production facilities and an automated distribution center in Torrance, the Company owns and operates a state-of-the-art aluminum foundry and its QwikSilver Division for motorcycle aftermarket parts in San Jacinto, Calif., at which it manufactures many of its quality products.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth above that are not historical facts are forward-looking statements that involve known and unknown risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as the financial strength and competitive pricing environment of the automotive and motorcycle aftermarket industries; product demand; market acceptance; manufacturing efficiencies; new product development; the success of planned advertising, marketing and promotional campaigns; and other risks identified herein and in other documents filed by the company with the Securities and Exchange Commission.
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Fiscal Year ended
June 30, June 30,
2001 2000 2001 2000
------------------ ------------------
Revenues $36,293,000 $37,107,000 $115,630,000 $121,173,000
Cost of sales 22,640,000 22,348,000 72,734,000 74,315,000
Gross profit 13,653,000 14,759,000 42,896,000 46,858,000
------------------ ------------------
Operating expenses
Selling,
general and
administrative 9,038,000 9,046,000 31,607,000 30,762,000
Research and
development 1,200,000 1,147,000 3,651,000 3,688,000
Total operating
expenses 10,238,000 10,193,000 35,258,000 34,450,000
------------------ ------------------
Operating income 3,415,000 4,566,000 7,638,000 12,408,000
Interest expense 77,000 48,000 283,000 196,000
Interest income 8,000 44,000 227,000 385,000
Income before
taxes on income 3,346,000 4,562,000 7,582,000 12,597,000
Taxes on income 1,223,000 1,576,000 2,790,000 4,549,000
------------------ ------------------
Net income $2,123,000 $2,986,000 $4,792,000 $8,048,000
Basic net income
per share $0.42 $0.58 $0.94 $1.55
Diluted net income
per share $0.42 $0.58 $0.94 $1.55
Basic weighted
average number
of shares
outstanding 5,077,000 5,132,000 5,077,000 5,179,000
Effect of dilutive
stock options and
warrants -- 1,000 -- 6,000
Diluted weighted
average number
of shares
outstanding 5,077,000 5,133,000 5,077,000 5,185,000
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, June 30,
2001 2000
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 5,995,000 $ 9,883,000
Accounts receivable, net 26,928,000 27,228,000
Inventories 22,899,000 17,157,000
Prepaid expenses and other 1,968,000 1,576,000
Total current assets 57,790,000 55,844,000
Property, plant and
equipment, net 40,913,000 42,156,000
Real estate properties, net 412,000 437,000
Goodwill and License agreement 1,891,000 842,000
Other 912,000 968,000
Total assets $101,918,000 $100,247,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $13,981,000 $15,076,000
Accrued expenses 4,165,000 4,574,000
Current portion of long-term
debt 63,000 1,921,000
Total current liabilities 18,209,000 21,571,000
Long-term debt 563,000 148,000
Deferred income taxes 3,122,000 3,085,000
Shareholders' equity 80,024,000 75,443,000
Total liabilities and
shareholders' equity $101,918,000 $100,247,000