Edelbrock Corp. Reports Results for First Quarter of Fiscal 2002
TORRANCE, Calif.--Nov. 6, 2001--Edelbrock Corp. today reported financial results for the first quarter of its 2002 fiscal year.For the fiscal 2002 quarter ended Sept. 25, 2001, revenues totaled $25.4 million compared to revenues of $25.7 million in the first quarter of fiscal 2001. Net income for the fiscal 2002 quarter was $693,000, or $0.14 per basic and diluted share, compared to net income of $1.37 million, or $0.27 per basic and diluted share, a year ago.
Edelbrock said that, while demand for its products remained strong among performance enthusiasts during the quarter, continued instability in the nation's economy prompted many customers to defer discretionary expenditures and coupled with distributors' reluctance to inventory replacement product, affected revenues for the period.
That, combined with significantly higher costs for energy, California workers' compensation insurance and employee medical expenses over the comparable year-ago quarter, reduced earnings for the period.
Both new and established product lines contributed to Edelbrock's sales for the first quarter of fiscal 2002. Sales of Edelbrock's broad line of aluminum automotive cylinder heads increased 14.8% over the year-ago quarter, while sales of the company's line of performance-enhancing nitrous-oxide products improved 25.7% over last year.
Edelbrock also reported continued strong revenue contributions from its Russell Performance Products subsidiary, which the company acquired in December 2000, of approximately $1.3 million. Russell is a leading manufacturer of more than 2,800 street-legal aftermarket brake lines, oil lines, fuel lines and filters for automotive and motorcycle applications.
The company reported that selling, general and administrative (SG&A) expenses, as a percentage of sales, increased during the first quarter of fiscal 2002 to 28.5% from 27.7% in the comparable quarter of fiscal 2001. Overall, SG&A expenses increased 2.0%, or $140,000, to $7.3 million, over the first quarter of 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 utilities and employee insurance costs.
Research and development (R&D) expenses for the quarter increased 4.0%, or $31,000, over the year-ago period, totaling $813,000. As a percentage of sales R&D expenses increased marginally, rising to 3.2% from 3.0% in the same period last year.
Commenting on the company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "I am proud to say that Edelbrock remained profitable and financially strong during the first quarter, which was a time of great economic uncertainty for America.
"Over the 64 years Edelbrock has been in business, we've worked diligently to not only build the best performance products available, but to ensure that enthusiasts are well aware of our efforts when they make their purchasing decisions," he said. "Those efforts have always rewarded us, especially when the bottom-line impact of the slowdown in sales we normally see during the cooler months of the year was exacerbated by overall weakness in the nation's economy.
"I remain optimistic that the general economy will recover in the not-too-distant future," Edelbrock continued. "In the months ahead, we'll continue to aggressively pursue the same proven strategy that has grown this company since we first opened our doors in 1938," he said.
"That means continuing to build superior performance and reliability into each of our products, supporting them with effective marketing, and by continuing to expand into new market niches where we can effectively leverage the power of the Edelbrock brand name to establish new sales channels.
"A great example of that element of our strategy was our recent acquisition of Russell Performance Products in December of last year," Edelbrock noted. "At that time, Russell was already a well-regarded brand among performance enthusiasts. Today, supported by the Edelbrock name as a division of Edelbrock, Russell's identity is even stronger, and has become a key contributor to our revenue stream.
"A few days ago, we re-introduced Russell, along with more than 150 new product applications, at the annual SEMA (Specialty Equipment Market Association) convention in Las Vegas," Edelbrock said. "In addition to being an outstanding showcase for our products, Edelbrock introduced a variety of new products, including the kick-off of our complete sport compact product line.
"The SEMA show has proven to be a highly reliable gauge of the strength of the market for all products and especially showed considerable enthusiasm this year for our new sport compact product line. The tremendous excitement we saw this year at SEMA left me with no doubt that, despite the prevailing economic climate, the market for performance products continues to be strong going forward and that Edelbrock remains exceptionally well positioned as one of its leaders."
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; marketplace 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 CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
September 25,
2001 2000
Revenues $ 25,425,000 $ 25,682,000
Cost of sales 16,282,000 15,687,000
Gross profit 9,143,000 9,995,000
Operating expenses
Selling, general and administrative 7,254,000 7,114,000
Research and development 813,000 782,000
Total operating expenses 8,067,000 7,896,000
Operating income 1,076,000 2,099,000
Interest expense 9,000 48,000
Interest income 33,000 121,000
Income before taxes on income 1,100,000 2,172,000
Taxes on income 407,000 804,000
Net income $ 693,000 $ 1,368,000
Basic net income per share $ 0.14 $ 0.27
Diluted net income per share $ 0.14 $ 0.27
Basic weighted average number
of shares outstanding 5,076,000 5,077,000
Effect of dilutive stock options and warrants -- --
Diluted weighted average number
of shares outstanding 5,076,000 5,077,000
EDELBROCK CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 25, June 30,
2001 2001
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 3,152,000 $ 5,995,000
Accounts receivable, net 24,167,000 26,928,000
Inventories 25,405,000 22,899,000
Prepaid expenses and other 2,231,000 1,968,000
Total current assets 54,955,000 57,790,000
Property, plant and equipment, net 40,816,000 40,913,000
Goodwill 1,053,000 1,053,000
License agreement 825,000 825,000
Other 1,332,000 1,337,000
Total assets $ 98,981,000 $101,918,000
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 11,362,000 $ 13,981,000
Accrued expenses 3,241,000 4,165,000
Current portion of long-term debt 63,000 63,000
Total current liabilities 14,666,000 18,209,000
Long-term debt 553,000 563,000
Deferred income taxes 3,113,000 3,122,000
Shareholders' equity 80,649,000 80,024,000
Total liabilities & shareholders' equity $ 98,981,000 $101,918,000