Edelbrock Corporation Improved Results for Fiscal 2002 Second Quarter
TORRANCE, Calif.--Feb. 7, 2002--Edelbrock Corporation today reported financial results for the second quarter and first six months of its 2002 fiscal year ended December 25, 2001.For the second quarter of fiscal 2002, revenues increased 10.7 percent to $30.6 million from revenues of $27.7 million in the same period of fiscal 2001. Net income for the fiscal 2002 quarter improved to $1.3 million, or $0.26 per basic and diluted share, from $1.2 million, or $0.25 per basic and diluted share, a year ago.
Revenues for the first six months of fiscal 2002 increased 5.1 percent to $56.1 million from revenues of $53.4 million in the same period of fiscal 2001. Net income for the first six months of fiscal 2002 totaled $2.0 million, or $0.39 per basic and diluted share, versus net income of $2.6 million, or $0.52 per basic and diluted share, a year ago.
Edelbrock attributed its improvement in quarterly revenue results to the continued success of its recent acquisition of Russell Performance, a series of successful new product introductions, and aggressive advertising and promotional activities that maintained strong demand among automotive enthusiasts for its broad range of its high-quality automotive and motorcycle aftermarket performance products.
Edelbrock said that the growth in revenues during the second fiscal quarter of 2002 came from a balanced mix of both established and emerging product lines. For example, quarterly sales of Edelbrock's high-performance carburetors and its popular line of aluminum automotive cylinder heads improved a strong 8.2 percent and 8.7 percent, respectively, over the year-ago period. Similar growth came from the sale of exhaust systems, up 32.6 percent, and water pumps, sales of which increased 30.2 percent over the year-ago period.
Chief among the emerging lines that performed notably for Edelbrock during the second quarter was its new Russell Performance Products division, which Edelbrock acquired in late December 2000. Russell is a leading manufacturer of more than 3,000 street-legal aftermarket brake lines, oil lines, fuel lines, and filters for automotive and motorcycle applications. Russell sales for the fiscal second quarter totaled approximately $1.3 million. Edelbrock also reported strong gains from its line of performance-enhancing nitrous oxide systems, sales of which rose 65.5 percent from the year-ago period, and its Chrome and Elite Aluminum Valve Covers and Air Cleaners, sales of which increased 10.3 percent over that same period. Edelbrock also reported good initial sales from its recently introduced line of exhaust systems and other performance products for import cars.
The Company reported that selling, general and administrative (SG&A) expenses, as a percentage of sales, decreased during the second quarter of fiscal 2002 to 26.2 percent from 27.1 percent a year ago. Overall, SG&A increased 7.0 percent, or $525,000, over the second quarter of last year to $8.0 million. The dollar increase in SG&A was primarily attributable to expanded advertising and promotional activities required to support Edelbrock's growing line of products, and operating, administrative and other costs associated with the addition of its Russell Performance division. For the first half of fiscal 2002, SG&A expenses decreased to 27.2 percent of sales from 27.4 percent for the same period of 2001, representing a 4.6 percent dollar increase from a year ago.
Research and Development (R&D) expenses for the second quarter of 2002 increased 6.2 percent, or $50,000, over the year-ago period to $852,000 as the Company continued to target market opportunities for emerging and existing product lines. As a percentage of sales, R&D expenses decreased slightly to 2.8 percent from 2.9 percent a year ago. For the first six months of fiscal 2002, R&D expenses rose 5.1 percent to $1.7 million, or 3.0 percent of sales, from $1.6 million, or 3.0 percent of sales, in the comparable year-ago period.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "We're pleased by what we saw during the second fiscal quarter, a period in which Edelbrock performed well against a backdrop of continued economic uncertainty. There are several positive things we did to bring about that performance. While maintaining tight control over operating and other costs, we continued to be highly aggressive -- and effective -- in promoting our products to keep Edelbrock squarely positioned as one of the industry's pre-eminent manufacturers of high-quality aftermarket performance products. At the same time, we remained very responsive to the enthusiasts who drive our market, introducing a range of new product applications to ensure that we have the right products at the right place, and at the right time.
"While many of those products helped to expand established lines, like cylinder heads and intake manifolds, which continue to serve us well, I'm particularly gratified by the sales now being generated by newer Edelbrock lines, such as our nitrous oxide and Qwik Data systems," Mr. Edelbrock continued. "Revenues from both those lines continue to trend steadily upward. I'm also very pleased with the continually improving contributions we're seeing from our recently acquired Russell Performance Products division, which, after only joining Edelbrock a year ago, is now an increasingly prominent contributor to our revenue stream.
"Unquestionably, Edelbrock's performance is still being hindered by the economy," Mr. Edelbrock concluded. "But we're continuing to grow in spite of those conditions. That tells me two things: that the market for Edelbrock products continues to be vibrant, and that Edelbrock is exceptionally good at serving that market."
Founded in 1938, Torrance, California-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
(Unaudited)
Three months ended Six months ended
December 25, December 25,
------------------------ ------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues $30,642,000 $27,687,000 $56,067,000 $53,369,000
Cost of sales 19,716,000 17,452,000 35,998,000 33,139,000
----------- ----------- ----------- -----------
Gross profit 10,926,000 10,235,000 20,069,000 20,230,000
----------- ----------- ----------- -----------
Operating expenses
Selling,
general and
administrative 8,021,000 7,496,000 15,275,000 14,610,000
Research and
development 852,000 802,000 1,665,000 1,584,000
----------- ----------- ----------- -----------
Total operating
expenses 8,873,000 8,298,000 16,940,000 16,194,000
----------- ----------- ----------- -----------
Operating income 2,053,000 1,937,000 3,129,000 4,036,000
Interest expense 11,000 47,000 20,000 95,000
Interest income 3,000 89,000 36,000 210,000
----------- ----------- ----------- -----------
Income before
taxes on income 2,045,000 1,979,000 3,145,000 4,151,000
Taxes on income 757,000 732,000 1,164,000 1,536,000
----------- ----------- ----------- -----------
Net income $ 1,288,000 $ 1,247,000 $ 1,981,000 $ 2,615,000
=========== =========== =========== ===========
Basic net
income per share $ 0.26 $ 0.25 $ 0.39 $ 0.52
=========== =========== =========== ===========
Diluted net
income per share $ 0.26 $ 0.25 $ 0.39 $ 0.52
=========== =========== =========== ===========
Basic weighted
average number
of shares
outstanding 4,992,000 5,077,000 5,033,000 5,077,000
=========== =========== =========== ===========
Diluted weighted
average number
of shares
outstanding 4,992,000 5,077,000 5,033,000 5,077,000
=========== =========== =========== ===========
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 25, June 30,
2001 2001
------------ ------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ -- $ 5,995,000
Accounts receivable, net 29,678,000 26,928,000
Inventories 24,224,000 22,899,000
Prepaid expenses and other 2,419,000 1,968,000
------------ ------------
Total current assets 56,321,000 57,790,000
Property, plant and equipment, net 39,779,000 40,913,000
Goodwill 1,172,000 1,172,000
License agreement 758,000 758,000
Other 1,379,000 1,285,000
------------ ------------
Total assets $ 99,409,000 $101,918,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 9,305,000 $ 13,981,000
Accrued expenses 3,970,000 4,165,000
Line of credit 1,570,000 --
Current portion of long-term debt 61,000 63,000
------------ ------------
Total current liabilities 14,906,000 18,209,000
Long-term debt 579,000 563,000
Deferred income taxes 3,097,000 3,122,000
Shareholders' equity 80,827,000 80,024,000
------------ ------------
Total liabilities and shareholders' equity $ 99,409,000 $101,918,000
============ ============