Edelbrock Reports Improved Sales and Earnings for Fourth Quarter and Fiscal Year 2002
TORRANCE, Calif.--Aug. 28, 2002--Edelbrock Corporation today reported that it achieved continued improvement in sales and earnings for its fiscal 2002 fourth quarter and year ended June 30, 2002.For the fourth quarter of fiscal 2002, revenues increased 8.3% to $39.3 million from revenues of $36.3 million in the same period of fiscal 2001. Net income for the fiscal 2002 fourth quarter improved to $2.2 million, or $0.44 per basic share and $0.43 per diluted share, from $2.1 million, or $0.42 per basic and diluted share, a year ago.
Revenues for fiscal 2002 increased 6.9% to $123.6 million from revenues of $115.6 million in fiscal 2001. Net income for fiscal 2002 improved to $5.4 million, or $1.06 per basic and diluted share, from net income of $4.8 million, or $0.94 per basic and diluted share, in fiscal 2001.
Edelbrock attributed its improved quarterly results to an extended period of favorable weather across the country that enabled enthusiasts to perform desired upgrades; continuing strong nationwide interest in motor sports; growing customer acceptance of both established and new product lines; and continued success of its recent acquisition of Russell Performance.
Edelbrock attributed the growth in revenues it achieved during the fourth quarter of fiscal 2002 to strong performance from both established and emerging product lines. Sales of Edelbrock's popular high-performance automotive carburetors rose 5.5% over the year-ago quarterly period, while sales of aluminum automotive intake manifolds and cylinder heads improved 8.4% and 6.7%, respectively. Sales of the Company's Chrome and Elite Aluminum Valve Covers and Air Cleaners improved 7.4% and sales of exhaust system and suspension products, which include mufflers, springs, tubular exhaust and cat-back systems for domestic and import vehicles, grew a combined 5.5%.
Among emerging lines, Edelbrock reported continued strong performance from its new Russell Performance Products division, which it acquired in December 2000. Sales of Russell products for the fourth quarter of fiscal 2002, which include nearly 3,000 street-legal aftermarket brake lines, oil lines, fuel lines, and filters for automotive and motorcycle applications, improved 65.4% over the year-ago period. In addition to sales of Russell products, sales of shock absorber products that include the patented Inertia Active System increased 6.0% over the year-ago period. The Company also continued to see very strong sales growth across its new line of performance products for sub-compact vehicles.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, increased during the fourth quarter of fiscal 2002 to 25.9% from 24.9% a year ago. Overall, SG&A increased 12.9%, or $1.2 million, over the fourth quarter of last year to $10.2 million. The year-to-year increase in SG&A was primarily attributable to the Company's expanded marketing efforts to support the growth of its sales base and increased medical costs associated with its self-funded insurance plan.
Research and development (R&D) expenses for the fourth quarter of fiscal 2002 increased 6.3%, or $75,000, over the year-ago period, totaling $1.3 million, or 3.2% of sales. The Company attributed this increase to its continuing efforts to develop new applications for existing and emerging product lines. For the fiscal year ended June 30, 2002, R&D expenses rose 5.5% to $3.9 million, or 3.1% of sales, from $3.7 million, or 3.2% of sales, in the comparable year-ago period.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "This was another solid quarter for us and a very good year for Edelbrock overall. A variety of factors contributed to our improved performance. First and foremost among them, however, is our continued success in pinpointing opportunities within the market where the power of the Edelbrock brand can be effectively leveraged. This can be very clearly seen in the way our emerging lines, both those we developed internally and those we acquired, have performed over the last few years. Most notable among the lines we designed in-house are our nitrous oxide performance enhancing systems for enthusiasts, and our growing roster of performance products for subcompact vehicles. Each of these lines has grown consistently since their introduction. Among the lines we acquired, we continue to be very pleased with the way the broad range of complementary products distributed by our Russell Performance Products division are selling. With Russell, we brought on board nearly 3,000 street-legal aftermarket brake lines, oil lines, fuel lines, and filters for automotive and motorcycle applications. Russell's high-quality products distributed under the Edelbrock name are really beginning to achieve their potential to become market leaders.
"I'm very pleased with the sales momentum we've established over the last several quarters," Mr. Edelbrock continued. "Despite some areas of continued sluggishness, the national economy appears to have seen the bottom," he said. "We also expect to continue to derive some benefit from the fact that Edelbrock is an American company that makes the vast majority of its products right here at home. Now, in particular, enthusiasts are looking to `buy American,' and when they do, Edelbrock, whose products are renowned for their superior quality and performance, become a natural choice."
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 other documents filed by the Company with the Securities and Exchange Commission.
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Fiscal Year ended
June 30, June 30,
2002 2001 2002 2001
Revenues $39,318,000 $36,293,000 $123,579,000 $115,630,000
Cost of sales 24,293,000 22,640,000 78,074,000 72,734,000
Gross profit 15,025,000 13,653,000 45,505,000 42,896,000
Operating expenses
Selling, general
and administra-
tive 10,202,000 9,038,000 33,151,000 31,607,000
Research and
development 1,275,000 1,200,000 3,852,000 3,651,000
Total operating
expenses 11,477,000 10,238,000 37,003,000 35,258,000
Operating income 3,548,000 3,415,000 8,502,000 7,638,000
Interest expense 45,000 77,000 96,000 283,000
Interest income 15,000 8,000 53,000 227,000
Income before taxes
on income 3,518,000 3,346,000 8,459,000 7,582,000
Taxes on income 1,271,000 1,223,000 3,099,000 2,790,000
Net income $2,247,000 $2,123,000 $5,360,000 $4,792,000
Basic net income per
share $0.44 $0.42 $1.06 $0.94
Diluted net income
per share $0.43 $0.42 $1.06 $0.94
Basic weighted
average number of
shares outstanding 5,129,000 5,077,000 5,039,000 5,077,000
Effect of dilutive
stock options and
warrants 47,000 -- 1,000 --
Diluted weighted
average number of
shares outstanding 5,176,000 5,077,000 5,040,000 5,077,000
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, June 30,
2002 2001
ASSETS
Current assets
Cash and cash equivalents $7,682,000 $5,995,000
Accounts receivable, net 31,892,000 26,928,000
Inventories 23,359,000 22,899,000
Prepaid expenses and other 2,869,000 1,968,000
Total current assets 65,802,000 57,790,000
Property, plant and equipment, net 38,564,000 40,913,000
Real estate properties, net 303,000 412,000
Goodwill and License agreement 1,930,000 1,930,000
Other 963,000 873,000
Total assets $107,562,000 $101,918,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $14,519,000 $13,981,000
Accrued expenses 4,954,000 4,165,000
Current portion of long-term debt 67,000 63,000
Total current liabilities 19,540,000 18,209,000
Long-term debt 527,000 563,000
Deferred income taxes 3,318,000 3,122,000
Shareholders' equity 84,177,000 80,024,000
Total liabilities and shareholders' equity $107,562,000 $101,918,000