Edelbrock Reports Improved Sales for Second Quarter and First Six Months of Fiscal 2003
TORRANCE, Calif.--Feb. 6, 2003--Edelbrock Corporation today reported improved sales for the second quarter of its 2003 fiscal year and for the six months ended December 25, 2002.For the three months ended December 25, 2002, revenues increased to $31.0 million from revenues of $30.6 million in the same period of fiscal 2002. Net income for the second quarter of fiscal 2003 totaled $1.2 million, or $0.22 per basic and diluted share, compared to net income of $1.3 million, or $0.23 per basic and diluted share, for the comparable period a year ago.
For the six months ended December 25, 2002, revenues improved to $56.9 million from revenues of $56.1 million in the comparable period a year ago. Net income for the first six months of fiscal 2003 increased to $2.1 million, or $0.38 per basic and diluted share, from net income of $2.0 million, or $0.36 per basic and diluted share, in the same period of fiscal 2002.
Edelbrock attributed its improved revenues for the three and six-month periods to the continued popularity of its more than 7,500 automotive and motorcycle products among enthusiasts. The Company said that the continued strength of the Edelbrock brand among performance enthusiasts, combined with effective management of operating costs, enabled it to maintain strong sales and earnings for both the three and six-month periods despite constrained discretionary spending caused by continued weakness in the national economy, a sustained period of adverse weather that also hampered sales growth, and a sharp increase in worker's compensation, liability and general medical insurance costs.
Edelbrock said that the growth in revenues it achieved during the second quarter of fiscal 2003 was led by its proven line of high-performance aluminum automotive cylinder heads, sales of which improved 23.7% over the year-ago period. The Company also pointed to its emerging line of performance parts for sport compact vehicles, up over 60%; performance-enhancing nitrous oxide systems, up 21.2%; and water pumps, up 5.9%, as key contributors to its growth in sales for the quarter. Edelbrock also reported that sales from its Russell Performance Products division remained extremely strong, improving substantially over the second quarter of fiscal 2002.
Edelbrock reported that selling, general and administrative (SG&A) expense, as a percentage of sales, increased only marginally during the second quarter of fiscal 2003, rising to 26.6% from 26.2% for the second quarter of fiscal 2002. Overall, SG&A increased 3.0%, or $242,000, to $8.3 million from $8.0 million, for the second quarter of fiscal 2002. The year-to-year increase in SG&A was primarily attributable to expanded advertising and promotional activities required to support Edelbrock's growing line of products, and increased worker's compensation, liability and general medical insurance costs. Research and development expenses for the second quarter of fiscal 2003 increased 10.6%, or $90,000, to $942,000, or 3.0% of sales, from $852,000, or 2.8% of sales, in the second quarter of fiscal 2002.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "We were pleased with our overall performance in the second quarter. Sales grew and earnings remained strong despite the continued weakness of the national economy and a sustained period of poor weather, particularly in the East, that may have prevented enthusiasts from performing their desired upgrades. One thing we've always done here at Edelbrock, which I firmly believe has been key to our great success over the years, is to keep in very close touch with our customers," Mr. Edelbrock said. "Because we do this, we know that demand for Edelbrock products remains strong. I am very encouraged by the tremendous excitement we see for our products, and I remain confident that, as the conditions I spoke of earlier improve, this excitement will translate into more vigorous growth for Edelbrock and its shareholders."
Founded in 1938, Torrance-based Edelbrock Corporation 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 motorcycle carburetor division in San Jacinto, California, 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 Six months ended
December 25, December 25,
2002 2001 2002 2001
Revenues $31,015,000 $30,642,000 $56,889,000 $56,067,000
Cost of sales 19,918,000 19,716,000 35,757,000 35,998,000
Gross profit 11,097,000 10,926,000 21,132,000 20,069,000
Operating expenses
Selling,
general and
administrative 8,263,000 8,021,000 16,107,000 15,275,000
Research and
development 942,000 852,000 1,777,000 1,665,000
Total operating
expenses 9,205,000 8,873,000 17,884,000 16,940,000
Operating income 1,892,000 2,053,000 3,248,000 3,129,000
Interest expense 11,000 11,000 31,000 20,000
Interest income 18,000 3,000 38,000 36,000
Income before
taxes on income 1,899,000 2,045,000 3,255,000 3,145,000
Taxes on income 702,000 757,000 1,204,000 1,164,000
Net income $1,197,000 $1,288,000 $2,051,000 $1,981,000
Basic net income
per share(a) $0.22 $0.23 $0.38 $0.36
Diluted net income
per share(a) $0.22 $0.23 $0.38 $0.36
Basic weighted
average number of
shares
outstanding(a) 5,452,000 5,492,000 5,452,000 5,537,000
Diluted weighted
average number of
shares
outstanding(a) 5,457,000 5,492,000 5,461,000 5,537,000
(a) Earnings per share and share amounts for the three month and six
month periods ended December 25, 2001 have been retroactively
adjusted to account for the Company's 10% stock dividend
distributed in June 2002.
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 25, June 30,
2002 2002
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $2,615,000 $7,682,000
Accounts receivable, net 29,015,000 31,892,000
Inventories 25,568,000 23,359,000
Prepaid expenses and other 2,873,000 2,869,000
Total current assets 60,071,000 65,802,000
Property, plant and equipment, net 39,104,000 38,564,000
Goodwill 1,172,000 1,172,000
License agreement 758,000 758,000
Other 1,329,000 1,266,000
Total assets $102,434,000 $107,562,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $8,350,000 $14,519,000
Accrued expenses 4,110,000 4,954,000
Current portion of long-term debt 56,000 67,000
Total current liabilities 12,516,000 19,540,000
Long-term debt 508,000 527,000
Deferred income taxes 3,182,000 3,318,000
Shareholders' equity 86,228,000 84,177,000
Total liabilities and shareholders'
equity $102,434,000 $107,562,000