Edelbrock Corp. Reports Results for Third Quarter and First Nine Months of Fiscal 2003
TORRANCE, Calif.--May 6, 2003--Edelbrock Corporation today reported sales and earnings for its fiscal 2003 third quarter and nine months ended March 25, 2003.For the quarter, revenues totaled $25.7 million as compared to revenues of $28.2 million in the same period of fiscal 2002. Net income for the third quarter of fiscal 2003 was $210,000, or $0.04 per basic and diluted share, compared to net income of $1,132,000, or $0.21 per basic and diluted share, in the third quarter of fiscal 2002.
For the nine months ended March 25, 2003, revenues totaled $82.5 million compared to revenues of $84.3 million in the first nine months of fiscal 2002. Net income for the fiscal 2003 period was $2.3 million or $0.41 per basic and diluted share, compared to net income of $3.1 million, or $0.57 per basic and diluted share, in the same period a year ago.
Edelbrock attributed its decrease in sales for the quarter to inclement weather, consumer concerns about the impending and ultimate war in Iraq, and the sluggish national economy. The decrease in quarterly revenues was across the majority of Edelbrock's product lines as customer warehouses reduced their inventory levels. Although sales of automotive carburetors decreased 11.9% and sales of aluminum automotive intake manifolds decreased by 11.7%, Edelbrock reported an increase in sales of its popular line of high performance aluminum automotive cylinder heads, sales of which improved 5.2% for the quarter. In addition, Edelbrock also reported an increase in third party casting work at its aluminum foundry, sales of which improved over 120% from the third quarter of 2002.
Edelbrock reported that selling, general and administrative (SG&A) expense, as a percentage of revenues, increased to 31.4% for the third quarter of fiscal 2003 from 27.2% in the year-ago period. Overall, SG&A rose 5.0%, or $382,000, to $8,056,000, for the third quarter of fiscal 2003. The year-to-year increase in SG&A was primarily attributable to an increase in advertising costs in connection with the marketing of its various product lines. The Company also experienced increases in workers' compensation, medical, and general liability insurance.
Research and development expenses for the third quarter of fiscal 2003 declined 5.2%, or $47,000, over the year-ago period, totaling $865,000. As a percent of revenues, R&D expenses increased to 3.4% from 3.2% in the same quarter of fiscal 2002.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer, Vic Edelbrock, said, "Like so many other companies today, Edelbrock's financial results for this period reflected the turmoil of the times. Adverse weather, continued sluggishness in the national economy, and apprehension about world events combined to compel distributors to reduce their inventory levels and in addition, many customers deferred purchases they would otherwise have made during the quarter.
"However, Edelbrock performed well during the quarter despite such adversity," Mr. Edelbrock said. "In each of our previous years of operation, we are proud of the fact that we have reported a profit every year and in an environment where many companies lost money and market share, Edelbrock remained profitable, financially strong, and squarely positioned among the elite of its industry. Now that the situation in Iraq has begun to stabilize, it is our hope that the economy and the cost of gasoline will follow suit. This year we'll be celebrating our sixty-fifth year of continuous operation. Over that time, this company has successfully weathered war, recession, and innumerable natural disasters. Through it all, I have every confidence that the road before us will lead to continued success in the years ahead."
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.
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
March 25, March 25,
--------------- ---------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues $25,658,000 $28,194,000 $82,547,000 $84,261,000
Cost of sales 16,404,000 17,783,000 52,161,000 53,781,000
------------ ------------ ------------ ------------
Gross profit 9,254,000 10,411,000 30,386,000 30,480,000
------------ ------------ ------------ ------------
Operating expenses
Selling,
general and
administrative 8,056,000 7,674,000 24,163,000 22,949,000
Research and
development 865,000 912,000 2,642,000 2,577,000
------------ ------------ ------------ ------------
Total operating
expenses 8,921,000 8,586,000 26,805,000 25,526,000
------------ ------------ ------------ ------------
Operating income 333,000 1,825,000 3,581,000 4,954,000
Interest expense 7,000 31,000 38,000 51,000
Interest income 8,000 2,000 46,000 38,000
------------ ------------ ------------ ------------
Income before
taxes on income 334,000 1,796,000 3,589,000 4,941,000
Taxes on income 124,000 664,000 1,328,000 1,828,000
------------ ------------ ------------ ------------
Net income $210,000 $1,132,000 $2,261,000 $3,113,000
============ ============ ============ ============
Basic net income
per share (a) $0.04 $0.21 $0.41 $0.57
============ ============ ============ ============
Diluted net income
per share (a) $0.04 $0.21 $0.41 $0.57
============ ============ ============ ============
Basic weighted
average number of
shares
outstanding (a) 5,452,000 5,450,000 5,452,000 5,507,000
Effect of diluted
stock options and
warrants (a) 9,000 - 9,000 -
------------ ------------ ------------ ------------
Diluted weighted
average number of
shares
outstanding (a) 5,461,000 5,450,000 5,461,000 5,507,000
============ ============ ============ ============
(a) Earnings per share and share amounts for the three and nine
months ended March 25, 2002 have been retroactively adjusted to
account for the Company's June 2002 10% stock dividend.
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 25, June 30,
2003 2002
------------- -------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $- $7,682,000
Accounts receivable, net 30,970,000 31,892,000
Inventories 29,018,000 23,359,000
Prepaid expenses and other 3,884,000 2,869,000
------------- -------------
Total current assets 63,872,000 65,802,000
Property, plant and equipment, net 38,705,000 38,564,000
Goodwill 1,172,000 1,172,000
License agreement 758,000 758,000
Other 1,312,000 1,266,000
------------- -------------
Total assets $105,819,000 $107,562,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $11,799,000 $14,519,000
Accrued expenses 3,854,000 4,954,000
Current portion of long-term debt 52,000 67,000
------------- -------------
Total current liabilities 15,705,000 19,540,000
Long-term debt 523,000 527,000
Deferred income taxes 3,153,000 3,318,000
Shareholders' equity 86,438,000 84,177,000
------------- -------------
Total liabilities and shareholders'
equity $105,819,000 $107,562,000
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