Edelbrock Corp. Reports Improved Sales and Earnings for Second Quarter of Fiscal Year 2004
TORRANCE, Calif.--Feb. 3, 2004--Edelbrock Corporation today reported sales and earnings for its fiscal 2004 second quarter and first six months ended December 25, 2003.For the quarter ended December 25, 2003, revenues increased to $31,741,000 from $31,015,000 in the same period of fiscal 2003. Net income for the second quarter ended December 25, 2003, improved to $1,287,000, or $0.24 per basic share ($0.23 per diluted share), from net income of $1,197,000, or $0.22 per basic and diluted share, for the second quarter of fiscal 2003.
For the six months ended December 25, 2003, revenues improved to $59,399,000 from $56,889,000 in the corresponding period a year ago. Net income for the six months ended December 25, 2003, was $1,754,000, or $0.32 per basic and diluted share, compared to net income of $2,051,000, or $0.38 per basic and diluted share, for the six months ended December 25, 2002.
Edelbrock attributed its improvement in sales for both the second quarter and first six months of fiscal 2004 to continued strong demand for its products combined with growing confidence among consumers in the nation's economic recovery. The Company noted that, while second quarter net income was improved over the year-ago period, earnings growth continued to be hampered by escalating workers' compensation and general insurance costs.
Edelbrock reported that sales remained strong for a range of new and established product lines in the second quarter. In the period, the Company's top performing lines included automotive carburetors (up 3.1%), aluminum automotive intake manifolds (up 3.0%), shock absorbers (up 32.4%), electronic fuel injection systems (up 5.5%), nitrous oxide systems (up 6.2%), and suspension products (up 65.0%). The Company also reported a 71.7% increase in revenue from third-party casting work at its aluminum foundry.
Edelbrock reported that selling, general and administrative (SG&A), as a percentage of sales, increased slightly to 26.7% for the second quarter of fiscal 2004 from 26.6% in the same period of fiscal 2003. Overall, SG&A increased 2.3%, or $194,000, to $8,459,000, for the second quarter of fiscal 2004. Research and development (R&D) expenses for the second quarter of fiscal 2004 decreased 13.7%, or $129,000, from the same period of fiscal 2003. As a percent of sales, R&D expenses decreased to 2.6% of sales for the second quarter of fiscal 2004 from 3.0% for the same period of fiscal 2003.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "The second quarter was a good one for Edelbrock. The slow but steady improvement we've seen in the national economy has begun to translate into greater consumer confidence and improved sales for Edelbrock as consumers are now starting the upgrades they desired to make.
"Importantly, we stayed on our strategy to maintain an R&D program that was highly responsive to our customers, remain highly aggressive in marketing our products, and continue to aggressively manage our costs," Mr. Edelbrock said. "Now, as in years past, those efforts are translating into sales and earnings growth.
"I am also pleased to report that we are on-track with the cost reduction programs that we previously discussed in our first quarter press release for our aluminum foundry located in San Jacinto, Calif. We have reduced the number of third-party foundry customers and as of late in the second fiscal quarter, virtually eliminated overtime at the aluminum foundry. We have also recently installed new foundry equipment that will reduce machine labor time and announced price increases on those third-party customers we elected to retain.
"In looking ahead, we will continue to focus on designing, manufacturing, and selling the quality performance products that the Edelbrock name is known for."
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Six months ended
December 25, December 25,
2003 2002 2003 2002
Revenues $31,741,000 $31,015,000 $59,399,000 $56,889,000
Cost of sales 20,452,000 19,918,000 38,256,000 35,757,000
Gross profit 11,289,000 11,097,000 21,143,000 21,132,000
Operating expenses
Selling, general
and
administrative 8,459,000 8,265,000 16,803,000 16,111,000
Research and
development 813,000 942,000 1,707,000 1,777,000
Total operating
expenses 9,272,000 9,207,000 18,510,000 17,888,000
Operating income 2,017,000 1,890,000 2,633,000 3,244,000
Interest expense 1,000 11,000 5,000 31,000
Interest income 10,000 18,000 21,000 38,000
Gain on sale of
fixed assets 17,000 2,000 135,000 4,000
Income before
taxes on income 2,043,000 1,899,000 2,784,000 3,255,000
Taxes on income 756,000 702,000 1,030,000 1,204,000
Net income $1,287,000 $1,197,000 $1,754,000 $2,051,000
Basic net income
per share $0.24 $0.22 $0.32 $0.38
Diluted net income
per share $0.23 $0.22 $0.32 $0.38
Basic weighted
average number of
shares
outstanding 5,459,000 5,452,000 5,456,000 5,452,000
Effect of diluted
stock options and
warrants 27,000 5,000 22,000 9,000
Diluted weighted
average number of
shares
outstanding 5,486,000 5,457,000 5,478,000 5,461,000
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 25, June 30,
2003 2003
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $4,677,000 $8,707,000
Accounts receivable, net 31,547,000 26,858,000
Inventories 26,611,000 26,398,000
Prepaid expenses and other 2,625,000 3,835,000
Total current assets 65,460,000 65,798,000
Property, plant and equipment, net 37,680,000 38,421,000
Goodwill 1,172,000 1,172,000
License agreement 708,000 758,000
Other 1,130,000 1,251,000
Total assets $106,150,000 $107,400,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $9,286,000 $12,038,000
Accrued expenses 4,964,000 4,692,000
Current portion of long-term debt 42,000 48,000
Total current liabilities 14,292,000 16,778,000
Long-term debt 178,000 494,000
Deferred income taxes 2,974,000 3,090,000
Shareholders' equity 88,706,000 87,038,000
Total liabilities and shareholders'
equity $106,150,000 $107,400,000