Edelbrock Corp. Reports Improvement in Sales and Earnings
TORRANCE, Calif.--May 4, 2004--Edelbrock Corporation today reported an improvement in sales and earnings for its fiscal 2004 third quarter and nine months ended March 25, 2004.For the quarter, revenues increased 11.3% to $28,551,000 from $25,658,000 in the comparable period of fiscal 2003. Net income for the third quarter of fiscal 2004 increased to $905,000, or $0.16 per diluted share, from net income of $210,000, or $0.04 per diluted share, in the third quarter of fiscal 2003. The results for the quarter were positively impacted by a pre-tax gain of $315,000 on the sale of a real estate asset (approximately $198,000, or $0.04 per diluted share, after tax).
For the nine months ended March 25, 2004, revenues rose 6.5% to $87,950,000 from revenues of $82,547,000 in the first nine months of fiscal 2003. Net income for the fiscal nine month 2004 period increased 17.6% to $2,659,000, or $0.48 per diluted share, from net income of $2,261,000, or $0.41 per diluted share, in the same period a year ago. Results for the nine month period ended March 25, 2004, reflected gains on the sale of real estate assets totaling $453,000 (approximately $285,000, or $0.05 per diluted share, after tax).
Edelbrock attributed its improved sales for the Fiscal 2004 quarter and nine month period to improvements in the national economy, favorable weather conditions that enabled enthusiasts to perform desired upgrades, and continued strong customer acceptance of the Edelbrock brand and products, reinforced by the Company's aggressive marketing program. Despite Edelbrock's strong performance in the fiscal 2004 periods, however, management noted that earnings growth continued to be hampered by continuing increases in worker's compensation and overall insurance costs.
Edelbrock reported that revenues for the third quarter were strong across a broad range of product categories. Sales of the Company's high-performance aluminum automotive cylinder heads rose 12.1% over the year-ago period, while sales of Edelbrock's highly regarded aluminum automotive intake manifolds improved 7.8%. Other lines that made notable contributions to the Company's quarterly sales growth included its popular chrome air cleaners and valve covers, up 37.3%; automotive carburetors, up 3.0%; exhaust systems, up 37.6%; and shock absorbers rose 24.9% for the quarter. Edelbrock also received a 12.2% quarterly sales increase from its Russell Performance Products division. Russell is a leading provider of performance plumbing and brake lines which includes street legal brake lines, oil lines, fuel lines, and filters for both automotive and motorcycle use, as well as other products for domestic and imported vehicles.
Edelbrock reported that selling, general, and administrative (SG&A), as a percentage of sales, decreased to 29.0% for the third quarter of fiscal 2004 from 31.4% in the year-ago period. Overall, SG&A increased 2.6%, or $208,000, to $8,276,000 for the third quarter of fiscal 2004. Research and development expenses for the third quarter of fiscal 2004 increased 8.4%, or $73,000, to $938,000, or 3.3% of sales, from $865,000, or 3.4% of sales, for the same period of fiscal 2003.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said: "Edelbrock performed extremely well in the third quarter. Despite the continuing impact of worker's compensation and other costs on our bottom line, we were able to mitigate the impact of those costs to some extent by focusing on top line growth. We did this by heightening our R&D activity and being even more aggressive in marketing our products so as to take full advantage of the improvement in the national economy and the favorable weather that we saw during the quarter. As our quarterly sales indicate, those efforts were all highly effective."
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
March 25, March 25,
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues $28,551,000 $25,658,000 $87,950,000 $82,547,000
Cost of sales 18,230,000 16,404,000 56,486,000 52,161,000
------------ ------------ ------------ ------------
Gross profit 10,321,000 9,254,000 31,464,000 30,386,000
------------ ------------ ------------ ------------
Operating expenses
Selling,
general, and
administrative 8,276,000 8,068,000 25,079,000 24,179,000
Research and
development 938,000 865,000 2,645,000 2,642,000
------------ ------------ ------------ ------------
Total operating
expenses 9,214,000 8,933,000 27,724,000 26,821,000
------------ ------------ ------------ ------------
Operating income 1,107,000 321,000 3,740,000 3,565,000
Interest expense 1,000 7,000 6,000 38,000
Interest income 9,000 8,000 30,000 46,000
Gain on sale of
assets and other
income 322,000 12,000 457,000 16,000
------------ ------------ ------------ ------------
Income before
taxes on income 1,437,000 334,000 4,221,000 3,589,000
Taxes on income 532,000 124,000 1,562,000 1,328,000
------------ ------------ ------------ ------------
Net income $905,000 $210,000 $2,659,000 $2,261,000
============ ============ ============ ============
Basic net income
per share $0.17 $0.04 $0.49 $0.41
============ ============ ============ ============
Diluted net income
per share $0.16 $0.04 $0.48 $0.41
============ ============ ============ ============
Basic weighted
average number of
shares
outstanding 5,464,000 5,452,000 5,459,000 5,452,000
Effect of dilutive
stock options and
warrants 51,000 9,000 32,000 9,000
------------ ------------ ------------ ------------
Diluted weighted
average number of
shares
outstanding 5,515,000 5,461,000 5,491,000 5,461,000
============ ============ ============ ============
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 25, June 30,
2004 2003
------------- -------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $5,929,000 $8,707,000
Accounts receivable, net 31,693,000 26,858,000
Inventories 28,192,000 26,398,000
Prepaid expenses and other 3,421,000 3,835,000
------------- -------------
Total current assets 69,235,000 65,798,000
Property, plant, and equipment, net 37,384,000 38,421,000
Goodwill 1,172,000 1,172,000
License agreement 694,000 758,000
Other 1,017,000 1,251,000
------------- -------------
Total assets $109,502,000 $107,400,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $11,256,000 $12,038,000
Accrued expenses 4,640,000 4,692,000
Current portion of long-term debt 40,000 48,000
------------- -------------
Total current liabilities 15,936,000 16,778,000
Long-term debt 179,000 494,000
Deferred income taxes 3,621,000 3,090,000
Shareholders' equity 89,766,000 87,038,000
------------- -------------
Total liabilities and shareholders' equity $109,502,000 $107,400,000
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