Edelbrock Corp. Reports Revenues and Earnings for Fiscal 1999 Q1
6 November 1998
Edelbrock Corp. Reports Strong Gain in Revenues and Earnings for Fiscal 1999 First Quarter
TORRANCE, Calif.--Nov. 6, 1998--Edelbrock Corp. (Nasdaq NM:EDEL) Friday reported a strong 10.6 percent gain in revenues and an 18.9 percent improvement in earnings for its fiscal 1999 first quarter ended Sept. 25, 1998.Edelbrock attributed the gain primarily to continued sales growth characterized by a favorable shift in its sales mix to higher-margin company-manufactured products.
For the first quarter of fiscal 1999, revenues rose 10.6 percent to $22.6 million from revenues of $20.4 million in the first quarter of last year. Net income for the fiscal 1999 quarter improved 18.9 percent to $1.4 million, or $0.26 per basic share ($0.26 per diluted share), from net income of $1.1 million, or $0.22 per basic share ($0.21 per diluted share) in the first quarter of fiscal 1998.
Both established and emerging product lines contributed to Edelbrock's first-quarter sales growth. Sales of the company's popular aluminum automotive intake manifolds and cylinder heads improved 13.1 percent and 32.5 percent, respectively, while sales of Edelbrock's exhaust and suspension systems increased 19.2 percent. Sales of Edelbrock's new line of Performer IAS shock absorbers, which entered the market in the fourth quarter of fiscal 1997, continued to reflect the positive effects of strong consumer acceptance and rapid expansion of the product's application base during the quarter.
Continued close control over selling, general and administrative expenses, despite continued investment in infrastructure and aggressive product advertising, also contributed to Edelbrock's improved profitability in the first quarter of fiscal 1999. For the quarter, SG&A increased to 27.8 percent of sales from 27.7 percent of sales in the first quarter of fiscal 1998.
Overall, SG&A increased 10.6 percent to $6.3 million from $5.7 million a year ago. Research and development expenses for the first quarter increased 19.6 percent over the fiscal 1998 quarter as Edelbrock sought to capitalize on timely market opportunities with a range of new applications for its automotive manifolds and cylinder heads, Performer IAS shock absorbers, and other products in great demand by consumers. As a percent of sales, research and development expenses increased to 3.0 percent of sales from 2.8 percent in the first quarter of fiscal 1998.
A portion of the increase in first quarter SG&A is attributable to Edelbrock's continued efforts to receive recommendation for the QS-9000 quality standard, which was achieved shortly after the quarter concluded. Management believes that QS-9000, a worldwide quality assurance management system specific to the automotive and heavy trucking industries, will enhance the company's competitive position, particularly among major original equipment manufacturers such as Ford, General Motors and Chrysler, all of which require their suppliers to comply with the standard.
"By virtually any measure this was an outstanding quarter for us," said Edelbrock Chairman and Chief Executive Officer Vic Edelbrock. "And while very pleased with our results, we were not surprised by them. The market for specialty performance equipment is healthier than it's ever been, and Edelbrock is very well positioned to take advantage of the opportunities that have emerged with that prosperity.
"Our ability to keep pace with the rapid growth of the automotive aftermarket -- which today is riding the crest of unprecedented interest in motorsports -- is a real tribute to the commitment and hard work of our employees," he said. "We continue to target the same goals that we have over the years. At its heart, our plan involves keeping costs in check while making the investments necessary to help us compete more effectively going forward. However, our plan also allows us the flexibility to move quickly when necessary to seize emerging market opportunities.
"Many additional opportunities remain before us, and the internal improvements we've made over the last few years -- most notably our recent achievement of QS-9000 recommendation, the upgrade to a new fully integrated computerized data management system, and the automated 65,950 square-foot distribution facility that we plan to construct and bring online by July 1999 -- will together put us in great position to take advantage of them," Edelbrock noted. "When we at Edelbrock say how excited we are about the future, one of the big reasons why is because we work so hard to prepare for it."
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Any statements set forth above which 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, the success of the company's, its vendors', and its suppliers' Year 2000 compliance programs and other risks identified herein and in other documents filed by the company with the Securities and Exchange Commission.
EDELBROCK CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 25, June 30,
1998 1998
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $5,450,000 $8,370,000
Accounts receivable, net 19,788,000 21,222,000
Inventories 18,056,000 16,776,000
Prepaid expenses and other 1,228,000 1,288,000
Total current assets 44,522,000 47,656,000
Property, plant and equipment,
net 35,162,000 35,676,000
Other 1,464,000 1,643,000
Total assets 81,148,000 84,975,000
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 9,993,000 14,724,000
Accrued expenses 3,281,000 3,610,000
Current portion of
long-term debt 62,000 62,000
Total current liabilities 13,336,000 18,396,000
Long-term debt 2,103,000 2,123,000
Deferred income taxes 2,693,000 2,725,000
Shareholders' equity 63,016,000 61,731,000
Total liabilities and
shareholders' equity $81,148,000 $84,975,000
-0-
EDELBROCK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
Sept. 25,
1998 1997
Revenues $22,595,000 $20,438,000
Cost of sales 13,545,000 12,427,000
Gross profit 9,050,000 8,011,000
Operating expenses
Selling, general and
administrative 6,272,000 5,669,000
Research and
development 678,000 567,000
Total operating
expenses 6,950,000 6,236,000
Operating income 2,100,000 1,775,000
Interest expense 51,000 69,000
Interest income 106,000 109,000
Income before taxes
on income 2,155,000 1,815,000
Taxes on income 797,000 673,000
Net income $1,358,000 $1,142,000
Basic net income
per share $0.26 $0.22
Diluted net income
per share $0.26 $0.21
Basic weighted average
number of shares
outstanding 5,257,000 5,250,000
Diluted weighted average
number of shares
outstanding 5,317,000 5,411,000