Edelbrock Reports Double-Digit Improvement in Sales for Q1
8 November 1999
Edelbrock Reports Double-Digit Improvement in Sales for First Fiscal Quarter
TORRANCE, Calif.--Nov. 5, 1999--Edelbrock Corporation (Nasdaq/NM:EDEL) today reported that continued strong sales of key automotive parts lines such as carburetors, aluminum cylinder heads and manifolds, led to a 13.5% improvement in sales for its first quarter of fiscal 2000 over the comparable year-ago period.For the quarter ended Sept. 25, 1999, sales increased to $25.6 million from $22.6 million in the first quarter of fiscal 1999. Net income for the fiscal 2000 quarter was $1.4 million, or $0.27 per diluted share, compared to net income of $1.4 million, or $0.26 per diluted share, a year ago.
Edelbrock reported that earnings for the fiscal 2000 quarter was affected by a shift in its sales mix to a higher percentage of lower-margin, outside-manufactured carburetors; depreciation; increased labor costs associated with additions to staff required to keep pace with the Company's ongoing sales-driven expansion; and preparations for the move to the Company's new distribution center, which opened in early October.
A range of products contributed to Edelbrock's double-digit sales gain. Sales of automotive carburetors manufactured to Edelbrock specifications by Magneti-Marelli Inc. increased 17.7% for the fiscal 2000 quarter. They were followed in magnitude by Edelbrock's aluminum cylinder heads, up 26.4%, and aluminum intake manifolds, up 10.3%.
Other lines posting strong percentage increases were fuel injection systems, up 56.9%, which includes Edelbrock's new Qwik Data data acquisition system, which ramped up sharply following its introduction in the fourth quarter of fiscal 1999 after being honored as one of the Specialty Equipment Marketers Association ("SEMA") best new race performance products at the industry's largest tradeshow in late 1998.
Edelbrock attributed its overall sales growth to a variety of factors. These include the Company's strong positioning as a premier manufacturer of reliable, performance products; aggressive advertising which successfully leveraged that position; strong word-of-mouth advertising from customers; and the surging popularity of auto racing in America coupled with America's love affair with the automobile, a trend that greatly benefits Edelbrock both as a sponsor of NASCAR and as the manufacturer of NASCAR's only officially licensed intake manifold.
A series of ongoing cost controls enabled Edelbrock to achieve a meaningful reduction in selling, general and administrative (SG&A) expenses, as a percentage of sales, during the first quarter of fiscal 2000. As a percentage of sales, SG&A for the quarter decreased to 26.6% from 27.8% in the comparable quarter of fiscal 1999. Overall, SG&A expenses increased 8.8%, or $555,000, to $6.8 million, from the first quarter of last year.
The year-to-year increase in SG&A is primarily attributable to increased advertising and promotional activities in support of Edelbrock's growing base of products and expenses relating to the move to the Company's new 66,000-square-foot automated distribution center.
Research and development expenses for the first quarter of fiscal 2000 increased 15.6% over the year-ago period to $784,000, or 3.1% of revenues, from $678,000, or 3.0% of revenues, for the same period last year, as Edelbrock continued to aggressively address market opportunities with a series of new products and product applications.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock, said: "We remain very pleased with our sales growth, which reflects not only the continuing increase in demand for automotive performance products in general, but for products designed specifically by Edelbrock due to their established reputation for superior quality and performance.
"Our results for the first quarter showed this quite clearly, as sales improved significantly for a trio of our best recognized products, cylinder heads, manifolds and carburetors," Edelbrock noted.
"I believe Edelbrock is very well-positioned to maintain strong sales in future periods," Edelbrock added. "Awareness of motorsports and performance has never been greater, and Edelbrock's visibility among buyers of performance products has never been higher.
"Our manufacturing facilities, now supported by a state-of-the-art distribution center, are not only ably meeting the demands of today, but can be efficiently expanded to handle those of the foreseeable future. We're also very strong financially, with good cash flow, low debt, and costs well under control. These are the powerful forces at work for Edelbrock and we believe they will work very well for us going forward."
Founded in 1938, Torrance-based Edelbrock Corp. 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 QwikSilver Division for motorcycle aftermarket parts in San Jacinto, Calif., 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; 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 CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Sept. 25,
1999 1998
Revenues $25,644,000 $22,595,000
Cost of sales 15,899,000 13,545,000
Gross profit 9,745,000 9,050,000
Operating expenses
Selling, general and administrative 6,827,000 6,272,000
Research and development 784,000 678,000
Total operating expenses 7,611,000 6,950,000
Operating income 2,134,000 2,100,000
Interest expense 50,000 51,000
Interest income 149,000 106,000
Income before taxes on income 2,233,000 2,155,000
Taxes on income 826,000 797,000
Net income $1,407,000 $1,358,000
Basic net income per share $0.27 $0.26
Diluted net income per share $0.27 $0.26
Basic weighted average number
of shares outstanding 5,222,000 5,257,000
Diluted weighted average number
of shares outstanding 5,261,000 5,317,000
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 25, 1999 June 30, 1999
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $9,163,000 $13,685,000
Accounts receivable, net 20,603,000 23,976,000
Inventories 18,586,000 17,155,000
Prepaid expenses and other 1,472,000 1,261,000
Total current assets 49,824,000 56,077,000
Property, plant and equipment, net 38,787,000 36,708,000
Other 1,470,000 1,467,000
Total assets $90,081,000 $94,252,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $11,764,000 $16,037,000
Accrued expenses 3,273,000 4,548,000
Current portion of long-term debt 69,000 69,000
Total current liabilities 15,106,000 20,654,000
Long-term debt 2,048,000 2,065,000
Deferred income taxes 2,864,000 2,882,000
Shareholders' equity 70,063,000 68,651,000
Total liabilities and
shareholders' equity $90,081,000 $94,252,000