Edelbrock Achieves Double-Digit Improvement in Sales
2 February 2000
Edelbrock Corp. Achieves Double-Digit Improvement in Sales With Improved Earnings for Second Quarter and First Six Months of Fiscal 2000
TORRANCE, Calif.--Feb. 2, 2000--Edelbrock Corp. today reported that it achieved double-digit gains in sales with improved earnings for its fiscal 2000 second quarter and first six months ended Dec. 25, 1999. Edelbrock attributed its improved quarterly results primarily to strong sales in key lines such as automotive carburetors and aluminum cylinder heads.For the second quarter of fiscal 2000, revenues rose 11.4 percent to $28.5 million from revenues of $25.6 million in the second quarter of last year. Net income for the fiscal 2000 quarter improved 23.0 percent to $1.8 million, or $0.34 per diluted share, from net income of $1.4 million, or $0.27 per diluted share, in the second quarter of fiscal 1999. Net income for the fiscal 1999 period included a pre-tax write-off for uncollectible receivables of approximately $400,000 from Champion Auto Stores Inc. Exclusive of that charge, net income for the fiscal 1999 quarter would have been reported as $1.7 million, or $0.32 per diluted share.
For the first six months of fiscal 2000, revenues improved 12.4 percent to $54.2 million from revenues of $48.2 million in the comparable period of fiscal 1999. Net income for the first half of fiscal 2000 rose 13.6 percent to $3.2 million, or $0.60 per diluted share, from net income of $2.8 million, or $0.52 per diluted share, in the first six months of fiscal 1999. Excluding the aforementioned receivable write-off, net income for the fiscal 1999 six-month period would have been reported as $3.0 million, or $0.57 per diluted share.
Continued strength in a pair of established product lines drove Edelbrock's double-digit improvement in revenues for the second quarter, with sales of its highly regarded carburetors and aluminum automotive cylinder heads improving 19.8 percent and 19.7 percent, respectively, from the year-ago period.
Selling, general and administrative expenses for the second quarter remained consistent with Edelbrock's strategy to tightly control costs while continuing to make strategic investments in advertising and infrastructure, two areas in which such investments have historically enhanced sales and the company's competitive position. For the quarter, SG&A increased to 26.2 percent of sales from 25.0 percent of sales in the second quarter of fiscal 1999. Overall, SG&A for the quarter increased 16.7 percent to $7.5 million from $6.4 million in the comparable period of fiscal 1999. Expenses during the current quarter were affected by the company's move to its new distribution facility as well as expansion of its current production facilities which included the 30,000 square-foot facility vacated by the former distribution center. For the first half of fiscal 2000, SG&A expenses as a percent of sales increased only marginally, rising to 26.4 percent of sales from 26.3 percent of sales a year ago.
Research and development expenses for the second quarter increased 14.0 percent over fiscal 1999 as Edelbrock continued to target market opportunities with new applications of automotive manifolds and cylinder heads, Performer IAS shock absorbers, and other products. For the quarter, R&D expenses increased to $870,000, or 3.1 percent of sales, from $763,000, or 3.0 percent of sales, a year ago. For the first six months of fiscal 2000, R&D expenses rose 14.8 percent to $1.7 million, or 3.1 percent of sales, from $1.4 million, or 3.0 percent of sales, in the comparable year-ago period.
As mentioned earlier, a portion of the increase in Edelbrock's second quarter SG&A resulted from maintaining sales growth while relocating from a 30,000 square-foot distribution operation to a new 66,000 square-foot facility in October 1999, along with the installation of advanced warehouse management software designed to afford more efficient distribution and improved data processing.
Commenting on the company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "This was another solid quarter for Edelbrock where we continued to capitalize on the exceptional environment for aftermarket automotive performance products while at the same time laying the foundation for continued growth in the future.
"I'm very proud to say that, while continuing to achieve our financial goals, we managed a virtually seamless relocation of a key facility without causing so much as a ripple in our established momentum," Edelbrock noted. "That's a tremendous accomplishment," he said. "One that I think reflects the efforts of a cohesive team of employees executing a well-considered plan with great precision.
"We're now moving quickly to convert the old distribution facility into an additional 30,000 square feet of state-of-the-art manufacturing capacity, which will do a great deal to help preserve our ability to meet the rising demand for our products in the months ahead."
Founded in 1938, Torrance, Calif.-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 other documents filed by the company with the Securities and Exchange Commission.
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Six months ended
December 25, December 25,
1999 1998 1999 1998
Revenues $28,522,000 $25,602,000 $54,166,000 $48,197,000
Cost of sales 17,498,000 15,789,000 33,397,000 29,334,000
Gross profit 11,024,000 9,813,000 20,769,000 18,863,000
Operating expenses
Selling, general
and administrative 7,475,000 6,403,000 14,302,000 12,675,000
Research and
development 870,000 763,000 1,654,000 1,441,000
Write-off of
uncollectible
receivable -- 400,000 -- 400,000
Total operating
expenses 8,345,000 7,566,000 15,956,000 14,516,000
Operating income 2,679,000 2,247,000 4,813,000 4,347,000
Interest expense 49,000 51,000 99,000 102,000
Interest income 151,000 66,000 300,000 172,000
Income before taxes
on income 2,781,000 2,262,000 5,014,000 4,417,000
Taxes on income 1,029,000 838,000 1,855,000 1,635,000
Net income $ 1,752,000 $ 1,424,000 $ 3,159,000 $ 2,782,000
Basic net income
per share $ 0.34 $ 0.27 $ 0.61 $ 0.53
Diluted net
income per share $ 0.34 $ 0.27 $ 0.60 $ 0.52
Basic weighted
average number of
shares outstanding 5,191,000 5,249,000 5,206,000 5,253,000
Diluted weighted
average number of
shares outstanding 5,214,000 5,309,000 5,257,000 5,311,000
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 25, June 30,
1999 1999
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 4,006,000 $13,685,000
Accounts receivable, net 25,635,000 23,976,000
Inventories 18,809,000 17,155,000
Prepaid expenses and other 1,301,000 1,261,000
Total current assets 49,751,000 56,077,000
Property, plant and equipment, net 39,375,000 36,708,000
Other 1,456,000 1,467,000
Total assets $90,582,000 $94,252,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $10,791,000 $16,037,000
Accrued expenses 3,816,000 4,548,000
Current portion of long-term debt 72,000 69,000
Total current liabilities 14,679,000 20,654,000
Long-term debt 2,028,000 2,065,000
Deferred income taxes 2,842,000 2,882,000
Shareholders' equity 71,033,000 68,651,000
Total liabilities and
shareholders' equity $90,582,000 $94,252,000