Edelbrock Corp. Reports Double-Digit Improvement in Sales, Improved Earnings for Third Quarter and First Nine Months of Fiscal 2000
8 May 2000
Edelbrock Corp. Reports Double-Digit Improvement in Sales, Improved Earnings for Third Quarter and First Nine Months of Fiscal 2000
TORRANCE, Calif.--May 8, 2000--Edelbrock Corp. today reported that it achieved a double-digit gain in sales and improved earnings for its fiscal 2000 third quarter and first nine months ended March 25, 2000.Edelbrock said that increased demand for such well established lines as automotive carburetors, aluminum cylinder heads and intake manifolds, along with continuing growth in other lines such as shock absorbers and exhaust/suspension systems, fueled the Company's sales improvement for the quarter.
For the third quarter of fiscal 2000, revenues rose 10.9 percent to $29.9 million from revenues of $27.0 million in the third quarter of last year. Net income for the fiscal 2000 quarter improved 6.7 percent to $1.9 million, or $0.37 per basic and diluted share, from net income of $1.8 million, or $0.34 per basic and diluted share, in the third quarter of fiscal 1999. Net income for the fiscal 1999 period included a pre-tax charge of $190,000 that settled remaining legal issues relating to alleged preference payments associated with the Chapter 11 Bankruptcy of Super Shops Inc. Exclusive of that charge, net income for the fiscal 1999 quarter would have been reported as $1.9 million, or $0.36 per diluted share.
For the first nine months of fiscal 2000, revenues improved 11.8 percent to $84.1 million from revenues of $75.2 million for the same period of fiscal 1999. Net income for the fiscal 2000 nine months rose 10.9 percent to $5.1 million, or $0.97 per basic and diluted share, from net income of $4.6 million, or $0.87 per basic share and $0.86 per diluted share, in the first nine months of fiscal 1999. Net income for the fiscal 1999 nine month period reflected the aforementioned Super Shops settlement in the third quarter and a pre-tax write-off for uncollectible receivables of $400,000 in the second quarter related to the Chapter 7 Bankruptcy of Champion Auto Stores Inc. Excluding these charges, net income for the fiscal 1999 period would have been reported as $0.93 per diluted share.
Strong performance from a range of established product lines drove Edelbrock's double-digit improvement in revenues for the third quarter. Sales of Edelbrock's automotive carburetors, a favorite among aftermarket enthusiasts, improved 9.2 percent on the quarter. Sales of the Company's popular aluminum automotive cylinder heads and intake manifolds increased 15.1 percent and 4.7 percent, respectively.
In addition to the traditional product lines, other lines also made significant contributions to the revenue mix. Sales of Edelbrock's Performer IAS(R) shock absorbers more than doubled from the previous quarterly period as the Company continued to expand the product's application base and increase awareness of its unique performance characteristics through aggressive advertising. Sales of exhaust system and suspension products rose 11.5 percent versus the comparable year-ago quarter.
Selling, general and administrative expenses for the third quarter continued to reflect Edelbrock's strategy to carefully manage costs while addressing present and future market opportunities with new product applications and the advertising and promotional activities to support them. For the quarter, improving sales, coupled with effective cost controls, caused SG&A to decrease to 24.8 percent of sales from 25.0 percent of sales in the third quarter of fiscal 1999. Overall, SG&A for the quarter increased 10.1 percent to $7.4 million from $6.7 million in the comparable period of fiscal 1999. For the first nine months of fiscal 2000, SG&A expenses remained consistent with those incurred in the comparable period of last year at 25.8 percent of sales.
Research and development expenses for the third quarter increased 18.9 percent over fiscal 1999 as Edelbrock continued to target a broad range of market opportunities with new applications of automotive manifolds and cylinder heads, Performer IAS(R) shock absorbers, and other products. For the quarter, R&D expenses increased to $887,000, or 3.0 percent of sales, from $746,000, or 2.8 percent of sales, a year ago. For the first nine months of fiscal 2000, R&D expenses rose 16.2 percent to $2.5 million, or 3.0 percent of sales, from $2.2 million, or 2.9 percent of sales, in the comparable year-ago period.
Commenting on the Company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said, "As evidenced by yet another strong sales quarter, the market for Edelbrock products remained outstanding in the third quarter. As we continue through the spring and early summer months, this time historically is characterized by rising interest in motor sports and corresponding purchasing activity from enthusiasts looking to improve their vehicles' performance.
"Throughout the year we work hard through our research and development, advertising and many promotional activities, including four display trailers on the road throughout the year attending consumer and motorsport events to make sure that when those same enthusiasts think of performance, the first name that comes to mind is Edelbrock," said Edelbrock. "The consistent improvement in sales we've seen over the years indicates very clearly that those efforts are paying off."
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.
EDELBROCK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
March 25, March 25,
2000 1999 2000 1999
Revenues $29,900,000 $26,973,000 $84,066,000 $75,170,000
Cost of sales 18,570,000 16,480,000 51,967,000 45,814,000
Gross profit 11,330,000 10,493,000 32,099,000 29,356,000
Operating expenses
Selling, general
and administrative 7,414,000 6,733,000 21,716,000 19,408,000
Research and
development 887,000 746,000 2,541,000 2,187,000
Write-off of
uncollectible
receivable -0- -0- -0- 400,000
Settlement expense -0- 190,000 -0- 190,000
Total operating
expenses 8,301,000 7,669,000 24,257,000 22,185,000
Operating income 3,029,000 2,824,000 7,842,000 7,171,000
Interest expense 49,000 50,000 148,000 152,000
Interest income 41,000 56,000 341,000 228,000
Income before
taxes on income 3,021,000 2,830,000 8,035,000 7,247,000
Taxes on income 1,118,000 1,046,000 2,973,000 2,681,000
Net income $ 1,903,000 $ 1,784,000 $ 5,062,000 $ 4,566,000
Basic net income
per share $ 0.37 $ 0.34 $ 0.97 $ 0.87
Diluted net income
per share $ 0.37 $ 0.34 $ 0.97 $ 0.86
Basic weighted
average number of
shares outstanding 5,174,000 5,257,000 5,196,000 5,255,000
Effect of diluted
stock options
and warrants -0- 49,000 23,000 55,000
Diluted weighted
average number of
shares outstanding 5,174,000 5,306,000 5,219,000 5,310,000
EDELBROCK CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 25,2000 June 30, 1999
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $413,000 $13,685,000
Accounts receivable, net 31,943,000 23,976,000
Inventories 17,671,000 17,155,000
Prepaid expenses and other 1,165,000 1,261,000
Total current assets 51,192,000 56,077,000
Property, plant and equipment, net 41,689,000 36,708,000
Other 1,485,000 1,467,000
Total assets $94,366,000 $94,252,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $12,599,000 $16,037,000
Accrued expenses 3,930,000 4,548,000
Current portion of long-term debt 74,000 69,000
Total current liabilities 16,603,000 20,654,000
Long-term debt 2,009,000 2,065,000
Deferred income taxes 2,817,000 2,882,000
Shareholders' equity 72,937,000 68,651,000
Total liabilities and
shareholders' equity $94,366,000 $94,252,000