Edelbrock Corp. Reports Sales and Earnings for Fiscal Q4 and Year 2000
6 September 2000
Edelbrock Corp. Reports Record Sales and Earnings for Fiscal Fourth Quarter and Year 2000
TORRANCE, Calif.--Sept. 6, 2000--Edelbrock Corp. today reported that it achieved new company records in both sales and earnings for its fiscal 2000 fourth quarter and year ended June 30, 2000.Edelbrock said that increased demand for such well-established lines as automotive carburetors and aluminum intake manifolds, along with continuing growth in other lines, particularly shock absorbers, drove the company's sales improvement for the quarter.
For the fourth quarter of fiscal 2000, revenues rose 9.9 percent to $37.1 million from revenues of $33.8 million in the fourth quarter of last year. Net income for the fiscal 2000 quarter improved 4.3 percent to $3.0 million, or $0.58 per basic and diluted share, from net income of $2.9 million, or $0.55 per basic and $0.54 per diluted share, in the fourth quarter of fiscal 1999.
For fiscal 2000, revenues improved 11.2 percent to $121.2 million from revenues of $108.9 million for fiscal 1999. Net income for fiscal 2000 rose 8.3 percent to $8.0 million, or $1.55 per basic and diluted share, from net income of $7.4 million, or $1.41 per basic share and $1.40 per diluted share, in fiscal 1999.
Net income for fiscal 1999 included a pre-tax charge of $190,000 in the third quarter that settled remaining legal issues relating to alleged preference payments associated with the Chapter 11 Bankruptcy of Super Shops, Inc. and a second quarter pre-tax write-off of non-collectible receivables of $400,000 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 $1.47 per diluted share.
Strong performance from a range of established product lines drove Edelbrock's double-digit improvement in revenues for the fourth quarter. Sales of Edelbrock's automotive carburetors, products valued by aftermarket enthusiasts for their performance and reliability, improved 15.2 percent on the quarter.
Sales of the company's high-performance aluminum automotive intake manifolds increased 13.0 percent, while sales of Edelbrock's water pumps, a product particularly favored by drivers of high-performance, sport utility, and tow vehicles, increased by 37.1 percent.
Other lines also made significant contributions to the revenue mix. Sales of Edelbrock's Performer IAS shock absorbers improved a strong 55.0 percent from the comparable fiscal 1999 quarter period as the company continued to build the product's application base and increase awareness of its unique performance characteristics through aggressive advertising.
Selling, general and administrative expenses for the fourth quarter rose slightly in response to higher costs associated with the ramp-up of the company's new distribution center and manufacturing product support activities to 24.4 percent of sales from 24.1 percent of sales in the fourth quarter of fiscal 1999.
Overall, SG&A for the quarter increased 10.9 percent to $9.0 million from $8.2 million in the comparable period of fiscal 1999. Fiscal 2000 SG&A expenses remained comparable to those incurred in the previous year at 25.4 percent of sales for the current year versus 25.3 percent for the prior year.
Research and development expenses for the fourth quarter increased 9.2 percent over fiscal 1999, as Edelbrock continued to field new applications of automotive manifolds and cylinder heads, Performer IAS shock absorbers, and other products.
For the quarter, R&D expenses remained substantially unchanged at $1.1 million, or 3.1 percent of sales, for both periods. For fiscal 2000, R&D expenses rose 13.9 percent to $3.7 million, or 3.0 percent of sales, from $3.2 million, or 3.0 percent of sales, in the year ago period.
Commenting on the company's results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock said: "Great internal execution throughout fiscal 2000 enabled us to leverage the success of the Edelbrock brand name against the vibrant and growing performance segment of the automotive and motorcycle aftermarkets.
"We maintained a watchful eye on costs while continuing to build sales, both through the introduction of new products and the expansion of existing lines. We also maintained a strong investment in our future, opening a new, state-of-the-art 66,000-square-foot distribution center and converting the vacated space to an additional 30,000 square feet of manufacturing capacity.
"Sales grew throughout the year as we continued to probe the market for opportunities, found a number of them we felt were highly promising, and then expanded our sales base with more new products and product applications," Edelbrock noted.
"We also signed a pair of key marketing agreements that will expose Edelbrock to broad new segments of the performance aftermarket where we had either little or no exposure previously," he said. "In the first, we gave California-based Ultra Wheel Company the exclusive rights to manufacture and sell a line of premier high-performance wheels using the Edelbrock brand name in return for royalties and other considerations.
"Ultra Wheel, a respected and well-established supplier to the aftermarket, distributes over a million wheels annually. Just recently, we acquired from JG Engine Dynamics/Lightspeed, an industry leader in the import racing market, the exclusive rights to manufacture and sell internal engine, exhaust and suspension components to the import aftermarket worldwide under the JG Dynamics and Edelbrock names.
"This gives us a tremendous opportunity to gain immediate entry to the estimated $756 million retail import aftermarket with a broad range of market-proven Edelbrock products.
"Going forward, we believe these and other such agreements, in concert with ongoing internal product development and marketing efforts, will do much to help us continue to deliver the stability and consistently improving financial results that should appeal to those seeking a good, long-term investment opportunity," Edelbrock said.
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Fiscal Year ended
June 30, June 30,
2000 1999 2000 1999
------------------ ------------------
Revenues $37,107,000 $33,773,000 $121,173,000 $108,943,000
Cost of sales 22,348,000 20,067,000 74,315,000 65,881,000
------------------ ------------------
Gross profit 14,759,000 13,706,000 46,858,000 43,062,000
Operating expenses
Selling,
general
and
administrative 9,046,000 8,156,000 30,762,000 27,564,000
Research and
development 1,147,000 1,050,000 3,688,000 3,237,000
Write-off of
uncollectible
receivable -- -- -- 400,000
Settlement
expense -- -- -- 190,000
Total
operating
expenses 10,193,000 9,206,000 34,450,000 31,391,000
------------------ ------------------
Operating income 4,566,000 4,500,000 12,408,000 11,671,000
Interest expense 48,000 51,000 196,000 203,000
Interest income 44,000 76,000 385,000 304,000
Income before
taxes on income 4,562,000 4,525,000 12,597,000 11,772,000
Taxes on income 1,576,000 1,663,000 4,549,000 4,344,000
Net income $2,986,000 $2,862,000 $8,048,000 $7,428,000
Basic net
income per
share $0.58 $0.55 $1.55 $1.41
Diluted net
income per
share $0.58 $0.54 $1.55 $1.40
Basic weighted
average number
of shares
outstanding 5,132,000 5,241,000 5,179,000 5,251,000
Effect of
dilutive stock
options and
warrants 1,000 39,000 6,000 51,000
Diluted weighted
average number
of shares
outstanding 5,133,000 5,280,000 5,185,000 5,302,000
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, June 30,
2000 1999
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 9,883,000 $ 13,685,000
Accounts receivable, net 27,228,000 23,976,000
Inventories 17,157,000 17,155,000
Prepaid expenses and other 1,576,000 1,261,000
Total current assets 55,844,000 56,077,000
Property, plant and equipment, net 42,156,000 36,708,000
Real estate properties, net 437,000 482,000
License agreement 842,000 --
Other 968,000 985,000
Total assets $100,247,000 $ 94,252,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 15,076,000 $ 16,037,000
Accrued expenses 4,574,000 4,548,000
Current portion of long-term debt 1,921,000 69,000
Total current liabilities 21,571,000 20,654,000
Long-term debt 148,000 2,065,000
Deferred income taxes 3,085,000 2,882,000
Shareholders' equity 75,443,000 68,651,000
Total liabilities and
shareholders' equity $100,247,000 $ 94,252,000