Business Services Industry
Edelbrock Corp. Reports Results for First Quarter of Fiscal 2005
Business Wire, Nov 9, 2004
TORRANCE, Calif. -- Edelbrock Corporation (Nasdaq:EDEL) today reported sales and earnings for the first quarter of its 2005 fiscal year ended September 25, 2004.
For the first quarter of fiscal 2005, revenues decreased 5.9% to $26,032,000 from revenues of $27,658,000 in the same period a year ago. Net income for the quarter was $350,000, or $0.06 per diluted share, compared to net income of $467,000, or $0.09 per diluted share, for the first quarter of fiscal 2004. Results for the quarter ended September 25, 2004 reflected professional fees and other costs totaling $179,000 associated with the pending "going-private" transaction proposed by Edelbrock's Chairman, President and Chief Executive Officer, O. Victor Edelbrock, in April 2004.
Edelbrock attributed the decrease in revenues for the first quarter of fiscal 2005 primarily to timing of sales orders in connection with its "VIP" dating program whereby certain customers are offered orders that ship by the end of Edelbrock's second quarter with extended credit terms. In addition, revenues were impacted by the stagnant economy, the higher price of gasoline, and uncertainty related to the national election.
Edelbrock reported that for the first quarter ended September 25, 2004, sales of aluminum automotive intake manifolds decreased by $678,000, or 11.1%, and sales of automotive carburetors decreased by $630,000, or 6.9%. While revenues for the first quarter declined across a majority of Edelbrock product lines, revenues remained strong in such lines as fuel injection which increased by $248,000, or 60.5%, and shocks which increased by $104,000, or 11.5%.
Edelbrock reported that selling, general and administrative (SG&A) expense, as a percentage of sales, increased to 30.9% for the first quarter of fiscal 2005 from 30.2% in the year-ago period. Overall, SG&A decreased 3.7%, or $311,000 over the year-ago period from $8,344,000 to $8,033,000, for the first quarter of fiscal 2005. The quarterly decrease in SG&A was primarily attributable to lower commissions and other variable selling expenses associated with lower revenues, offset by professional fees and similar costs associated with the pending "going-private" transaction. Research and development (R&D) expenses for the first quarter of fiscal 2005 decreased 6.7%, or $60,000 over the year-ago period, from $894,000 to $837,000. As a percentage of revenues, R&D expenses remained unchanged at 3.2% for both periods.
About Edelbrock Corporation:
Founded in 1938, Torrance, California-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 motorcycle carburetor division 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 which are not historical facts, including statements relating to future economic and climatic conditions, 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, sales growth and activity levels, cash flows, dependence on key suppliers, market acceptance, manufacturing efficiencies, new product development, the success of planned advertising, marketing and promotional campaigns, and other risks identified herein and in other documents filed by the Company with the Securities and Exchange Commission. Other potential risks and uncertainties that may affect the Company's business and financial condition include the potential effects of the proposal by Mr. Edelbrock to acquire the outstanding shares of the Company's common stock not already beneficially owned or controlled by him such as (i) the distraction of the Company's management from the operation of the Company's business caused by the pendency of the proposed transaction and related litigation, required filings with the Securities and Exchange Commission, and any subsequent developments; and (ii) material increases in the Company's expenses for professional services and other transaction and litigation related costs and expenses which are expected to be incurred whether or not the proposed transaction is consummated.
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
September 25,
-------------------------
2004 2003
------------ ------------
Revenues $26,032,000 $27,658,000
Cost of sales 16,603,000 17,804,000
------------ ------------
Gross profit 9,429,000 9,854,000
------------ ------------
Operating expenses
Selling, general and administrative 8,033,000 8,344,000
Research and development 837,000 894,000
------------ ------------
Total operating expenses 8,870,000 9,238,000
------------ ------------
Operating income 559,000 616,000
Interest expense (1,000) (4,000)
Interest income 25,000 11,000
Gain on sale of assets and other income 1,000 118,000
------------ ------------
Income before taxes on income 584,000 741,000
Taxes on income 234,000 274,000
------------ ------------
Net income $350,000 $467,000
============ ============
Basic net income per share $0.06 $0.09
============ ============
Diluted net income per share $0.06 $0.09
============ ============
Basic weighted average number of shares
outstanding 5,485,000 5,454,000
Effect of dilutive stock options and warrants 152,000 11,000
------------ ------------
Diluted weighted average number of shares
outstanding 5,637,000 5,465,000
============ ============
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 25, June 30,
2004 2004
------------- -------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $11,868,000 $12,540,000
Accounts receivable, net 21,700,000 27,825,000
Inventories 31,295,000 28,399,000
Prepaid expenses and other 3,316,000 3,246,000
------------- -------------
Total current assets 68,179,000 72,010,000
Property, plant and equipment, net 36,178,000 36,588,000
Goodwill 1,172,000 1,172,000
License agreement 666,000 680,000
Other 842,000 834,000
------------- -------------
Total assets $107,037,000 $111,284,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $7,262,000 $10,345,000
Accrued expenses 4,484,000 5,992,000
Current portion of long-term debt 25,000 35,000
------------- -------------
Total current liabilities 11,771,000 16,372,000
Long-term debt and capital lease
obligations 177,000 179,000
Deferred income taxes 3,990,000 3,984,000
Shareholders' equity 91,099,000 90,749,000
------------- -------------
Total liabilities and shareholders' equity $107,037,000 $111,284,000
============= =============
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