Edelbrock Continues High Performance Results

Edelbrock Corporation has reported that its revenues are up 10% in the quarter, with profits essentially flat.
The supplier of high performance parts released its financial results for the second quarter and first six months of its 2002 fiscal year ended December 25, 2001.
For the second quarter of fiscal 2002, revenues increased 10.7% to $30.6 million from revenues of $27.7 million in the same period of fiscal 2001. Net income for the fiscal 2002 quarter improved to $1.3 million, or $0.26 per basic and diluted share, from $1.2 million, or $0.25 per basic and diluted share, a year ago. All figures in U.S. dollars.
Revenues for the first six months of fiscal 2002 increased 5.1% to $56.1 million from revenues of $53.4 million in the same period of fiscal 2001. Net income for the first six months of fiscal 2002 totaled $2.0 million, or $0.39 per basic and diluted share, versus net income of $2.6 million, or $0.52 per basic and diluted share, a year ago.
Edelbrock attributed its improvement in quarterly revenue results to the continued success of its recent acquisition of Russell Performance, a series of successful new product introductions, and aggressive advertising and promotional activities that maintained strong demand among automotive enthusiasts for its broad range of its high-quality automotive and motorcycle aftermarket performance products.
Commenting on the company’s results, Edelbrock chairman and chief executive officer Vic Edelbrock said, “We’re pleased by what we saw during the second fiscal quarter, a period in which Edelbrock performed well against a backdrop of continued economic uncertainty. There are several positive things we did to bring about that performance. While maintaining tight control over operating and other costs, we continued to be highly aggressive–and effective–in promoting our products to keep Edelbrock squarely positioned as one of the industry’s pre-eminent manufacturers of high-quality aftermarket performance products. At the same time, we remained very responsive to the enthusiasts who drive our market, introducing a range of new product applications to ensure that we have the right products at the right place, and at the right time.
“While many of those products helped to expand established lines, like cylinder heads and intake manifolds, which continue to serve us well, I’m particularly gratified by the sales now being generated by newer Edelbrock lines, such as our nitrous oxide and Qwik Data systems,” he continued. “Revenues from both those lines continue to trend steadily upward. I’m also very pleased with the continually improving contributions we’re seeing from our recently acquired Russell Performance Products division, which, after only joining Edelbrock a year ago, is now an increasingly prominent contributor to our revenue stream."
The company says that the growth in revenues during the second fiscal quarter of 2002 came from a balanced mix of both established and emerging product lines. For example, quarterly sales of Edelbrock’s high-performance carburetors and its popular line of aluminum automotive cylinder heads improved a strong 8.2% and 8.7%, respectively, over the year-ago period. Similar growth came from the sale of exhaust systems, up 32.6%, and water pumps, sales of which increased 30.2% over the year-ago period.
Chief among the emerging lines that performed notably for Edelbrock during the second quarter was its new Russell Performance Products division, which Edelbrock acquired in late December 2000. Russell is a leading manufacturer of more than 3,000 street-legal aftermarket brake lines, oil lines, fuel lines, and filters for automotive and motorcycle applications. Russell sales for the fiscal second quarter totaled approximately $1.3 million. Edelbrock also reported strong gains from its line of performance-enhancing nitrous oxide systems, sales of which rose 65.5% from the year-ago period, and its Chrome and Elite Aluminum Valve Covers and Air Cleaners, sales of which increased 10.3% over that same period. Edelbrock also reported good initial sales from its recently introduced line of exhaust systems and other performance products for import cars.
The Company reported that selling, general and administrative (SG&A) expenses, as a percentage of sales, decreased during the second quarter of fiscal 2002 to 26.2% from 27.1% a year ago. Overall, SG&A increased 7.0%, or $525,000, over the second quarter of last year to $8.0 million. The dollar increase in SG&A was primarily attributable to expanded advertising and promotional activities required to support Edelbrock’s growing line of products, and operating, administrative and other costs associated with the addition of its Russell Performance division. For the first half of fiscal 2002, SG&A expenses decreased to 27.2% of sales from 27.4% for the same period of 2001, representing a 4.6% dollar increase from a year ago.
Research and Development (R&D) expenses for the second quarter of 2002 increased 6.2%, or $50,000, over the year-ago period to $852,000 as the Company continued to target market opportunities for emerging and existing product lines. As a percentage of sales, R&D expenses decreased slightly to 2.8% from 2.9% a year ago. For the first six months of fiscal 2002, R&D expenses rose 5.1% to $1.7 million, or 3.0% of sales, from $1.6 million, or 3.0% of sales, in the comparable year-ago period.
“Unquestionably, Edelbrock’s performance is still being hindered by the economy,” Edelbrock concluded. “But we’re continuing to grow in spite of those conditions. That tells me two things: that the market for Edelbrock products continues to be vibrant, and that Edelbrock is exceptionally good at serving that market.”