EXHIBIT 99.1
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| CONTACT: | | Jeffrey L. Thompson
Executive Vice-President
(310) 781-2222 |
EDELBROCK CORP. REPORTS IMPROVEMENT IN SALES AND EARNINGS FOR
THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 2004
TORRANCE, Calif. – May 4, 2004 – Edelbrock Corporation (Nasdaq: EDEL) today reported an improvement in sales and earnings for its fiscal 2004 third quarter and nine months ended March 25, 2004.
For the quarter, revenues increased 11.3% to $28,551,000 from $25,658,000 in the comparable period of fiscal 2003. Net income for the third quarter of fiscal 2004 increased to $905,000, or $0.16 per diluted share, from net income of $210,000, or $0.04 per diluted share, in the third quarter of fiscal 2003. The results for the quarter were positively impacted by a pre-tax gain of $315,000 on the sale of a real estate asset (approximately $198,000 or $0.04 per diluted share, after tax).
For the nine months ended March 25, 2004, revenues rose 6.5% to $87,950,000 from revenues of $82,547,000 in the first nine months of fiscal 2003. Net income for the fiscal nine month 2004 period increased 17.6% to $2,659,000, or $0.48 per diluted share, from net income of $2,261,000, or $0.41 per diluted share, in the same period a year ago. Results for the nine month period ended March 25, 2004 reflected gains on the sale of real estate assets totaling $453,000 (approximately $285,000 or $0.05 per diluted share, after tax).
Edelbrock attributed its improved sales for the Fiscal 2004 quarter and nine month period to improvements in the national economy, favorable weather conditions that enabled enthusiasts to perform desired upgrades, and continued strong customer acceptance of the Edelbrock brand and products, reinforced by the Company’s aggressive marketing program. Despite Edelbrock’s strong performance in the fiscal 2004 periods, however, management noted that earnings growth continued to be hampered by continuing increases in worker’s compensation and overall insurance costs.
Edelbrock reported that revenues for the third quarter were strong across a broad range of product categories. Sales of the Company’s high-performance aluminum automotive cylinder heads rose 12.1% over the year-ago period, while sales of Edelbrock’s highly regarded aluminum automotive intake manifolds improved 7.8%. Other lines that made notable contributions to the Company’s quarterly sales growth included its popular chrome air cleaners and valve covers, up 37.3%; automotive carburetors, up 3.0%; exhaust systems, up 37.6%; and shock absorbers rose 24.9% for the quarter. Edelbrock also received a 12.2% quarterly sales increase from its Russell Performance Products division. Russell is a leading provider of performance plumbing and brake lines which includes street legal brake lines, oil lines, fuel lines, and filters for both automotive and motorcycle use, as well as other products for domestic and imported vehicles.
Edelbrock reported that selling, general and administrative (SG&A), as a percentage of sales, decreased to 29.0% for the third quarter of fiscal 2004 from 31.4% in the year-ago period. Overall, SG&A increased 2.6%, or $208,000, to $8,276,000 for the third quarter of fiscal 2004. Research and development expenses for the third quarter of fiscal 2004 increased 8.4%, or $73,000, to $938,000, or 3.3% of sales, from $865,000 or 3.4% of sales, for the same period of fiscal 2003.
Commenting on the Company’s results, Edelbrock Chairman and Chief Executive Officer Vic Edelbrock, said, “Edelbrock performed extremely well in the third quarter. Despite the continuing impact of worker’s compensation and other costs on our bottom line, we were able to mitigate the impact of those costs to some extent by focusing on top line growth. We did this by heightening our R&D activity and being even more aggressive in marketing our products so as to take full advantage of the improvement in the national economy and the favorable weather that we saw during the quarter. As our quarterly sales indicate, those efforts were all highly effective,” Mr. Edelbrock concluded.
“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 announced April 12, 2004 by O. Victor Edelbrock, the Company’s Chairman, President, and Chief Executive Officer to acquire the Company’s outstanding 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 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 Corp. Reports Improvement in Sales and Earnings For the Third Quarter and First Nine Months of Fiscal Year 2004 – Page 4
EDELBROCK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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| | | | Three months ended | | Nine months ended |
| | | | March 25, | | March 25, |
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| | | | 2004 | | 2003 | | 2004 | | 2003 |
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| Revenues | | $ | 28,551,000 | | | $ | 25,658,000 | | | $ | 87,950,000 | | | $ | 82,547,000 | |
| Cost of sales | | | 18,230,000 | | | | 16,404,000 | | | | 56,486,000 | | | | 52,161,000 | |
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| | Gross profit | | | 10,321,000 | | | | 9,254,000 | | | | 31,464,000 | | | | 30,386,000 | |
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| Operating expenses | | | | | | | | | | | | | | | | |
| | Selling, general and administrative | | | 8,276,000 | | | | 8,068,000 | | | | 25,079,000 | | | | 24,179,000 | |
| | Research and development | | | 938,000 | | | | 865,000 | | | | 2,645,000 | | | | 2,642,000 | |
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| | Total operating expenses | | | 9,214,000 | | | | 8,933,000 | | | | 27,724,000 | | | | 26,821,000 | |
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| Operating income | | | 1,107,000 | | | | 321,000 | | | | 3,740,000 | | | | 3,565,000 | |
| Interest expense | | | 1,000 | | | | 7,000 | | | | 6,000 | | | | 38,000 | |
| Interest income | | | 9,000 | | | | 8,000 | | | | 30,000 | | | | 46,000 | |
| Gain on sale of assets and other income | | | 322,000 | | | | 12,000 | | | | 457,000 | | | | 16,000 | |
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| Income before taxes on income | | | 1,437,000 | | | | 334,000 | | | | 4,221,000 | | | | 3,589,000 | |
| Taxes on income | | | 532,000 | | | | 124,000 | | | | 1,562,000 | | | | 1,328,000 | |
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| Net income | | $ | 905,000 | | | $ | 210,000 | | | $ | 2,659,000 | | | $ | 2,261,000 | |
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| Basic net income per share | | $ | 0.17 | | | $ | 0.04 | | | $ | 0.49 | | | $ | 0.41 | |
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| Diluted net income per share | | $ | 0.16 | | | $ | 0.04 | | | $ | 0.48 | | | $ | 0.41 | |
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| Basic weighted average number of shares outstanding | | | 5,464,000 | | | | 5,452,000 | | | | 5,459,000 | | | | 5,452,000 | |
| Effect of dilutive stock options and warrants | | | 51,000 | | | | 9,000 | | | | 32,000 | | | | 9,000 | |
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| Diluted weighted average number of shares outstanding | | | 5,515,000 | | | | 5,461,000 | | | | 5,491,000 | | | | 5,461,000 | |
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Edelbrock Corp. Reports Improvement in Sales and Earnings For the Third Quarter and First Nine Months of Fiscal Year 2004 – Page 5
EDELBROCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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| | | | March 25, | | June 30, |
| | | | 2004 | | 2003 |
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| | | | (Unaudited) | | | | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| | Cash and cash equivalents | | $ | 5,929,000 | | | $ | 8,707,000 | |
| | Accounts receivable, net | | | 31,693,000 | | | | 26,858,000 | |
| | Inventories | | | 28,192,000 | | | | 26,398,000 | |
| | Prepaid expenses and other | | | 3,421,000 | | | | 3,835,000 | |
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| Total current assets | | | 69,235,000 | | | | 65,798,000 | |
| Property, plant and equipment, net | | | 37,384,000 | | | | 38,421,000 | |
| Goodwill | | | 1,172,000 | | | | 1,172,000 | |
| License agreement | | | 694,000 | | | | 758,000 | |
| Other | | | 1,017,000 | | | | 1,251,000 | |
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| Total assets | | $ | 109,502,000 | | | $ | 107,400,000 | |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| | Accounts payable | | $ | 11,256,000 | | | $ | 12,038,000 | |
| | Accrued expenses | | | 4,640,000 | | | | 4,692,000 | |
| | Current portion of long-term debt | | | 40,000 | | | | 48,000 | |
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| Total current liabilities | | | 15,936,000 | | | | 16,778,000 | |
| Long-term debt | | | 179,000 | | | | 494,000 | |
| Deferred income taxes | | | 3,621,000 | | | | 3,090,000 | |
| Shareholders’ equity | | | 89,766,000 | | | | 87,038,000 | |
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| Total liabilities and shareholders’ equity | | $ | 109,502,000 | | | $ | 107,400,000 | |
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