Edelbrock Corporation

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Edelbrock Corporation

2700 California Street
Torrance, California 90503
U.S.A.
Telephone: (310) 781-2222
Toll Free: (800) 416-8626
Fax: (310) 782-3828
Web site: http://www.edelbrock.com

Public Company
Incorporated: 1938
Employees: 691
Sales: $121.17 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: EDEL
NAIC: 336399 All Other Motor Vehicle Parts Manufacturing

Edelbrock Corporation manufactures and markets specialty performance automotive and motorcycle parts. Under the Edelbrock and QwikSilver brand names, the company sells intake manifolds, carburetors, camshafts, cylinder heads, exhaust systems, shock absorbers, and other components to used-vehicle owners seeking to improve the performance and efficiency of their cars and motorcycles. As such, Edelbrock Corp. competes in the automotive and motorcycle aftermarket, a market segment comprising parts that are purchased by consumers after they purchase their cars or motorcycles. Edelbrock Corp. operates its own sand-cast aluminum foundry in San Jacinto, California, and manufacturing, distribution, and warehouse facilities in Torrance, California. The two most important product lines in terms of revenue are high-performance carburetors and intake manifolds. In 1999, carburetors and manifolds accounted for 68 percent of total sales. Although the company’s stock is traded on the NASDAQ National Market, the Edelbrock family owns nearly 50 percent of the company. Vic Edelbrock, Jr., the son of Edelbrock Corp.’s founder, has served as chairman, chief executive officer, and president since 1962.

Origins

Edelbrock Corp.’s long-time position in the performance parts industry was established by Vic Edelbrock, Sr., a Kansas native with a passion for modified, high-performance, “hot rod” vehicles. Born in a small farming community in Wichita in 1913, Edelbrock began working full time at age 14, when his school days were cut short by a fire that razed his father’s grocery store. Edelbrock was thrust into the position of having to help support his family. He found a job at an auto repair shop, where he first developed his skills as an automotive mechanic. Several years later, after the Great Depression had descended upon the nation, Edelbrock joined in the great exodus west, attracted, like thousands of Midwesterners, by promise of prosperity in California.

At age 18, Edelbrock arrived in California in 1931 to live with his brother. Two years later, Edelbrock married and soon went into business with his wife’s brother. The pair opened a repair shop on Wilshire Boulevard in Beverly Hills, and, despite the bleak economic times, the business quickly flourished. After a year, in 1934, Edelbrock opened his own shop on the corner of Venice and Hoover in Los Angeles and, again, enjoyed a steady stream of customers. Edelbrock moved his shop three more times during the 1930s, with his reputation as an expert mechanic traveling with him. Edelbrock became a fixture within the regional racing community, working on cars during the day and spending his weekends racing at Muroc Dry Lake, the future site of Edwards Air Force Base. His stature within the circle of Los Angeles racing enthusiasts grew significantly after 1938, the year he bought a 1932 Ford roadster. The 1932 roadster became a proving ground on wheels for Edelbrock’s product designs, a litmus test for the performance-enhancing automotive parts he would test at the dry lakes located 80 miles northeast of Los Angeles.

When Edelbrock bought the Ford roadster, he began designing a custom manifold, an automotive component used to direct fuel to the engine’s cylinders. At first, he teamed up with a partner, Tommy Thickston, to develop the ‘ Thickston” mani-fold, but Edelbrock was dissatisfied with the result. He designed his own, the “Slingshot” manifold, the first product to bear the Edelbrock name. As he would with other aftermarket parts, Edelbrock tested his new manifold by racing with it at Muroc. He drove his modified 1932 roadster out to the dry lakes, removed the fenders and windshield, and then put them back on when he was finished racing. Using his Ford roadster to test the performance of his custom parts proved to be a marketing boon. At Murac, Edelbrock was a consistent winner, driving at speeds in excess of 120 miles per hour before the war. Competitors and onlookers soon learned of his Slingshot manifold, creating a rush of excitement and scores of new customers. Edelbrock built roughly 100 Slingshots during the course of the next three years, further etching the Edelbrock name into the minds of the racing community.

When the United States entered World War II, Edelbrock stopped racing and applied his talents to the prosecution of the war. Although the turn of events represented an interruption to Edelbrock’s burgeoning business, the experience he gained during the war years exposed him to the capabilities of a wide array of machining tools. Edelbrock spent time welding at the Long Beach shipyards in Southern California and hand fabricating parts for aircraft. When the war ended, he turned his attention back to racing and to resuming the development of his business interests. He purchased his first building for his company in Hollywood and opened a machine shop and auto repair facility.

Postwar Growth

Considering his love for racing, which had turned to midget car racing after the war, Edelbrock’s auto repair business was always more of a performance parts shop than a repair shop. His company’s first catalog, printed in 1946 and destined to become a marketing staple for the company throughout the century, declared as much, with “Edelbrock Power and Speed Equipment” emblazoned across the front cover. Edelbrock competed in midget races as often as six nights a week, touring throughout the Southern California racing circuit and showcasing his high-performance auto parts. To support his efforts on the track, Edelbrock bought one of the performance industry’s first engine dynamometers in 1949, which enabled him to substantiate his racing results with data and point to measurable performance gains. Along with the dynamometer, the Edelbrock Equipment Company, as the company was then called, also gained its first purpose-built facility in 1949. Containing 5,000 square feet, the building housed a small machine shop, repair bays, the engine dynamometer, a stock room, and office space, giving Edelbrock the space and the capabilities to flesh out his catalog of performance parts.

The company hit its stride during the 1950s, as Edelbrock focused all of his attention on fabricating components designed to add power and speed to automobiles. The company’s parts were purchased by competitive racers and car hobbyists alike— by anyone who wanted to increase vehicle performance. Within this cross-section of mechanical sophisticates, the Edelbrock name was regarded with trust and respect, enjoying brand strength that could be applied to a host of products. The company’s production selection broadened beyond its signature in-take manifolds to include aluminum cylinder heads, flywheels, pistons, camshafts, adjustable tappets, and other parts. During this period of product expansion, Edelbrock parts appeared on the cover of magazines such as Hot Rod.

1962: From One Generation to Another

One era of leadership gave way to another when Vic Edelbrock died of cancer in 1962 at the age of 49. His son, 26-year-old O. Vic Edelbrock, Jr., inherited the Edelbrock legacy and the reins of command. The transition was smoothed considerably by the presence of the company’s long-serving employees and support management, individuals who had started working for Vic, Sr., in the 1930s. Under his son’s management—a tenure that would stretch into the 21st century—the company continued its leadership role in the design and development of performance parts. Vic, Jr., personified the company’s esteem within the high-performance aftermarket industry, serving as the president of the Specialty Equipment Marketing Association from 1971 to 1974, but he did not earn the post because of his company’s size. Relative to the industry’s largest concerns, Edelbrock was a small company known more for its attention to product design and development than for its market dominance. The company remained as such during the first two decades of Vic, Jr.’s, leadership, content with catering to the needs of a specific and small clientele. A more ambitious Edelbrock Corp. emerged during the 1980s, as the company broadened its product selection and pursued a larger segment of the aftermarket.

Company Perspectives:

When we say “proven” at Edelbrock we mean it. Many hours of research, design and testing go into each Edelbrock product before it goes to market. Through teamwork, good equipment and dedication, Edelbrock designs and manufactures products that deliver maximum performance. Edelbrock engineers are enthusiasts who have joined our team because of our outstanding reputation for producing remarkable products. They are a combination of racing veterans and scholars. Jack Mayberry heads our Engineering Department. Dr. Rick Roberts earned his PhD in 1985 from Cal Tech and is our Chief Engineer. Our group ofdyno technicians are “hands-on” engine builders who are putting together their own engines at home as well as at work. Whatever their background, our team has one thing in common … the love of performance.

Although Edelbrock Corp. continued to deliver automotive components sought after by racing enthusiasts, the company widened its target customer base to include those who frequented aftermarket retail shops for purposes other than racing. There existed a market segment of car owners who merely wanted to increase the performance of the efficiency of their vehicles, and Edelbrock Corp. tailored its strategic focus to address the needs of such customers. The company’s product selection increased to include camshaft kits, valve train parts, exhaust systems, engine accessories, fuel system parts, and other performance parts. As a whole, Edelbrock Corp.’s product line represented what the company called its “Total Power Package” line. Customers could purchase components piece-meal, until they ultimately acquired the Edelbrock power package. The switch in strategy was significant, embellishing on the hot rod clientele with which the company had established its reputation. Although the Edelbrock name still registered as a trustworthy choice for the aftermarket connoisseurs, the more inclusive market approach addressed a larger customer base, delivering a discernible boost to the company’s financial totals.

Once the extension of the company’s product line proved successful, Edelbrock Corp. began to develop the infrastructure to support the aggrandizement of the Edelbrock brand name. In 1987, the company moved its headquarters to Torrance, California, after spending 20 years in El Segundo, California. From there, Edelbrock Corp. made a move toward vertically integrating its operations, building its own sand-cast aluminum foundry in 1990. What followed was the continued extension of the company’s product line, as the Edelbrock brand name was leveraged to support the sales of carburetors, aluminum cylinder heads, aluminum water pumps, and fuel-injected manifolds. The company manufactured approximately half of its own products, contracting with domestic manufacturers for the rest.

The latter half of the 1990s witnessed substantial physical expansion and strategic diversification, growth that for the first time in the company’s history came under the eye of the investing public. In October 1994, Edelbrock Corp. completed its initial public offering of stock, raising $21 million for the expansion of its operations and the purchase of new equipment. The proceeds were put to use several months later when the company constructed a new 37,000-square-foot building in Torrance that expanded its exhaust products division, a producer of mufflers, tailpipes, and other exhaust related products. New construction also included the addition of a 15,000-square-foot building in San Jacinto, California, which was dedicated to warehouse space for the aluminum foundry.

As Edelbrock Corp. stepped up production capacity of its nearly 60-year-old automotive aftermarket business, the company also took its first steps into a new market. In 1994, the company began making a line of intake manifolds and aluminum cylinder heads for Harley Davidson motorcycles. The foray into the motorcycle aftermarket was strengthened with the March 1995 acquisition of QwikSilver II, Inc., an Apple Valley, California-based manufacturer of carburetors for Harley Davidson motorcycles. The $500,000 acquisition fleshed out the company’s line so that it could offer a complete Harley Davidson aftermarket package. By the end of the company’s fiscal 1995, revenues were up 26 percent to $67 million, an increase attributable, in large part, to the diversification into the motor-cycle aftermarket.

Edelbrock pressed ahead with increasing manufacturing capacity following the QwikSilver acquisition. A new 45,000-square-foot building was constructed next to the company’s exhaust facility in December 1996, followed by the construction of two smaller facilities located next to the foundry in San Jacinto. One of the new buildings, a 15,000-square-foot structure, became the new home for the QwikSilver business formerly based in Apple Valley.

In May 1998, Edelbrock Corp. entered another new market, introducing a line of aftermarket shock absorbers. Production of the shock absorbers was housed in the recently constructed building next to the company’s exhaust manufacturing site in Torrance.

By the end of the 1990s, the company’s aggressive expansion and willingness to enter new markets enabled it to reach a significant financial milestone. In 1999, the company eclipsed the $100-million-in-sales mark, posting $109 million in sales. Perhaps more important, the expansion and new product introductions had not tarnished the company’s profit performance. Net income growth demonstrated encouraging vitality during the latter half of the decade, increasing from $6.4 million in 1996 to $8 million in 2000, when sales reached $121 million, more than twice the total recorded five years earlier. Further robust financial growth was expected in the years ahead, with the company basing much of its optimism on anticipated growth in the import aftermarket. In June 2000, Edelbrock Corp. acquired the exclusive rights to manufacture and sell internal engine, exhaust, and suspension components under the Edelbrock and JG name to the import aftermarket, providing a new substantial area of growth for the years ahead.