Racing Champions Reports Record 1999 First Quarter Results
GLEN ELLYN, Ill.--(BUSINESS WIRE)--April 27, 1999--Racing Champions Corporation (NASDAQ: RACN - news) today announced record financial results for its first quarter ended March 31, 1999.
Net sales for the quarter increased by 23% to $35.3 million from $28.6 million for the comparable period a year ago. While consistent with recent quarters, the Company's gross margin of 52.9% varied from the 57.8% recorded during last year's first quarter which included higher than normal margins due to NASCAR's 50th anniversary product lines. The Company was able to more than offset this reduction in gross margin by holding its selling, general and administrative expenses to only an 8% increase. The result was 27% growth in operating income for the quarter to $5.3 million compared with $4.1 million last year. Net income increased by 64% to $2.8 million, or $0.17 per diluted share, versus $1.7 million, or $0.10 per diluted share, a year earlier.
For the quarter, the collectible die cast category led the way with strong sales in NASCAR and custom/classic product lines. Particularly strong product performers included NASCAR Originals, WCW Nitro Street Rods and Hot Rockin' Steel. The strength of collectible die-cast sales and the moderate increase in the trading card and other collectibles category more than offset the quarter-to-quarter decrease in apparel and souvenirs.
Earlier this month Racing Champions announced that it had completed the acquisition of The Ertl Company, Inc., one of the oldest and most respected names in collectibles. With $175 million in annual revenues, Ertl is the market leader in both agricultural and custom imprint die-cast collectibles.
Bob Dods, Chairman and Chief Executive Officer said, ''I am particularly pleased with our strong first quarter results. In addition to successfully operating our Racing Champions business, many members of our management team have been engaged in completing the acquisition of The Ertl Company, Inc. and integrating operations of the two businesses.
Dods continued, ''With Ertl's market leadership position in agricultural and custom imprint die-cast collectibles, this acquisition represents a very exciting opportunity to broaden Racing Champions' participation in the rapidly expanding collectibles market. Many of the management and operating capabilities which have contributed to our success in NASCAR die-cast collectibles also have direct application to Ertl's product lines. We look forward to not only realizing significant synergies from combining our two companies, but to leveraging our already well-known brands across wider distribution channels to further heighten our profile within the collectibles market.''
Dods added, ''But as we plan the future of our combined enterprise, we are also focused on meeting the shorter term objectives which we have set. We are very much on schedule for a number of new product introductions during the second quarter including our Outdoor Life and Field & Stream 1:64 and 1:24 scale die cast products, and NASCAR RULES!, our highly detailed 1:64 scale die-cast stock cars with opening hoods and trunks. We are particularly excited about our Petty Enterprises die cast program, which commemorates the Petty family's participation in NASCAR events with replicas of vehicles which they have driven or owned over the past 50 years. We also will bring to market a number of innovative trading card products and collectible plush products during the second quarter. During the second half of the year, we plan to launch a number of new die-cast replicas including 1:64 scale Real Racing Replica radio control NASCAR stock cars, 1:43 and 1:18 scale Ertl NASCAR stock cars, 1:43 scale Racing Champions Mint vehicles and 1:64 scale Ertl American Muscle cars.''
Dods concluded, ''As we continue to introduce an impressive portfolio of new product offerings, it's clear that we are operating on all cylinders to make sure that rather than moderating our progress, the acquisition of Ertl will in fact accelerate our momentum as one of the leading die-cast collectibles companies.''
Founded in 1989, Racing Champions (http://www.racingchampions.com) is a leading producer and marketer of collectibles available at more than 20,000 retail outlets throughout North America. The Company is best known for its extensive lines of officially licensed NASCAR die-cast racing replicas, Press Pass trading cards and NASCAR souvenirs and apparel, Ertl agricultural and custom imprint die cast replicas and AMT model kits. Additional high profile, licensed die-cast series include WCW, Sony Signatures, Outdoor Life and Field & Stream. |
