High-flying BoydsC Wheels Inc. took a tumble Tuesday as its stock lost more than 30% on word that the custom automotive equipment maker expects its 1996 profit to fall below analysts’ estimates.
Boyds Wheels stock closed at $9.875 a share, down $4.375, in heavy trading on the Nasdaq market. The company said its profits would fall after several years of steady increases, despite a 53% hike in sales.
Industry analysts had expected the company, which posted a $900,000 profit for 1995, to top $2.1 million in 1996. The company posted a profit of $1.6 million for the first nine months, but said Tuesday that it might have to restate its third-quarter financial report, which included a $614,000 profit for the three months ended Sept. 30.
Boyd Coddington, the company’s founder and chairman, was not available for comment. A company spokeswoman said the drop in profit was caused by a temporary manufacturing disruption during a factory expansion, problems with an inefficient furnace used to melt aluminum for cast wheels and a lower return from overseas sales due largely to unfavorable exchange rates in Japan.
Some analysts, however, have questioned in the past whether the company has grown so fast it has outstripped the capabilities of its management team.
Boyds Wheels added a chief operating officer and several new accountants last year in an effort to beef up management and cost-control efforts. The spokeswoman said Tuesday that the company doesn’t expect the problems of the last half of 11996 to carry over into the current year.
Growth has been explosive at Boyds Wheels, which was founded in 1988 to make custom wheels for the expensive hot rods Coddington built. The company, which went public in 1995, has added custom motorcycle parts, car care products and expanded its custom automobile wheel line in recent years. Additionally, founder Coddington’s custom car building business, Hot Rods by Boyd, was acquired by Boyds Wheels late last year.
Coddington said in a statement Tuesday that he expects revenue for the year--excluding sales by the hot rod company--to hit $27.2 million, up substantially from $17.8 million in 1995.
To handle its growing product line, Boyds Wheels has increased its Stanton manufacturing facility by 50%, to 120,000 square feet.
The company went public with an offering of 1.2 million shares at $6.25 a share and raised $10 million with a secondary public offering at $11.25 a share last June. The stock rose steadily to a high of $16.875 in November before beginning a slow decline that accelerated abruptly Tuesday.
The company said it will report its 1996 financial results next month.