EVANSVILLE, Ind., Oct. 24,
2024 /PRNewswire/ -- Escalade, Inc. (NASDAQ:
ESCA, or the "Company"), a leading manufacturer and distributor of
sporting goods and indoor/outdoor recreational equipment, today
announced third quarter and year to date results for 2024.
THIRD QUARTER 2024
(As compared to the third
quarter 2023)
- Net sales were $67.7 million, a
decline of 7.7%
- Operating income was $8.0 million
compared to $6.4 million in 2023
- $2.3 million in non-recurring
business rationalization expenses absorbed in the quarter
- $3.9 million gain on sale of
assets held for sale recognized in the quarter
- Net income of $5.7 million, or
$0.40 earnings per diluted share vs.
$4.3 million, or $0.31 per diluted share for 2023
NINE MONTHS ENDED SEPTEMBER 30,
2024
(As compared to the nine months ended
September 30, 2023)
- Net sales were $187.6 million, a
decline of 5.3%
- Operating income was $15.5
million compared to $12.9
million in 2023
- $2.7 million in non-recurring
business rationalization expenses absorbed during the nine months
2024
- Net income of $10.3 million, or
$0.73 per diluted share vs.
$7.0 million, or $0.50 per diluted share for 2023
For the third quarter ended September 30,
2024, Escalade reported net income of $5.7 million, or $0.40 per diluted share, versus net income of
$4.3 million, or $0.31 per diluted share for the third quarter in
2023. Total net sales declined 7.7% on a year-over-year basis in
the third quarter, due to soft consumer demand and inventory
destocking in most categories, partly offset by growth in the
archery, safety, and basketball categories.
For the nine months ended September 30,
2024, Escalade reported net income of $10.3 million, or $0.73 per diluted share, versus $7.0 million, or $0.50 per diluted share for the nine months ended
September 30, 2023. Total net sales
declined 5.3% on a year-over-year basis in the first nine months of
2024 again due to soft consumer demand and channel destocking,
partly offset by growth in the Company's table tennis, basketball,
and archery categories.
Escalade reported third quarter gross margin of 24.8%, an
increase of 10 basis points versus the prior-year quarter,
primarily driven by improved fixed cost absorption, partly offset
by increased cost of goods sold of $1.8
million due to non-recurring expenses associated with
strategic cost rationalization initiatives, including the closure
and sale of its Mexico
operations.
The Company generated $10.5
million of cash flow from operations in the third quarter
2024, compared to $14.8 million for
the same quarter in 2023. Earnings before interest, taxes,
depreciation, and amortization ("EBITDA") increased 26.0% to
$9.9 million in the third quarter
2024, versus $7.9 million in the
prior-year period.
Total debt at the end of the quarter was $29.5 million, down from $72.0 million at the end of the third quarter
last year.
As of September 30, 2024, the
Company had total cash and equivalents, and availability on its
senior secured revolving credit facility maturing in 2027, of
$73.3 million. On October 11, 2024, the Company entered into an
amendment to its senior secured revolving credit facility that
reduced borrowing capacity by $15.0
million, resulting in total availability of $58.3 million. At the end of the third quarter
2024, net debt (total debt less cash) was 1.1x trailing
twelve-month EBITDA.
Escalade announced a quarterly dividend of $0.15 per share to be paid to all shareholders of
record on January 6, 2025 and payable
on January 13, 2025.
MANAGEMENT COMMENTARY
"During a transitional period in consumer demand, we continue to
position Escalade for long-term value creation through a
combination of portfolio optimization, operational rigor, and fixed
cost reductions, along with continued product innovation and brand
building investments," stated Walter P.
Glazer, Jr., President and CEO of Escalade. "During the
third quarter, we delivered solid margins across key product lines
despite lower sales and non-recurring expenses to reduce our
operational footprint as part of an ongoing cost rationalization
program. This program encompasses a series of initiatives,
including the sale of our Mexico
facility, optimization of our Eagan,
Minnesota operations, and the wind down of our Orlando, Florida operations which we expect to
complete by year end."
"Consumers and retail partners remain cautious regarding the
near-term outlook for spending on discretionary recreational
goods," continued Glazer. "This will likely result in a more
promotional fourth quarter, as our retail partners seek to drive
consumer demand and keep channel inventories low. We believe that
our leading portfolio of brands will enable us to continue to
outperform across our core categories as we move through this
current phase of the economic cycle," continued Glazer. "Our third
quarter sales reflected solid demand for our archery, basketball
and safety categories. While sales declined across most of our
sales channels during the third quarter, we generated more than 13%
year-over-year growth in international sales and 29% growth in our
owned e-commerce sales."
"During the first nine months of 2024, we absorbed $2.7 million in non-recurring expenses related to
ongoing asset and cost rationalization programs," stated Glazer.
"Importantly, we expect these programs will generate sustained
margin improvement into 2025. Our teams have done an exceptional
job of managing through the post-pandemic 'return-to-normal' and
have positioned us for enhanced growth and profitability in the
years ahead."
"With the divestiture of our Mexico facility and strong operating cash
flow, we repaid $13.7 million of
outstanding debt during the quarter, taking our ratio of net debt
to trailing twelve-month EBITDA to 1.1x at the end of the third
quarter," stated Glazer. "At this time, we continue to prioritize
debt reduction and intend to pay off our higher cost variable rate
debt by year-end 2024. In October
2024, we successfully renegotiated our revolving credit
facility to allow for more favorable terms and a lower cost of
debt, while reducing our unused availability. Our disciplined,
return-on-assets-focused approach to capital allocation, including
investments in our brands and new product development, continues to
position us to build leading positions in the markets we
serve."
"Our strong portfolio of brands has consistently outperformed
the broader recreational equipment market through the economic
cycle," concluded Glazer. "Looking ahead, we will continue to
invest in our brands which provide consumers with innovative,
quality products that promote a healthy, active lifestyle and
create memorable moments that last a lifetime, much as we have for
the last century."
CONFERENCE CALL
A conference call will be held Thursday,
October 24, 2024, at 11:00 a.m.
ET to review the Company's financial results, discuss recent
events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation
materials will be available in the Investor Relations section of
Escalade's website at www.escaladeinc.com. To listen to a live
broadcast, go to the site at least 15 minutes prior to the
scheduled start time in order to register, download, and install
any necessary audio software.
To participate in the live teleconference:
Domestic Live:
|
1-877-300-8521
|
International
Live:
|
1-412-317-6026
|
To listen to a replay of the teleconference, which subsequently
will be available through November 7,
2024:
Domestic
Replay:
|
1-844-512-2921
|
International
Replay:
|
1-412-317-6671
|
Conference
ID:
|
10193511
|
USE OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial statements in accordance
with U.S. generally accepted accounting principles ("GAAP"), this
release contains the non-GAAP financial measure known as "EBITDA."
A reconciliation of this non-GAAP financial measure is contained at
the end of this press release. EBITDA is a non-GAAP financial
measure that Escalade uses to facilitate comparisons of operating
performance across periods. Escalade believes the disclosure of
EBITDA provides useful information to investors regarding its
financial condition and results of operations. Non-GAAP measures
should be viewed as a supplement to and not a substitute for the
Company's U.S. GAAP measures of performance and the financial
results calculated in accordance with U.S. GAAP and reconciliations
from these results should be carefully evaluated. Non-GAAP
measures have limitations as an analytical tool and should not be
considered in isolation or in lieu of an analysis of the Company's
results as reported under U.S. GAAP and should be evaluated only on
a supplementary basis.
ABOUT ESCALADE
Founded in 1922, and headquartered in Evansville, Indiana, Escalade designs,
manufactures, and sells sporting goods, fitness, and indoor/outdoor
recreation equipment. Our mission is to connect family and friends
creating lasting memories. Leaders in our respective categories,
Escalade's brands include Brunswick Billiards®; STIGA® table
tennis; Accudart®; RAVE Sports® water recreation; Victory Tailgate®
custom games; Onix® pickleball; Goalrilla™ basketball; Lifeline®
fitness; Woodplay® playsets; and Bear® Archery. Escalade's products
are available online and at leading retailers nationwide. For more
information about Escalade's many brands, history, financials, and
governance please visit www.escaladeinc.com.
INVESTOR RELATIONS CONTACT
Patrick Griffin
Vice President - Corporate Development & Investor Relations
812-467-1358
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements relating to
present or future trends or factors that are subject to risks and
uncertainties. These risks include, but are not limited to:
Escalade's ability to achieve its business objectives; Escalade's
ability to successfully achieve the anticipated results of
strategic transactions, including the integration of the operations
of acquired assets and businesses and of divestitures or
discontinuances of certain operations, assets, brands, and
products; the continuation and development of key customer,
supplier, licensing and other business relationships; Escalade's
ability to develop and implement our own direct to consumer
e-commerce distribution channel; the impact of competitive products
and pricing; product demand and market acceptance; new product
development; Escalade's ability to successfully negotiate the
shifting retail environment and changes in consumer buying habits;
the financial health of our customers; disruptions or delays in our
business operations, including without limitation disruptions or
delays in our supply chain, arising from political unrest, war,
terrorism, labor strikes, natural disasters, public health crises
such as the coronavirus pandemic, and other events and
circumstances beyond our control; the impact of management's
conclusion, in consultation with the Audit Committee, that material
weaknesses existed in the Company's internal control procedures
over financial reporting; the evaluation and implementation of
remediation efforts designed and implemented to enhance the
Company's control environment, which remediation efforts are
ongoing; the potential identification of one or more additional
material weaknesses in the Company's internal control of which the
Company is not currently aware or that have not yet been detected;
the Company's inability or failure to fully remediate material
weaknesses in our internal control procedures over financial
reporting or any other material weaknesses in the future could
result in material misstatements in our financial statements;
Escalade's ability to control costs, including managing inventory
levels; Escalade's ability to successfully implement actions to
lessen the potential impacts of tariffs and other trade
restrictions applicable to our products and raw materials,
including impacts on the costs of producing our goods, importing
products and materials into our markets for sale, and on the
pricing of our products; general economic conditions, including
inflationary pressures; fluctuation in operating results; changes
in foreign currency exchange rates; changes in the securities
markets; continued listing of the Company's common stock on the
NASDAQ Global Market; the Company's inclusion or exclusion from
certain market indices; Escalade's ability to obtain financing, to
maintain compliance with the terms of such financing and to manage
debt levels; the availability, integration and effective operation
of information systems and other technology, and the potential
interruption of such systems or technology; the potential impact of
actual or perceived defects in, or safety of, our products,
including any impact of product recalls or legal or regulatory
claims, proceedings or investigations involving our products; risks
related to data security or privacy breaches; the potential impact
of regulatory claims, proceedings or investigations involving our
products; potential residual impacts of the COVID-19 global
pandemic on Escalade's financial condition and results of
operations; and other risks detailed from time to time in
Escalade's filings with the Securities and Exchange Commission.
Escalade's future financial performance could differ materially
from the expectations of management contained herein. Escalade
undertakes no obligation to release revisions to these
forward-looking statements after the date of this report.
Escalade, Incorporated
and Subsidiaries
Consolidated Statements of
Operations (Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
All Amounts in
Thousands Except Per Share Data
|
September
30, 2024
|
|
September
30, 2023
|
|
September
30, 2024
|
|
September
30, 2023
|
|
|
|
|
|
|
|
|
Net sales
|
$67,738
|
|
$73,358
|
|
$187,568
|
|
$198,060
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
Cost of products
sold
|
50,947
|
|
55,222
|
|
141,312
|
|
152,225
|
Selling,
administrative and general expenses
|
11,675
|
|
11,071
|
|
32,439
|
|
31,123
|
Amortization
|
1,047
|
|
620
|
|
2,231
|
|
1,860
|
Gain on sale of assets
held for sale
|
(3,905)
|
|
--
|
|
(3,905)
|
|
--
|
|
|
|
|
|
|
|
|
Operating
Income
|
7,974
|
|
6,445
|
|
15,491
|
|
12,852
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(530)
|
|
(1,325)
|
|
(1,995)
|
|
(4,280)
|
Other
income
|
7
|
|
5
|
|
13
|
|
30
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
7,451
|
|
5,125
|
|
13,509
|
|
8,602
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
1,784
|
|
850
|
|
3,223
|
|
1,637
|
|
|
|
|
|
|
|
|
Net Income
|
$5,667
|
|
$4,275
|
|
$10,286
|
|
$6,965
|
|
|
|
|
|
|
|
|
Earnings Per Share
Data:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$ 0.41
|
|
$0.31
|
|
$ 0.74
|
|
$0.51
|
Diluted earnings per
share
|
$ 0.40
|
|
$0.31
|
|
$ 0.73
|
|
$0.50
|
|
|
|
|
|
|
|
|
Dividends
declared
|
$ 0.15
|
|
$ 0.15
|
|
$ 0.45
|
|
$ 0.45
|
|
|
|
|
|
|
|
|
Consolidated Balance
Sheets (Unaudited)
|
All Amounts in
Thousands Except Share Information
|
September 30,
2024
|
December 31,
2023
|
September 30,
2023
|
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$ 426
|
$ 16
|
$ 919
|
Receivables, less
allowance of $669; $652; and $367; respectively
|
53,480
|
49,985
|
63,378
|
Inventories
|
85,485
|
92,462
|
105,267
|
Prepaid
expenses
|
5,117
|
4,280
|
4,303
|
Prepaid income
tax
|
156
|
88
|
2,080
|
TOTAL CURRENT
ASSETS
|
144,664
|
146,831
|
175,947
|
|
|
|
|
Property, plant and
equipment, net
|
22,856
|
23,786
|
23,949
|
Assets held for
sale
|
--
|
2,653
|
2,823
|
Operating lease
right-of-use assets
|
7,640
|
8,378
|
8,645
|
Intangible assets,
net
|
26,409
|
28,640
|
29,260
|
Goodwill
|
42,326
|
42,326
|
42,326
|
Other assets
|
1,035
|
391
|
423
|
TOTAL ASSETS
|
$244,930
|
$253,005
|
$283,373
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Current portion of
long-term debt
|
$ 7,143
|
$ 7,143
|
$ 7,143
|
Trade accounts
payable
|
19,965
|
9,797
|
24,050
|
Accrued
liabilities
|
13,769
|
15,283
|
11,991
|
Current operating
lease liabilities
|
1,083
|
1,041
|
1,037
|
TOTAL CURRENT
LIABILITIES
|
41,960
|
33,264
|
44,221
|
|
|
|
|
Other
Liabilities:
|
|
|
|
Long‑term
debt
|
22,353
|
43,753
|
64,896
|
Deferred income tax
liability
|
3,125
|
3,125
|
4,516
|
Operating lease
liabilities
|
7,125
|
7,897
|
8,163
|
Other
liabilities
|
297
|
387
|
407
|
TOTAL LIABILITIES
|
74,860
|
88,426
|
122,203
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Preferred
stock:
|
|
|
|
Authorized 1,000,000
shares; no par value, none issued
|
|
|
|
Common
stock:
|
|
|
|
Authorized 30,000,000
shares; no par value, issued and outstanding – 13,877,302;
13,736,800; and 13,736,800; shares respectively
|
5,909
|
4,480
|
3,935
|
Retained
earnings
|
164,161
|
160,099
|
157,235
|
TOTAL STOCKHOLDERS'
EQUITY
|
170,070
|
164,579
|
161,170
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$244,930
|
$253,005
|
$283,373
|
Reconciliation of
GAAP Net Income to Non-GAAP EBITDA (Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
All Amounts in
Thousands
|
September 30,
2024
|
|
September 30,
2023
|
|
September 30,
2024
|
|
September 30,
2023
|
|
|
|
|
|
|
|
|
Net Income
(GAAP)
|
$5,667
|
|
$ 4,275
|
|
$10,286
|
|
$6,965
|
|
|
|
|
|
|
|
|
Interest
expense
|
530
|
|
1,325
|
|
1,995
|
|
4,280
|
Income tax
expense
|
1,784
|
|
850
|
|
3,223
|
|
1,637
|
Depreciation and
amortization
|
1,940
|
|
1,423
|
|
4,691
|
|
4,221
|
|
|
|
|
|
|
|
|
EBITDA
(Non-GAAP)
|
$9,921
|
|
$7,873
|
|
$20,195
|
|
$17,103
|
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SOURCE Escalade, Incorporated