Escalade, Inc. reported 4.7 percent in the fourth quarter but operating earnings were flat due to acquisition-related expenses.
In early November, Escalade announced that it had acquired Victory Tailgate, a brand known for its premium licensed and custom tailgating games.
“We finished fourth quarter 2018 with revenue growth of 4.7 percent and improved our gross profit by $230 thousand in a highly competitive consumer market,” stated Dave Fetherman, president and chief executive officer of Escalade, Inc. “Acquisition related expenses caused SG&A to be slightly higher and operating income to be relatively flat to prior year. We continue to focus on operational and sales initiatives that support our transformational shift of consumers to e-commerce platforms. With our strong balance sheet and business strategies in place, we are confident in the future direction of our company.”
Fourth Quarter Results
Net sales for the fourth quarter of 2018 were $51.0 million compared to net sales of $48.7 million for the same quarter in 2017, an increase of $2.3 million or 4.7 percent.
Gross margin ratio for the fourth quarter of 2018 was 24.0 percent, compared to 24.7 percent for the same period in the prior year.
Selling, general and administrative expenses (SG&A) were $6.9 million for the quarter compared to $6.5 million for the same period in the prior year, an increase of $0.4 million or 5.9 percent due primarily to acquisition related activity. SG&A, as a percent of sales, for the fourth quarter of 2018 increased to 13.5 percent from 13.3 percent reported for the same period prior year.
Operating income for the fourth quarter of 2018 was $5.0 million compared to operating income of $5.1 million for the same period in the prior year, a decrease of $0.1 million or 2.5 percent.
Other income for the fourth quarter of 2018 was down compared to the same period in the prior year due to the sale of our 50 percent owned equity method investment, Stiga.
Net income for the fourth quarter of 2018 was $3.6 million, or 25 cents per share, compared to net income of $7.5 million, or 52 cents diluted earnings per share for the same quarter in 2017. Net income for 2017 was favorably impacted by approximately $3.0 million of income tax benefit resulting from the Tax Cuts and Jobs Act of 2017.
Full Year Results
Full year net sales for 2018 were $175.8 million compared to $177.3 million in 2017, a decrease of $1.5 million.
Gross margin ratio for full year 2018 increased to 25.6 percent from 25.2 percent.
SG&A for full year 2018 were $29.8 million compared to $28.5 million in 2017, an increase of $1.3 million, or 4.4 percent due primarily to acquisition related activity and customer specific advertising. As a percent of sales, SG&A increased to 17.0 percent from 16.1 percent in 2017.
Operating income for full year 2018 was $13.8 million compared to $14.6 million in 2017, a decrease of $0.8 million.
Other income for full year 2018 was $13.1 million compared to $1.7 million 2017. During 2018, the company recognized a $13.0 million gain in other income on the sale of our 50 percent owned equity method investment, Stiga, a Swedish entity.
Full year net income for 2018 was $20.4 million, or $1.41 diluted earnings per share compared to net income of $14.1 million, or 98 cents diluted earnings per share for 2017.
The company announced a quarterly dividend of $0.125 per share would be paid to all shareholders of record on March 11, 2019 and disbursed on March 18, 2019.
Headquartered in Evansville, IN, Escalade Sports’ brands include Bear Archery, Bear X, Trophy Ridge, Rocket, SIK and Cajun Bowfishing archery equipment; STIGA and Ping-Pong table tennis; Accudart and Unicorn darting; Atomic, Victory Tailgate, Triumph Sports, Viva Sol, Zume recreational games; Onix pickleball equipment; Goalrilla, Goalsetter residential in-ground basketball systems, Goaliath and Silverback residential in-ground and portable basketball goals; Lifeline and the STEP fitness products; Woodplay premium playsets; Vuly trampolines; and Cue&Case – a leader in specialty billiard accessories.