Escalade, Inc., the parent of the Brunswick Billiards, Stiga, Accudart, Rave Sports, Victory Tailgate, Onix, Goalrilla, Lifeline Fitness, Woodplay, and Bear Archery brands, reported that total net sales increased 0.7 percent year-over-year to $57.3 million in the first quarter, primarily due to a return in normalized seasonal demand for basketball products, outdoor games and archery.
“During the first quarter, we experienced increased demand for our basketball, table tennis, archery and outdoor games products,” said Walter P. Glazer, Jr., president and CEO, Escalade, Inc. “Our retail partners successfully reduced their inventory levels coming into 2024, so we believe most channel inventories of our products are relatively light. We saw continued growth in our owned direct-to-consumer website sales, which increased 28 percent in the first quarter, as we continue to support effective marketing campaigns and new product development.”
Gross margin was 25.0 percent of net sales in the quarter, an increase of 560 basis points versus the prior-year period, said to be primarily driven by more favorable product mix, decreased inventory storage and handling costs and favorable fixed cost absorption.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased $2.8 million to $4.4 million in the first quarter 2024 versus EBITDA of $1.6 million in the prior-year Q1 period.
Net income for the first quarter was $1.8 million, or 13 cents per diluted share, compared to a net loss of $1.0 million, or a loss of 7 cents per diluted share, for the comparative quarter in 2023.
“Our first quarter results reflect demand stabilization along with significant improvement in gross margin. We are returning to more normalized market conditions as we move further from the pandemic-driven peak in demand and elevated costs,” said Glazer. “We still have work to do, but we anticipate continued opportunity for margin improvement in 2024 despite our cautious outlook on consumer demand for discretionary recreational goods for the remainder of the year.
Total debt at the end of the quarter was $53.5 million, down from $95.2 million at the end of the first quarter last year and up from $50.9 million at year-end. The increase from year-end was primarily due to inventory investments made before the spring selling season.
“We ended the first quarter with a ratio of net debt to trailing twelve-month EBITDA of 2.0x, well within our targeted range of 1.5x to 2.5x,” stated Glazer. “Looking to the remainder of 2024, we intend to continue deploying available cash flow to debt repayment, which should result in additional interest expense savings, while continuing to invest in our brands and new product development within our strong recreational products portfolio.”
As of March 31, 2024, the company had total cash and equivalents of $0.3 million with $62.4 million of availability on its senior secured revolving credit facility maturing in 2027. At the end of the first quarter 2024, net debt (total debt less cash) was 2.0x, trailing twelve-month EBITDA.
Escalade announced a quarterly dividend of 15 cents per share to be paid to all shareholders of record on July 8, 2024, and payable on July 15, 2024.
Image courtesy Onix/Kasandra Gehrke
