Escalade Inc. (ESCA, Escalade Sports) Interim President and CEO Patrick Griffin was thrown into the spotlight on Wednesday, August 29 after the company’s then CEO Armin Boehm exited after just seven months on the job. First order of business for the company’s former VP of Corporate Development and Investor Relations was assuring people on a conference call with analysts and investors – and presumably did not see the move coming – that the transition does not reflect any disruption to the company’s strategic direction or its operations. Next stop will no doubt include customers and partners.
Griffin has worked at Escalade for the past 23 years, is an officer of the company, and has served as a member of the Board of Directors since 2009. Prior to that, Griffin served as president of Martin Yale Group, a former subsidiary of Escalade. He has held various other roles at Escalade since 2002.
“The Board and leadership team remain fully aligned and committed to executing our long-term vision, and we remain focused on delivering exceptional consumer experiences, building enduring brand loyalty and maintaining operational excellence,” Griffin said. “These principles have defined who we have been for more than five decades as a public company and they continue to guide us today.
“I will work to ensure that this leadership transition will be as seamless as possible for all the stakeholders,” he continued. “Finally, the Board and Executive Leadership Team are confident in our path forward, and we remain sharply focused on creating value for our shareholders.”
The guiding presence of Board Chairman Walter Glazer, who was appointed chairman in May 2018 and served as company president and CEO from 2022 to March 31, 2025 when Boehm was appointed, will clearly help in the awkward transition. The company notes in his CV that he purchased his first shares of Escalade in October 1991 and has followed the company since that time.
Tariffs and Risk, and Solutions
The company made a fairly damning statement in its Q3 10-Q filing regarding the Trump Administrations’s ongoing tariff saga and its effect on the company and customers. The filing, which was most likely written before recent meetings between President Trump and China’s President Xi, stated:
The United States Government has continued making new announcements concerning tariffs enacted and/or proposed to be enacted on the importation of goods into the United States as well as negotiations of trade agreements to potentially replace such tariffs. Although the United States has begun to negotiate reciprocal trade agreements with several nations, few agreements have been finalized to date and the administration has paused or modified many of its announced tariffs leading to uncertainty with respect to which tariffs may apply and the size and scope of such tariffs.
However, recent announcements from China and the U.S. have reignited concerns over a potential trade war. Although the company has engaged in actions to mitigate the potential impacts from tariffs and other economic pressures such as inflation and supply chain disruptions, it may not be able to effectively protect itself from these risks. Tariffs, a potential trade war with China and other restrictions on trade could result in increased costs and/or the unavailability of goods purchased by the company, which in turn may result in lower profitability and/or a decline in sales as well as the loss of goodwill among customers. General economic conditions, inflation, recessionary fears, rising interest rates, changes in the housing market and declining consumer confidence also may impact the company adversely. Management cannot predict the full impact of these factors on the company.
The company stated that the due to the tariff situation and the company’s results of operations for the third quarter are not necessarily indicative of the results to be expected for full fiscal year 2025.
“Beginning in July, we implemented a series of targeted price increases across our portfolio,” Griffin noted. “Our approach was surgical, grounded in careful analysis of price elasticity and market dynamics. These price increases reflect a balanced approach to share the impact of tariffs across the supply chain while preserving competitiveness and protecting margins. Our teams continue to closely monitor trade policy developments and will recalibrate as needed.”
In looking ahead to the fourth quarter, Griffin said the company anticipates consumer spending to remain cautious, consistent with broader retail trends, which are likely to result in softer holiday sales compared to recent years.
“Notably, we have observed a shift in consumer spending patterns across our portfolio with strong demand for premium products, while demand for lower-priced products is softening,” the interim CEO observed. “Persistent economic and geopolitical volatility has weighed on consumer confidence and sentiment, particularly with middle and lower-income consumers.”
He said with price sensitivity elevated, many consumers are delaying higher ticket purchases, trading down or waiting for promotional opportunities. In response, ESCA is collaborating closely with its retail partners to “drive value-oriented marketing and promotional strategies for certain segments of the market, highlighting products that resonate most with consumers and aligning pricing and inventory with demand trends.”
“Our proactive supply chain management over the past six months ensured that we are well prepared for the holiday season,” he added. “We are ahead of schedule from an inventory delivery perspective and are fully prepared to capitalize on the entire holiday shopping season. While navigating through near-term headwinds, we remain firmly focused on our long-term strategy of investing in product innovation and brand development to strengthen our market leadership and to enhance the consumer experience.”
Third Quarter Revenue Summary
Escalade posted flat sales in its third quarter, reaching $67.8 million, compared to $67.7 million in the year-go Q3 period as gains in archery, table tennis, billiards, and safety were offset by softer market demand in basketball, as well as the strategic exit from certain categories. Company sales declined in the Mass Merchants channel, but rose slightly in the Specialty Dealers and E-Commerce channels. The International business saw a small dip for the period.
“We experienced improved results driven by solid demand across most of our portfolio of leading brands as well as cost discipline and operational efficiency,”Griffin noted. “We achieved these results despite heightened consumer uncertainty and ongoing tariff-related costs.”
Griffin said the company gained market share, particularly in the Safety and Archery categories, supported by the strength of its “domestic manufacturing presence and consistent product availability.”
Product and Acquisitions
The completed the acquisition of Gold Tip from Revelyst in the third quarter.
“This acquisition aligns closely with our long-term strategic and financial criteria and will allow us to achieve greater scale and unlock additional synergies,” Griffin noted. “Gold Tip’s 20-year heritage in carbon arrows, along with Bee Stinger’s premium stabilizers, enhances our category leadership and broadens our product offering to archery and bowhunting customers. We are actively integrating this business into our operations and expect this acquisition will be accretive to earnings in 2026.”
The acquisition, will join a product group launched its 2026 archery assortment, which included over 30 products across the Bear, Trophy Ridge and Cajun brands.
“Early response from consumers to these new products and cutting-edge innovations has been good,” Griffin said. “These new products include the Redeem and Alaskan Pro archery bows, offer advanced technology and performance at unparalleled price points. Within Trophy Ridge, our refreshed accessory lineup includes the No. 1 selling Whisker Biscuit arrow rest, continues to reinforce our market leadership in the archery category.”
Looking ahead, he said they will continue to pursue additional tuck-in acquisitions that are both financially accretive and strategically aligned.
“Through our investments, we are positioning Escalade for above-market growth and long-term value creation, anchored by leading brands defined by quality, innovation and durability,” Griffin said. “We are focused on strengthening our brands through strategic partnerships. Recent collaborations in archery, basketball and billiards are helping elevate visibility and consumer engagement. We’ve seen this model succeed with our Pickleball and Cornhole brands, and we expect similar results as we expand this strategy across our brand portfolio.”
He added that, “At the same time, we will maintain a disciplined focus on balance sheet strength by prioritizing debt reduction, consistent dividends and opportunistic share repurchases to support shareholder value creation.”
Profitability and Expenses
Margin improvement was said to be driven by lower manufacturing and logistics costs, benefits from ongoing footprint rationalization, and tariff mitigation initiatives. “Importantly, we believe our third quarter margins represent a sustainable level of performance absent any unforeseen cost or tariff pressures, Griffin added.”
Griffin said top line growth was led by continued investment in innovative high-quality products positions us well in an environment where consumers are increasingly focused on both value and quality. He said these efforts have enabled ESCA to gain market share in the dynamic market environment.
“As discussed on our prior calls, we have executed a proactive tariff mitigation and supply chain readiness strategy,” Griffin continued. “This playbook not only supported margin expansion this quarter, but has also positioned us well for the holiday shopping season as we strategically manage our inventory levels and assortment.”
Gross margin for the third quarter reached 28.1 percent net sales, an increase of 334 basis points from 24.8 percent in the prior-year period. This improvement was said to be primarily driven by lower fixed costs and decreased inventory storage and handling costs, though tariff-related costs reportedly partially offset these gains.
“Gross margin improved significantly, driven by operational efficiency and targeted price increases in the quarter, which more than offset $4.3 million in tariff-related costs,” Griffin noted.
Selling, general and administrative (SG&A) expenses during the third quarter decreased by 4.1 percent, or $0.5 million, year-over -year to $11.2 million.
Operating income was $7.3 million, or 10.8 percent of net sales, down from $8.0 million, or 11.8 percent of net sales, in the year-ago Q3 period.
Earnings before interest, taxes, depreciation and amortization decreased by $1.3 million, to $8.6 million in the third quarter of 2025 versus $9.9 million in the prior-year period. Company CFO Stephen Wawrin said on the call this decline primarily reflects the absence of a onetime $3.9 million gain on the sale of assets recognized in the third quarter of last year. Improved gross margins in 2025 partially offset the decline in 2024.
Escalade reported net income of $5.6 million, or 40 cents per diluted share, in the third quarter, compared to $5.7 million, or 40 cents per diluted share, in the year-ago quarter.
Balance Sheet and Cash Flow Summary
As of September 30, 2025, the company had total cash and equivalents of $3.5 million. At the end of the third quarter of 2025, net leverage was 0.7x. As of September 30, 2025, ESCA had $20.2 million of total debt outstanding. At quarter-end, the company also had $60.0 million of availability on its senior secured revolving credit facility, which matures in 2027.
Total debt at the end of the quarter was $20.2 million, down 31.4 percent from $29.5 million at the end of the third quarter last year.
In terms of cash flow, during the third quarter of 2025, cash used in operating activities was negative $0.1 million, compared with $10.5 million in cash generated in the third quarter in 2024. This change reportedly reflected a seasonal buildup in working capital relative to the second quarter in advance of the holiday selling season.
“The year-over-year decline in operating cash flow primarily reflects increased working capital usage, driven by the timing of quarter end accounts receivable collections and our strategic inventory investments in preparation for the ramp-up to the holiday season,” said Wawrin.
As of September 30, 2025, the company had total cash and equivalents of $3.5 million. t the end of the third quarter 2025, net debt (total debt less cash) was 0.7x trailing twelve-month EBITDA.
Outlook
“Looking ahead,” added Griffin, “we expect consumers to remain cautious, and value driven. Together with our retail partners, we are executing a balanced promotional strategy during the holiday shopping season that highlights the quality of our brands, while deploying targeted promotions to generate consumer demand and maximize sell-through. Supported by our reduced operational footprint and ongoing cost discipline, we expect to sustain improved gross margin performance, even as consumer demand for discretionary products remains uneven.”
Griffin concluded, “We remain focused on disciplined capital allocation and profitable growth. During the quarter, we completed the acquisition of Gold Tip, a leading arrow brand for bowhunting and target archery. The acquisition also included the Bee Stinger line of premium bow stabilizers. These two brands expand our archery product portfolio and position us for continued market share gains in the archery category. As we look forward, our strategy remains centered on profitable growth, operational excellence and creating value for our customers and shareholders.”
Image courtesy Escalade Sports
