Escalade, Inc., the parent of the Brunswick Billiards, Stiga, Accudart, Rave Sports, Victory Tailgate, Onix, Goalrilla, Lifeline Fitness, Woodplay, and Bear Archery brands, reported net sales for the third quarter of $67.7 million, a decline of 7.7 percent year-over-year due to soft consumer demand and inventory destocking in most categories. This was partly offset by growth in the archery, safety, and basketball categories.

“Consumers and retail partners remain cautious regarding the near-term outlook for spending on discretionary recreational goods,” commented Walter P. Glazer, Jr., president and CEO of Escalade, Inc. “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.

“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 percent year-over-year growth in international sales and 29 percent growth in our owned e-commerce sales,” continued Glazer.

Escalade reported a third-quarter gross margin of 24.8 percent, 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.

“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,” Glazer noted.

Operating income was $8.0 million, compared to $6.4 million in Q3 2023. The company recognized a $3.9 million gain on the sale of assets held for sale in the quarter.

The company reported a net income of $5.7 million, or 40 cents per diluted share, in the third quarter, compared to a net income of $4.3 million, or 31 cents per diluted share, for the third quarter in 2023.

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 percent to $9.9 million in the third quarter 2024, versus $7.9 million in the prior-year period.

ESCA reported $2.3 million in non-recurring business rationalization expenses were absorbed in the quarter.

Balance Sheet Summary
Total debt at quarter-end was $29.5 million, down from $72.0 million at the end of last year’s third quarter.

As of September 30, 2024, the company had total cash, equivalents and availability on its senior secured revolving credit facility maturing in 2027 of $73.3 million. On October 11, 2024, the company said it entered into an amendment to its senior secured revolving credit facility that reduced borrowing capacity by $15.0 million, resulting in a total availability of $58.3 million.

At the end of the third quarter of 2024, net debt (total debt less cash) was 1.1x, trailing twelve-month EBITDA.

“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.

Glazer continued, “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.”

Escalade announced a quarterly dividend of 15 cents per share to be paid to all shareholders of record on January 6, 2025, payable on January 13, 2025.

Nine-Month YTD Summary
“During the first nine months of 2024, we absorbed $2.7 million in non-recurring expenses related to ongoing asset and cost rationalization programs,” added 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.”

  • Net sales were $187.6 million, a decline of 5.3 percent;
  • 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; and
  • Net income of $10.3 million, or 73 cents per diluted share, versus $7.0 million, or 50 cents per diluted share, for 2023.

Image courtesy Bear Archery