Escalade, Inc. reported earnings as lower fixed costs and a favorable sales mix lifted gross margins by 408 basis points. Sales for the quarter inched up 0.6 percent versus the prior-year comparative period, with the gain attributed to the acquisition of the Gold Tip archery brand and continued strength in the Billiards and Safety categories, partially offset by softer demand in the Outdoor and Indoor Games categories.

First Quarter Sales
Total first quarter net sales increased 0.6 percent to $55.8 million on a year-over-year (y/y) basis in the first quarter, primarily due to increases in its archery categories resulting from the recent Gold Tip acquisition. Net sales also benefited from increased demand in the billiards and safety categories. These increases were partially offset by a decline in sales in the outdoor and indoor game categories.

Profitability and Cash Flow
Escalade reported first quarter gross margin of 30.7 percent, an increase of 408 basis points versus the prior-year period.

“This improvement was driven by sustained cost management, ongoing process and productivity initiatives and a favorable customer and product mix with a shift towards higher-value products, reflecting relative strength among more affluent consumers in several categories,” said Patrick J. Griffin, president and CEO, Escalade, Inc. on a conference call with analysts.

Selling, general and administrative expenses were $10.7 million during the first quarter, a $0.1 million increase compared to the prior-year Q1 period.

Operating income increased 59.8 percent y/y to $5.8 million.

Net income for the first quarter of 2026 was $4.4 million, or 32 cents per share, compared to net income of $2.6 million, or 19 cents, for the first quarter in 2025.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased $2.2 million to $7.1 million in the first quarter of 2026, versus $4.9 million in the prior-year period.

“We delivered a strong improvement in profitability in the first quarter, including more than 400 basis points of gross margin expansion and a 44 percent increase in EBITDA compared with the prior-year period. These results reflect our continued focus on operational excellence, the accretive contribution from the Gold Tip archery acquisition, and a favorable sales mix.”

Griffin continued, “Against a challenging macroeconomic backdrop, we remain focused on driving continued gains in profitability and operating cash flow.”

He said the company’s performance underscores the benefits of its improved operating model driven by cost-control and efficiency initiatives, as well as efforts to strengthen the portfolio through both organic investment and strategic acquisitions.

Balance Sheet Summary
Total cash and equivalents as of March 31, 2026 was $13.1 million, while availability on the senior secured revolving credit facility maturing in 2027 was $57.9 million. At the end of the first quarter 2026, net debt (total debt less cash) was 0.1x trailing twelve-month EBITDA.

Despite completing two acquisitions in the second half of last year, total inventory declined $3.4 million year-over-year in the first quarter. Griffen said this reflects an ongoing focus on working capital efficiency as a contributor to free cash flow generation.

“As we move through 2026, we expect inventory levels to decline further as we progress toward our longer-term target of approximately 3x inventory turns. We continue to closely monitor emerging tariff policy changes and are prepared to adjust as market conditions evolve,” he offered.

Total debt at the end of the quarter was $16.7 million, down from $23.8 million at the end of the first quarter last year, and $18.5 million at the end of 2025.

“Our balance sheet remains strong, providing ample financial flexibility to pursue additional accretive acquisitions, and we continue to develop our pipeline of opportunities,” Griffin concluded. “Our disciplined approach to capital allocation is centered on generating attractive returns and remains fundamental to our strategy for delivering long-term shareholder value.”

Griffin said strengthening the balance sheet remains a priority.

“During the first quarter, we repaid nearly $2 million of long-term debt while also increasing cash balances,” he shared. “Given our low-cost fixed rate debt and the current interest rate environment, we continue to benefit from favorable cash arbitrage. Our strong free cash flow generation supports both prudent debt management and continued investment in efficiency and growth. In closing, we continue to build momentum as we transition from a focus on optimizing our cost structure and balance sheet towards the prioritization of profitable growth.”

During the first quarter of 2026, the company generated $6.1 million in cash flow from operations, an increase of $2.4 million relative to the first quarter of last year. The improvement in cash flow from operations was primarily attributable to an increase in profitability and a reduction in cash flow used for working capital purposes.

Escalade announced a quarterly dividend of $0.1525 per share to be paid to all shareholders of record on July 6, 2026 and payable on July 13, 2026.

Outlook
Griffin speculated that inflationary pressures, including elevated energy costs, will likely weigh on consumer spending throughout the balance of the year and could also create incremental cost pressure on the company.

“If current macroeconomic and geopolitical conditions persist, we would likely expect consumer demand to remain uneven in the coming quarters,” Griffin speculated. “That said, many of our products provide consumers with affordable at-home recreation and entertainment alternatives, which may help offset softer discretionary spending.”

He added that despite these challenging conditions, they still believe the company’s operational improvements will enable it to deliver gross margins above the prior-year levels.

“Additionally, we plan to solidify our foundation for growth in 2026 through enhanced capital investments,” he noted. He said the investments are focused on expanding capacity, improving operational efficiency and expanding the product development and innovation pipeline.

“Given these strategic investments, we expect capital spending will be higher in 2026 compared to last year,” the CEO continued. “We are building a denser pipeline of fresh and innovative new products across our portfolio. Bear Archery introduced several new bows during the first quarter. As an example, the 58-inch Grizzly Hunter Recurve Bow inspired by the classic Grizzly models of the 1950s is designed to blend long bow feel with recurve performance. We also launched the Cajun Archery Sucker Punch Pro RTF Bow, engineered specifically for high-performance and confined bow fishing environments as well as the new Trophy Ridge React 5 Max sight designed to help serious bow hunters achieve fast and accurate shots.

Escalade’s brands include Goalrilla in-ground basketball hoops; Stiga tennis tables and accessories; Bear Archery and archery equipment; Brunswick Billiards tables and accessories; Accudart darting; Onix pickleball; Lifeline fitness products; and Rave Sports water recreation products.

“We also expanded product offerings within our indoor and outdoor games categories,” Griffen said. “Following the AllCornhole acquisition, we introduced a variety of new cornhole bag designs to improve performance and playability, along with the new flagship cornhole board that will be the official professional tournament board of the American Cornhole League moving forward.”

He said they also introduced the American Legend Westbrook 3-in-1 combo game table, which transitions seamlessly between billiards, table tennis and dining while maintaining a high-quality furniture aesthetic.

“These launches are representative of a more consistent flow of new product development and innovation across our businesses, which is an important driver of category leadership and long-term profitable growth,” the CEO concluded.

Image courtesy Gold Tip Archery