Boosted by acquisitions, Escalade Inc. (Nasdaq:ESCA) reported revenues for the third quarter were up 9.4 percent, to $34.6 million. Net income from continuing operations, however, slumped 47.4 percent to $2 million, or 14 cents a share, from $3.8 million, or 27 cents, a year earlier.
Gross margins eroded to 27.3 percent from 30.5 percent due to decreased sales and margins in archery and increased R&D spending. Selling, general and administrative expenses expanded to 20 percent of sales from 15.4 percent, related to acquisitions, the timing of selling and administration expenditures, marketing efforts in new categories acquired during 2014 and expenditures in new products to be introduced in late 2015 and 2016.
Net income from continuing operations was adversely impacted by foreign currency exchange rates associated with its 50 percent ownership of Stiga, headquartered in Sweden.
Net income in the year-ago period came to $13.6 million, boosted by $9.8 million in income from discontinued operations. The company last year sold both its Information Security and Print Finishing businesses to focus on sporting goods.
Robert Keller, president and CEO, said the company continues to make strategic investments in acquisitions. During the third quarter, Onix Sports Inc., a maker of paddles, balls and sportswear for the sport of pickleball, and Goalsetter Systems Inc., a maker of in-ground basketball goals, were acquired for $10.3 million.
Said Keller, “We remain confident in our strategy to grow our sports and outdoor recreation equipment business through internal innovation and acquisitions, while maintaining a strong balance sheet and dividend for our shareholders.”
Other recent acquisitions include Cue & Case Sales, a maker of billiard accessories, in October 2014; and DMI Sports, which makes indoor games and accessories for darts, table tennis, game tables and billiards, in November 2013.
Escalade’s other brands include Stiga and Ping-Pong table tennis, Accudart and Unicorn darting; Goalrilla, Goaliath and Silverback sports training equipment and basketball goal systems; and Bear Archery, Trophy Ridge and Cajun Bowfishing hunting products.
–Tom Ryan
