Escalade Inc. reported sales for the second quarter jumped 50.1 percent to $83.5 million. The gains were primarily driven by growth in its outdoor and fitness categories, including basketball, Lifeline Fitness and Victory Tailgate as demand for its fitness and home recreation products continue to be high amidst COVID-19.

Net income for the second quarter of 2020 was $8.7 million, or 61 cents per share, compared to net income of 1.9 million, or 13 cents, for the same quarter in 2019. Through two quarters of 2020, diluted earnings per share are 11 cents ahead of full-year 2019 levels.

Gross margin ratio for the second quarter of 2020 was 27.8 percent, compared to 23.3 percent for the same period in the prior year. The improvement in gross margin was primarily due to product mix and operational improvements the company has performed over the last year. In addition, lower inventory levels and cleaner inventory minimized markdown exposure. The improved margins were partially offset by headwinds in factory utilization due to closures at two of its operating facilities for an extended period of time due to COVID-19 early in the quarter. Gross profit for the second quarter of 2020 was $23.2 million compared to $13.0 million for the same quarter in 2019.

Selling, general and administrative expenses (SG&A) were $11.9 million for the quarter compared to $10.0 million for the same period in the prior year, an increase of $1.9 million or 18.8 percent. The increase in SG&A is in line with the growth of the business. SG&A, as a percent of sales, for the second quarter of 2020 decreased to 14.3 percent from 18.0 percent reported for the same period the prior year.

Operating income for the second quarter of 2020 was $10.9 million compared to operating income of $2.5 million for the same period in the prior year.

Net income for the second quarter of 2020 was $8.7 million, or $0.61 diluted earnings per share compared to net income of 1.9 million, or $0.13 diluted earnings per share for the same quarter in 2019. Through two quarters of 2020, diluted earnings per share are $0.11 ahead of full-year 2019 levels.

“Following a strong first-quarter performance, the Company accelerated growth in the second quarter, delivering record sales and earnings. Despite continued challenges associated with the COVID-19 pandemic, our revenue grew 50.1 percent, while gross margin expanded 450 basis points in the quarter. This resulted in an acceleration of diluted EPS to $0.61 versus $0.13 in 2019,” said Scott Sincerbeaux, president and CEO of Escalade, Inc. “Our entire organization rallied around each other to ensure the well-being of our collective teams. Early in the quarter, our production facilities in Gainesville, Florida and Rosarito, Mexico experienced closures associated with the outbreak of COVID-19 and reopened with heightened health and safety protocols and we expect this to continue for the foreseeable future. We have proactively worked to ramp up domestic and international production to meet existing and anticipated future demand while securing critical inventory to support ongoing trends in the marketplace. Our ability to react and accelerate manufacturing efforts is a meaningful reflection on the relationships we have with our partners across the globe. These essential steps will serve to support our key retailers and business partners as the country continues to reopen. The changing consumer landscape and return to home recreation and entertainment place us in a position to meet demand and our strong pipeline of product and industry-leading innovation positions us for sustained growth now and into the future. We are making appropriate investments in talent and organizational structure as well as facility improvements and expanded supply chain capabilities. These investments will enable us to navigate the continued uncertainty in the marketplace, meet customer and consumer demand and pave the way for continued organic growth. I would like to thank our leadership team and the entire organization for their effort and commitment to delivering a record quarter. My first three months as the new Chief Executive Officer of Escalade, Inc. have been educational and inspiring. We are fortunate to have a talented team working together to accelerate growth at a critical time in our history.”

In response to the company’s financial performance, positive outlook and strength of its balance sheet, the Board of Directors approved a 12 percent increase to the quarterly dividend, moving the per-share payout from $0.125 to $0.14. “Our results place us squarely in a position to return shareholder value, a critical component of our long-range plan and indicative of the strength of our company and our financial position,” said Sincerbeaux.

“The company is in a strengthened financial position given our business performance, gross margin expansion and nimble organizational structure,” said Stephen Wawrin, Escalade’s VP finance and chief financial officer. “Inventory levels have been right-sized and our aging has significantly improved, allowing us the flexibility to invest in essential key items to support ongoing demand. In addition, our current $50 million credit facility remains untapped and, among other uses, enables us to explore strategic acquisitions to further strengthen our product portfolio and channels of distribution.”

The quarterly dividend will be paid to all shareholders of record on September 14, 2020, and disbursed on September 21, 2020.

Headquartered in Evansville, IN, Escalade Sports is a global manufacturer and distributor of sports and outdoor recreational equipment. Leaders in their respective categories, Escalade Sports’ brands include Bear Archery, Bear X, Trophy Ridge, Rocket, SIK and Cajun Bowfishing archery equipment; STIGA and Ping-Pong table tennis; Accudart and Unicorn darting; Atomic, Victory Tailgate, Triumph Sports, Viva Sol, Zume Games recreational games; DURA and Onix pickleball equipment; Goalrilla, Goalsetter residential in-ground basketball systems, Goaliath and Silverback residential in-ground and portable basketball goals; Lifeline and the STEP fitness products; Woodplay premium playsets; Vuly trampolines; and Cue&Case – a leader in specialty billiard accessories.

Photo courtesy Lifeline Fitness