Escalade Reports First Quarter 2024 Results
- Positive: Escalade reported growth in net sales, operating income, EBITDA, and net income for the first quarter of 2024 compared to the same period in 2023.
- Positive: The company achieved a 0.7% increase in net sales, reaching $57.3 million, with a gross margin improvement of 560 basis points.
- Positive: EBITDA increased to $4.4 million in the first quarter of 2024, showing a significant improvement over the prior-year period.
- Positive: Escalade's net income for the quarter was $1.8 million, resulting in $0.13 diluted earnings per share, compared to a net loss in the same quarter of 2023.
- Positive: The total debt decreased to $53.5 million at the end of the quarter, down from $95.2 million in the first quarter last year.
- Positive: Escalade declared a quarterly dividend of $0.15 per share, demonstrating the company's commitment to returning value to shareholders.
- Positive: Management highlighted the stabilization of demand and margin improvement, focusing on cost management, innovation, and product development to drive growth.
- Positive: The company aims to optimize its asset base, reduce debt, and invest in brand and product development in 2024.
- None.
Insights
Escalade, Inc.'s report of a marginal 0.7% increase in net sales indicates a relatively stable revenue trajectory, which may not suggest significant market momentum but does reflect resilience in consumer demand for their sporting and recreational products. A key figure, the operating income, which grew to
Furthermore, the substantial growth in EBITDA by
Reducing total debt from
The increase in direct-to-consumer website sales by
However, the CEO's cautious statement on consumer demand for discretionary goods indicates potential volatility in future sales, suggesting investors monitor market trends closely. The planned divestiture of the Mexico operations signals a strategic refocus and potential for streamlining costs which could improve operational efficiencies in the long term, but may involve short-term transition costs or disruptions.
For retail investors, the declaration of a quarterly dividend of
With the company's efforts to manage costs and drive innovation while delivering a substantial increase in gross margin, it appears to be navigating the post-pandemic environment adeptly. The focus on developing compelling products that cater to healthy lifestyles resonates with current consumer health trends and can be a growth driver.
FIRST QUARTER 2024 HIGHLIGHTS
(As compared to the first quarter 2023)
- Net sales were
$57.3 million 0.7% - Operating income was
$3.1 million $0.1 million - EBITDA totaled
$4.4 million $2.8 million - Net income of
$1.8 million $0.13
For the three months ended March 31, 2024, Escalade posted net sales of
Total net sales increased
Escalade reported first quarter gross margin of
Earnings before interest, taxes, depreciation, and amortization ("EBITDA") increased
Net income for the first quarter of 2024 was
Total debt at the end of the quarter was
As of March 31, 2024, the Company had total cash and equivalents of
Escalade announced a quarterly dividend of
MANAGEMENT COMMENTARY
"Our first quarter results reflect demand stabilization along with significant improvement in gross margin. We are returning to more normalized market conditions as we move further from the pandemic driven peak in demand and elevated costs," stated Walter P. Glazer, Jr., President and CEO of Escalade. "We still have work to do, but we anticipate continued opportunity for margin improvement in 2024 despite our cautious outlook on consumer demand for discretionary recreational goods for the remainder of the year."
"In recent quarters, we sold through much of our higher cost inventory that had impacted margins in 2023," continued Glazer. "In the first quarter 2024, we delivered a gross margin of
"During the first quarter, we experienced increased demand for our basketball, table tennis, archery and outdoor games products," continued Glazer. "Our retail partners successfully reduced their inventory levels coming into 2024, so we believe most channel inventories of our products are relatively light. We saw continued growth in our owned direct-to-consumer website sales, which increased
"As we right size our asset base, including the planned divestiture of our
"We ended the first quarter with a ratio of net debt to trailing twelve-month EBITDA of 2.0x, well within our targeted range of 1.5x to 2.5x," stated Glazer. "Looking to the remainder of 2024, we intend to continue deploying available cash flow to debt repayment, which should result in additional interest expense savings, while continuing to invest in our brands and new product development within our strong recreational products portfolio."
CONFERENCE CALL
A conference call will be held Thursday, April 25, 2024, at 11:00 a.m. ET to review the Company's financial results, discuss recent events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of Escalade's website at www.escaladeinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference:
Domestic Live: | 1-877-300-8521 |
International Live: | 1-412-317-6026 |
To listen to a replay of the teleconference, which subsequently will be available through May 9, 2024:
Domestic Replay: | 1-844-512-2921 |
International Replay: | 1-412-317-6671 |
Conference ID: | 10188694 |
USE OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial statements in accordance with
ABOUT ESCALADE
Founded in 1922, and headquartered in
INVESTOR RELATIONS CONTACT
Patrick Griffin
Vice President - Corporate Development & Investor Relations
812-467-1358
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements relating to present or future trends or factors that are subject to risks and uncertainties. These risks include, but are not limited to: Escalade's ability to achieve its business objectives; Escalade's ability to successfully achieve the anticipated results of strategic transactions, including the integration of the operations of acquired assets and businesses and of divestitures or discontinuances of certain operations, assets, brands, and products; the continuation and development of key customer, supplier, licensing and other business relationships; Escalade's ability to develop and implement our own direct to consumer e-commerce distribution channel; the impact of competitive products and pricing; product demand and market acceptance; new product development; Escalade's ability to successfully negotiate the shifting retail environment and changes in consumer buying habits; the financial health of our customers; disruptions or delays in our business operations, including without limitation disruptions or delays in our supply chain, arising from political unrest, war, labor strikes, natural disasters, public health crises such as the coronavirus pandemic, and other events and circumstances beyond our control; the impact of management's conclusion, in consultation with the Audit Committee, that material weaknesses existed in the Company's internal control procedures over financial reporting; the evaluation and implementation of remediation efforts designed and implemented to enhance the Company's control environment, which remediation efforts are ongoing; the potential identification of one or more additional material weaknesses in the Company's internal control of which the Company is not currently aware or that have not yet been detected; the Company's inability or failure to fully remediate material weaknesses in our internal control procedures over financial reporting or any other material weaknesses in the future could result in material misstatements in our financial statements; Escalade's ability to control costs, including managing inventory levels; Escalade's ability to successfully implement actions to lessen the potential impacts of tariffs and other trade restrictions applicable to our products and raw materials, including impacts on the costs of producing our goods, importing products and materials into our markets for sale, and on the pricing of our products; general economic conditions, including inflationary pressures; fluctuation in operating results; changes in foreign currency exchange rates; changes in the securities markets; continued listing of the Company's common stock on the NASDAQ Global Market; the Company's inclusion or exclusion from certain market indices; Escalade's ability to obtain financing, to maintain compliance with the terms of such financing and to manage debt levels; the availability, integration and effective operation of information systems and other technology, and the potential interruption of such systems or technology; the potential impact of actual or perceived defects in, or safety of, our products, including any impact of product recalls or legal or regulatory claims, proceedings or investigations involving our products; risks related to data security of privacy breaches; the potential impact of regulatory claims, proceedings or investigations involving our products; potential residual impacts of the COVID-19 global pandemic on Escalade's financial condition and results of operations; and other risks detailed from time to time in Escalade's filings with the Securities and Exchange Commission. Escalade's future financial performance could differ materially from the expectations of management contained herein. Escalade undertakes no obligation to release revisions to these forward-looking statements after the date of this report.
Escalade, Incorporated and Subsidiaries | ||||||||
Three Months Ended | ||||||||
All Amounts in Thousands Except Per Share Data | March 31, | March 31, | ||||||
Net sales | ||||||||
Costs and Expenses | ||||||||
Cost of products sold | 42,950 | 45,879 | ||||||
Selling, administrative and general expenses | 10,701 | 10,283 | ||||||
Amortization | 593 | 620 | ||||||
Operating Income | 3,060 | 149 | ||||||
Other Income (Expense) | ||||||||
Interest expense | (735) | (1,375) | ||||||
Other income | 3 | 18 | ||||||
Income (Loss) Before Income Taxes | 2,328 | (1,208) | ||||||
Provision (Benefit) for Income Taxes | 553 | (256) | ||||||
Net Income (Loss) | ( | |||||||
Earnings (Loss) Per Share Data: | ||||||||
Basic earnings (loss) per share | ( | |||||||
Diluted earnings (loss) per share | ( | |||||||
Dividends declared | $ 0.15 | $ 0.15 | ||||||
Consolidated Balance Sheets | |||
All Amounts in Thousands Except Share Information | March 31, | December 31, | March 31, |
(Unaudited) | (Audited) | (Unaudited) | |
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | |||
Receivables, less allowance of | 52,274 | 49,985 | 50,468 |
Inventories | 95,991 | 92,462 | 122,453 |
Prepaid expenses | 2,949 | 4,280 | 4,879 |
Prepaid income tax | -- | 88 | 175 |
TOTAL CURRENT ASSETS | 151,497 | 146,831 | 184,039 |
Property, plant and equipment, net | 23,420 | 23,786 | 24,679 |
Assets held for sale | 2,480 | 2,653 | 2,823 |
Operating lease right-of-use assets | 8,118 | 8,378 | 8,844 |
Intangible assets, net | 28,047 | 28,640 | 30,500 |
Goodwill | 42,326 | 42,326 | 42,326 |
Other assets | 459 | 391 | 376 |
TOTAL ASSETS | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Current portion of long-term debt | |||
Trade accounts payable | 15,981 | 9,797 | 17,232 |
Accrued liabilities | 9,484 | 15,283 | 10,500 |
Income tax payable | 441 | -- | -- |
Current operating lease liabilities | 1,055 | 1,041 | 991 |
TOTAL CURRENT LIABILITIES | 34,104 | 33,264 | 35,866 |
Other Liabilities: | |||
Long‑term debt | 46,383 | 43,753 | 88,082 |
Deferred income tax liability | 3,125 | 3,125 | 4,516 |
Operating lease liabilities | 7,628 | 7,897 | 8,398 |
Other liabilities | 387 | 387 | 407 |
TOTAL LIABILITIES | 91,627 | 88,426 | 137,269 |
Stockholders' Equity: | |||
Preferred stock: | |||
Authorized 1,000,000 shares; no par value, none issued | |||
Common stock: | |||
Authorized 30,000,000 shares; no par value, issued and outstanding – |
4,909 |
4,480 |
2,879 |
Retained earnings | 159,811 | 160,099 | 153,439 |
TOTAL STOCKHOLDERS' EQUITY | 164,720 | 164,579 | 156,318 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Reconciliation of GAAP Net Income to Non-GAAP EBITDA | |||
Three Months Ended | |||
All Amounts in Thousands | March 31, | March 31, | |
Net Income (Loss) (GAAP) | ( | ||
Interest expense | 735 | 1,375 | |
Income tax expense (benefit) | 553 | (256) | |
Depreciation and amortization | 1,373 | 1,396 | |
EBITDA (Non-GAAP) | |||
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SOURCE Escalade, Incorporated
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