EVANSVILLE, Ind., Aug. 6, 2020 /PRNewswire/ -- Escalade,
Incorporated (NASDAQ: ESCA) - "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%,
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
places 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 in 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 our balance sheet, the Board of Directors
approved a 12% 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."
Net sales for the second quarter of 2020 were $83.5 million compared to net sales of
$55.6 million for the same quarter in
2019, an increase of $27.9 million or
50.1%. The increase in sales was primarily driven by growth in our
outdoor and fitness categories, including basketball, Lifeline
Fitness and Victory Tailgate as demand for our fitness and home
recreation products continues to be high amidst the COVID-19
pandemic. Business categories lagging in Q1 came back to life in Q2
as our brick and mortar partners began to reopen.
Gross margin ratio for the second quarter of 2020 was 27.8%,
compared to 23.3% 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 our 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%. 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% from
18.0% reported for the same period 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.
The Company announced a quarterly dividend of $0.14 per share to be paid to all shareholders of
record on September 14, 2020 and
disbursed on September 21, 2020.
Escalade is a leading manufacturer and marketer of sporting
goods products sold worldwide. To obtain more information on the
Company and its products, visit our website at:
www.EscaladeInc.com or contact Patrick
Griffin, Vice President of Corporate Development &
Investor Relations at 812/467-1358.
ABOUT ESCALADE SPORTS
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.
Escalade Sports' products are available at sporting goods dealers
and independent retailers nationwide. For more information on
Escalade Sports, its brands, instruction manuals, retailers,
warranty, replacement parts or customer service, please call
1-888-784-4288 or visit www.escaladesports.com.
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:
specific and overall impacts of the COVID-19 global pandemic on
Escalade's financial condition and results of operations;
Escalade's plans and expectations surrounding the transition to its
new Chief Executive Officer and all potential related effects and
consequences; the impact of competitive products and pricing;
product demand and market acceptance; new product development;
Escalade's ability to achieve its business objectives, especially
with respect to its Sporting Goods business on which it has chosen
to focus; 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; the
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; Escalade's
ability to control costs; 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;
fluctuation in operating results; changes in foreign currency
exchange rates; changes in the securities markets; Escalade's
ability to obtain financing and to maintain compliance with the
terms of such financing; the availability, integration and
effective operation of information systems and other technology,
and the potential interruption of such systems or technology; risks
related to data security of privacy breaches; 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
Consolidated
Statements of Operations
(Unaudited, In
Thousands Except Per Share Data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
All Amounts in
Thousands Except Per Share Data
|
July 11,
2020
|
|
July 13,
2019
|
|
July 11,
2020
|
|
July 13,
2019
|
|
|
|
|
|
|
|
|
Net sales
|
$83,524
|
|
$55,639
|
|
$120,813
|
|
$87,741
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
Cost of products
sold
|
60,289
|
|
42,680
|
|
87,363
|
|
66,305
|
Selling,
administrative and general expenses
|
11,921
|
|
10,038
|
|
19,378
|
|
17,783
|
Amortization
|
442
|
|
450
|
|
776
|
|
788
|
|
|
|
|
|
|
|
|
Operating
Income
|
10,872
|
|
2,471
|
|
13,296
|
|
2,865
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(60)
|
|
(131)
|
|
(104)
|
|
(199)
|
Other
income
|
22
|
|
3
|
|
68
|
|
9
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
10,834
|
|
2,343
|
|
13,260
|
|
2,675
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
2,124
|
|
467
|
|
2,599
|
|
532
|
|
|
|
|
|
|
|
|
Net Income
|
$8,710
|
|
$ 1,876
|
|
$10,661
|
|
$ 2,143
|
|
|
|
|
|
|
|
|
Earnings Per Share
Data:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.62
|
|
$
0.13
|
|
$
0.76
|
|
$
0.15
|
Diluted earnings per
share
|
$
0.61
|
|
$
0.13
|
|
$
0.75
|
|
$
0.15
|
|
|
|
|
|
|
|
|
Dividends
declared
|
$
0.125
|
|
$
0.125
|
|
$
0.25
|
|
$
0.25
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
(Unaudited, In
Thousands)
|
|
All Amounts in
Thousands Except Share Information
|
July 11,
2020
|
December 28,
2019
|
July 13,
2019
|
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$16,669
|
$ 5,882
|
$ 4,598
|
Receivables, less
allowance of $728; $483; and $533; respectively
|
49,516
|
35,450
|
35,229
|
Inventories
|
41,653
|
42,269
|
47,984
|
Prepaid
expenses
|
2,085
|
3,151
|
2,958
|
Prepaid income
tax
|
--
|
163
|
1,687
|
TOTAL CURRENT
ASSETS
|
109,923
|
86,915
|
92,456
|
|
|
|
|
Property, plant and
equipment, net
|
14,713
|
15,111
|
15,387
|
Operating lease
right-of-use assets
|
1,395
|
1,080
|
1,288
|
Intangible assets,
net
|
18,071
|
18,847
|
19,529
|
Goodwill
|
26,749
|
26,749
|
26,749
|
Other
assets
|
57
|
77
|
94
|
TOTAL
ASSETS
|
$170,908
|
$148,779
|
$155,503
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Note
payable
|
$ --
|
$ 135
|
$ 135
|
Trade accounts
payable
|
18,109
|
7,765
|
7,187
|
Accrued
liabilities
|
13,196
|
9,689
|
7,732
|
Income tax
payable
|
1,705
|
--
|
--
|
Current operating
lease liabilities
|
711
|
621
|
694
|
TOTAL CURRENT
LIABILITIES
|
33,721
|
18,210
|
15,748
|
|
|
|
|
Other
Liabilities:
|
|
|
|
Long–term
debt
|
--
|
--
|
7,393
|
Deferred income tax
liability
|
3,537
|
3,537
|
3,409
|
Operating lease
liabilities
|
699
|
475
|
616
|
Other
liabilities
|
387
|
387
|
1,094
|
TOTAL LIABILITIES
|
38,344
|
22,609
|
28,260
|
|
|
|
|
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 – 14,153,579;
14,214,777; and 14,467,634; shares respectively
|
14,154
|
14,215
|
14,468
|
Retained
earnings
|
118,410
|
111,955
|
112,775
|
TOTAL STOCKHOLDERS'
EQUITY
|
132,564
|
126,170
|
127,243
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$170,908
|
$148,779
|
$155,503
|
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SOURCE Escalade, Incorporated