Escalade Reports Fourth Quarter and Full Year 2024 Results

EVANSVILLE, Ind., Feb. 26, 2025 /PRNewswire/ -- Escalade, Inc. (Nasdaq: ESCA, or the "Company"), a leading manufacturer and distributor of sporting goods and indoor/outdoor recreational equipment, today announced results for the fourth quarter and full year 2024.

FOURTH QUARTER 2024 RESULTS
(As compared to the fourth quarter 2023)

• Net sales decreased 2.4% to $63.9 million
• Gross margin improved 61 basis points, to 24.9%
• Operating income decreased 9.0% to $4.5 million
• EBITDA totaled $5.9 million, a decrease of 7.6%
• Net income of $2.7 million, or $0.19 per diluted share vs. $2.9 million, or $0.21 per diluted share for 2023
• Cash provided by operations of $12.3 million vs $20.6 million in 2023

FULL YEAR 2024 RESULTS
(As compared to full year 2023)

• Net sales decreased 4.6% to $251.5 million
• Gross margin improved 130 basis points, to 24.7%
• Operating income increased 12.3% to $20.0 million
• EBITDA totaled $26.1 million, an increase of 11.1%
• Net income of $13.0 million, or $0.93 per diluted share vs. $9.8 million, or $0.71 per diluted share for 2023
• Cash provided by operations of $36.0 million vs. $48.3 million in 2023

For the fourth quarter ended December 31, 2024, Escalade reported net income of $2.7 million, or $0.19 per diluted share, versus net income of $2.9 million, or $0.21 per diluted share for the fourth quarter in 2023. Total net sales declined 2.4% on a year-over-year basis in the fourth quarter, primarily due to softer consumer demand across the majority of the Company's product categories, partially offset by improved demand in the archery, table tennis, and fitness categories.

Escalade reported fourth quarter gross margin of 24.9%, an increase of 61 basis points versus the prior-year quarter, driven by lower manufacturing and logistics costs, when compared to the prior-year period.

The Company generated $12.3 million of cash flow from operations in the fourth quarter of 2024, compared to $20.6 million in the prior-year period. Earnings before interest, taxes, depreciation, and amortization ("EBITDA") decreased 7.6% to $5.9 million in the fourth quarter 2024, versus $6.4 million in the prior-year period.

As of December 31, 2024, the Company had $52.3 million of availability on its senior secured revolving credit facility maturing in 2027. During the fourth quarter of 2024, the Company utilized its strong cash flow from operations to reduce its debt by $3.9 million, resulting in a ratio of net debt to trailing twelve month EBITDA of 0.8x at December 31, 2024, down from 2.2x at the end of 2023.

The Board of Directors has authorized the current share repurchase program be reset and has authorized up to $20.0 million in future stock repurchases. The repurchase authorization does not have an expiration date and does not oblige the Company to acquire any particular amount of the Company's common stock.

Escalade's Board of Directors has declared a quarterly dividend of $0.15 per share of common stock. The dividend is payable on April 14, 2025 to all shareholders of record at the close of business on April 7, 2025.

MANAGEMENT COMMENTARY

"During the fourth quarter, we maintained strong operational discipline across the organization through a combination of improved asset optimization, expense reduction, and operational efficiency culminating in margin expansion and strong free cash flow generation in the period," stated Walter P. Glazer, Jr., President and CEO of Escalade. "Over the last two years as part of our cost rationalization program, we've removed significant costs from the business through the third quarter sale of our Mexico facility, operational improvements across our organization, and workforce reductions. As planned, we completed the winddown of our Orlando, Florida operations and terminated the facility lease in the fourth quarter. I should point out that we absorbed substantial one-time costs associated with these actions during 2023 and 2024 that will not recur in 2025."

Glazer continued, "These initiatives enabled us to reduce our owned and leased square footage by nearly 20% in 2024. Furthermore, we have reduced total headcount by 23% over the past two years. We believe these actions to right-size our business position us to realize improved operating leverage and results during the current period of soft consumer demand. As we continue to invest in innovation and new product development, we plan to drive growth by gaining market share and fully participating in the next expansionary period in the economic cycle."

"We remain highly focused on disciplined capital efficiency, which includes a continued focus on inventory rationalization," stated Glazer. "We reduced total inventories by 18% over the last year and anticipate further improvement as we move through 2025. During 2024, we generated more than $36 million of operating cash flow, $25 million of which we used to reduce our outstanding debt, including paying off our higher cost variable rate debt, resulting in a net leverage ratio of 0.8x at year-end 2024, the lowest level in four years."

"Following a period of cost rationalization and efficiency improvements, our business is well positioned for profitable long-term growth. Given the current headwinds associated with an uncertain macro-environment, we remain cautious in the near-term regarding consumer spending on discretionary recreational goods," continued Glazer. "Our consumer-driven approach to innovation remains core to our business strategy. In the year ahead, we intend to prioritize investments in new product development within our portfolio of market-leading brands to support our mission of helping families and friends create lasting memories while pursuing healthy, active lifestyles."

"Escalade remains committed to a balanced return of capital program," continued Glazer. "During the fourth quarter, we repurchased $2.2 million of Escalade shares, paid $2.1 million in cash dividends, reduced debt by $3.9 million and built up $3.8 million of cash reserves. We will continue to pursue our disciplined approach to capital allocation including remaining selective acquirors of high quality, complementary brands consistent with our strategies to build long-term shareholder value."

CONFERENCE CALL

A conference call will be held Wednesday, February 26, 2025, 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:

1-844-481-2516

International Live:

1-412-317-0544

To listen to a replay of the teleconference, which subsequently will be available through March 12, 2025:

Domestic Replay:

1-844-512-2921

International Replay:

1-412-317-6671

Conference ID:

10196141

USE OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial statements in accordance with U.S. generally accepted accounting principles ("GAAP"), this release contains the non-GAAP financial measure known as "EBITDA." A reconciliation of this non-GAAP financial measure is contained at the end of this press release. EBITDA is a non-GAAP financial measure that Escalade uses to facilitate comparisons of operating performance across periods. Escalade believes the disclosure of EBITDA provides useful information to investors regarding its financial condition and results of operations. Non-GAAP measures should be viewed as a supplement to and not a substitute for the Company's U.S. GAAP measures of performance and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated. Non-GAAP measures have limitations as an analytical tool and should not be considered in isolation or in lieu of an analysis of the Company's results as reported under U.S. GAAP and should be evaluated only on a supplementary basis.