EVANSVILLE, Ind., Aug. 4, 2022
/PRNewswire/ -- Escalade, Inc. (NASDAQ: ESCA, or the
"Company"), a leading manufacturer and distributor of sporting
goods and indoor/outdoor recreational equipment, today announced
second quarter and year to date results for 2022.
SECOND QUARTER 2022
(As compared to the second
quarter 2021)
- Net Sales decreased 5.4% to $94.3
million
- Organic sales, excluding acquisition contributions, declined
13.0%
- Gross margin was flat at 25.2% and gross profit decreased
5.4%
- Operating income decreased 23.4% to $8.2
million
- Net income of $5.7 million, or
$0.42 per diluted share vs.
$8.1 million, or $0.58 per share for Q2 2021
- EBITDA decreased 15.7% to $10.3
million
- Announced $0.15 per share cash
dividend to shareholders of record on September 6, 2022
SIX MONTHS ENDED JULY 9,
2022
(As compared to the first half 2021)
- Net Sales increased 4.9% to $166.7
million
- Organic sales, excluding acquisition contributions, declined
3.6%
- Gross margin declined 46 basis points, to 26.3%
- Operating income decreased 3.4% to $17.2
million
- Net income of $12.3 million, or
$0.91 per diluted share vs.
$13.6 million, or $0.97 per diluted share for 2021
- EBITDA increased 1.5% to $20.9
million
For the three months ended July 9,
2022, Escalade reported net income of $5.7 million, or $0.42 per diluted share, on net sales of
$94.3 million. The Company reported
gross margin of 25.2%, consistent with the prior-year period,
despite continued challenges related to the global supply chain,
raw materials cost inflation, and labor constraints.
Selling, general, and administrative expense as percentage of
net sales increased to 15.6% in the second quarter 2022, versus
13.9% in the prior-year period, due to lower sales volume and
expenses related to the acquisition and integration of Brunswick
Billiards. SG&A expenses for the legacy business units were
down year over year on an absolute basis.
Earnings before interest, taxes, depreciation, and amortization
("EBITDA") declined 15.7% to $10.3
million in the second quarter 2022, versus $12.3 million in the prior-year period. For the
six months year-to-date EBITDA increased 1.5% to $20.9 million vs $20.6
million in 2021.
As of July 9, 2022, the Company
had total cash and equivalents of $6.2
million, together with $7.3
million of availability on its senior secured revolving
credit facility maturing in 2027. At the end of the second quarter
2022, net debt (total debt less cash) was 2.55x trailing
twelve-month EBITDA.
During the second quarter strong organic demand for indoor games
and pickleball, together with contribution from the Brunswick
Billiards® acquisition completed January 21,
2022, were more than offset by the timing of shipments
within the basketball category, along with lower demand within the
fitness and outdoor categories, including archery and water
sports.
Escalade announced a quarterly dividend of $0.15 per share to be paid to all shareholders of
record on September 6, 2022 and
disbursed on September 13, 2022.
MANAGEMENT COMMENTARY
"During the second quarter, we continued to build leading
positions across our niche sports, games, and outdoor categories,
while leveraging the benefits afforded by our hybrid manufacturing
and sourcing capabilities, decentralized structure and lean
operating model," stated Walter P. Glazer,
Jr., President and CEO of Escalade.
"Although rising interest rates, inflationary headwinds and
geopolitical uncertainty have dampened broader consumer sentiment
and demand currently, our diverse portfolio of premium brands and
base of consumers who value quality, performance, and an active
lifestyle, should support our growth plans over the longer term,"
continued Glazer.
"Second quarter sales declined on a year-over-year basis due to
softness in select outdoor categories, together with the previously
announced pull-forward of basketball revenue from the second to the
first quarter of 2022," continued Glazer. "Importantly, gross
profit margin held consistent with the prior-year period, as we
successfully navigated rising material, shipping and labor
costs."
"The integration of our recently completed acquisition of
Brunswick Billiards® has progressed ahead of plan and, as
previously disclosed, is expected to be accretive to earnings in
the second half of 2022," continued Glazer. "We believe this
acquisition will allow for meaningful cross-selling synergies
across our billiards and indoor recreation markets, categories that
continue to outperform in the current market
environment."
"Subsequent to the quarter end, we exercised a portion of
our accordion availability, expanding our senior revolving credit
facility by $10 million," continued
Glazer. "We have an additional $15
million that we could exercise in the future, further
increasing our credit line."
"We've demonstrated a commitment to effective capital allocation
and disciplined balance sheet management, an approach that
contributes to long-term value creation," continued Glazer.
"Looking ahead, our near-term capital allocation priorities include
a targeted reduction in net leverage, investments in organic growth
initiatives, and the consistent payment of a quarterly cash
dividend," concluded Glazer.
CONFERENCE CALL
A conference call will be held Thursday,
August 4, 2022, 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:
|
877-300-8521
|
International
Live:
|
412-317-6026
|
To listen to a replay of the teleconference, which subsequently
will be available through August 18,
2022:
Domestic
Replay:
|
844-512-2921
|
International
Replay:
|
412-317-6671
|
Conference
ID:
|
10169236
|
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.
ABOUT ESCALADE, INC
Founded in 1922, and headquartered in Evansville, Indiana, Escalade designs,
manufactures, and sells sporting goods, fitness, and indoor/outdoor
recreation equipment. Our mission is to connect family and
friends creating lasting memories. Leaders in our respective
categories, Escalade's brands include Brunswick Billiards®; STIGA®
table tennis; Accudart®; RAVE Sports® water recreation; Victory
Tailgate® custom games; Onix® pickleball; Goalrilla™ basketball;
Lifeline® fitness; Woodplay® playsets; and Bear® Archery.
Escalade's products are available online and at leading retailers
nationwide. For more information about Escalade's many brands,
history, financials, and governance please visit
www.escaladeinc.com.
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:
specific and overall impacts of the COVID-19 global pandemic on
Escalade's financial condition and results of operations; 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; Escalade's
ability to develop and implement our own direct to consumer
e-commerce distribution channel; 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; 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; 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 and to maintain compliance with the
terms of such financing; the availability, integration and
effective operation of information systems and other 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; 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 9,
2022
|
|
July 10,
2021
|
|
July 9,
2022
|
|
July 10,
2021
|
|
|
|
|
|
|
|
|
Net sales
|
$94,337
|
|
$99,679
|
|
$166,717
|
|
$158,870
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
Cost of products
sold
|
70,613
|
|
74,606
|
|
122,874
|
|
116,363
|
Selling,
administrative and general expenses
|
14,680
|
|
13,810
|
|
25,206
|
|
23,686
|
Amortization
|
855
|
|
577
|
|
1,425
|
|
1,006
|
|
|
|
|
|
|
|
|
Operating
Income
|
8,189
|
|
10,686
|
|
17,212
|
|
17,815
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(948)
|
|
(387)
|
|
(1,508)
|
|
(621)
|
Other
income
|
29
|
|
21
|
|
72
|
|
56
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
7,270
|
|
10,320
|
|
15,776
|
|
17,250
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
1,597
|
|
2,194
|
|
3,449
|
|
3,682
|
|
|
|
|
|
|
|
|
Net Income
|
$ 5,673
|
|
$8,126
|
|
$12,327
|
|
$13,568
|
|
|
|
|
|
|
|
|
Earnings Per Share
Data:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$ 0.42
|
|
$ 0.59
|
|
$ 0.91
|
|
$ 0.98
|
Diluted earnings per
share
|
$ 0.42
|
|
$ 0.58
|
|
$ 0.91
|
|
$ 0.97
|
|
|
|
|
|
|
|
|
Dividends
declared
|
$ 0.15
|
|
$ 0.14
|
|
$ 0.30
|
|
$ 0.28
|
Consolidated Balance
Sheets
(Unaudited, In Thousands)
|
|
All Amounts in
Thousands Except Share Information
|
July 9,
2022
|
December 25,
2021
|
July 10,
2021
|
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$ 6,195
|
$ 4,374
|
$10,641
|
Receivables, less
allowance of $726; $457; and $717; respectively
|
60,011
|
65,991
|
52,248
|
Inventories
|
130,246
|
92,382
|
86,612
|
Prepaid
expenses
|
7,263
|
7,569
|
4,775
|
Prepaid income
tax
|
621
|
739
|
--
|
TOTAL CURRENT
ASSETS
|
204,336
|
171,055
|
154,276
|
|
|
|
|
Property, plant and
equipment, net
|
28,344
|
24,936
|
20,792
|
Operating lease
right-of-use assets
|
9,318
|
2,210
|
2,079
|
Intangible assets,
net
|
35,353
|
20,778
|
21,638
|
Goodwill
|
39,226
|
32,695
|
32,695
|
Other assets
|
275
|
124
|
137
|
TOTAL ASSETS
|
$316,852
|
$251,798
|
$231,617
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Current portion of
long-term debt
|
$ 7,143
|
$ 7,143
|
$ 7,143
|
Trade accounts
payable
|
24,650
|
15,847
|
14,705
|
Accrued
liabilities
|
20,483
|
24,385
|
14,875
|
Income tax
payable
|
--
|
--
|
180
|
Current operating
lease liabilities
|
676
|
818
|
1,526
|
TOTAL CURRENT
LIABILITIES
|
52,952
|
48,193
|
38,429
|
|
|
|
|
Other
Liabilities:
|
|
|
|
Long‑term
debt
|
94,040
|
50,396
|
42,857
|
Deferred income tax
liability
|
4,759
|
4,759
|
4,193
|
Operating lease
liabilities
|
8,660
|
1,387
|
557
|
Other
liabilities
|
448
|
448
|
448
|
TOTAL LIABILITIES
|
160,859
|
105,183
|
86,484
|
|
|
|
|
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 –
13,590,407; 13,493,332; and 13,779,489; shares
respectively
|
13,590
|
13,493
|
13,779
|
Retained
earnings
|
142,403
|
133,122
|
131,354
|
TOTAL STOCKHOLDERS'
EQUITY
|
155,993
|
146,615
|
145,133
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$316,852
|
$251,798
|
$231,617
|
Reconciliation of
GAAP Net Income to Non-GAAP EBITDA
(Unaudited, In Thousands)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
All Amounts in
Thousands
|
July 9,
2022
|
|
July 10,
2021
|
|
July 9,
2022
|
|
July 10,
2021
|
|
|
|
|
|
|
|
|
Net Income
(GAAP)
|
$ 5,673
|
|
$8,126
|
|
$12,327
|
|
$13,568
|
|
|
|
|
|
|
|
|
Interest
expense
|
948
|
|
387
|
|
1,508
|
|
621
|
Income tax
expense
|
1,597
|
|
2,194
|
|
3,449
|
|
3,682
|
Depreciation and
amortization
|
2,130
|
|
1,575
|
|
3,603
|
|
2,709
|
|
|
|
|
|
|
|
|
EBITDA
(Non-GAAP)
|
$10,348
|
|
$12,282
|
|
$20,887
|
|
$20,580
|
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SOURCE Escalade, Incorporated