Financial Performance - Escalade reported net sales of $55.5 million for Q1 2025, a decrease of 3.2% compared to $57.3 million in Q1 2024[3][8] - Net income for Q1 2025 was $2.6 million, or $0.19 diluted earnings per share, representing an increase of 46.2% from $1.8 million, or $0.13 diluted earnings per share in Q1 2024[4][8] - EBITDA increased to $4.9 million in Q1 2025, up 11.0% from $4.4 million in the prior-year period[5][8] - Net income for Q1 2025 increased to $2,619,000, up 47.5% from $1,775,000 in Q1 2024[22] - EBITDA for Q1 2025 was $4,922,000, an increase of 10.9% compared to $4,436,000 in Q1 2024[24] Cash Flow and Assets - Cash flow from operations was $3.8 million, a significant increase of $3.8 million compared to the same quarter last year[6] - Cash and cash equivalents at the end of Q1 2025 were $2,214,000, down from $4,194,000 at the end of Q4 2024, representing a decrease of 47.3%[22] - Net cash provided by operating activities for Q1 2025 was $3,791,000, significantly higher than $7,000 in Q1 2024[22] - Total current assets decreased to $131,108,000 in Q1 2025 from $133,824,000 in Q4 2024, a decline of 2.0%[20] Debt and Equity - Total debt decreased to $23.8 million at the end of Q1 2025, down from $53.5 million at the end of Q1 2024[6] - Long-term debt decreased to $16,667,000 in Q1 2025 from $18,452,000 in Q4 2024, a decrease of 9.6%[20] - Total liabilities decreased to $53,309,000 in Q1 2025 from $57,333,000 in Q4 2024, a reduction of 7.0%[20] - Total stockholders' equity remained relatively stable at $168,765,000 in Q1 2025 compared to $168,997,000 in Q4 2024[20] Dividends and Shareholder Returns - Escalade announced a quarterly dividend of $0.15 per share, payable on July 14, 2025[7] - The company paid cash dividends of $2,061,000 in Q1 2025, slightly down from $2,063,000 in Q1 2024[22] Operational Insights - Gross margin improved to 26.7%, an increase of 161 basis points year-over-year, driven by lower fixed costs and reduced inventory handling costs[4][9] - The company experienced increased demand in archery and safety products, partially offsetting declines in basketball and table tennis[3][9] - Escalade is focused on product innovation and capital allocation to enhance long-term shareholder value[9] - The company is evaluating options to mitigate the impact of new tariffs and potential supply chain disruptions[9] Other Financial Metrics - The company reported a loss on disposal of assets amounting to $3,000 in Q1 2025, compared to $67,000 in Q1 2024[22]

Group 1 - Escalade, Inc. will release its first quarter 2025 financial results on May 5, 2025, before the market opens [1] - A conference call to discuss the financial results and recent events will take place on the same day at 11:00 a.m. ET [1] - The conference call will be accessible via a live webcast on Escalade's website [2] Group 2 - Escalade, Inc. was founded in 1922 and is headquartered in Evansville, Indiana [3] - The company specializes in designing, manufacturing, and selling sporting goods and recreational equipment [3] - Escalade's product brands include Brunswick Billiards®, STIGA®, Accudart®, RAVE Sports®, and others, available online and at major retailers [3]

Revenue Concentration and Customer Risk - In 2024, one customer accounted for approximately 19% of the Company's revenues, while another customer accounted for about 13%[13]. - Two major customers accounted for over 10% of consolidated gross sales in the 2024 fiscal year, highlighting the risk of revenue loss if these customers are lost[40]. - The Company faces potential financial difficulties from customers, which could lead to significant write-offs of receivables[41]. Accounts Receivable and Inventory Management - As of December 31, 2024, approximately 25% of total accounts receivable was with one customer, down from 29% in 2023[14]. - The Company reduced inventory to more normalized levels across most categories during 2023 and 2024[31]. Workforce and Management Changes - Escalade's workforce decreased from 479 employees in 2023 to 457 employees in 2024, with 450 being full-time[25]. - The Company is transitioning to a new Chief Executive Officer, Mr. Armin Boehm, effective April 1, 2025, which may disrupt operations[39]. Strategic Initiatives and Growth - Escalade's growth strategy includes expanding its e-commerce business and direct-to-consumer distribution channels[35]. - The Company is focused on product innovation and brand marketing to differentiate its offerings in a competitive market[20]. - Management is pursuing acquisitions to strengthen its leadership in product categories and divesting underperforming operations, including the discontinuation of its Mexico operations in 2024[109]. Financial Performance - Net sales decreased by 4.6% in 2024 compared to 2023, with significant declines in multiple categories due to softer consumer demand[113]. - The overall gross margin increased to 24.7% in 2024 from 23.4% in 2023, positively impacted by lower manufacturing and logistics costs[113]. - Selling, general and administrative expenses (SG&A) rose to $43.3 million in 2024, an increase of 4.4% from $41.5 million in 2023[114]. - The effective tax rate for 2024 was 26.9%, higher than the 21.3% rate in 2023, primarily due to state income tax expenses and nondeductible expenses[115]. - The Sporting Goods segment reported net sales of $251.5 million in 2024, down from $263.6 million in 2023, with operating income increasing to $23.1 million[116]. Internal Control and Compliance - The Company has identified material weaknesses in its internal control over financial reporting as of December 31, 2023, which could result in material misstatements in financial statements if not remediated[67]. - The Company has not maintained effective internal control over financial reporting as of December 31, 2024, due to identified material weaknesses[190]. - Grant Thornton LLP issued an adverse opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[147]. - The company is actively engaged in remediation efforts, including redistributing work previously performed by the CFO to other accounting team members for review and approval[152]. Risk Factors - The sporting goods market is highly fragmented and competitive, with many products experiencing low growth rates[29]. - Supply chain disruptions and reliance on third-party suppliers may adversely affect sales and customer satisfaction[42]. - The Company faces risks associated with sourcing and manufacturing outside of the United States, particularly due to tariffs on goods imported from China, which may lead to increased costs and lower profitability[62]. - Cybersecurity threats are increasing, and a breach could result in significant financial and reputational damage[49]. - International operations expose the Company to risks such as political instability, currency fluctuations, and regulatory constraints[59]. Capital Structure and Liquidity - The current ratio for 2024 was 3.9, down from 4.4 in 2023, indicating a decrease in liquidity[119]. - Total debt at the end of the 2024 fiscal year was $25.6 million, with maximum borrowings under revolving credit lines totaling $58.7 million[120]. - The Company plans to invest approximately $2.5 million in capital expenditures in 2025[134]. Shareholder Information - The Company currently pays a quarterly cash dividend of $0.15 per common share, dependent on future cash flow generation[58]. - As of February 19, 2025, there were approximately 87 stockholders of record for the Company's common stock[100]. - The Company has repurchased a total of 2,297,715 shares of its common stock for an aggregate price of $31,007,115 under its stock repurchase program[101]. Economic and Market Conditions - Economic conditions significantly influence consumer spending on sporting goods, and any downturns could negatively impact the Company's sales and financial performance[77]. - Fluctuations in economic conditions may hinder the Company's ability to accurately forecast product demand, potentially leading to excess inventory or shortages[78]. - The Company is exposed to risks from international conflicts and natural disasters, which could disrupt supply chains and manufacturing operations, adversely affecting sales and profitability[82].

Financial Data and Key Metrics Changes - In Q4 2024, the company reported net income of $2.7 million or $0.19 per diluted share on net sales of $63.9 million, with a gross margin of 24.9%, up from 24.3% in the prior year period, reflecting a 61 basis point increase primarily due to lower operational costs [30][31] - Operating cash flow for 2024 was $36 million, including $12.3 million in Q4, while total cash and equivalents at year-end were $4.2 million [11][32] Business Line Data and Key Metrics Changes - The company experienced a 2% decline in sales year-over-year in Q4, but achieved over 60 basis points of gross margin improvement driven by lower manufacturing and logistics costs [7][30] - Selling, general, and administrative expenses increased by 5% to $10.9 million in Q4 compared to the prior year [31] Market Data and Key Metrics Changes - The company has reduced inventory levels by 44% in 2024 and nearly 20% compared to year-end 2023, indicating improved working capital efficiency [9][32] - The company maintained price discipline while managing inventory levels, which positively impacted operating cash flow performance [10][11] Company Strategy and Development Direction - The company is focused on consumer-driven innovation and strengthening consumer connections, with plans to invest in new product launches and brand-building initiatives [13][14] - The company aims to capitalize on the next expansionary phase of the economic cycle and improve discretionary consumer spending on recreational products [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the soft consumer demand for discretionary recreational goods but expressed optimism about pockets of demand growth within their diversified brand portfolio [13] - The company is prepared to manage tariff impacts through diversified sourcing and has developed a playbook to address tariffs while maintaining operational efficiency [24][25] Other Important Information - The company repaid $25.3 million in debt during 2024, ending the year with a net leverage ratio of 0.8 times trailing twelve-month EBITDA [11][33] - The company executed $2.2 million in share repurchases under its existing $15 million authorization during Q4 [12] Q&A Session Summary Question: Inventory management in light of potential tariffs - The company has advanced some shipments to mitigate tariff impacts but aims to maintain efficiency in inventory use while reducing levels further [38][39] Question: Impact of product mix on gross margin - Management indicated that there has not been a significant shift in product mix affecting gross margins, but they expect gross margins to improve moving forward [42][43] Question: Nonrecurring expenses and future profitability - Management noted that one-time costs in 2024 were roughly comparable to a gain on sale of $3.9 million, providing context for future profitability normalization [49] Question: Capital allocation strategy - With reduced leverage, the company plans to continue stock buybacks, pay dividends, and remain selective in acquisitions [51][53]

Financial Performance - Net sales for Q4 2024 decreased by 2.4% to $63.9 million compared to Q4 2023[3] - Operating income decreased by 9.0% to $4.5 million in Q4 2024[8] - EBITDA for Q4 2024 totaled $5.9 million, a decrease of 7.6% from $6.4 million in Q4 2023[5] - Net income for Q4 2024 was $2.7 million, or $0.19 per diluted share, compared to $2.9 million, or $0.21 per diluted share in Q4 2023[3] - Net income for Q4 2024 was $2,700,000, down from $2,864,000 in Q4 2023, representing a decrease of about 5.7%[25] - EBITDA (Non-GAAP) for the full year 2024 increased to $26,119,000 from $23,513,000 in 2023, reflecting a growth of approximately 11%[25] Cash Flow and Debt Management - Cash flow from operations in Q4 2024 was $12.3 million, down from $20.6 million in the prior year[5] - The company reduced its debt by $3.9 million during Q4 2024, resulting in a net debt to trailing twelve month EBITDA ratio of 0.8x[6] - Long-term debt significantly decreased from $43,753,000 in 2023 to $18,452,000 in 2024, a reduction of approximately 57.8%[22] - Cash and cash equivalents rose sharply from $16,000 in 2023 to $4,194,000 in 2024, a significant increase[22] Inventory and Assets - Total inventories were reduced by 18% over the last year, with further improvements anticipated in 2025[10] - Total assets decreased from $253,005,000 in 2023 to $226,330,000 in 2024, a decline of approximately 10.6%[22] - Current liabilities rose to $34,495,000 in 2024 from $33,264,000 in 2023, an increase of about 3.7%[22] - Trade accounts payable increased from $9,797,000 in 2023 to $11,858,000 in 2024, an increase of approximately 20.9%[22] Equity and Earnings - Retained earnings increased from $160,099,000 in 2023 to $164,779,000 in 2024, showing a growth of about 2.1%[22] - The total stockholders' equity increased from $164,579,000 in 2023 to $168,997,000 in 2024, reflecting a growth of approximately 2.5%[22] Dividends and Future Plans - A quarterly dividend of $0.15 per share was declared, payable on April 14, 2025[9] - The company plans to prioritize investments in new product development to support growth amid soft consumer demand[10] Cost Management - Gross margin improved by 61 basis points to 24.9% in Q4 2024, driven by lower manufacturing and logistics costs[4] - The company reported a depreciation and amortization expense of $6,041,000 for the full year 2024, compared to $5,671,000 in 2023, an increase of about 6.5%[25]

Core Viewpoint - Escalade, Inc. reported a decline in net sales and net income for the fourth quarter of 2024 compared to the same period in 2023, primarily due to softer consumer demand across most product categories, although some categories like archery and fitness showed improved demand [2][9]. Fourth Quarter 2024 Results - Net income for Q4 2024 was $2.7 million, or $0.19 per diluted share, down from $2.9 million, or $0.21 per diluted share in Q4 2023 [2][9]. - Total net sales decreased by 2.4% year-over-year to $63.9 million, with a gross margin of 24.9%, an increase of 61 basis points from the prior year [2][3][9]. - Operating income fell by 9.0% to $4.5 million, while EBITDA decreased by 7.6% to $5.9 million [4][9]. Full Year 2024 Results - For the full year 2024, net sales decreased by 4.6% to $251.5 million, while net income increased to $13.0 million, or $0.93 per diluted share, compared to $9.8 million, or $0.71 per diluted share in 2023 [9]. - Gross margin improved by 130 basis points to 24.7%, and operating income rose by 12.3% to $20.0 million [9]. Cash Flow and Debt Management - The company generated $12.3 million in cash flow from operations in Q4 2024, down from $20.6 million in the prior year [4][9]. - Escalade reduced its debt by $3.9 million during Q4 2024, resulting in a net debt to trailing twelve-month EBITDA ratio of 0.8x, down from 2.2x at the end of 2023 [5][10]. Shareholder Returns - The Board of Directors authorized a share repurchase program of up to $20.0 million, with no expiration date [6]. - A quarterly dividend of $0.15 per share was declared, payable on April 14, 2025 [7]. Management Commentary - The CEO highlighted operational discipline, cost rationalization, and efficiency improvements as key factors in maintaining margins and cash flow generation [8][10]. - The company aims to invest in innovation and new product development to drive growth and market share during the current economic cycle [10].

Core Viewpoint - Escalade, Inc. will announce its fourth quarter and full year 2024 financial results on February 26, 2025, before the market opens [1] Financial Results Announcement - The financial results will be reviewed in a conference call scheduled for February 26, 2025, at 11:00 a.m. ET [2] - A webcast of the conference call will be available on Escalade's Investor Relations website [2] Participation Details - Domestic and international phone numbers are provided for live participation in the teleconference [3] - A replay of the teleconference will be available until March 12, 2025, with specific numbers for domestic and international listeners [3] Company Overview - Escalade, Inc. was founded in 1922 and is headquartered in Evansville, Indiana, specializing in sporting goods and recreational equipment [3] - The company’s mission is to connect families and friends through memorable experiences [3] - Escalade's brands include Brunswick Billiards®, STIGA®, Accudart®, RAVE Sports®, Victory Tailgate®, Onix®, Goalrilla™, Lifeline®, Woodplay®, and Bear® Archery, with products available online and at major retailers [3]

Company Leadership Transition - Escalade, Inc. has appointed Armin Boehm as the new Chief Executive Officer and President, effective April 1, 2025, succeeding Walter P. Glazer, Jr. who announced his retirement in August 2024 [1] - Walter P. Glazer, Jr. expressed confidence in Boehm's leadership capabilities, highlighting his visionary approach and deep understanding of the sporting goods industry [2] - Boehm aims to build upon Escalade's strong foundation, embrace innovation, and enhance consumer-centric strategies to drive sustainable growth and superior shareholder returns [2] Executive Background - Armin Boehm brings over three decades of leadership experience in the sporting goods industry, having held key roles at Gibson Inc., Amer Sports, and Puma [2] - His previous positions include Chief Commercial Officer at Gibson, where he contributed to growth in the musical instrument sector, and leadership roles at Amer Sports and Puma, focusing on commercial operations and product management [2] Company Overview - Escalade, Inc. was founded in 1922 and is headquartered in Evansville, Indiana, specializing in the design, manufacture, and sale of sporting goods and recreational equipment [4] - The company’s mission is to connect families and friends through shared experiences, with a portfolio that includes well-known brands such as Brunswick Billiards, STIGA, and Bear Archery [4]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks in the market [2] Company Summary: Escalade (ESCA) - Escalade holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4] - The stock has a Forward P/E ratio of 13.26, significantly lower than the industry average of 24.50, with a historical range between 9.66 and 25.23 over the past year [4] - Escalade's P/S ratio is 0.8, compared to the industry average of 1.02, highlighting its undervaluation based on sales performance [5] - The P/CF ratio for Escalade is 10, which is attractive relative to the industry's average of 20.13, with a historical range of 9.34 to 20.24 over the past year [6] - Overall, the metrics suggest that Escalade is likely undervalued, making it one of the strongest value stocks in the market [7]

Core Insights - Momentum investors focus on "buying high and selling higher" rather than traditional strategies of buying low and waiting for recovery [1] - Identifying the right entry point for fast-moving stocks can be challenging, as they may lose momentum if future growth does not justify high valuations [2] - Investing in bargain stocks with recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score [3] Stock Analysis: Escalade (ESCA) - Escalade (ESCA) has shown a four-week price change of 7.8%, indicating growing investor interest [4] - Over the past 12 weeks, ESCA's stock gained 6.9%, with a beta of 1.22, suggesting it moves 22% more than the market [5] - ESCA has a Momentum Score of A, indicating a favorable time to invest based on momentum [6] - The stock has received a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - ESCA is trading at a Price-to-Sales ratio of 0.80, suggesting it is undervalued at 80 cents for each dollar of sales [7] Investment Opportunities - ESCA is highlighted as a strong candidate for investment, with potential for significant growth [8] - There are additional stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, providing further investment opportunities [8] - Zacks offers over 45 Premium Screens tailored to different investing styles, aiding in stock selection [9]