Financial Data and Key Metrics Changes - For Q1 2024, the company reported net income of $1.8 million or $0.13 per diluted share on net sales of $57.3 million, with gross margins improving to 25% from 19.4% in the prior year, a 560 basis point increase [8][16] - Total cash provided by operations was $7,000 for Q1 2024, down from $4.5 million in the prior year, primarily due to a seasonal increase in inventories and accounts receivable [9] Business Line Data and Key Metrics Changes - Sales in basketball, table tennis, outdoor games, and archery categories grew year-over-year, indicating a stabilization in consumer demand [4] - Direct-to-consumer sales increased by 28% year-over-year in Q1 2024, highlighting a key growth area for the company [17] Market Data and Key Metrics Changes - The company noted that retail partners successfully reduced their inventory levels coming into 2024, suggesting a healthier market environment for their products [16] Company Strategy and Development Direction - The company is focused on maximizing return on assets by optimizing its asset base and cost structure, aiming to enhance long-term profitability [4] - There is a commitment to prioritize the repayment of variable rate debt, with a net debt leverage of 2.0x EBITDA, within the target range of 1.5x to 2.5x [6][21] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer spending, noting that while it may be softer, their brands cater to a higher income segment that can maintain spending [5] - The company is actively working on resolving material weaknesses in internal controls over financial reporting and expects to conclude remediation efforts within the year [10] Other Important Information - Selling, general and administrative expenses increased by 4% year-over-year to $10.7 million, with SG&A as a percentage of net sales rising to 18.7% [20] - The company is in the process of divesting its Rosarito assets and has engaged with potential buyers [16][25] Q&A Session Summary Question: Update on supply chain and production in Mexico - Management confirmed that operations have been moved from Mexico to U.S.-based facilities and are in the process of selling the property, with several potential buyers engaged [25] Question: Future use of cash and free cash flow - The company will continue to focus on debt repayment, particularly of higher-cost variable rate debt, while remaining open to acquisition opportunities, balancing these against continued debt repayments [28]

Financial Performance - Net sales for the three months ended March 31, 2024, increased to $57,304 thousand, up from $56,931 thousand in the same period of 2023, representing a growth of 0.65%[10] - Operating income significantly improved to $3,060 thousand for Q1 2024, compared to only $149 thousand in Q1 2023, marking a substantial increase of 1,953.69%[10] - Net income for the three months ended March 31, 2024, was $1,775 thousand, a turnaround from a net loss of $952 thousand in the same period of 2023[10] - Basic and diluted earnings per share for Q1 2024 were both $0.13, compared to a loss of $0.07 per share in Q1 2023[10] Assets and Cash Flow - Total assets as of March 31, 2024, were $256,347 thousand, a decrease from $293,587 thousand as of March 31, 2023[27] - Cash and cash equivalents at the end of Q1 2024 were $283 thousand, down from $6,064 thousand at the end of Q1 2023[14] - The company reported a net cash provided by operating activities of $7 thousand for Q1 2024, a significant decline from $4,516 thousand in Q1 2023[14] Dividends - The company declared dividends of $0.15 per share for both Q1 2024 and Q1 2023[10] - The Company paid a quarterly dividend of $0.15 per common share, totaling approximately $2.1 million on January 12, 2024[28] Cost of Goods Sold and Inventory - The cost of products sold decreased to $42,950 thousand in Q1 2024 from $45,879 thousand in Q1 2023, reflecting a reduction of 6.36%[10] - Inventory levels as of March 31, 2024, totaled $95,991 thousand, an increase from $92,462 thousand as of December 31, 2023[21] Gross Sales and Adjustments - Total gross sales for the three months ended March 31, 2024, were $64.047 million, an increase from $62.973 million in the same period of 2023[37] - The Company recognized total gross-to-net sales adjustments of $6.743 million for the three months ended March 31, 2024, compared to $6.042 million in the same period of 2023[37] Debt and Credit Facilities - The Company has a senior revolving credit facility with a maximum availability of $85.0 million as of March 31, 2024[46] - As of March 31, 2024, the outstanding principal amount of the term loan was $31.0 million, and the total amount drawn under the Revolving Facility was $22.5 million[47] Lease Obligations - The weighted average remaining lease term for operating leases was 7.89 years as of March 31, 2024[40] - The Company recorded operating lease costs of $375,000 for the three months ended March 31, 2024, compared to $374,000 for the same period in 2023[40] - Future minimum lease payments under non-cancellable leases total $10,602,000 as of March 31, 2024[41] Litigation - The company is involved in litigation but does not expect any material adverse effects on its business or financial condition[42] - The company does not believe that existing litigation will have a material adverse effect on its business or financial condition[42] Stock-Based Compensation - The company recognized stock-based compensation expense of $429 thousand in Q1 2024, slightly down from $459 thousand in Q1 2023[25]

Financial Performance - Escalade reported net sales of $57.3 million for Q1 2024, a year-over-year increase of 0.7% compared to $56.9 million in Q1 2023[3] - EBITDA for Q1 2024 was $4.4 million, up $2.8 million from $1.6 million in Q1 2023[4] - Net income for Q1 2024 was $1.8 million, or $0.13 diluted earnings per share, compared to a net loss of $1.0 million, or $0.07 diluted loss per share, in Q1 2023[5] - Net income for Q1 2024 was $1,775,000, a significant improvement compared to a net loss of $952,000 in Q1 2023[21] - EBITDA for Q1 2024 reached $4,436,000, up from $1,563,000 in Q1 2023, indicating a year-over-year increase of 184%[21] Cost and Margin Improvements - Gross margin improved to 25.0%, an increase of 560 basis points from the prior year, driven by a favorable product mix and reduced inventory costs[4] - Management anticipates continued opportunities for margin improvement in 2024 despite a cautious outlook on consumer demand for discretionary recreational goods[8] Debt and Liabilities - Total debt decreased to $53.5 million from $95.2 million at the end of Q1 2023, reflecting inventory investments for the spring selling season[5] - Total liabilities decreased to $91,627,000 in Q1 2024 from $137,269,000 in Q1 2023, representing a reduction of 33.3%[19] - The company ended Q1 2024 with a net debt to trailing twelve-month EBITDA ratio of 2.0x, within the targeted range of 1.5x to 2.5x[8] - Long-term debt increased to $46,383,000 in Q1 2024 from $43,753,000 in Q4 2023, reflecting a rise of 6%[19] Assets and Equity - Total current assets increased to $151,497,000 in Q1 2024 from $146,831,000 in Q4 2023, reflecting a growth of 1.5%[19] - Cash and cash equivalents rose to $283,000 in Q1 2024, compared to $16,000 in Q4 2023, showing a substantial increase[19] - Total stockholders' equity remained stable at $164,720,000 in Q1 2024, compared to $164,579,000 in Q4 2023[19] Inventory and Payables - Inventories increased to $95,991,000 in Q1 2024 from $92,462,000 in Q4 2023, indicating a growth of 5.5%[19] - Trade accounts payable increased to $15,981,000 in Q1 2024 from $9,797,000 in Q4 2023, marking a rise of 62.8%[19] Dividends and Operations - Escalade announced a quarterly dividend of $0.15 per share, payable on July 15, 2024[6] - Escalade plans to divest its Mexico operations to drive efficiencies in fixed costs[8] Sales and Marketing - Direct-to-consumer website sales increased by 28% in Q1 2024, supported by effective marketing and new product development[8]

EVANSVILLE, Ind., April 23, 2024 /PRNewswire/ -- Escalade, Inc. (NASDAQ: ESCA, or the "Company"), a leading manufacturer and distributor of sporting goods and indoor/outdoor recreational equipment, today announced that it will issue first quarter 2024 results before the market opens on Thursday, April 25, 2024.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 con ...

Financial Data and Key Metrics Changes - The company reported a net income of $2.9 million or $0.21 per diluted share on net sales of $65.5 million for the fourth quarter of 2023, with gross margins improving to 24.3% from 22.4% in the prior year period [23][24] - Total net sales for the full year 2023 were $263.6 million, a decrease of 16% compared to 2022, while total gross margin for the year was 23.4%, slightly down from 23.5% in 2022 [24][48] - Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by $0.6 million to $6.4 million in the fourth quarter of 2023 compared to $5.8 million in the prior year [12] Business Line Data and Key Metrics Changes - Sales in the fourth quarter declined by 9.2% year-over-year, with strong growth in basketball and indoor games categories, offset by softness in other categories [9] - Direct-to-consumer sales saw a significant increase, with non-licensed DTC sales up 39% in the fourth quarter compared to the prior year [9] Market Data and Key Metrics Changes - The company noted that retail inventories have declined meaningfully, positioning them for a solid start to 2024, with most retail inventories in good shape [9] - The competitive promotional environment varies by category, with some experiencing strong promotional activity while others remain stable [28] Company Strategy and Development Direction - The company remains committed to investing in innovative product development to build market-leading positions in key growth categories [10] - A focus on operational excellence, cost discipline, and a well-capitalized balance sheet is emphasized to navigate the transitional period for consumers [3][10] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding consumer spending and top-line sales, expecting consumer demand to remain relatively soft into 2024 [34] - The company is optimistic about margin enhancement opportunities, particularly as retail inventories normalize and consumer demand is expected to recover [36][22] Other Important Information - The company successfully reduced its total debt by $44 million during 2023, with a focus on repaying high-interest variable rate debt [5][10] - Material weaknesses in internal financial reporting controls were identified, but management assured that these did not impact the accuracy of financial statements [6][13] Q&A Session Summary Question: Retail inventory situation - Management indicated that retail inventories are balanced and in good shape, with some categories still having excess inventory [16][50] Question: Cost impact of financial controls - There will be higher audit costs and IT system costs, but these are not expected to significantly change the outlook [36] Question: Competitive promotional environment - The competitive promotional environment varies, with some categories experiencing strong promotions while others remain stable [39]

Customer Concentration - In 2023, one customer accounted for approximately 20% of the Company's revenues, while another customer accounted for about 11%[13]. - As of December 31, 2023, approximately 29% of total accounts receivable was with one customer, compared to 28% in 2022[14]. - The Company has two major customers, each accounting for over 10% of consolidated gross sales in the 2023 fiscal year, highlighting the risk of revenue loss if either customer is lost[39]. Workforce and Operations - Escalade's workforce decreased from 593 employees in 2022 to 479 employees in 2023, with a notable reduction in employees in Mexico from 90 to 10[25]. - As of December 31, 2023, the company ceased all manufacturing and distribution operations at its Rosarito, Mexico location, moving inventories to facilities in Olney, Illinois, and Evansville, Indiana[98]. - The company operates from multiple locations, including a 771,000 square foot facility in Evansville, Indiana, which is owned and used for distribution, sales, marketing, and engineering[98]. Financial Performance - Net sales for the Sporting Goods segment decreased by 16.0% in 2023, totaling $263.6 million compared to $313.8 million in 2022[120]. - Operating income for the Sporting Goods segment fell to $17.5 million in 2023, down from $25.9 million in 2022, representing a decrease of 32.2%[120]. - Net income for the Sporting Goods segment decreased by 45.6% in 2023, amounting to $8.8 million compared to $16.1 million in 2022[120]. - The overall gross margin decreased to 23.4% in 2023 from 23.5% in 2022, impacted by reduced inventory levels and increased handling costs[117]. - Selling, general and administrative expenses (SG&A) were $41.5 million in 2023, a decrease of 7.3% from $44.8 million in 2022, with SG&A as a percentage of sales rising to 15.7%[118]. - The effective tax rate for 2023 was 21.3%, slightly higher than the 20.5% rate in 2022, primarily due to state taxes[119]. - Net sales for 2023 were $263,566,000, a decrease of 16% compared to $313,757,000 in 2022[211]. - Cost of products sold decreased to $201,795,000 in 2023 from $240,118,000 in 2022, reflecting a reduction of 16%[211]. - Operating income for 2023 was $17,811,000, down 32% from $26,315,000 in 2022[211]. - Net income for 2023 was $9,829,000, a decline of 45% compared to $17,989,000 in 2022[211]. - Basic earnings per share decreased to $0.72 in 2023 from $1.33 in 2022, representing a decline of 46%[211]. - Total assets decreased to $253,005,000 in 2023 from $298,718,000 in 2022, a reduction of 15%[209]. - Total liabilities decreased significantly from $140,243,000 in 2022 to $88,426,000 in 2023, a decrease of 37%[209]. - Stockholders' equity increased to $164,579,000 in 2023 from $158,475,000 in 2022, an increase of 4%[209]. - Current assets decreased to $146,831,000 in 2023 from $188,198,000 in 2022, a decline of 22%[209]. - Long-term debt was reduced from $87,738,000 in 2022 to $43,753,000 in 2023, a decrease of 50%[209]. Supply Chain and Sourcing - The Company has increased sourcing from Brazil and Vietnam to mitigate supply chain disruptions[26]. - The Company relies on third-party suppliers for raw materials, and disruptions in supply could negatively impact sales and customer satisfaction[41]. - The Company has experienced increased shipping costs for products obtained from overseas due to a shortage of available shipping containers, which could impair operating results[44]. - The Company sources many products and raw materials from countries including Mexico, Brazil, China, and Vietnam, exposing it to unique international operational risks[58]. - U.S. tariffs on goods imported from China have increased costs, potentially leading to lower profitability if price increases cannot be offset[60]. - The Phase 1 trade agreement between the U.S. and China expired on December 31, 2021, with ongoing trade negotiations remaining uncertain[61]. Strategic Initiatives - The Company has made strategic acquisitions over the years, including the acquisition of Brunswick Billiards® in January 2022, enhancing its billiards portfolio[19]. - Escalade's business strategy focuses on investing in product innovation and developing strong brand names to differentiate its product line[20]. - The Company's growth strategy includes expanding its e-commerce business and making strategic acquisitions in the Sporting Goods sector[35]. Regulatory and Compliance - The Company believes it is in material compliance with all applicable regulations set by the Consumer Product Safety Commission[15]. - The Company is subject to various laws and regulations related to health, safety, and environmental protection, which could adversely affect its operations[72]. - Changes in accounting standards could materially affect how the Company records and reports its financial condition and results of operations[75]. - The Company identified material weaknesses in its internal control over financial reporting, which could lead to material misstatements in financial statements[66]. - The Company has not maintained effective internal control over financial reporting as of December 31, 2023, due to identified material weaknesses[199]. - The company’s internal control weaknesses include issues related to information technology general controls and the period end close process[203]. Risk Factors - The sporting goods market is highly competitive, with Escalade facing competition from larger companies with greater resources[29]. - The Company continues to face challenges in attracting and retaining skilled management and key personnel, which could adversely affect its business and financial condition[37]. - Cybersecurity threats are increasing, and any breach could result in significant financial, legal, and reputational damage to the Company[50]. - The company has not identified any significant cybersecurity risks stemming from known threats, but ongoing risks remain that could materially affect its business[92]. - The company is committed to continuously improving its cybersecurity posture through regular assessments, employee training, and engagement of third-party consultants[96]. - The company is exposed to risks from geopolitical instability, natural disasters, and public health crises, which could significantly impact its sales and profitability[85]. - The company faces uncertainties regarding the economic impact of potential future pandemics and public health crises, which could adversely affect its financial performance[87]. - The Company acknowledges that new risk factors may emerge in a rapidly changing environment, impacting its business and financial performance[88]. Capital and Liquidity - The Company's ability to expand its business is dependent on the availability of adequate capital, influenced by cash flow and access to equity and debt capital[36]. - The Company's quarterly cash dividend is currently $0.15 per common share, dependent on sufficient cash flow generation from operations[57]. - Total debt at the end of 2023 was $50.9 million, with maximum borrowings under revolving credit lines totaling $100.6 million[123]. - Management anticipates that cash generated from projected 2024 operations will be sufficient for its operational needs[132]. - The Company estimates capital expenditures for 2024 to be approximately $4.0 million[131]. - The Company has no material commitments for capital expenditures as of December 31, 2023[147]. Internal Controls and Auditing - The independent registered accounting firm for the company is FORVIS, LLP, with PCAOB ID number 686[174]. - The company has been audited by FORVIS, LLP since 1977, indicating a long-standing relationship with the auditor[195]. - The company’s financial statements were audited in accordance with PCAOB standards, and an unqualified opinion was expressed on those financial statements[200]. - The report on internal control over financial reporting was based on criteria established in the Internal Control – Integrated Framework (2013) issued by COSO[197]. - The Company plans to engage third-party resources to support internal control testing and remediation efforts[161].

Financial Performance - Net sales for Q4 2023 decreased by 9.2% to $65.5 million compared to Q4 2022[3] - Operating income for Q4 2023 increased by 1.6% to $5.0 million compared to the prior year[7] - EBITDA for Q4 2023 totaled $6.4 million, an increase of 11.1% year-over-year[5] - Full year 2023 net income was $9.8 million, or $0.71 per diluted share, down from $18.0 million, or $1.31 per diluted share in 2022[7] - Net income for Q4 2023 was $2,864,000, compared to $2,704,000 in Q4 2022, representing an increase of about 5.9%[23] - Non-GAAP EBITDA for the four quarters ended December 31, 2023, was $23,513,000, down from $32,457,000 in the previous year, a decrease of approximately 27.6%[23] Cash Flow and Debt Management - Cash flow from operations in Q4 2023 was $20.6 million, up 43.9% from $14.3 million in Q4 2022[5] - The company reduced its net debt by $21.1 million in Q4 2023, resulting in a net debt to trailing twelve-month EBITDA ratio of 2.2x[6] - Long-term debt significantly reduced from $87,738,000 in 2022 to $43,753,000 in 2023, a decrease of approximately 50.2%[21] - The current portion of long-term debt remained stable at $7,143,000 for both years[21] Inventory and Working Capital - The company reduced total inventories by nearly $13 million in Q4 2023, improving working capital efficiency[9] - Current liabilities decreased from $38,941,000 in 2022 to $33,264,000 in 2023, a reduction of about 14.6%[21] Asset Management - Total assets decreased from $298,718,000 in 2022 to $253,005,000 in 2023, a decline of approximately 15.3%[21] - The company’s cash and cash equivalents decreased significantly from $3,967,000 in 2022 to $16,000 in 2023, a decline of approximately 99.6%[21] - Retained earnings increased from $156,450,000 in 2022 to $160,099,000 in 2023, reflecting a growth of about 2.1%[21] Dividends and Future Outlook - A quarterly dividend of $0.15 per share has been declared, payable on April 22, 2024[8] - The company is optimistic about growth opportunities in its direct-to-consumer channel and product innovation despite softer consumer demand[9] Operational Metrics - The company reported a total of 365 fiscal days in 2023, compared to 371 days in 2022, indicating a reduction in operational days[25] - Trade accounts payable increased slightly from $9,414,000 in 2022 to $9,797,000 in 2023, an increase of about 4.1%[21] Margin Improvement - Gross margin improved by 192 basis points to 24.3% in Q4 2023, driven by price discipline and a favorable sales mix[4]

Financial Data and Key Metrics Changes - Escalade reported net income of $4.3 million or $0.31 per diluted share on net sales of $73.4 million for Q3 2023, with gross margins improving to 24.7% from 18.2% in the prior year period, reflecting a 652 basis point increase [20][21] - Operating income and operating cash flow showed significant year-over-year growth, contributing to nearly $12 million of debt reduction in the quarter [5][21] - Total cash provided by operations was $14.8 million for the quarter, compared to cash used in operations of $5.5 million in the prior year period, primarily due to improvements in working capital management [21] Business Line Data and Key Metrics Changes - Sales declined 11.6% year-over-year in Q3 2023, an improvement from a 28.4% decline in Q1 and a 9.5% decline in Q2, indicating a stabilization in the mass merchant channel [6][7] - Direct-to-consumer sales grew over 50% year-to-date, driven by effective marketing campaigns and new product launches [8] Market Data and Key Metrics Changes - Retail sales of recreation products remain generally soft, with ongoing inventory destocking trends normalizing in some categories [9][13] - The company is closely monitoring consumer confidence amid higher interest rates and inflation, which continues to impact discretionary spending [9] Company Strategy and Development Direction - The company is focused on investing in innovative product development to strengthen market positions in key growth categories, including the launch of new Bear Archery products and American Cornhole League licensed items [14][16] - Escalade aims to maintain a disciplined cost structure and reduce long-term debt, targeting a net leverage range between 1.5x and 2.5x EBITDA [18][24] Management's Comments on Operating Environment and Future Outlook - Management noted that while the environment is improving, there is still cautious inventory management among retailers, which may affect new product introductions [9][38] - The company expects favorable input costs and lower fixed costs to support margin expansion in 2024 [11][12] Other Important Information - Selling, general and administrative expenses increased by 26.3% year-over-year to $11.1 million, primarily due to adjustments in incentive compensation accruals [26] - The transition to a conventional 12-month reporting calendar resulted in 92 operating days in Q3 2023 compared to 84 in the prior year [27] Q&A Session Summary Question: Is there still cost pressure in labor? - Management indicated that labor cost pressure is much better than it was a year ago [30] Question: Update on the Mexico divestiture? - Management is actively working with potential buyers and providing necessary information, but cannot predict the exact closing date [31] Question: What is the business days count for Q4? - The difference in business days for Q4 is just one day, with 92 days this year compared to 91 last year [34][36] Question: How does the company view new product introductions in 2024? - Management emphasized that new product development is crucial and they plan to maintain a steady pace of new product launches despite the current environment [38]

Financial Performance - Net sales for the third quarter ended September 30, 2023, were $73,358,000, a decrease of 2.07% compared to $74,904,000 for the same period in 2022[11]. - Operating income increased to $6,445,000 for the third quarter of 2023, up 52.9% from $4,220,000 in the third quarter of 2022[11]. - Net income for the three quarters ended September 30, 2023, was $6,965,000, compared to $15,285,000 for the same period in 2022, reflecting a decrease of 54.4%[11]. - Basic earnings per share for the third quarter of 2023 were $0.31, an increase from $0.22 in the third quarter of 2022[11]. - For the three quarters ended September 30, 2023, total revenues were $198,060 thousand, down from $241,621 thousand for the same period in 2022, indicating a decrease of approximately 18%[31]. - The net income for the third quarter was $4,275 thousand, up from $2,958 thousand in the same quarter of the previous year, representing a year-over-year increase of about 44%[31]. - Operating income for the three quarters ended September 30, 2023, was $12,852 thousand, down from $21,432 thousand in the same period last year, representing a decrease of 40.0%[31]. Cash and Cash Equivalents - Cash and cash equivalents at the end of the period were $919,000, down from $4,000,000 at the end of the same period in 2022[14]. - The company experienced a net decrease in cash and cash equivalents of $3,048,000 for the three quarters ended September 30, 2023[14]. - The company reported a net cash provided by operating activities of $27,706,000 for the three quarters ended September 30, 2023, compared to a net cash used of $5,742,000 for the same period in 2022[14]. - The company reported a net cash used by investing activities of $1,563 thousand for the three quarters ended September 30, 2023, compared to $37,509 thousand for the same period in 2022[14]. Dividends - The company declared dividends of $0.15 per share for the third quarter of 2023, consistent with the same period in 2022[11]. - The company paid a quarterly dividend of $0.15 per common share on September 5, 2023, totaling approximately $2.1 million[32]. - The company paid quarterly dividends of $0.15 per common share, totaling approximately $2.1 million for each of the three payments made in 2023[32][33]. Inventory and Assets - Total inventories as of September 30, 2023, were $105,267,000, a decrease of 13.6% from $121,870,000 as of December 31, 2022[20]. - The total assets as of September 30, 2023, were $283,373 thousand, a decrease from $320,324 thousand as of October 1, 2022[31]. Stock-Based Compensation - The company recognized stock-based compensation expense of $546 thousand for the third quarter, compared to $377 thousand for the same period last year, marking an increase of about 45%[30]. - The company recognized stock-based compensation expense of $1,463 thousand for the three quarters ended September 30, 2023, compared to $1,453 thousand for the same period in 2022, indicating a slight increase of 0.7%[30]. - The company issued 30,921 shares of common stock valued at $395 thousand in lieu of cash bonuses to certain officers during the three quarters ended September 30, 2023[27]. Debt and Lease Obligations - The company’s outstanding principal amount of the term loan was $34.5 million, and the total amount drawn under the Revolving Facility was $37.5 million as of September 30, 2023[52]. - The current portion of long-term debt was $7,143 thousand as of September 30, 2023, consistent with the previous year[24]. - Total future minimum lease payments as of September 30, 2023, amounted to $11,352,000, with current operating lease liabilities at $1,037,000 and long-term operating lease liabilities at $8,163,000[46]. - The total operating lease cost for the third quarter of 2023 was $893,000, down 21.1% from $1,132,000 in the third quarter of 2022[11]. - The weighted average remaining lease term for operating leases decreased to 8.29 years as of September 30, 2023, from 9.29 years in the previous year[46]. Other Financial Metrics - The company recognized total gross-to-net sales adjustments of $21,082 thousand for the three quarters ended September 30, 2023, compared to $22,352 thousand in the same period of 2022, a decrease of 5.7%[43]. - The maximum availability under the senior revolving credit facility was reduced to $85 million following the dissolution of Escalade Insurance, Inc.[51]. - The company’s EBITDA covenant was adjusted to a minimum of $22.5 million for the second and third fiscal quarters of 2023[51]. - The weighted average common shares outstanding for the third quarter ended September 30, 2023, were 13,737 thousand, compared to 13,590 thousand for the same period last year[34]. - Total gross sales for the third quarter ended September 30, 2023, were $81,238 thousand, slightly down from $81,457 thousand in the same quarter of 2022, representing a decrease of 0.3%[43]. - Total net sales for the three quarters ended September 30, 2023, were $198,060 thousand, down from $241,621 thousand for the same period in 2022, indicating a decline of 17.9%[43]. Accounting Standards - The company adopted the new accounting standard ASU 2016-13 on January 1, 2023, which did not have a material impact on its financial statements[37].

Financial Performance - Net sales for the second quarter of 2023 were $67,771,000, a decrease of 28.1% compared to $94,337,000 in the second quarter of 2022[11] - Operating income for the second quarter of 2023 was $6,258,000, down 23.5% from $8,189,000 in the same period last year[11] - Net income for the second quarter of 2023 was $3,642,000, representing a decline of 35.8% from $5,673,000 in the second quarter of 2022[11] - Basic earnings per share for the second quarter of 2023 were $0.27, down from $0.42 in the second quarter of 2022[11] - For the two quarters ended June 30, 2023, total revenues were $124,702 thousand, down from $166,717 thousand in the same period of 2022, a decrease of about 25.3%[31] - Net income for the two quarters ended June 30, 2023, was $2.69 million, a decrease of 78% compared to $12.33 million for the same period in 2022[14] - Operating income for the two quarters ended June 30, 2023, was $6.41 million, down from $17.21 million for the same period in 2022, reflecting a decrease of 63%[31] Cash and Cash Equivalents - Total cash and cash equivalents at the end of the second quarter of 2023 were $577,000, a decrease from $6,195,000 at the end of the second quarter of 2022[14] - Cash and cash equivalents at the end of the period were $577 thousand, a significant decrease from $6.2 million at the end of the same period in 2022[14] Dividends - The company declared dividends of $0.15 per share for the second quarter of 2023, consistent with the same period in 2022[11] - The company paid a quarterly dividend of $0.15 per common share on June 19, 2023, totaling approximately $2.1 million[32] Inventory and Assets - The company’s total inventories as of June 30, 2023, were $111,676,000, down from $130,246,000 as of July 9, 2022[20] - The total assets as of June 30, 2023, were $281,085 thousand, compared to $316,852 thousand as of July 9, 2022, reflecting a decrease of about 11.3%[31] Stock and Compensation - The company awarded 21,200 restricted stock units to directors and 145,563 restricted stock units to employees during the two quarters ended June 30, 2023[28] - The company recognized stock-based compensation expense of $458 thousand for the second quarter of 2023, compared to $688 thousand for the same period in 2022, a decrease of approximately 33.4%[30] - The company recognized stock-based compensation expense of $917 thousand for the two quarters ended June 30, 2023, compared to $1.08 million for the same period in 2022[30] Debt and Lease Obligations - The outstanding principal amount of the term loan was $36,300,000, and the total amount drawn under the revolving credit facility was $47,700,000 as of June 30, 2023[52] - The total future minimum lease payments as of June 30, 2023, amounted to $11,430,000, with current operating lease liabilities at $1,002,000 and long-term operating lease liabilities at $8,222,000[46] - The company’s weighted average remaining lease term for operating leases decreased to 8.57 years as of June 30, 2023, from 9.47 years in the previous year[45] - The company adjusted the funded debt to EBITDA ratio financial covenant to 4:25 to 1:00 for the end of the second fiscal quarter of 2023[51] - The company’s EBITDA covenant was adjusted to a minimum of $22.5 million for the second and third fiscal quarters of 2023[51] Sales Performance - The company reported total gross sales of $74,931 thousand for the second quarter ended June 30, 2023, down from $102,433 thousand in the same period of 2022, a decline of approximately 26.9%[42] - Gross sales from mass merchants were $19.5 million in Q2 2023, down 32.7% from $28.9 million in Q2 2022[42] - E-commerce sales decreased by 29.5% to $27.1 million in Q2 2023 from $38.5 million in Q2 2022[42] - Total net sales for the second quarter ended June 30, 2023, were $67.8 million, a decrease of 28.2% compared to $94.3 million for the same period in 2022[42] Accounting Standards - The company adopted the new accounting standard ASU 2016-13 on January 1, 2023, which did not have a material impact on its financial statements[36]