Escalade Inc (ESCA, Financial), a leading manufacturer and distributor of sporting goods and indoor/outdoor recreational equipment, announced its third quarter and year to date results for 2023 on October 26, 2023. The company reported a net income of $4.3 million for the third quarter ended September 30, 2023, up from $3.0 million for the same period in 2022. However, total net sales declined by 2.1% on a year-over-year basis in the third quarter, primarily due to softer consumer demand across most of the company's product categories.
Financial Performance
For the first three quarters ended September 30, 2023, Escalade reported a net income of $7.0 million, down from $15.3 million for the same period in 2022. Total net sales declined by 18.0% on a year-over-year basis in 2023 due to softer consumer demand and the impact of the change in the company's reporting calendar.
Escalade reported a third quarter gross margin of 24.7%, an increase of 652 basis points versus the prior-year quarter, due to a favorable product mix and lower costs associated with supply chain disruption. The company generated $14.8 million of cash flow from operations in the third quarter 2023, compared to cash use from operations of $5.5 million for the same quarter in 2022.
Management Commentary
We delivered strong third quarter results highlighted by significant year-over-year-growth in gross margins, operating income and operating cash flow resulting in substantial debt reduction," stated Walter P. Glazer, Jr., President and CEO of Escalade. "The wholesale inventory destocking cycle that began earlier this year progressed favorably for many of our categories. Order activity also improved within our mass merchant channel, which includes our big box and sporting goods retailers, during the third quarter driven by demand for our basketball and pickleball product categories."
Financial Position
As of September 30, 2023, the company had total cash and equivalents of $0.9 million, together with $47.5 million of availability on its senior secured revolving credit facility maturing in 2027. At the end of the third quarter 2023, net debt (total debt less cash) was 3.1x trailing twelve-month EBITDA.
Escalade's Board of Directors has declared a quarterly dividend of $0.15 per share of common stock. The dividend is payable on January 12, 2024 to all shareholders of record at the close of business on January 5, 2024.
Explore the complete 8-K earnings release (here) from Escalade Inc for further details.
