UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) | October 31, 2019 |
ESCALADE, INCORPORATED |
(Exact Name of Registrant as Specified in Its Charter) |
Indiana |
(State or Other Jurisdiction of Incorporation) |
0-6966 | 13-2739290 |
(Commission File Number) | (IRS Employer Identification No.) |
817 Maxwell Avenue, Evansville, Indiana | 47711 |
(Address of Principal Executive Offices) | (Zip Code) |
(812) 467-1358 |
(Registrant’s Telephone Number, Including Area Code) |
Not Applicable |
(Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of Exchange on which registered | ||
Common Stock, No Par Value | ESCA | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Section 2 – | Financial Information |
Item 2.02 | Results of Operations and Financial Condition. |
On October 31, 2019, Escalade, Incorporated ("Escalade") issued the press release attached hereto as Exhibit 99.1 announcing financial information regarding Escalade's third quarter results for 2019.
The information under this Item 2.02 shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Section 8 – | Other Events |
Item 8.01 | Other Events. |
On October 31, 2019, the Board of Directors of Escalade announced that a quarterly dividend of twelve and a half cents $0.125 per share would be paid to all shareholders of record on December 9, 2019 and disbursed on December 16, 2019.
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits |
Exhibit | Description | |
99.1 | Press release dated October 31, 2019 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Escalade, Incorporated has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 31, 2019 | ESCALADE, INCORPORATED | ||
By: | /s/ STEPHEN R. WAWRIN | ||
Stephen R. Wawrin, Vice President and Chief Financial Officer |
3
Exhibit 99.1
Escalade Reports Third Quarter 2019 Results
EVANSVILLE, Ind., Oct. 31, 2019 /PRNewswire/ -- Escalade, Incorporated (NASDAQ: ESCA) - "We saw revenue growth of 4.1% in the quarter as we continue to grow sales in the Games category. This growth was partially offset by a continuing decline in archery vertical bow sales. Overall, consumer preferences continue to shift toward E-commerce," stated Dave Fetherman, President and CEO. "With the continuing shift to E-commerce, we are evaluating opportunities to optimize our organization and business processes. As we continue to focus on streamlining operations, we consolidated our Lifeline Fitness Chicago office into the Olney, Illinois facility and absorbed these consolidation costs during the third quarter. We are working with vendors and retailers to reduce the impact of tariffs and customer allowances. As a result of these initiatives, we anticipate gross margin to improve in 2020. The Company repurchased 176,287 shares of stock during the quarter and announced a quarterly dividend of $0.125 per share."
Net sales for the third quarter of 2019 were $45.8 million compared to net sales of $44.0 million for the same quarter in 2018.
Gross margin ratio for the third quarter of 2019 was 21.9%, compared to 28.0% for the same period in the prior year. Gross profit for the third quarter of 2019 was $10.0 million compared to gross profit of $12.3 million for the same quarter in 2018. Margins were negatively impacted by customer allowances, lower factory utilization and sales mix.
Selling, general and administrative expenses (SG&A) were $6.8 million for the quarter compared to $6.9 million for the same period in the prior year, a decrease of $0.1 million or 0.9%. SG&A, as a percent of sales, for the third quarter of 2019 decreased to 14.8% from 15.6% reported for the same period prior year.
Operating income for the third quarter of 2019 was $2.9 million compared to operating income of $5.1 million for the same period in the prior year.
Net income for the third quarter of 2019 was $2.5 million, or $0.18 diluted earnings per share compared to net income of $3.6 million, or $0.25 diluted earnings per share for the same quarter in 2018.
The Company announced a quarterly dividend of $0.125 per share to be paid to all shareholders of record on December 9, 2019 and disbursed on December 16, 2019.
Escalade is a leading manufacturer and marketer of sporting goods products sold worldwide. To obtain more information on the Company and its products, visit our website at: www.EscaladeInc.com or contact Patrick Griffin, Vice President of Corporate Development & Investor Relations at 812/467-1358.
ABOUT ESCALADE SPORTS
Headquartered in Evansville, IN, Escalade Sports is a global manufacturer and distributor of sports and outdoor recreational equipment. Leaders in their respective categories, Escalade Sports' brands include Bear® Archery, Bear X™, Trophy Ridge®, Rocket®, SIK™ and Cajun Bowfishing™ archery equipment; STIGA® and Ping-Pong® table tennis; Accudart® and Unicorn® darting; Atomic®, Victory Tailgate®, Triumph™ Sports, Viva Sol®, Zume Games® recreational games; Onix® pickleball equipment; Goalrilla™, Goalsetter® residential in-ground basketball systems, Goaliath® and Silverback® residential in-ground and portable basketball goals; Lifeline® and the STEP® fitness products; Woodplay® premium playsets; Vuly™ trampolines; and Cue&Case® - a leader in specialty billiard accessories. Escalade Sports' products are available at sporting goods dealers and independent retailers nationwide. For more information on Escalade Sports, its brands, instruction manuals, retailers, warranty, replacement parts or customer service, please call 1-888-784-4288 or visit www.escaladesports.com.
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: 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; the 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 supply chain; 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; 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, 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 Condensed Statements of Operations (Unaudited, In Thousands Except Per Share Data) | |||||||
| |||||||
| |||||||
| Three Months Ended |
| Nine Months Ended | ||||
All Amounts in Thousands Except Per Share Data | October 5, 2019 |
| October 6, 2018 |
| October 5, 2019 |
| October 6, 2018 |
|
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|
|
|
|
Net sales | $45,756 |
| $43,955 |
| $133,497 |
| $124,788 |
|
|
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|
Costs and Expenses |
|
|
|
|
|
|
|
Cost of products sold | 35,717 |
| 31,646 |
| 102,022 |
| 91,994 |
Selling, administrative and general expenses | 6,793 |
| 6,856 |
| 24,576 |
| 22,927 |
Amortization | 347 |
| 319 |
| 1,135 |
| 1,067 |
|
|
|
|
|
|
|
|
Operating Income | 2,899 |
| 5,134 |
| 5,764 |
| 8,800 |
|
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|
|
|
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|
Other Income (Expense) |
|
|
|
|
|
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|
Interest expense | (96) |
| (35) |
| (295) |
| (390) |
Equity in earnings of affiliates | -- |
| -- |
| -- |
| 121 |
Gain on sale of equity method investment (includes
| -- |
| -- |
| -- |
| 13,020 |
Other income (expense) | 3 |
| 7 |
| 12 |
| (92) |
|
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|
|
|
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|
Income Before Income Taxes | 2,806 |
| 5,106 |
| 5,481 |
| 21,459 |
|
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|
Provision for Income Taxes | 266 |
| 1,531 |
| 798 |
| 4,597 |
|
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|
Net Income | $ 2,540 |
| $ 3,575 |
| $ 4,683 |
| $ 16,862 |
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Earnings Per Share Data: |
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|
Basic earnings per share | $ 0.18 |
| $ 0.25 |
| $ 0.32 |
| $ 1.17 |
Diluted earnings per share | $ 0.18 |
| $ 0.25 |
| $ 0.32 |
| $ 1.17 |
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Dividends declared | $ 0.125 |
| $ 0.125 |
| $ 0.375 |
| $ 0.375 |
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Consolidated Condensed Balance Sheets (Unaudited, In Thousands) | |||
| |||
| |||
All Amounts in Thousands Except Share Information | October 5, 2019 | December 29, 2018 | October 6, 2018 |
| (Unaudited) | (Audited) | (Unaudited) |
ASSETS |
|
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Current Assets: |
|
|
|
Cash and cash equivalents | $ 5,226 | $ 2,824 | $ 11,121 |
Receivables, less allowance of $519; $532; and $516; respectively | 35,592 | 40,682 | 36,522 |
Inventories | 48,424 | 39,122 | 45,660 |
Prepaid expenses | 2,696 | 4,151 | 2,982 |
Prepaid income tax | 1,613 | 1,082 | -- |
Other current assets | -- | 2 | 12 |
TOTAL CURRENT ASSETS | 93,551 | 87,863 | 96,297 |
|
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|
Property, plant and equipment, net | 15,207 | 15,498 | 13,367 |
Operating lease right-of-use assets | 1,242 | -- | -- |
Intangible assets, net | 19,181 | 19,785 | 18,624 |
Goodwill | 26,749 | 26,381 | 21,548 |
Other assets | 86 | -- | -- |
TOTAL ASSETS | $156,016 | $149,527 | $149,836 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
|
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Note payable | $ 135 | $ -- | $ -- |
Trade accounts payable | 9,947 | 5,631 | 9,465 |
Accrued liabilities | 8,819 | 11,072 | 9,859 |
Income tax payable | -- | -- | 1,120 |
Current operating lease liabilities | 689 | -- | -- |
TOTAL CURRENT LIABILITIES | 19,590 | 16,703 | 20,444 |
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Other Liabilities: |
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Long-term debt | 5,221 | -- | -- |
Deferred income tax liability | 3,409 | 3,409 | 2,469 |
Operating lease liabilities | 575 | -- | -- |
Other liabilities | 1,094 | 1,094 | 503 |
TOTAL LIABILITIES | 29,889 | 21,206 | 23,416 |
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Stockholders' Equity: |
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Preferred stock: |
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Authorized 1,000,000 shares; no par value, none issued |
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Common stock: |
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Authorized 30,000,000 shares; no par value, issued and outstanding
|
14,291 |
14,439 |
14,440 |
Retained earnings | 111,836 | 113,882 | 111,980 |
TOTAL STOCKHOLDERS' EQUITY | 126,127 | 128,321 | 126,420 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $156,016 | $149,527 | $149,836 |