Escalade (NASDAQ: ESCA) boosts Q1 profit and trims debt
Escalade, Inc. delivered stronger profitability in the first quarter of 2026 on nearly flat sales. Net sales were $55.8 million versus $55.5 million a year ago, but gross margin improved to 30.7% from 26.7%, lifting operating income to $5.8 million from $3.7 million.
Net income rose to $4.4 million, or $0.32 per diluted share, up from $2.6 million, or $0.19 per share. Operating cash flow increased to $6.1 million from $3.8 million, helping reduce total debt to $16.7 million from $18.5 million, while cash grew to $13.1 million.
The company continued shareholder returns, declaring quarterly dividends of $0.15 and $0.1525 per share, and repurchased 17,500 shares during the quarter under its ongoing buyback program. Management reports compliance with credit agreement covenants and notes ongoing exposure to tariffs, shipping disruptions, and macroeconomic pressures.
Positive
- Profitability improved sharply, with gross margin rising to 30.7% from 26.7%, operating income increasing to $5.8 million from $3.7 million, and net income advancing to $4.4 million ($0.32 per diluted share) from $2.6 million ($0.19 per share).
- Balance sheet strengthened, as operating cash flow grew to $6.1 million, total debt fell to $16.7 million from $18.5 million, the revolving credit facility had no borrowings, and cash and cash equivalents increased to $13.1 million.
Negative
- None.
Insights
Margin expansion and deleveraging drove a strong earnings quarter for Escalade.
Escalade kept revenue essentially flat at $55.8M, but improved gross margin to 30.7% from 26.7%, nearly doubling operating income to $5.8M. Net income rose to $4.4M, with diluted EPS at $0.32 versus $0.19.
Cash generation strengthened, with operating cash flow up to $6.1M from $3.8M. Total debt declined to $16.7M, or 9.5% of equity, and the revolving facility had no borrowings as of March 31, 2026, indicating reduced balance sheet risk.
The company maintained its dividend, paying $0.15 and then $0.1525 per share, and continued modest buybacks while remaining in compliance with its credit covenants. Future results will depend on managing tariff exposure, shipping disruptions, and broader economic headwinds discussed in the risk language.
Key Figures
Key Terms
gross-to-net sales adjustments financial
current expected credit losses (CECL) financial
restricted stock units financial
operating lease right-of-use assets financial
Funded Debt to EBITDA Ratio financial
accordion feature financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
For the transition period from _____ to _____
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal Executive Office) |
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
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Non-accelerated filer ☐ |
Smaller reporting company 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
Outstanding at April 22, 2026 |
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Common, no par value |
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INDEX
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Page No. |
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Part I. |
Financial Information: |
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Item 1 - |
Financial Statements: |
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Consolidated Condensed Balance Sheets as of March 31, 2026, December 31, 2025, and March 31, 2025 |
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Consolidated Condensed Statements of Operations for the Three Months Ended March 31, 2026 and March 31, 2025 |
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Consolidated Condensed Statements of Stockholders’ Equity for the Three Months Ended March 31, 2026 and March 31, 2025 |
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Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2026 and March 31, 2025 |
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Notes to Consolidated Condensed Financial Statements |
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Item 2 - |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 - |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4 - |
Controls and Procedures |
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Part II. |
Other Information |
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Item 1 - |
Legal Proceedings |
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Item 1A - |
Risk Factors |
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Item 2 - |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 6 - |
Exhibits |
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Signature |
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
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All Amounts in Thousands Except Share Information |
March 31, 2026 |
December 31, 2025 |
March 31, 2025 |
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(Unaudited) |
(Audited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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Receivables, less allowance of $ |
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Inventories |
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Prepaid expenses |
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Prepaid income tax |
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TOTAL CURRENT ASSETS |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Goodwill |
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Other assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Current portion of long-term debt |
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Trade accounts payable |
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Accrued liabilities |
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Income tax payable |
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Current operating lease liabilities |
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TOTAL CURRENT LIABILITIES |
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Other Liabilities: |
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Long‑term debt |
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Deferred income tax liability |
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Operating lease liabilities |
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Other liabilities |
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TOTAL LIABILITIES |
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Stockholders' Equity: |
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Preferred stock: |
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Authorized |
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Common stock: |
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Authorized |
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Retained earnings |
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TOTAL STOCKHOLDERS' EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ | $ | $ | |||||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
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Three Months Ended |
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All Amounts in Thousands Except Per Share Data |
March 31, 2026 |
March 31, 2025 |
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Net sales |
$ | $ | ||||||
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Costs and Expenses |
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Cost of products sold |
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Selling, administrative and general expenses |
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Amortization |
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Operating Income |
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Other Income (Expense) |
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Interest expense |
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Interest income |
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Other income |
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Income Before Income Taxes |
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Provision for Income Taxes |
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Net Income |
$ | $ | ||||||
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Earnings Per Share Data: |
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Basic earnings per share |
$ | $ | ||||||
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Diluted earnings per share |
$ | $ | ||||||
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Dividends declared |
$ | $ | ||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
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Common Stock |
Retained |
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All Amounts in Thousands |
Shares |
Amount |
Earnings |
Total |
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Balances at December 31, 2024 |
$ | $ | $ | |||||||||||||
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Net income |
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Expense of restricted stock units |
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Settlement of restricted stock units |
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Dividends declared |
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Purchase of stock |
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Issuance of common stock for service |
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Balances at March 31, 2025 |
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Balances at December 31, 2025 |
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Net income |
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Expense of restricted stock units |
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Settlement of restricted stock units |
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Dividends declared |
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Purchase of stock |
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Issuance of common stock for service |
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Balances at March 31, 2026 |
$ | $ | $ | |||||||||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Three Months Ended |
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All Amounts in Thousands |
March 31, 2026 |
March 31, 2025 |
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Operating Activities: |
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Net income |
$ | $ | ||||||
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Depreciation and amortization |
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Allowance for credit losses |
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Stock-based compensation |
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Loss on disposal of assets |
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Common stock issued in lieu of bonus to officers |
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Changes in assets and liabilities |
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Net cash provided by operating activities |
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Investing Activities: |
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Purchase of property and equipment |
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Net cash used in investing activities |
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Financing Activities: |
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Proceeds from issuance of long-term debt |
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Payments on long-term debt |
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Cash dividends paid |
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Purchase of stock |
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Net cash used in financing activities |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
$ | $ | ||||||
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Supplemental Cash Flows Information |
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Interest paid |
$ | $ | ||||||
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Income taxes (refunded) paid, net |
$ | ( |
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See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A – Summary of Significant Accounting Policies
Presentation of Consolidated Condensed Financial Statements – The significant accounting policies followed by the Company and its wholly owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for its annual financial reporting. All adjustments that are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported have been included in the accompanying consolidated condensed financial statements. The consolidated condensed balance sheet of the Company as of December 31, 2025 has been derived from the audited consolidated balance sheet of the Company as of that date. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2025 filed with the Securities and Exchange Commission.
Note B ‑ Seasonal Aspects
The results of operations for the three months ended March 31, 2026 and March 31, 2025 are not necessarily indicative of the results to be expected for the full year.
Note C ‑ Inventories
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In thousands |
March 31, 2026 |
December 31, 2025 |
March 31, 2025 |
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Raw materials |
$ | $ | $ | |||||||||
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Work in progress |
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Finished goods |
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Note D – Fair Values of Financial Instruments
Accounting Standard Codification (“ASC”) 820, “Fair Value Measurement and Disclosures,” outlines a valuation framework and creates a fair value hierarchy for assets and liabilities as follows:
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Level 1: Observable inputs such as quoted prices in active markets; |
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Level 2: Inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
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Level 3: Unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions. |
Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated their carrying values at March 31, 2026, December 31, 2025 and March 31, 2025. The Company believes the carrying value of borrowings under our senior secured revolving credit facility, due to variable rate interest, adequately reflects the fair value of these instruments.
The Company discloses the fair value of its term loan using Level 2 inputs, which are estimated using treasury rates for a similar instrument, as follows:
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March 31, 2026 |
December 31, 2025 |
March 31, 2025 |
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In thousands |
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
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Term Loan Facility |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Note E – Stock Compensation
The fair value of stock-based compensation is recognized in accordance with the provisions of FASB ASC 718, Stock Compensation.
For the three months ended March 31, 2026 and March 31, 2025, the Company recognized stock based compensation expense of $
On March 5, 2026, the Company awarded
Note F ‑ Segment Information
The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its president and chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated net sales and consolidated net income to assess financial performance and allocate resources.
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As of and for the Three Months Ended March 31, 2026 |
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In thousands |
Sporting Goods |
Corp. |
Total |
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Revenues from external customers |
$ | $ | $ | |||||||||
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Cost of product sold |
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Other operating expenses |
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Operating income (loss) |
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Interest expense, net |
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Other income |
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Provision (benefit) for Income Taxes |
( |
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Net income (loss) |
( |
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Depreciation and Amortization |
$ | $ | ||||||||||
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Total assets |
$ | $ | $ | |||||||||
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As of and for the Three Months Ended March 31, 2025 |
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In thousands |
Sporting Goods |
Corp. |
Total |
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Revenues from external customers |
$ | $ | $ | |||||||||
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Cost of product sold |
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Other operating expenses |
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Operating income (loss) |
( |
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Interest expense, net |
( |
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Other income |
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Provision (benefit) for Income Taxes |
( |
) | ||||||||||
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Net income (loss) |
( |
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Depreciation and Amortization |
$ | $ | ||||||||||
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Total assets |
$ | $ | $ | |||||||||
Note G – Dividend Payment
On January 12, 2026, the Company paid a quarterly dividend of $
On April 13, 2026, the Company paid a quarterly dividend of $
Note H ‑ Earnings Per Share
The shares used in computation of the Company’s basic and diluted earnings per common share are as follows:
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Three Months Ended |
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In thousands |
March 31, 2026 |
March 31, 2025 |
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Weighted average common shares outstanding |
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Dilutive effect of restricted stock units |
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Weighted average common shares outstanding, assuming dilution |
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Note I – New Accounting Standards and Changes in Accounting Principles
With the exception of that discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2026, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, that are of significance, or potential significance to the Company.
In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments clarify the application of the current expected credit losses (CECL) model to trade receivable and contract assets and are intended to improve consistency in the measurement of expected credit losses. The guidance is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption of ASU 2025-05 did not have a material impact on the Company’s condensed consolidated financial statements, financial condition, or results of operations.
Note J – Revenue from Contracts with Customers
Revenue Recognition – Revenue is recognized when a contract exists with a customer that specifies the goods to be provided at an agreed upon sales price and when the performance obligations under the terms of the contract are satisfied; generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title. Sales are made on normal and customary short-term credit terms or upon delivery of point-of-sale transactions. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts. These costs are recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue.
The Company enters into contractual arrangements with customers in the form of customer orders that specify goods, quantity, pricing, and associated order terms. The Company does not have long-term contracts that are satisfied over time. Due to the nature of the contracts, no significant judgment exists in relation to the identification of the customer contract, satisfaction of the performance obligations, or transaction price.
Gross-to-net sales adjustments – We recognize revenue net of various sales adjustments to arrive at net sales as reported on the statement of operations. These adjustments are referred to as gross-to-net sales adjustments and primarily fall into one of three categories: returns, warranties and customer allowances.
Returns – The Company records an accrued liability and reduction in sales for estimated product returns based upon historical experience. An accrued liability and reduction in sales is also recorded for approved return authorizations that have been communicated by the customer.
Warranties – Limited warranties are provided on certain products for varying periods. We record an accrued liability and reduction in sales for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liability and sales in the current year. The accrued liability amount attributable to warranties was $
Customer Allowances – Customer allowances are common practice in the industries in which the Company operates. These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales. The Company reviews such allowances on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.
Contract Balances – Amounts relating to returns and customer allowances create contract liabilities, which were $
Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products. These products are sold through multiple sales channels that include: mass merchants, specialty dealers, key on-line retailers (“E-commerce”) and international. The following table depicts the disaggregation of revenue according to sales channel:
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Three Months Ended |
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All Amounts in Thousands |
March 31, 2026 |
March 31, 2025 |
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Gross Sales by Channel: |
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Mass Merchants |
$ | $ | ||||||
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Specialty Dealers |
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E-commerce |
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International |
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Other |
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Total Gross Sales |
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Less: Gross-to-Net Sales Adjustments |
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Returns |
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Warranties |
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Customer Allowances |
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Total Gross-to-Net Sales Adjustments |
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Total Net Sales |
$ | $ | ||||||
Note K – Leases
We have operating leases for office, manufacturing and distribution facilities as well as for certain equipment. Our leases have remaining lease terms of
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and operating lease liabilities on our consolidated balance sheet. The Company has elected an accounting policy to not recognize short-term leases (one year or less) on the balance sheet. The Company also elected the package of practical expedients which applies to leases that commenced before the adoption date. By electing the package of practical expedients, the Company did not need to reassess the following; whether any existing contracts are or contain leases, the lease classification for any existing leases and initial direct costs for any existing leases.
ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot be determined, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Lease terms may include options to extend or terminate the lease and are recognized in the presentation of the ROU assets and operating lease liabilities when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease costs include payment for taxes and common area maintenance charges.
Components of lease expense and other information is as follows:
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Three Months Ended |
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All Amounts in Thousands |
March 31, 2026 |
March 31, 2025 |
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Lease Expense |
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Operating Lease Cost |
$ | $ | ||||||
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Short-term Lease Cost |
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Variable Lease Cost |
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Total Operating Lease Cost |
$ | $ | ||||||
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Operating Lease – Operating Cash Flows |
$ | $ | ||||||
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Weighted Average Remaining Lease Term – Operating Leases (in years) |
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Weighted Average Discount Rate – Operating Leases |
% | % | ||||||
Future minimum lease payments under non-cancellable leases as of March 31, 2026 were as follows:
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All Amounts in Thousands |
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Year 1 |
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Year 2 |
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Year 3 |
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Year 4 |
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Year 5 |
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Thereafter |
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Total future minimum lease payments |
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Less imputed interest |
( |
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Total |
$ | |||
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Reported as of March 31, 2026 |
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Current operating lease liabilities |
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Long-term operating lease liabilities |
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Total |
$ |
Note L – Commitments and Contingencies
The Company is involved in litigation arising in the normal course of its business, but the Company does not believe the disposition or ultimate resolution of such claims or lawsuits will have a material adverse effect on the business or financial condition of the Company. Based on current information, available insurance coverage and established reserves, the Company believes that the eventual outcome of existing litigation against the Company will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to the Company’s results of operations for any particular period, depending, in part, upon the size of the loss or liability imposed and the operating results for the applicable period.
Note M – Debt
On October 11, 2024, the Company entered into the Fifth Amendment (the “Fifth Amendment”) to its Amended and Restated Credit Agreement with its issuing bank, JPMorgan Chase Bank, N.A. and the other lenders identified therein (the “Restated Credit Agreement”). The Fifth Amendment eliminated the fixed charge coverage ratio covenant and related provisions. The fixed charge ratio covenant was replaced by a new minimum interest coverage ratio covenant of
The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of March 31, 2026.
As of March 31, 2026, the outstanding principal amount of the term loan was $
Note N – Provision for Taxes
The effective tax rate for the three months ending March 31, 2026 was
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Item 2. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward-Looking Statements
This report contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 3b-6 promulgated thereunder. All statements, other than statements of historical fact, are forward-looking statements. These statements relate to our financial condition, results of operations, plans, objectives, future performance, capital actions or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “potential,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. These risks include, but are not limited to: Escalade’s ability to achieve its business objectives; Escalade’s plans and expectations surrounding the transition to its new Chief Executive Officer and all potential related effects and consequences; Escalade’s ability to successfully implement actions to lessen the potential impacts of tariffs, a potential trade war with China 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; our international operations, including any related to political uncertainty and geopolitical tensions; 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 protect its intellectual property; Escalade’s ability to develop and implement our own direct to consumer e-commerce distribution channel; the impact of competitive products and pricing; product demand and market acceptance; new product development; 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, terrorist attacks, labor strikes, natural disasters, public health crises such as the coronavirus pandemic, and other events and circumstances beyond our control; the evaluation and implementation of remediation efforts designed and implemented to enhance the Company’s control environment; the potential identification of one or more additional material weaknesses in the Company’s internal control of which the Company is not currently aware or that have not yet been detected; Escalade’s ability to control costs, including managing inventory levels; general economic conditions, including inflationary pressures; 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, to maintain compliance with the terms of such financing and to manage debt levels; the availability, integration and effective operation of information systems and other technology, and the potential interruption of such systems or 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; risks related to data security of privacy breaches; the potential impact of regulatory claims, proceedings or investigations involving our products; Escalade’s use of estimates in its financial reporting as well as in its forward looking statements; 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.
Overview
Escalade, Incorporated (Escalade, the Company, we, us or our) is focused on growing its Sporting Goods business through organic growth of existing categories, strategic acquisitions, and new product development. The Sporting Goods business competes in a variety of categories including basketball goals, archery, billiards, indoor and outdoor game recreation and fitness products. Strong brands and on-going investment in product development provide a solid foundation for building customer loyalty and continued growth.
Within the sporting goods industry, the Company has successfully built a robust market presence in several niche markets. This strategy is heavily dependent on expanding our customer base, barriers to entry, strong brands, excellent customer service and a commitment to innovation. A key strategic advantage is the Company’s established relationships with major customers that allow the Company to bring new products to market in a cost effective manner while maintaining a diversified portfolio of products to meet the demands of consumers. In addition to strategic customer relations, the Company has substantial manufacturing and import experience that enable it to be a low cost supplier.
To enhance growth opportunities, the Company has focused on promoting new product innovation and development and brand marketing. In addition, the Company has embarked on a strategy of acquiring companies or product lines that complement or expand the Company's existing product lines or provide expansion into new or emerging categories in sporting goods. A key objective is the acquisition of product lines with barriers to entry that the Company can take to market through its established distribution channels or through new market channels. Significant synergies are achieved through assimilation of acquired product lines into the existing Company structure.
Management believes that key indicators in measuring the success of these strategies are revenue growth, earnings growth, new product introductions, and the expansion of channels of distribution.
The United States Government has made a series of announcements concerning tariffs enacted and/or proposed to be enacted on the importation of goods into the United States including a baseline tariff rate and individualized higher rates on many countries including countries that supply goods to the Company, including China from which the Company imports a substantial amount of goods. Although the United States Supreme Court ruled that many of these tariffs were invalid, the availability of any refunds of such tariffs remains uncertain and the Government has initiated new tariffs and may impose other tariffs as well. Additionally, hostilities in the Middle East have adversely affected shipping routes and oil prices and may have effects on the economy in general. Tariffs, restrictions on trade, rising energy costs and disrupted shipping routes could result in increased costs and/or the unavailability of goods purchased by the Company, which in turn may result in lower profitability and/or a decline in sales as well as the loss of goodwill among customers. General economic conditions, inflation, recessionary fears, rising energy costs, rising interest rates, changes in the housing market and declining consumer confidence also may impact the Company adversely. Management cannot predict the full impact of these factors on the Company. Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the period ended March 31, 2026 are not necessarily indicative of the results to be expected for fiscal year 2026.
Results of Operations
The following schedule sets forth certain consolidated statement of operations data as a percentage of net revenue:
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Three Months Ended |
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March 31, 2026 |
March 31, 2025 |
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Net revenue |
100.0 | % | 100.0 | % | ||||
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Cost of products sold |
69.3 | % | 73.3 | % | ||||
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Gross margin |
30.7 | % | 26.7 | % | ||||
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Selling, administrative and general expenses |
19.2 | % | 19.1 | % | ||||
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Amortization |
1.0 | % | 1.0 | % | ||||
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Operating income |
10.5 | % | 6.6 | % | ||||
Revenue and Gross Margin
Sales increased 0.6% for the first quarter of 2026, compared with the same period in the prior year. Sales increased primarily due to increases in our archery categories due to the recent Gold Tip acquisition and increased demand in our billiards and safety categories. These increases were partially offset due to a decline in our outdoor and indoor game categories.
Gross margin increased to 30.7% for the first quarter of 2026 compared to 26.7% for the same period in 2025 primarily driven by lower fixed costs and favorable sales mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $10.7 million for the first quarter of 2026 compared to $10.6 million for the same period in the prior year, an increase of $0.1 million or 1.5%. SG&A as a percent of sales is 19.2% for the first quarter of 2026 compared with 19.1% for the same period in the prior year.
Provision (Benefit) for Income Taxes
The effective tax rate for the first three months of 2026 was 23.6% compared to 23.8% for the same period in the prior year.
Financial Condition and Liquidity
Total debt at the end of the first three months of 2026 was $16.7 million, a decrease of $1.8 million from December 31, 2025. The following schedule summarizes the Company’s total debt:
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In thousands |
March 31, 2026 |
December 31, 2025 |
March 31, 2025 |
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Current portion of long-term debt |
$ | 16,667 | $ | 7,143 | $ | 7,143 | ||||||
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Long term debt |
- | 11,309 | 16,667 | |||||||||
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Total Debt |
$ | 16,667 | $ | 18,452 | $ | 23,810 | ||||||
As a percentage of stockholders’ equity, total debt was 9.5%, 10.7% and 14.1% at March 31, 2026, December 31, 2025, and March 31, 2025 respectively.
On October 11, 2024, the Company entered into the Fifth Amendment (the “Fifth Amendment”) to its Amended and Restated Credit Agreement with its issuing bank, JPMorgan Chase Bank, N.A. and the other lenders identified therein (the “Restated Credit Agreement”). The Fifth Amendment eliminated the fixed charge coverage ratio covenant and related provisions. The fixed charge ratio covenant was replaced by a new minimum interest coverage ratio covenant of 3.50 to 1:00 effective September 30, 2024. Under the terms of the Fifth Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $75.0 million to $60.0 million, but added an accordion feature that could increase the facility in an amount not to exceed $85.0 million. The Fifth Amendment further revised the restricted payments covenant to provide that if at any time the Company’s Funded Debt to EBITDA Ratio would exceed 1.75 to 1.0, then the aggregate combined total of cash dividends and Company share repurchases may not exceed $12.0 million in any trailing twelve month period.
The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of March 31, 2026.
As of March 31, 2026, the outstanding principal amount of the term loan was $16.7 million and total amount drawn under the revolving facility was zero. The term loan and revolving facility have a maturity date of January 21, 2027.
The Company funds working capital requirements and shareholder dividends through operating cash flows and revolving credit agreements with its Lenders. The Company expects that cash generated from its 2026 and Q1 2027 operations will be sufficient to pay the remaining term loan balance of $11.3 million due on January 21, 2027.
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Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not Required.
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Item 4. |
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Escalade maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, could provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
Management of the Company has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the first quarter of 2026.
There have been no changes to the Company’s internal control over financial reporting that occurred since the beginning of the Company’s first quarter of 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Refer to Note L of the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 for information regarding legal proceedings.
Item 1A. RISK FACTORS.
In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. These risks and uncertainties could materially and adversely affect our business, consolidated financial condition, results of operations, or cash flows. Our operations could also be affected by additional risks or uncertainties that are not presently known to us or that we currently do not consider material to our business. As of the date of this filing, there have been no material changes in our risk factors from those disclosed in the above-referenced Form 10-K, which risk factors are incorporated herein by reference.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
c) Issuer Purchases of Equity Securities
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Period |
(a) Total Number of Shares (or Units) Purchased |
(b) Average Price Paid per Share (or Unit) |
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
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Share purchases prior to 12/31/2025 under the current repurchase program. |
2,515,750 | $ | 13.56 | 2,515,750 | $ | 18,206,933 | ||||||||||
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First quarter purchases: |
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1/1/2026-1/31/2026 |
None |
None |
No Change |
No Change |
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2/1/2026-2/28/2026 |
None |
None |
No Change |
No Change |
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3/1/2026-3/31/2026 |
17,500 | $ | 16.03 | 2,533,250 | $ | 17,926,418 | ||||||||||
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Total share purchases under the current program |
2,533,250 | $ | 13.57 | 2,533,250 | $ | 17,926,418 | ||||||||||
The Company has one stock repurchase program which was established in February 2003 by the Board of Directors and which initially authorized management to expend up to $3,000,000 to repurchase shares on the open market as well as in private negotiated transactions. Since the program’s inception, the Board has replenished and increased the dollar amount of authorized stock repurchases on multiple occasions. Most recently, in February 2025, the Board of Directors increased the stock repurchase program to $20,000,000. From its inception date through March 31, 2026, the Company has repurchased 2,533,250 shares of its common stock under this repurchase program for an aggregate price of $34,385,912. The repurchase program has no termination date and there have been no share repurchases that were not part of a publicly announced program.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. MINE SAFETY DISCLOSURES.
Not applicable.
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS
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Number |
Description |
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3.1 |
Articles of Incorporation of Escalade, Incorporated. Incorporated by reference from Exhibit 3.1 to the Company’s 2007 First Quarter Report on Form 10-Q filed on April 13, 2007. |
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3.2 |
Amended By-laws of Escalade, Incorporated, as amended August 10, 2022. Incorporated by reference from Exhibit 3.2 to the Company’s 2022 Third Quarter Report on Form 10-Q filed on October 27, 2022. |
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31.1 |
Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification. |
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31.2 |
Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification. |
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32.1 |
Chief Executive Officer Section 1350 Certification. |
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32.2 |
Chief Financial Officer Section 1350 Certification. |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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101.INS |
Inline XBRL Instance Document |
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101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ESCALADE, INCORPORATED |
| Date: April 30, 2026 |
/s/ Stephen R. Wawrin Vice President and Chief Financial Officer (On behalf of the registrant and in his capacities as Principal Financial Officer and Principal Accounting Officer) |