ESCALADE INC
For the period ended Sep 30, 2024. Filed Oct 24, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 24, 2024
ESCA$20.60+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0001437749-24-023485
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-24.
0001437749-24-031986
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 29 previous paragraphs and 31 current paragraphs.
19 unchanged; 9 reworded; 2 added; 1 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Gross margin increased to 24.8% for the third quarter of 2024 compared to 24.7% for the same period in 2023 primarily driven by improved fixed cost absorption, partly offset by increased cost of goods sold of $1.8 million due to non-recurring expenses associated with strategic cost rationalization initiatives, including the closure and sale of its Mexico operations.
Current report
On October 11, 2024, the Company entered into the Fifth Amendment (the “Fifth Amendment”) to 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.
Removed paragraphs (1)
Previous report
Gross margin decreased to 24.2% for the second quarter of 2024 compared to 24.6% for the same period in 2023 primarily driven by lower fixed cost absorption, increased customer program spending, and severance related expenses associated with the Company’s ongoing asset optimization initiative.
Reworded paragraphs (9)
Previous wording
Total net sales declined 7.7% on a year-over-year basis in the second quarter, due to softening consumer demand and channel inventory destocking, particularly in our indoor/outdoor games categories, partly offset by growth in our Stiga table tennis, Bear Archery, and Brunswick Billiards brands. Mass merchant, specialty dealer and third-party e-commerce channel sales were all soft during the quarter, partly offset by 15% growth in international sales and 28% growth in our owned e-commerce sales.
Current wording
Total net sales declined 7.7% on a year-over-year basis in the third quarter, due to soft consumer demand and inventory destocking in most categories, partly offset by growth in the archery, safety, and basketball categories. During the third quarter, sales declined across most of our sales channels, partly offset by growth in our international and e-commerce. Our e-commerce channel experienced growth driven by our owned e-commerce sales.
Previous wording
For the first six months of 2024, total net sales declined 3.9% compared to the first half of 2023 again due to softening consumer demand and channel destocking, partly offset by growth in our table tennis, basketball, and archery categories.
Current wording
For the nine months ended September 30, 2024, total net sales declined 5.3% compared to the same period in 2023 again due to soft consumer demand and channel destocking, partly offset by growth in the Company’s table tennis, basketball, and archery categories.
Previous wording
Selling, general and administrative expenses (SG&A) were $10.1 million for the second quarter of 2024 compared to $9.8 million for the same period in the prior year, an increase of $0.3 million or 3.0%. SG&A as a percent of sales is 16.1% for the second quarter of 2024 compared with 14.5% for the same period in the prior year.
Current wording
Selling, general and administrative expenses (SG&A) were $11.7 million for the third quarter of 2024 compared to $11.1 million for the same period in the prior year, an increase of $0.6 million or 5.5%. SG&A as a percent of sales is 17.2% for the third quarter of 2024 compared with 15.1% for the same period in the prior year.
Previous wording
For the first six months of 2024, SG&A were $20.8 million compared to $20.1 million for the same period in the prior year, an increase of $0.7 million, or 3.6%. SG&A as a percent of sales is 17.3% for the first six months of 2024 compared with 16.1% for the same period in the prior year.
Current wording
For the nine months ended September 30, 2024, SG&A were $32.4 million compared to $31.1 million for the same period in the prior year, an increase of $1.3 million, or 4.2%. SG&A as a percent of sales is 17.3% for the nine months ended September 30, 2024 compared with 15.7% for the same period in the prior year.
Previous wording
The effective tax rate for the first six months of 2024 was 23.8% compared to 22.6% for the same period last year.
Current wording
The effective tax rate for the nine months ended September 30, 2024 was 23.9% compared to 19.0% for the same period last year.
Previous wording
Total debt as of June 30, 2024 was $43.2 million, a decrease of $7.7 million from December 31, 2023. The following schedule summarizes the Company’s total debt:
Current wording
Total debt as of September 30, 2024 was $29.5 million, a decrease of $21.4 million from December 31, 2023. The following schedule summarizes the Company’s total debt:
Previous wording
As a percentage of stockholders’ equity, total debt was 26.0%, 30.9% and 53.0% at June 30, 2024, December 31, 2023, and June 30, 2023 respectively.
Current wording
As a percentage of stockholders’ equity, total debt was 17.3%, 30.9% and 44.7% at September 30, 2024, December 31, 2023, and September 30, 2023 respectively.
Previous wording
On May 8, 2023, the Company entered into the Third Amendment (the “Third Amendment”) to the Restated Credit Agreement. The Third Amendment adjusted the funded debt to EBITDA ratio financial covenant to 4:25 to 1:00 as of the end of the Company’s second fiscal quarter of 2023, 3:00 to 1:00 as of the end of the Company’s third fiscal quarter of 2023, and 2:75 to 1:00 as of the end of the Company’s fourth fiscal quarter of 2023 and thereafter. The Third Amendment adjusted the fixed charge coverage ratio covenant to 1:10 to 1:00 commencing as of the Company’s fourth fiscal quarter of 2023 and 1:25 to 1:00 as of the end of the Company’s first fiscal quarter of 2024 and thereafter. For the Company’s second and third fiscal quarters in 2023, the Third Amendment suspended the fixed charge coverage ratio covenant and added a minimum EBITDA covenant of $22.5 million as of the end of each such fiscal quarter. Under the terms of the Third Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $90.0 million to $75.0 million, upon the consummation of the sale of the Company’s Mexican subsidiary and the dissolution of Escalade Insurance, Inc. The proceeds from such sale and dissolution, respectively, will be used to partially prepay the amounts outstanding under the revolving credit facility. As reflected in the Fourth Amendment to the Restated Credit Agreement effective September 1, 2023, the maximum availability of the senior revolving credit facility was reduced to $85.0 million following the dissolution of Escalade Insurance, Inc. The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of June 30, 2024.
Current wording
On May 8, 2023, the Company entered into the Third Amendment (the “Third Amendment”) to the Restated Credit Agreement. The Third Amendment adjusted the funded debt to EBITDA ratio financial covenant to 4:25 to 1:00 as of the end of the Company’s second fiscal quarter of 2023, 3:00 to 1:00 as of the end of the Company’s third fiscal quarter of 2023, and 2:75 to 1:00 as of the end of the Company’s fourth fiscal quarter of 2023 and thereafter. The Third Amendment adjusted the fixed charge coverage ratio covenant to 1:10 to 1:00 commencing as of the Company’s fourth fiscal quarter of 2023 and 1:25 to 1:00 as of the end of the Company’s first fiscal quarter of 2024 and thereafter. For the Company’s second and third fiscal quarters in 2023, the Third Amendment suspended the fixed charge coverage ratio covenant and added a minimum EBITDA covenant of $22.5 million as of the end of each such fiscal quarter. Under the terms of the Third Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $90.0 million to $75.0 million, upon the consummation of the sale of the Company’s Mexican subsidiary and the dissolution of Escalade Insurance, Inc. The proceeds from such sale and dissolution, respectively, will be used to partially prepay the amounts outstanding under the revolving credit facility. As reflected in the Fourth Amendment to the Restated Credit Agreement effective September 1, 2023, the maximum availability of the senior revolving credit facility was reduced to $85.0 million following the dissolution of Escalade Insurance, Inc.
Previous wording
As of June 30, 2024, the outstanding principal amount of the term loan was $29.2 million and total amount drawn under the Revolving Facility was $14.0 million.
Current wording
As of September 30, 2024, the outstanding principal amount of the term loan was $27.4 million and total amount drawn under the Revolving Facility was $2.1 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of September 30, 2024.