EVANSVILLE, IN -- (MARKET WIRE) -- April 13, 2007 -- Escalade, Incorporated (
NASDAQ:
ESCA)
announced that revenues in the first quarter of 2007 were relatively
unchanged in total from the same period last year. However, profitability
was lower as a result of higher costs and lower income from European joint
ventures. As a result, earnings per share were $0.08 for the quarter
compared to $0.13 for the same period last year.
Revenues in the Sporting Goods segment increased 3% in the first quarter
compared to the same quarter last year as a result of increased sales in
the specialty retail and dealer marketplace. Expanding distribution into
the specialty retail and dealer marketplace is a key element in the
Company's strategy designed to expand the customer base, increase product
offerings and lessen the impact of sales to the Company's mass-market
retail customers. During the first quarter, sales to the specialty retail
and dealer channel grew 74% compared to the same period last year.
Approximately 38% of this increase came from products related to
acquisitions completed in 2006 while the remainder of the increase
represents strong internal growth of existing products. Sales to
mass-market retail customers declined 25% during the first quarter compared
to last year due primarily to diminishing consumer demand for game room
products. We expect this trend in sales to continue throughout the rest of
2007, but expect gains in sales to the specialty retail and dealer channel
to offset declines in the mass-market retailer channel. Operating income
from the Sporting Goods segment was up in the first quarter of 2007
compared to last year reflecting the absence of start-up costs associated
with the Reynosa, Mexico plant that were recorded in the first quarter of
last year. Although sales for 2007 are expected to be flat compared to last
year, we expect improved operating profits from the Sporting Goods business
in 2007.
Compared to the prior year, revenues from the Office Products segment grew
1% in the first quarter. The Company is beginning to realize results from
efforts taken during the last half of 2006 to strengthen the sales force in
Europe as sales from that sector were up slightly over the same period last
year. However, this was offset by a slow down in North America sales due to
increased competition and customers pairing down inventory levels.
Operating profits from the Office Products business were down slightly in
the first quarter compared to last year due to the drop in North America
sales which have a higher gross margin than sales from Europe. Management
still anticipates that 2007 revenues and profits in the Office Products
business will be roughly equal to the levels achieved in 2006.
The Company continues to explore opportunities to increase shareholder
value. To that end, the Company paid a dividend of $0.22 per share on March
16, 2007, an increase of 10% over the dividend paid last year.
The Company also announced that Terry Frandsen, currently serving as the
Company's Chief Financial Officer, will serve as interim Chief Executive
Officer following the unexpected and sudden death of Daniel A. Messmer who
served as the Company's Chief Executive Officer and President before his
death on April 9, 2007. Mr. Frandsen will continue to serve as the
Company's Chief Financial Officer while serving as the interim Chief
Executive Officer.
Robert E. Griffin, Escalade's Chairman stated that "Finding someone to
replace Daniel Messmer will be difficult. Over the 34 years that he worked
for Escalade, he helped build a very successful culture based on
collaboration, trust, and respect for all the individuals in the
organization. Mr. Messmer's leadership style fostered high performance
expectations that are crucial to the Company's success. As we search for
his permanent replacement, we will be looking for these same traits. Key
characteristics of Escalade's next CEO will include a proven ability to
lead an organization of Escalade's size and complexity; significant
knowledge of the industries in which Escalade does business; the ability to
develop strong executive managers in our subsidiaries; and the ability to
lead and inspire a collaborative effort of Escalade's entire management
team in developing and implementing effective strategic plans for both of
our business segments. The sudden death of Mr. Messmer was a shock to
everyone in the Company, but our existing management team has the
leadership and experience necessary to see the Company through this
transition period, and we do not anticipate any significant disruption in
the Company's business operations. Our customers can expect the same
continued high level of service and quality demonstrated before Mr.
Messmer's untimely death."
The Escalade Board of Directors also withdrew its previous determination to
increase the size of the Board to seven directors effective as of the date
of the Annual Meeting of Stockholders to be held on April 27, 2007, and
voted instead to retain the size of the Board at six directors as permitted
pursuant to the terms of Escalade's Bylaws. Other than Mr. Messmer, the
nominees named in Escalade's proxy statement relating to the 2007 Annual
Meeting will be nominated for those six board seats.
Escalade is a quality manufacturer and marketer of sporting goods and
office/graphic arts products sold worldwide. To obtain more information on
the Company and its products, visit our website at:
www.EscaladeInc.com or
contact Terry Frandsen Vice President and CFO at 812/467-1334.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited, In Thousands Except Per Share Amounts)
3 Months Ended 12 Months Ended
-------------------- --------------------
24 March 25 March 24 March 25 March
2007 2006 2007 2006
--------- --------- --------- ---------
NET SALES $ 33,467 $ 32,800 $ 192,132 $ 186,333
OPERATING EXPENSES
Cost of goods sold 22,455 22,048 138,228 128,907
Selling and administrative 8,708 8,405 40,220 37,632
Restructuring -- -- -- (631)
--------- --------- --------- ---------
OPERATING INCOME 2,304 2,347 13,684 20,425
OTHER INCOME (EXPENSE)
Interest expense (517) (254) (2,900) (2,616)
Other income (expense) (421) (65) 15 1,772
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 1,366 2,028 10,799 19,581
PROVISION FOR INCOME TAXES 269 304 2,931 6,179
--------- --------- --------- ---------
NET INCOME $ 1,097 $ 1,724 $ 7,868 $ 13,402
========= ========= ========= =========
PER SHARE DATA
Basic earnings per share $ 0.08 $ 0.13 $ 0.60 $ 1.03
========= ========= ========= =========
Diluted earnings per share $ 0.08 $ 0.13 $ 0.60 $ 1.02
========= ========= ========= =========
Average shares outstanding 13,034 12,979 13,034 $ 13,042
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
24 March 2007 25 March 2006 30 December 2006
--------------- --------------- ----------------
ASSETS
Current assets $ 72,924 $ 69,011 $ 74,470
Property, Plant &
Equipment - net 20,673 21,080 20,657
Other assets 33,193 16,161 30,561
Goodwill 24,992 21,759 25,027
--------------- --------------- ----------------
Total $ 151,782 $ 128,011 $ 150,715
=============== =============== ================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 35,337 $ 24,290 $ 41,345
Other liabilities 32,883 27,394 23,655
Stockholders' equity 83,562 76,327 85,715
--------------- --------------- ----------------
Total $ 151,782 $ 128,011 $ 150,715
=============== =============== ================
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, Escalade's ability to
successfully integrate the operations of acquired assets and businesses,
new product development, the continuation and development of key customer
and supplier relationships, Escalade's ability to control costs, general
economic conditions, fluctuations in operating results, changes in the
securities markets 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 update
these forward-looking statements after the date of this report.
Contact Information: Contact:
Terry Frandsen
Vice President and CFO
812/467-1334