SOURCE: Escalade, Inc.

April 13, 2006 07:30 ET

Escalade Announces First Quarter Results of $0.11 Per Share

WABASH, IN -- (MARKET WIRE) -- April 13, 2006 -- Escalade, Incorporated (NASDAQ: ESCA) announced that first quarter net sales were $32,800,000, a 10% increase compared to the year ago quarter. Net income rose 18% to $1,364,000 or $0.11 per share versus $0.09 in the year ago quarter. During the first quarter of 2006, the Company began expensing the fair value of employee stock options; this totaled $130,000.

Net sales at Escalade Sports increased 42% to $19,883,000 driven primarily by increased basketball system sales to sporting goods chains, and secondarily by increased sales to specialty dealers. Although the first quarter is the seasonal low point of the year for sporting goods sales and usually results in a loss, Escalade Sports recorded a small profit as compared to a loss in the year ago quarter, in spite of absorbing most of the start up costs for a new manufacturing facility in Reynosa, Mexico. This new facility will require additional start-up expenses in the second quarter, however most of the expense has been incurred and expected savings in the second half will more than offset these start-up costs. Late in the quarter, the Company completed the acquisition of the Woodplay line of premium outdoor redwood play systems which broadens the Company's specialty dealer offering. This acquisition contributed $700,000 net sales in the first quarter and compliments the Company's strategy of diversifying its distribution channels, customers, and product lines. Mr. Reed, CEO and President of Escalade, Inc. stated, "We are only partially through the 2006 fall and Christmas product placement process with our large customers, and, early indications point to overall placement gains. This coupled with the gains we are making with the specialty dealers; lead us to believe this should be a good year for sporting goods with gains in both sales and income."

Although net sales at Martin Yale's office products declined 18% for the quarter to $12,916,000, the Company is encouraged by the fact that net income increased 18% as a result of the product rationalization and restructuring programs initiated in 2004 and continued throughout 2005. The sales decline was due primarily to the European operations product rationalization, exchange rate differences and greater competition in the paper shredder market. Both North America and International increased in profitability. Dan Messmer, President of Martin Yale, stated, "With our prior emphasis on profitability through product rationalization and restructuring successfully paying off and now nearing completion, we have shifted our main focus to increasing sales. We are continuing to strengthen our management team, primarily in the sales/marketing area and have developed a new line of lower cost paper shredders that are priced competitively and yield higher margins. This new line of paper shredders is now being introduced worldwide and is receiving favorable customer comments. We are continuing to take the steps necessary to achieve a sales turnaround and expect to see sales gains in the core product lines in 2006 with improved profitability over the prior year."

Mr. Reed further stated that, "Based upon our solid and improving balance sheet, along with optimism that cash flow will continue to be strong, the Board of Directors voted to increase the annual dividend to $0.20 per share, an increase of 33%. Additionally, the Directors voted to replenish our stock buyback program, returning it to the $3,000,000 level, providing the opportunity to acquire shares when the market appears to undervalue them. We are continuing to look for other means to enhance shareholder value, including the ongoing review of acquisition opportunities. "

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 260/569-7208 or C.W. (Bill) Reed, President and CEO at 260/569-7233.

                 ESCALADE, INCORPORATED AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF INCOME
           (Unaudited, In Thousands Except Per Share Amounts)

                                 3 Months Ended         12 Months Ended
                             25 March    19 March    25 March    19 March
                               2006        2005        2006        2005
                             ---------   ---------   ---------   ---------

NET SALES                    $  32,800   $  29,782   $ 188,635   $ 213,808

OPERATING  EXPENSES
  Cost of goods sold            22,048      20,859     131,210     154,732
  Selling and administrative     8,405       7,175      36,665      39,572
  Restructuring                      -           -           -       2,366
  Impairment of goodwill             -           -           -       1,312
                             ---------   ---------   ---------   ---------

OPERATING INCOME                 2,347       1,748      20,760      15,826

OTHER INCOME (EXPENSE)
  Interest expense                (254)       (286)     (1,450)     (1,692)
  Other income (expense)           (65)        245         227         281
                             ---------   ---------   ---------   ---------

INCOME BEFORE INCOME TAXES       2,028       1,707      19,537      14,415

PROVISION FOR INCOME TAXES         664         553       7,385       6,032
                             ---------   ---------   ---------   ---------

NET INCOME                   $   1,364   $   1,154   $  12,152   $   8,383
                             =========   =========   =========   =========

PER SHARE DATA
  Basic earnings per share   $    0.11   $    0.09   $    0.93   $    0.64
                             =========   =========   =========   =========
  Diluted earnings per share $    0.10   $    0.09   $    0.92   $    0.63
                             =========   =========   =========   =========
  Average shares outstanding    12,979      13,058      13,042      13,031


                        CONSOLIDATED CONDENSED BALANCE SHEET
                            (Unaudited, In Thousands)

                                        25 March   19 March   31 December
                                          2006        2005        2005
                                       ---------   ---------   ---------
ASSETS
  Current assets                       $  68,315   $  77,910   $  71,187
  Property, Plant & Equipment - net       21,080      15,773      20,307
  Other assets                            16,161      16,838      16,645
  Goodwill                                21,759      17,793      17,157
                                       ---------   ---------   ---------
    Total                              $ 127,315   $ 128,314   $ 125,296
                                       =========   =========   =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities                  $  25,983   $ 27,865    $  30,867
  Other liabilities                       27,394     31,849       19,836
  Stockholders' equity                    73,938     68,600       74,593
                                       ---------   ---------   ---------
    Total                              $ 127,315   $ 128,314   $ 125,296
                                       =========   =========   =========
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
    260/569-7208

    C.W. (Bill) Reed
    President and CEO
    260/569-7233