EVANSVILLE, IN -- (MARKET WIRE) -- February 26, 2007 -- Escalade, Incorporated (
NASDAQ:
ESCA)
announced today that revenues for the fourth quarter and year ended
December 30, 2006 were up 4% over the same periods last year. However,
lower gross margins and higher selling, general and administrative costs
resulted in a decline in profitability. Net income for the fourth quarter
was $2.6 million or $0.20 per share compared to restated net income of $3.4
million or $0.26 per share for the same period last year. Net income for
the year ended December 30, 2006 was $8.5 million or $0.65 per share
compared to restated net income of $12.9 million or $0.99 per share for
last year.
Revenues in the sporting goods segment were up 11% and 13% for the fourth
quarter and year ended December 30, 2006, respectively, compared to the
same periods last year. Acquisitions completed in the first half of fiscal
2006 comprise a substantial part of the increase in revenues and are a key
element in the Company's goal of expanding distribution into the specialty
retail and dealer marketplace. Sales into the mass retail market were
relatively unchanged from the prior year and the Company continues to enjoy
strong relationships with these customers. Gross margins declined slightly
in fiscal 2006 due to pricing pressures in the mass retail marketplace and
unfavorable production variances in the new manufacturing plant in Reynosa,
Mexico. Expanding specialty retail and dealer sales are expected to yield
higher gross margins and offset pricing pressures in the mass retail
marketplace. Selling, general and administrative costs increased 22% in
fiscal 2006 compared to fiscal 2005; due to relocation costs associated
with the new plant in Mexico and higher selling costs associated with the
specialty retail and dealer marketplace. Operating income from the sporting
goods segment was down 52% and 28% for the fourth quarter and year ended
December 30, 2006, respectively, compared to last year. The Company
anticipates modest revenue growth in 2007 as recent acquisitions in the
archery and residential playground markets enable increased distribution in
the specialty retail and dealer marketplace. The higher gross margins
associated with this revenue growth are expected to generate improved
operating profits in 2007.
Compared to the same periods last year, revenues in the office products
segment declined 10% and 12% in the fourth quarter and year ended December
30, 2006, respectively, compared to the same periods last year.
Approximately 31% of the year-over-year decline resulted from the
completion of a program initiated in 2005 to rationalization low margin
products and unprofitable customers. A direct result of this program has
been a steady improvement in overall gross margin ratios year-over-year.
Roughly 44% of the current year decline is attributed to declining demand
for paper shredders in the European and Asian markets. Operating profits in
the office products segment declined 40% and 6% in the fourth quarter and
year ended December 30, 2006, respectively, compared to last year.
Management is optimistic that initiatives begun in 2006 to strengthen
selling efforts will increase total sales and improve operating profits for
2007 in comparison to 2006.
Daniel Messmer, President and CEO of Escalade, Inc. stated that "Fiscal
2006 was a very challenging year, but it has not diminished our resolve to
increase shareholder value through improved performance. We expect 2007
will also be challenging as we continue expanding the specialty retail and
dealer markets in the sporting goods business and begin to experience
revenue growth in the office product business."
On February 21, 2007, Escalade announced a $0.22 per share dividend
representing a 10% increase over the $0.20 dividend declared last year and
reflecting the continued strong cash flow of the business. Management
believes that 2007 profits will continue to generate sufficient cash flows
to pay dividends and meet operating capital requirements.
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 or Dan
Messmer, President and Chief Executive Officer at 812/467-4449.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited, In Thousands Except Per Share Amounts)
3 Months Ended 12 Months Ended
---------------------- ----------------------
30 Dec 2006 31 Dec 2005 30 Dec 2006 31 Dec 2005
(Restated) (Restated)
---------- ---------- ---------- ----------
NET SALES $ 44,133 $ 42,425 $ 191,465 $ 183,315
OPERATING EXPENSES
Cost of goods sold 33,138 28,364 137,821 127,719
Selling and administrative 8,484 8,987 39,918 36,401
Restructuring Costs -- (631) -- (631)
---------- ---------- ---------- ----------
OPERATING INCOME 2,511 5,705 13,726 19,826
OTHER INCOME (EXPENSE)
Interest expense (711) (357) (2,637) (1,482)
Other income (expense) 937 283 372 915
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 2,737 5,631 11,461 19,259
PROVISION FOR INCOME TAXES 146 2,248 2,966 6,343
---------- ---------- ---------- ----------
NET INCOME $ 2,591 $ 3,383 $ 8,495 $ 12,916
========== ========== ========== ==========
PER SHARE DATA
Basic earnings per share $ 0.20 $ 0.26 $ 0.65 $ 0.99
========== ========== ========== ==========
Diluted earnings per
share $ 0.20 $ 0.26 $ 0.65 $ 0.98
========== ========== ========== ==========
Average shares
outstanding 13,036 12,997 13,012 13,055
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
30 December 2006 31 December 2005
---------------- ----------------
ASSETS
Current assets $ 74,470 $ 70,751
Property, Plant & Equipment - net 20,657 20,307
Other assets 30,561 16,645
Goodwill 25,027 17,157
---------------- ----------------
Total $ 150,715 $ 124,860
================ ================
Current liabilities $ 41,345 $ 28,401
Other liabilities 23,655 19,836
Stockholders equity 85,715 76,623
---------------- ----------------
Total $ 150,715 $ 124,860
================ ================
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
or
Dan Messmer
President and Chief Executive Officer
812/467-4449
www.EscaladeInc.com