Escalade Q4 Earnings Call Highlights

27 Feb 2026, 17:39 by Michael Walen · The Markets Daily

Escalade (NASDAQ:ESCA) reported fourth-quarter 2025 results that management said reflected the benefits of recent cost actions and portfolio moves, even as discretionary consumer demand remained uneven. On the earnings call, Interim President and CEO Patrick Griffin said the company ended 2025 “on solid footing,” citing a healthier margin profile, improved operating leverage, and stronger free cash flow as Escalade shifts its focus from cost optimization toward profitable growth.

Sales declined as margins expanded

Griffin said fourth-quarter net sales declined 2.2%, in line with broader discretionary leisure spending trends. The company attributed the decline to softer consumer demand in categories such as basketball and outdoor games within its e-commerce channel. Management said those declines were partially offset by “healthy growth” in archery and billiards, driven by a recent acquisition and new product introductions.

Despite lower sales, Escalade posted a notable improvement in profitability. Griffin said gross margin increased 280 basis points year-over-year to 27.7% of net sales, which he attributed to structural cost actions and operational discipline.

Chief Financial Officer Stephen Wawrin provided the detailed quarterly figures, reporting net income of $3.7 million, or $0.27 per diluted share, on net sales of $62.6 million for the three months ended Dec. 31, 2025. Gross margin was 27.7% versus 24.9% in the prior-year period.

Cost actions, acquisition benefits, and SG&A items

Wawrin said the year-over-year gross margin improvement primarily reflected lower operational costs tied to facility consolidation and the company’s cost rationalization program, reduced storage and handling costs, and the benefit of the Gold Tip acquisition completed in the third quarter of 2025, which he said was accretive to fourth-quarter results.

Selling, general and administrative expenses increased 6.8%, or $0.7 million, to $11.6 million. Wawrin said the increase was primarily due to $0.5 million of non-recurring executive transition expenses incurred during the quarter.

EBITDA increased by $0.6 million to $6.5 million in the fourth quarter of 2025 compared with $5.9 million in the prior-year period, reflecting higher gross profit partially offset by the executive transition costs, according to the CFO.

Inventory reductions lift cash flow; balance sheet remains conservative

Management highlighted progress on working capital and balance sheet priorities. Griffin said total inventory declined 10% year-over-year and that Escalade expects to reduce inventory further in 2026 as it works toward a longer-term target of 3x inventory turns.

Wawrin said operating cash flow for the quarter totaled $14.9 million, up from $12.3 million in the prior-year period, driven primarily by the inventory reduction (a $7.6 million decrease) and improved profitability. As of Dec. 31, 2025, Escalade had $11.9 million in cash and equivalents.

On leverage, Wawrin said net leverage was 0.3x at quarter-end, with $18.5 million of total debt outstanding. Griffin added that Escalade repaid nearly $2 million of long-term debt during the quarter while increasing cash levels. He said the company is taking advantage of “attractive cash arbitrage” given its low-cost fixed-rate bank debt and the current interest rate environment.

Acquisitions, capex plans, and facility purchase

Griffin said Escalade intends to use its free cash flow strength to invest in growth and pursue accretive M&A. He noted that after acquiring Gold Tip Archery in the third quarter, Escalade completed another acquisition during the fourth quarter: AllCornhole, which he described as a leading brand in competitive cornhole bags that will expand the company’s outdoor recreation portfolio.

Looking to 2026, Griffin said capital expenditures are expected to increase, with investments aimed at expanding capacity, improving efficiency, and supporting long-term growth. He also said Escalade plans to selectively invest in and optimize its manufacturing and distribution footprint.

During the Q&A session, Griffin clarified details around a facility purchase disclosed for the quarter. He said Escalade bought a 110,000-square-foot facility in Olney, Illinois, where it already had two facilities. Initially, he said, it will be used primarily for warehousing supporting the company’s fitness and safety businesses, particularly U.S. Weight, though management is evaluating additional uses, including potential consolidation of other categories or future acquisitions.

Tariff outlook and product mix commentary

Management said it is monitoring tariff policy developments but does not see an immediate impact from recent changes. Griffin said the company took price increases last summer to help offset tariff impacts and is not currently planning “any significant additional price increases” in the near term, while acknowledging the environment remains dynamic.

Asked about product mix, Griffin said Escalade is generally seeing favorable sales trends at higher price points, while trends for opening price point products have been less favorable. He added that sales of leading brands, including Bear Archery, are accretive to the company’s overall margin profile and said that was also true across “a lot” of the Brunswick portfolio.

On potential tariff refunds, Griffin said a refund tied to tariff developments would be meaningful for Escalade. In response to an analyst question, he estimated the amount that could be refunded in the “$4 million-$5 million range,” while noting that not all tariffs the company paid are tied to Section 301 tariffs.

Looking ahead, Griffin said consumer conditions are expected to remain mixed in 2026, shaped by moderating interest rates and persistent inflation, with less affluent consumers likely remaining more price sensitive. He said the company’s focus is shifting toward profitable growth while leveraging the operational discipline and leaner cost structure established in 2025.

About Escalade (NASDAQ:ESCA)

Escalade, Inc is a U.S.-based manufacturer and distributor of recreational equipment and specialty products for both consumer and commercial markets. Headquartered in Evansville, Indiana, the company operates through two principal business segments: Sporting Goods and Commercial Products. The Sporting Goods segment encompasses a diverse range of products such as hockey and lacrosse goal assemblies, fitness accessories, archery and hunting gear, and table tennis equipment. The Commercial Products segment focuses on seating solutions for restaurants, hospitality venues and other public spaces under the Top Seat brand, as well as storage, display products and industrial carts.

Within Sporting Goods, Escalade markets its products under proprietary brands including Bear® Archery, Gene St.