EVANSVILLE, IN -- (MARKET WIRE) -- October 27, 2006 -- Escalade, Incorporated (
NASDAQ:
ESCA)
announced today that third quarter revenues increased 3% in 2006 compared
to the same quarter last year. Added to a strong first half, year-to-date
revenues increased 5% compared to the same period last year. Higher
selling, general and administrative costs, primarily in the Sporting Goods
business, resulted in lower operating income and net income. Earnings per
share for the third quarter of 2006 were $0.23 per share compared to $0.42
per share last year and $0.41 per share for the nine months ended October
7, 2006 compared to $0.68 per share for the same period last year.
Sporting Goods sales increased 5% and 14% in the three months and nine
months ended October 7, 2006, respectively, compared to the same periods
last year including revenues from acquisitions completed in the first half
of 2006. Management anticipates that sales to the mass market channel in
2006 will be comparable to the level achieved in 2005. The Company
continues to pursue a strategy of expanding distribution into the specialty
retail and dealer marketplace. The Company embarked on this strategy to
lessen the impact of fluctuations in sales to the mass market retail
channel. The acquisitions in the first half of 2006 support this strategy.
Consequently sales into this market channel increased 94% and 59% for the
three months and nine months ended October 7, 2006, respectively, compared
to the same periods last year. Sales to the specialty retail and dealer
channel yield higher gross margins, but have higher selling and advertising
costs. Management expects total Sporting Goods sales for 2006 to be better
than 2005.
Office Product sales declined 1% and 13% in the three months and nine
months ended October 7, 2006, respectively, compared to the same periods
last year. In the second half of 2005 the Company undertook a program of
rationalizing low margin products and unprofitable customers. Excluding the
effects of this rationalization on the third quarter, sales increased 1%
over the same period last year. The effects of this rationalization program
accounted for approximately one-third of the year-to-date sales decline.
The remainder of the year to date sales decline is attributed to lower
market demand for high security shredders and price competition in the
European shredder market. The Company continues to invest in sales and
marketing personnel and believes it is beginning to reverse the current
sales decline and expects improvement in 2007. Consequently, Office
products sales for 2006 are expected to be lower than 2005.
Compared to last year, profitability is down and will be down in total for
fiscal 2006 due to pricing pressures from mass market retailers and higher
selling, general and administrative costs associated with expanded
distribution in the specialty market channels. A majority of the increase
in selling, general and administrative costs relates to the Sporting Goods
business and includes non-recurring start-up costs relating to the new
manufacturing plant in Reynosa, Mexico. Excluding non-recurring costs the
ratio of selling, general and administrative costs to revenues in the
Sporting Goods business remains relatively unchanged from the prior year.
The remainder of the increase in selling, general and administrative cost
is composed of incentive stock options expense and non-recurring expenses
relating to the retirement of the former President and CEO.
Daniel A. Messmer, President and Chief Executive Officer of Escalade, Inc.,
stated that "2006 is proving to be a difficult year. We remain focused on
profitability while actively engaged in expanding revenues."
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)
Three Twelve
Months Ended Nine Months Ended Months Ended
--------------- ----------------- -----------------
07 01 07 01 07 01
October October October October October October
2006 2005 2006 2005 2006 2005
------- ------- -------- -------- -------- --------
NET SALES $65,583 $63,557 $147,332 $140,890 $192,059 $197,197
OPERATING EXPENSES
Cost of goods sold 49,023 46,148 104,684 99,355 135,350 139,365
Selling and
administrative 10,650 8,935 31,434 27,414 39,833 38,788
Restructuring - - - - - 954
------- ------- -------- -------- -------- --------
OPERATING INCOME 5,910 8,474 11,214 14,121 16,876 18,090
OTHER INCOME (EXPENSE)
Interest expense (862) (345) (1,926) (1,125) (2,283) (1,471)
Other income
(expense) (310) 225 (565) 632 (283) 105
------- ------- -------- -------- -------- --------
INCOME BEFORE INCOME
TAXES 4,738 8,354 8,723 13,628 14,310 16,724
PROVISION FOR INCOME
TAXES (1,746) (2,902) (3,335) (4,767) (5,841) (6,918)
------- ------- -------- -------- -------- --------
NET INCOME $ 2,992 $ 5,452 $ 5,388 $ 8,861 $ 8,469 $ 9,806
======= ======= ======== ======== ======== ========
PER SHARE DATA
Basic earnings per
share $ 0.23 $ 0.42 $ 0.41 $ 0.68 $ 0.65 $ 0.75
======= ======= ======== ======== ======== ========
Diluted earnings per
share $ 0.23 $ 0.41 $ 0.41 $ 0.67 $ 0.65 $ 0.74
======= ======= ======== ======== ======== ========
Average shares
outstanding 13,026 13,055 13,007 13,065 13,003 13,049
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
07 October 01 October 31 December
2006 2005 2005
---------- ---------- ----------
ASSETS
Current assets $ 94,414 $ 94,555 $ 71,187
Property, Plant & Equipment - net 20,290 18,245 20,307
Other assets 30,987 15,478 16,645
Goodwill 24,708 17,234 17,157
---------- ---------- ----------
Total $ 170,399 $ 145,512 $ 125,296
========== ========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities $ 61,843 $ 46,187 $ 30,867
Other liabilities 29,045 26,658 19,836
Stockholders equity 79,511 72,667 74,593
---------- ---------- ----------
Total $ 170,399 $ 145,512 $ 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
812/467-1334
Dan Messmer
President and Chief Executive Officer
812/467-4449