Escalade, Incorporated Q3 FY2025 earnings call

• Leadership transition: Patrick Griffin appointed Interim President and CEO effective October 29, with no disruption to strategic direction. - Third quarter results: Improved results due to solid demand, cost discipline, operational efficiency. Margin improvement from lower manufacturing/logistics costs, footprint rationalization, and tariff mitigation. Top line growth led by investment in innovative products. - Tariff mitigation and supply chain: Proactive strategy supported margin expansion and positioned for holiday season. Price increases in July were surgical, balancing tariff impact. - New product launches: Launched 2026 archery assortment with over 30 products. Completed acquisition of Gold Tip from Revelyst, expected to be accretive to earnings in 2026. - Community engagement: Partnered with Project Blackboard and Chicago Sky WNBA team to transform a basketball court.

Net sales improved driven by solid demand across most brands. Margin improvement from lower manufacturing/logistics costs, footprint rationalization, and tariff mitigation. Archery saw strong performance with new product launches like Redeem and Alaskan Pro bows. Safety category is taking market share as a domestic manufacturer. Games and other categories also did well. Pickleball is a growing market where they maintain market share despite not being specifically highlighted in the initial strong categories discussion, with ongoing investment in new products.

• Anticipate cautious consumer spending in Q4, softer holiday sales compared to recent years. - Focus on product innovation and brand development for long-term value creation. - Pursue additional tuck-in acquisitions that are financially accretive and strategically aligned. - Maintain disciplined focus on balance sheet strength with debt reduction, consistent dividends, and opportunistic share repurchases.

• Consumer uncertainty. - Ongoing tariff-related costs. - Economic and geopolitical volatility weighing on consumer confidence and sentiment.

Q: Could you provide more granularity on market share gains in other categories despite price increases in July?

A: Safety category is taking market share as a domestic manufacturer, and some other categories and games have done well.

Q: Pickleball wasn't in the earlier highlighted strong categories, why?

A: Pickleball is a growing market, they maintain market share at retail, continuing to invest in new products with the hype launched being well received.

Q: Impact of tariffs going into the fourth quarter?

A: Expect the impact to be lower in the fourth quarter relative to the third quarter.

Q: Time line for hiring permanent CEO and traits looked for?

A: Board will gather to find permanent CEO, traits aligned with growth mindset and focus on the business.

Q: Change in capital allocation priority with low debt?

A: May build cash position, continue looking for acquisitions, pay dividend, and look for share buybacks opportunistically, and invest in businesses.