What changed in this filing

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Item 1. Financial Statements

2024-10-24 compared with 2024-07-25 · 87 added, 47 removed, 270 unchanged (33% of the section changed)

3 unchanged sentences

All Amounts in Thousands Except Share Information

September 30,

Current Assets:

37 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

All Amounts in Thousands Except Per Share Data

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Costs and Expenses

1 unchanged sentence

Selling, administrative and general expenses

Gain on sale of assets held for sale

Operating Income

11 unchanged sentences

All Amounts in Thousands

Balances at March 31, 2023

Balances at June 30, 2023

Expense of restricted stock units

Settlement of restricted stock units

Dividends declared

Issuance of common stock for service

Balances at June 30, 2023

Balances at September 30, 2023

Balances at December 31, 2022

3 unchanged sentences

Issuance of common stock for service

Balances at June 30, 2023

Balances at September 30, 2023

All Amounts in Thousands

Balances at March 31, 2024

Balances at June 30, 2024

Expense of restricted stock units

Settlement of restricted stock units

Dividends declared

Balances at June 30, 2024

Balances at September 30, 2024

Balances at December 31, 2023

2 unchanged sentences

Dividends declared

Balances at June 30, 2024

Balances at September 30, 2024

See notes to Consolidated Condensed Financial Statements.

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

All Amounts in Thousands

June 30, 2024

June 30, 2023

September 30,

Operating Activities:

2 unchanged sentences

Stock-based compensation

Loss on disposal of assets

(Gain) loss on disposal of assets

Common stock issued in lieu of bonus to officers

5 unchanged sentences

Proceeds from sale of property and equipment

Net cash used by investing activities

Net cash provided by (used in) investing activities

Financing Activities:

3 unchanged sentences

Cash dividends paid

Net cash used by financing activities

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

22 unchanged sentences

The revisions had no impact on total assets, total liabilities, total shareholders' equity, net income or the cash flow statement.

The impact of this revision on our consolidated balance sheet and consolidated statement of stockholders’ equity as of June 30, 2023 was as follows:

The impact of this revision on our consolidated balance sheet and consolidated statement of stockholders’ equity as of September 30, 2023 was as follows:

As Previously

1 unchanged sentence

Total Stockholders’ Equity

Assets Held For Sale

We classify assets as held for sale when our management approves and commits to a formal plan of sale that is probable of being completed within one (1) year.

Assets designated as held for sale are recorded at the lower of their current carrying value or their fair market value, less costs to sell, beginning in the period in which the assets meet the criteria to be classified as held for sale.

During the three months ended September 30, 2024, the Company completed the sale of its Mexico facility for $ 6.6 million.

The Company received cash proceeds of $ 5.9 million, with the remaining $ 0.7 million deposited in an escrow account.

The Company recognized a gain of $ 3.9 million, included in operating income in the Consolidated Statement of Operations.

Note B ‑ Seasonal Aspects

The results of operations for the three and six months ended June 30, 2024 and June 30, 2023 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and nine months ended September 30, 2024 and September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

Note C ‑ Inventories

September 30,

Raw materials

6 unchanged sentences

Unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated their carrying values at June 30, 2024, December 31, 2023 and June 30, 2023.

Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated their carrying values at September 30, 2024, December 31, 2023 and September 30, 2023.

The Company believes the carrying value of borrowings under our senior secured revolving credit facility, due to variable rate interest, adequately reflects the fair value of these instruments.

The Company discloses the fair value of its term loan using Level 2 inputs, which are estimated using treasury rates for a similar instrument, as follows:

June 30, 2024

September 30, 2024

December 31, 2023

June 30, 2023

September 30, 2023

Term Loan Facility

1 unchanged sentence

The fair value of stock-based compensation is recognized in accordance with the provisions of FASB ASC 718, Stock Compensation .

During the six months ended June 30, 2024, the Company awarded 12,900 restricted stock units to directors and 130,800 restricted stock units to employees.

During the nine months ended September 30, 2024, the Company awarded 12,900 restricted stock units to directors and 130,800 restricted stock units to employees.

The restricted stock units awarded to directors time vest over two years ( one -half one year from grant date and one -half two years from grant date) provided that the director is still a director of the Company at the vest date.

1 unchanged sentence

The 2024 restricted stock units awarded to employees time vest over three years ( one -third one year from grant, one -third two years from grant and one -third three years from grant) provided that the employee continues to serve as an employee, director or consultant of the Company on the vesting date.

For the three and six months ended June 30, 2024, the Company recognized stock based compensation expense of $ 497 thousand and $ 926 thousand, respectively compared to stock based compensation expense of $ 458 thousand and $ 917 thousand for the same periods in the prior year.

At June 30, 2024 and June 30, 2023, respectively, there was $ 2,341 thousand and $ 2,525 thousand in unrecognized stock-based compensation expense related to non-vested stock awards.

The unrecognized compensation expense of unvested restricted stock awards net yet recognized as of June 30, 2024 are expected to be recognized over the weighted average period of 1.6 years.

For the three and nine months ended September 30, 2024, the Company recognized stock based compensation expense of $ 503 thousand and $ 1,429 thousand, respectively, compared to stock based compensation expense of $ 546 thousand and $ 1,463 thousand for the same periods in the prior year.

At September 30, 2024 and September 30, 2023, respectively, there was $ 1,838 thousand and $ 1,979 thousand in unrecognized stock-based compensation expense related to non-vested stock awards.

The unrecognized compensation expense of unvested restricted stock awards not yet recognized as of September 30, 2024 is expected to be recognized over the weighted average period of 1.4 years.

Note F ‑ Segment Information

For the Three Months

Ended June 30, 2024

Ended September 30, 2024

Sporting Goods

Revenues from external customers

1 unchanged sentence

Net income (loss)

As of and for the Six Months

Ended June 30, 2024

As of and for the Nine Months

Ended September 30, 2024

Sporting Goods

Revenues from external customers

2 unchanged sentences

For the Three Months

Ended June 30, 2023

Ended September 30, 2023

Sporting Goods

Revenues from external customers

Operating income (loss)

Net income (loss)

As of and for the Six Months

Ended June 30, 2023

As of and for the Nine Months

Ended September 30, 2023

Sporting Goods

Revenues from external customers

8 unchanged sentences

The total amount of the dividend was approximately $ 2.1 million and was charged against retained earnings.

On October 14, 2024 the Company paid a quarterly dividend of $ 0.15 per common share to all shareholders of record on October 7, 2024.

The total amount of the dividend was approximately $ 2.1 million and was charged against retained earnings.

Note H ‑ Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Weighted average common shares outstanding

Dilutive effect of stock options and restricted stock units

Dilutive effect of restricted stock units

Weighted average common shares outstanding, assuming dilution

Note I – New Accounting Standards and Changes in Accounting Principles

With the exception of that discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three and six months ended June 30, 2024, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, that are of significance, or potential significance to the Company.

With the exception of that discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three and nine months ended September 30, 2024, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, that are of significance, or potential significance to the Company.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

22 unchanged sentences

Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liability and sales in the current year.

The accrued liability amount attributable to warranties was $ 610 thousand as of June 30, 2024.

The accrued liability amount attributable to warranties was $ 604 thousand as of September 30, 2024.

There were no changes to the accrual due to a change in estimate during the current period.

2 unchanged sentences

The Company reviews such allowances on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.

Contract Balances – Amounts relating to returns and customer allowances create contract liabilities, which were $ 4,662 thousand, $ 5,325 thousand and $ 5,866 thousand as of June 30, 2024, December 31, 2023, and December 31, 2022.

Contract Balances – Amounts relating to returns and customer allowances create contract liabilities, which were $ 5,985 thousand, $ 5,325 thousand and $ 5,866 thousand as of September 30, 2024, December 31, 2023, and December 31, 2022.

Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products.

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

All Amounts in Thousands

September 30,

Gross Sales by Channel:

10 unchanged sentences

Our leases have remaining lease terms of 1 year to 8 years.

As of June 30, 2024, the Company has not entered into any lease arrangements classified as a finance lease.

As of September 30, 2024, the Company has not entered into any lease arrangements classified as a finance lease.

We determine if an arrangement is a lease at inception.

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

All Amounts in Thousands

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Lease Expense

6 unchanged sentences

Other information about lease amounts recognized in our consolidated financial statements is summarized as follows:

Six Months Ended

Nine Months Ended

All Amounts in Thousands

September 30,

Weighted Average Remaining Lease Term – Operating Leases (in years)

Weighted Average Discount Rate – Operating Leases

Future minimum lease payments under non-cancellable leases as of June 30, 2024 were as follows:

Future minimum lease payments under non-cancellable leases as of September 30, 2024 were as follows:

All Amounts in Thousands

2 unchanged sentences

Less imputed interest

Reported as of June 30, 2024

Reported as of September 30, 2024

Current operating lease liabilities

26 unchanged sentences

As reflected in the Fourth Amendment to the Restated Credit Agreement effective September 1, 2023, the maximum availability of the senior revolving credit facility was reduced to $ 85.0 million following the dissolution of Escalade Insurance, Inc.

The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of June 30, 2024.

As of June 30, 2024, the outstanding principal amount of the term loan was $ 29.2 million and total amount drawn under the Revolving Facility was $ 14.0 million.

On October 11, 2024, the Company entered into the Fifth Amendment (the “Fifth Amendment”) to the Restated Credit Agreement.

The Fifth Amendment eliminated the fixed charge coverage ratio covenant and related provisions.

The fixed charge ratio covenant was replaced by a new minimum interest coverage ratio covenant of 3.50 to 1:00 effective September 30, 2024.

Under the terms of the Fifth Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $ 75.0 million to $ 60.0 million, but added an accordion feature that could increase the facility in an amount not to exceed $ 85.0 million.

The Fifth Amendment further revised the restricted payments covenant to provide that if at any time the Company’s Funded Debt to EBITDA Ratio would exceed 1.75 to 1.0, then the aggregate combined total of cash dividends and Company share repurchases may not exceed $ 12.0 million in any trailing twelve month period.

The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of September 30, 2024.

As of September 30, 2024, the outstanding principal amount of the term loan was $ 27.4 million and total amount drawn under the Revolving Facility was $ 2.1 million.

Note N – Provision for Taxes

The effective tax rate for the three months ending June 30, 2024 was 23.8 % compared to 22.3 % for the same three month period last year.

The effective tax rate for the first six months ending June 30, 2024 was 23.8 % compared to 22.6 % for the same period last year.

The effective tax rate for the three months ending September 30, 2024 was 23.9 % compared to 16.6 % for the same three month period last year.

The effective tax rate for the nine months ending September 30, 2024 was 23.9 % compared to 19.0 % for the same period last year.

The increase in the effective tax rate for 2024 is primarily due to the recognition of gain on the sale of stock in Harvard Sports, Inc., a wholly owned subsidiary of Escalade, Inc., which was completed during the three months ended September 30, 2024.

Another factor causing an increase in rate from the prior year is the dissolution of the Company’s captive insurance company.

In prior years, the premiums paid to the captive were included in book income, but were non-taxable, resulting in a decrease in tax rate.

With the dissolution of the captive in 2023, Escalade no longer has this non-taxable income to reduce its income tax rate.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements