What changed in this filing

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Item 1. Financial Statements

2025-08-01 compared with 2025-05-05 · 116 added, 64 removed, 324 unchanged (36% of the section changed)

18 unchanged sentences

Accrued liabilities

Income tax payable

Current operating lease liabilities

22 unchanged sentences

Three Months Ended

Six Months Ended

All Amounts in Thousands Except Per Share Data

15 unchanged sentences

All Amounts in Thousands

Balances at March 31, 2024

Expense of restricted stock units

Settlement of restricted stock units

Dividends declared

Balances at June 30, 2024

Balances at December 31, 2023

2 unchanged sentences

Dividends declared

Balances at June 30, 2024

All Amounts in Thousands

Balances at March 31, 2025

Expense of restricted stock units

Settlement of restricted stock units

Issuance of restricted stock awards

Dividends declared

Purchase of stock

Issuance of common stock for service

Balances at June 30, 2025

Balances at December 31, 2024

1 unchanged sentence

Settlement of restricted stock units

Issuance of restricted stock awards

Dividends declared

1 unchanged sentence

Issuance of common stock for service

Balances at March 31, 2025

Balances at June 30, 2025

See notes to Consolidated Condensed Financial Statements.

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

Six Months Ended

All Amounts in Thousands

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Operating Activities:

4 unchanged sentences

Common stock issued in lieu of bonus to officers

Director stock compensation

Changes in assets and liabilities

9 unchanged sentences

Purchase of stock

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

13 unchanged sentences

Note B ‑ Seasonal Aspects

The results of operations for the three months ended March 31, 2025 and March 31, 2024 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 2025 and June 30, 2024 are not necessarily indicative of the results to be expected for the full year.

Note C ‑ Inventories

7 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 March 31, 2025, December 31, 2024 and March 31, 2024.

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, 2025, December 31, 2024 and June 30, 2024.

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:

March 31, 2025

June 30, 2025

December 31, 2024

March 31, 2024

June 30, 2024

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 .

For the three months ended March 31, 2025 and March 31, 2024, the Company recognized stock based compensation expense of $ 467 thousand and $ 429 thousand, respectively.

At March 31, 2025 and March 31, 2024, there was $ 2.0 million and $ 1.0 million, respectively, 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 March 31, 2025 is expected to be recognized over the weighted average period of 1.7 years.

On March 11, 2025, the Company awarded 72,351 restricted stock units to employees.

The 2025 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.

During the six months ended June 30, 2025, the Company awarded 18,000 restricted stock units to directors, 105,181 restricted stock units and 35,000 shares of restricted stock 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.

Director restricted stock units are subject to forfeiture, except for termination of services as a result of retirement, death or disability, if on the vesting date the director no longer holds a position with the Company.

All of the 2025 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.

The 35,000 shares of restricted stock vest on the fifth anniversary from the grant date provided that the employee is still employed by the Company on the vesting date.

For the three and six months ended June 30, 2025, the Company recognized stock based compensation expense of $ 495 thousand and $ 962 thousand, respectively compared to stock based compensation expense of $ 497 thousand and $ 926 thousand for the same periods in the prior year.

At June 30, 2025 and June 30, 2024, there was $ 2.8 million and $ 2.3 million, respectively, 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 June 30, 2025 is expected to be recognized over the weighted average period of 2.2 years.

Note F ‑ Segment Information

3 unchanged sentences

As of and for the Three Months

Ended March 31, 2025

Ended June 30, 2025

Sporting Goods

7 unchanged sentences

Depreciation and Amortization

As of and for the Six Months

Ended June 30, 2025

Sporting Goods

Revenues from external customers

Cost of product sold

Other operating expenses

Operating income (loss)

Interest expense

Provision (benefit) for Income Taxes

Net income (loss)

Depreciation and Amortization

As of and for the Three Months

Ended March 31, 2024

Ended June 30, 2024

Sporting Goods

7 unchanged sentences

Depreciation and Amortization

As of and for the Six Months

Ended June 30, 2024

Sporting Goods

Revenues from external customers

Cost of product sold

Other operating expenses

Operating income (loss)

Interest expense

Provision (benefit) for Income Taxes

Net income (loss)

Depreciation and Amortization

Note G – Dividend Payment

3 unchanged sentences

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

On July 14, 2025, the Company paid a quarterly dividend of $ 0.15 per common share to all shareholders of record on July 7, 2025.

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

Weighted average common shares outstanding

2 unchanged sentences

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 months ended March 31, 2025, 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, 2024, 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 six months ended June 30, 2025, 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, 2024, that are of significance, or potential significance to the Company.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

23 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 $ 608 thousand as of March 31, 2025.

The accrued liability amount attributable to warranties was $ 556 thousand as of June 30, 2025.

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 $ 5,629 thousand, $ 6,708 thousand and $ 5,325 thousand as of March 31, 2025, December 31, 2024, and December 31, 2023.

Contract Balances – Amounts relating to returns and customer allowances create contract liabilities, which were $ 5,025 thousand, $ 6,708 thousand and $ 5,325 thousand as of June 30, 2025, December 31, 2024, and December 31, 2023.

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

All Amounts in Thousands

March 31, 2025

March 31, 2024

Gross Sales by Channel:

10 unchanged sentences

Our leases have remaining lease terms of 1 year to 4 years.

As of March 31, 2025, the Company has not entered into any lease arrangements classified as a finance lease.

As of June 30, 2025, 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

All Amounts in Thousands

March 31, 2025

March 31, 2024

Lease Expense

4 unchanged sentences

Operating Lease – Operating Cash Flows

Weighted Average Remaining Lease Term – Operating Leases (years)

New ROU Assets – Operating Leases

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

Six Months Ended

All Amounts in Thousands

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 March 31, 2025 were as follows:

Future minimum lease payments under non-cancellable leases as of June 30, 2025 were as follows:

All Amounts in Thousands

Remainder of Year 1

Total future minimum lease payments

Less imputed interest

Reported as of March 31, 2025

Reported as of June 30, 2025

Current operating lease liabilities

11 unchanged sentences

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 March 31, 2025.

As of March 31, 2025, the outstanding principal amount of the term loan was $ 23.8 million and total amount drawn under the Revolving Facility was zero .

The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of June 30, 2025.

As of June 30, 2025, the outstanding principal amount of the term loan was $ 22.0 million and total amount drawn under the Revolving Facility was zero .

Note N – Provision for Taxes

The effective tax rate for the three months ending March 31, 2025 was 23.8 % compared to 23.8 % for the same three month period last year.

The effective tax rate for the three months ending June 30, 2025 was 25.8 % compared to 23.8 % for the same three month period last year.

The effective tax rate for the first six months ending June 30, 2025 was 24.7 % compared to 23.8 % for the same period last year.

Note O – Subsequent Events

On July 4, 2024, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law.

The OBBBA includes changes such as provisions allowing accelerated tax deductions for qualified property and research expenditures and provides permanent extensions of certain expiring provisions of the Tax Cuts and Jobs Act.

We are currently evaluating the impact of the OBBBA to our consolidated financial statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

7 unchanged sentences

Escalade’s ability to achieve its business objectives;

Escalade’s plans and expectations surrounding the transition to its new Chief Executive Officer and all potential related effects and consequences;

Escalade’s ability to successfully implement actions to lessen the potential impacts of tariffs, a potential trade war with China and other trade restrictions applicable to our products and raw materials, including impacts on the costs of producing our goods, importing products and materials into our markets for sale, and on the pricing of our products;

our international operations, including any related to political uncertainty and geopolitical tensions;

Escalade’s ability to successfully achieve the anticipated results of strategic transactions, including the integration of the operations of acquired assets and businesses and of divestitures or discontinuances of certain operations, assets, brands, and products;

the continuation and development of key customer, supplier, licensing and other business relationships;

Escalade’s plans and expectations surrounding the transition to its new Chief Executive Officer and all potential related effects and consequences;

Escalade’s ability to protect its intellectual property;

Escalade’s ability to develop and implement our own direct to consumer e-commerce distribution channel;

4 unchanged sentences

the financial health of our customers;

disruptions or delays in our business operations, including without limitation disruptions or delays in our supply chain, arising from political unrest, war, labor strikes, natural disasters, public health crises such as the coronavirus pandemic, and other events and circumstances beyond our control;

disruptions or delays in our business operations, including without limitation disruptions or delays in our supply chain, arising from political unrest, war, terrorist attacks, labor strikes, natural disasters, public health crises such as the coronavirus pandemic, and other events and circumstances beyond our control;

the evaluation and implementation of remediation efforts designed and implemented to enhance the Company’s control environment;

1 unchanged sentence

Escalade’s ability to control costs, including managing inventory levels;

Escalade’s ability to successfully implement actions to lessen the potential impacts of tariffs and other trade restrictions applicable to our products and raw materials, including impacts on the costs of producing our goods, importing products and materials into our markets for sale, and on the pricing of our products;

our international operations, including any related to political uncertainty and geopolitical tensions;

general economic conditions, including inflationary pressures;

9 unchanged sentences

the potential impact of regulatory claims, proceedings or investigations involving our products;

Escalade’s use of estimates in its financial reporting as well as in its forward looking statements;

and other risks detailed from time to time in Escalade’s filings with the Securities and Exchange Commission.

13 unchanged sentences

Management believes that key indicators in measuring the success of these strategies are revenue growth, earnings growth, new product introductions, and the expansion of channels of distribution.

The United States Government has recently made a series of announcements concerning tariffs enacted and/or proposed to be enacted on the importation of goods into the United States including a baseline tariff rate and individualized higher rates on many countries including countries that supply goods to the Company, including China from which the Company imports a substantial amount of goods.

Some countries have indicated a willingness to negotiate reciprocal trade agreements and the administration has also paused or modified many of its announced tariffs leading to uncertainty with respect to which tariffs may apply and the size and scope of such tariffs.

Other countries, such as China, have announced retaliatory tariffs and other restrictive measures to which the administration has responded in kind leading to concerns of a sustained trade war.

The United States Government has continued making new announcements concerning tariffs enacted and/or proposed to be enacted on the importation of goods into the United States as well as negotiations of trade agreements to potentially replace such tariffs.

Although the United States has begun to negotiate reciprocal trade agreements with several nations, few agreements have been finalized to date and the administration has paused or modified many of its announced tariffs leading to uncertainty with respect to which tariffs may apply and the size and scope of such tariffs.

While the United States and China have announced agreements on certain trade frameworks and have backed off of previously announced retaliatory tariffs and other restrictive measures, the details of these agreements have not been fully disclosed and concerns over a potential trade war have persisted.

Although the Company has engaged in actions to mitigate the potential impacts from tariffs and other economic pressures such as inflation and supply chain disruptions, it may not be able to effectively protect itself from these risks.

Tariffs, a potential trade war with China and other restrictions on trade could result in increased costs and/or the unavailability of goods purchased by the Company, which in turn may result in lower profitability and/or a decline in sales as well as the loss of goodwill among customers.

1 unchanged sentence

Management cannot predict the full impact of these factors on the Company.

Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the period ended March 31, 2025 are not necessarily indicative of the results to be expected for fiscal year 2025.

Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the period ended June 30, 2025 are not necessarily indicative of the results to be expected for fiscal year 2025.

Results of Operations

1 unchanged sentence

Three Months Ended

March 31, 2025

March 31, 2024

Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Cost of products sold

2 unchanged sentences

Revenue and Gross Margin

Sales decreased 3.2% for the first quarter of 2025, compared with the same period in the prior year.

Sales decreased primarily due to softer demand for basketball and table tennis products, partially offset by an increase in demand for archery and safety products.

Gross margin increased to 26.7% for the first quarter of 2025 compared to 25.0% for the same period in 2024 primarily driven by lower fixed costs and decreased inventory storage and handling costs.

Sales decreased 13.1% for the second quarter of 2025, compared with the same period in the prior year.

Sales decreased primarily due to softer market demand across most categories, including delayed customer shipments due to tariff volatility, partially offset by market share gains within the safety category.

For the six months ended June 30, 2025, net sales decreased 8.4% compared with the same period in the prior year, driven by the same factors that impacted the second quarter.

Gross margin increased 56 basis points to 24.7% for the second quarter of 2025 compared to 24.2% for the same period in 2024 primarily driven by lower fixed costs and decreased inventory storage and handling costs, partially offset by tariff-related costs and unfavorable product mix.

For the six months ended June 30, 2025, gross margin increased to 25.7% compared to 24.6% for the same period in 2024 driven by the favorable impact of lower fixed costs, partially offset by tariff-related costs and an unfavorable product mix.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) were $10.6 million for the first quarter of 2025 compared to $10.7 million for the same period in the prior year, a decrease of $0.1 million or 1.2%.

SG&A as a percent of sales is 19.1% for the first quarter of 2025 compared with 18.7% for the same period in the prior year.

Selling, general and administrative expenses (SG&A) were $10.2 million for the second quarter of 2025 compared to $10.1 million for the same period in the prior year, an increase of $0.1 million or 1.8%.

SG&A as a percent of sales is 18.9% for the second quarter of 2025 compared with 16.1% for the same period in the prior year.

For the six months ended June 30, 2025, SG&A were $20.8 million compared to $20.8 million for the same period in the prior year.

Provision (Benefit) for Income Taxes

The effective tax rate for the first three months of 2025 and 2024 was 23.8%.

The effective tax rate for the three months ending June 30, 2025 was 25.8% compared to 23.8% for the same three month period last year.

The effective tax rate for the first six months ending June 30, 2025 was 24.7% compared to 23.8% for the same period last year.

Financial Condition and Liquidity

Total debt at the end of the first three months of 2025 was $23.8 million, a decrease of $1.8 million from December 31, 2024.

Total debt as of June 30, 2025 was $22.0 million, a decrease of $3.6 million from December 31, 2024.

The following schedule summarizes the Company’s total debt:

1 unchanged sentence

Long term debt

As a percentage of stockholders’ equity, total debt was 14.1%, 15.1% and 32.5% at March 31, 2025, December 31, 2024, and March 31, 2024 respectively.

As a percentage of stockholders’ equity, total debt was 13.1%, 15.1% and 26.0% at June 30, 2025, December 31, 2024, and June 30, 2024 respectively.

On October 11, 2024, the Company entered into the Fifth Amendment (the “Fifth Amendment”) to its Amended and Restated Credit Agreement with its issuing bank, JPMorgan Chase Bank, N.A.

4 unchanged sentences

The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of March 31, 2025.

As of March 31, 2025, the outstanding principal amount of the term loan was $23.8 million and total amount drawn under the Revolving Facility was zero.

The Company was in compliance with the debt covenants set forth in the Restated Credit Agreement as of June 30, 2025.

As of June 30, 2025, the outstanding principal amount of the term loan was $22.0 million and total amount drawn under the Revolving Facility was zero.

The Company funds working capital requirements and shareholder dividends through operating cash flows and revolving credit agreements with its Lenders.

8 unchanged sentences

Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Remediation of Previously Reported Material Weakness

As previously reported in Part II, Item 9A.

“Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2024, in connection with our assessment of the effectiveness of internal control over financial reporting as of December 31, 2024, we identified control deficiencies with respect to segregation of duties conflicts.

During the year ended December 31, 2024, certain material estimates / calculations continued to be prepared or compiled by the CFO.

Because of this individual being the CFO there is not an individual in a supervisory role reviewing these estimates and calculations.

Accordingly, this represents a continued material weakness in our controls over the period end close process involving segregation of duties conflicts.

This material weakness did not result in a misstatement of the Company’s financial statements;

however, it could have resulted in misstatements of interim or annual consolidated financial statements and disclosures that would result in a material misstatement that would not be prevented or detected.

In response to the material weakness discussed above, we redistributed the work previously performed by the CFO so that the material estimates and calculations were performed by others within the accounting team and then were reviewed and approved by the CFO.

As of March 31, 2025, with the completion of remediation efforts previously discussed, we have successfully remediated the material weakness.

Changes in Internal Control over Financial Reporting

Management of the Company has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the first quarter of 2025.

Other than the completed remediation efforts described above, there have been no changes to the Company’s internal control over financial reporting that occurred since the beginning of the Company’s first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no changes to the Company’s internal control over financial reporting that occurred since the beginning of the Company’s second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

2 unchanged sentences

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