EXHIBIT 99.1
PRESS RELEASE
ESCALADE ANNOUNCES FIRST QUARTER RESULTS AND MANAGEMENT CHANGE
Evansville, IN (April 13, 2007) Escalade, Incorporated (NASDAQ: ESCA) announced
that revenues in the first quarter of 2007 were relatively unchanged in total
from the same period last year. However, profitability was lower as a result of
higher costs and lower income from European joint ventures. As a result,
earnings per share were $0.08 for the quarter compared to $0.13 for the same
period last year.
Revenues in the Sporting Goods segment increased 3% in the first quarter
compared to the same quarter last year as a result of increased sales in the
specialty retail and dealer marketplace. Expanding distribution into the
specialty retail and dealer marketplace is a key element in the Company's
strategy designed to expand the customer base, increase product offerings and
lessen the impact of sales to the Company's mass-market retail customers. During
the first quarter, sales to the specialty retail and dealer channel grew 74%
compared to the same period last year. Approximately 38% of this increase came
from products related to acquisitions completed in 2006 while the remainder of
the increase represents strong internal growth of existing products. Sales to
mass-market retail customers declined 25% during the first quarter compared to
last year due primarily to diminishing consumer demand for game room products.
We expect this trend in sales to continue throughout the rest of 2007, but
expect gains in sales to the specialty retail and dealer channel to offset
declines in the mass-market retailer channel. Operating income from the Sporting
Goods segment was up in the first quarter of 2007 compared to last year
reflecting the absence of start-up costs associated with the Reynosa, Mexico
plant that were recorded in the first quarter of last year. Although sales for
2007 are expected to be flat compared to last year, we expect improved operating
profits from the Sporting Goods business in 2007.
Compared to the prior year, revenues from the Office Products segment grew 1% in
the first quarter. The Company is beginning to realize results from efforts
taken during the last half of 2006 to strengthen the sales force in Europe as
sales from that sector were up slightly over the same period last year. However,
this was offset by a slow down in North America sales due to increased
competition and customers pairing down inventory levels. Operating profits from
the Office Products business were down slightly in the first quarter compared to
last year due to the drop in North America sales which have a higher gross
margin than sales from Europe. Management still anticipates that 2007 revenues
and profits in the Office Products business will be roughly equal to the levels
achieved in 2006.
The Company continues to explore opportunities to increase shareholder value. To
that end, the Company paid a dividend of $0.22 per share on March 16, 2007, an
increase of 10% over the dividend paid last year.
The Company also announced that Terry Frandsen, currently serving as the
Company's Chief Financial Officer, will serve as interim Chief Executive Officer
following the unexpected and sudden death of Daniel A. Messmer who served as the
Company's Chief Executive Officer and President before his death on April 9,
2007. Mr. Frandsen will continue to serve as the Company's Chief Financial
Officer while serving as the interim Chief Executive Officer.
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Robert E. Griffin, Escalade's Chairman stated that "Finding someone to replace
Daniel Messmer will be difficult. Over the 34 years that he worked for Escalade,
he helped build a very successful culture based on collaboration, trust, and
respect for all the individuals in the organization. Mr. Messmer's leadership
style fostered high performance expectations that are crucial to the Company's
success. As we search for his permanent replacement, we will be looking for
these same traits. Key characteristics of Escalade's next CEO will include a
proven ability to lead an organization of Escalade's size and complexity;
significant knowledge of the industries in which Escalade does business; the
ability to develop strong executive managers in our subsidiaries; and the
ability to lead and inspire a collaborative effort of Escalade's entire
management team in developing and implementing effective strategic plans for
both of our business segments. The sudden death of Mr. Messmer was a shock to
everyone in the Company, but our existing management team has the leadership and
experience necessary to see the Company through this transition period, and we
do not anticipate any significant disruption in the Company's business
operations. Our customers can expect the same continued high level of service
and quality demonstrated before Mr. Messmer's untimely death."
The Escalade Board of Directors also withdrew its previous determination to
increase the size of the Board to seven directors effective as of the date of
the Annual Meeting of Stockholders to be held on April 27, 2007, and voted
instead to retain the size of the Board at six directors as permitted pursuant
to the terms of Escalade's Bylaws. Other than Mr. Messmer, the nominees named in
Escalade's proxy statement relating to the 2007 Annual Meeting will be nominated
for those six board seats.
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.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited, In Thousands Except Per Share Amounts)
3 Months Ended 12 Months Ended
---------------------------- ----------------------------
24 March 25 March 24 March 25 March
2007 2006 2007 2006
------------ ------------ ------------ ------------
NET SALES $ 33,467 $ 32,800 $ 192,132 $ 186,333
OPERATING EXPENSES
Cost of goods sold 22,455 22,048 138,228 128,907
Selling and administrative 8,708 8,405 40,220 37,632
Restructuring -- -- -- (631)
------------ ------------ ------------ ------------
OPERATING INCOME 2,304 2,347 13,684 20,425
OTHER INCOME (EXPENSE)
Interest expense (517) (254) (2,900) (2,616)
Other income (expense) (421) (65) 15 1,772
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,366 2,028 10,799 19,581
PROVISION FOR INCOME TAXES 269 304 2,931 6,179
------------ ------------ ------------ ------------
NET INCOME $ 1,097 $ 1,724 $ 7,868 $ 13,402
============ ============ ============ ============
PER SHARE DATA
Basic earnings per share $ 0.08 $ 0.13 $ 0.60 $ 1.03
============ ============ ============ ============
Diluted earnings per share $ 0.08 $ 0.13 $ 0.60 $ 1.02
============ ============ ============ ============
Average shares outstanding 13,034 12,979 13,034 13,042
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CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
30 December
24 March 2007 25 March 2006 2006
------------- ------------- -------------
ASSETS
Current assets $ 72,924 $ 69,011 $ 74,470
Property, Plant & Equipment - net
20,673 21,080 20,657
Other assets 33,193 16,161 30,561
Goodwill 24,992 21,759 25,027
------------- ------------- -------------
Total $ 151,782 $ 128,011 $ 150,715
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,337 $ 24,290 $ 41,345
Other liabilities 32,883 27,394 23,655
Stockholders' equity 83,562 76,327 85,715
------------- ------------- -------------
Total $ 151,782 $ 128,011 $ 150,715
============= ============= =============
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.
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