Escalade Sales Slip as Third-Quarter Profit Rises

The Tip Desk · October 29, 2026 · 3 min read

Net sales fell 3.2% to $65.6 million while net income rose to $6.7 million, or $0.48 a share, after a 123-basis-point gross-margin expansion.

Escalade, Inc. (ESCA), a manufacturer and distributor of sporting goods and indoor/outdoor recreational equipment, reported third-quarter net sales of $65.6 million, a 3.2% year-over-year decline that reversed the 6.2% increase to $57.7 million in the second quarter.

The company said the drop was driven primarily by lower sales in basketball, indoor games and table tennis against a year-ago period that reflected tariff-related order timing. Those declines were partly offset by archery, including vertical-bow demand and the incremental contribution from the September 2025 Gold Tip acquisition, as well as higher demand in safety and outdoor games.

Profitability moved the other way. Gross margin expanded 123 basis points to 29.4%, after a 146-basis-point year-over-year expansion to 26.2% in the second quarter. Escalade attributed the improvement to better absorption and a favorable customer and sales mix.

Operating income was $8.7 million, compared with $7.3 million a year earlier. Pre-tax income included tariff recoveries of $1.7 million. Net income was $6.7 million, or $0.48 a share, versus $5.6 million, or $0.40 a share, in the year-ago third quarter. EBITDA was $10.0 million, up $1.4 million from $8.6 million, and included a $1.6 million benefit from the recovery of tariff costs incurred in prior periods.

Cash generation strengthened. The company provided $14.9 million from operations, compared with cash used of $1.0 million a year earlier.

President and Chief Executive Officer Patrick J. Griffin said consumer demand across the portfolio remained reasonably stable despite deteriorating consumer sentiment, and that reported sales were unfavorably impacted by last year’s tariff-related shift of larger customer orders from the second quarter into the third, as well as a strategic exit from certain lower-margin product lines. He said the gross-margin gain reflected a favorable sales mix and improved fixed-cost absorption from 2025 acquisitions, which offset higher freight and material costs.

The balance sheet continued to tighten. Total debt at September 30 was $13.1 million, down from $20.2 million a year earlier. Cash and equivalents were $24.5 million, and availability on the senior secured revolving credit facility maturing in 2027 was $60.0 million. Griffin said the company ended the quarter in a net cash position.

Escalade declared a quarterly dividend of $0.1525 a share, matching the second-quarter declaration, payable January 11, 2027 to shareholders of record on January 4, 2027.

Griffin said that through the first nine months of 2026 the company expanded gross margin by more than 210 basis points versus the same period in 2025 and that operational improvements, cost controls and inventory management had established a margin structure the company believes is sustainable through the cycle. He said inflationary pressures, higher interest rates and broader economic and geopolitical uncertainty are expected to continue to weigh on consumer spending for discretionary goods. Looking to 2027, the company said a steady cadence of new product launches and a full year of contribution from Gold Tip will position the business to take market share and generate sales growth, even as consumer headwinds persist.