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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2025 or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number 0-6966

ESCALADE, INCORPORATED

(Exact name of registrant as specified in its charter)

Indiana

(State or Other Jurisdiction of Incorporation or Organization)

13-2739290

(I.R.S. Employer Identification No.)

817 Maxwell Ave, Evansville, Indiana

(Address of principal Executive Office)

47711

(Zip Code)

812-467-1358

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, No Par Value	ESCA	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at October 27, 2025
Common, no par value	13,803,745

INDEX

		Page No.
Part I.	Financial Information:

Item 1 -	Financial Statements:

	Consolidated Condensed Balance Sheets as of September 30, 2025, December 31, 2024, and September 30, 2024	3

	Consolidated Condensed Statements of Operations for the Three Months and Nine Months Ended September 30, 2025 and September 30, 2024	4

	Consolidated Condensed Statements of Stockholders’ Equity for the Three Months and Nine Months Ended September 30, 2025 and September 30, 2024	5

	Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2025 and September 30, 2024	6

	Notes to Consolidated Condensed Financial Statements	7

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4 -	Controls and Procedures	18

Part II.	Other Information

Item 1 -	Legal Proceedings	18


Item 1A -	Risk Factors	18

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 6 -	Exhibits	20

	Signature	20

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

ESCALADE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

All Amounts in Thousands Except Share Information	September 30, 2025		December 31, 2024		September 30, 2024
	(Unaudited)		(Audited)		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,509	$	4,194	$	426
Receivables, less allowance of $957; $694; and $669; respectively		52,756		48,768		53,480
Inventories		80,662		76,025		85,485
Prepaid expenses		4,350		4,372		5,117
Prepaid income tax		-		465		156
TOTAL CURRENT ASSETS		141,277		133,824		144,664

Property, plant and equipment, net		21,716		22,221		22,856
Operating lease right-of-use assets		1,347		1,186		7,640
Intangible assets, net		25,636		25,838		26,409
Goodwill		42,326		42,326		42,326
Other assets		158		935		1,035
TOTAL ASSETS	$	232,460	$	226,330	$	244,930

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt	$	7,143	$	7,143	$	7,143
Trade accounts payable		21,119		11,858		19,965
Accrued liabilities		12,923		15,050		13,769
Income tax payable		1,169		-		-
Current operating lease liabilities		496		444		1,083
TOTAL CURRENT LIABILITIES		42,850		34,495		41,960

Other Liabilities:
Long‑term debt		13,095		18,452		22,353
Deferred income tax liability		3,302		3,302		3,125
Operating lease liabilities		886		787		7,125
Other liabilities		-		297		297
TOTAL LIABILITIES		60,133		57,333		74,860

Stockholders' Equity:
Preferred stock:
Authorized 1,000,000 shares; no par value, none issued		-		-		-
Common stock:
Authorized 30,000,000 shares; no par value, issued and outstanding – 13,803,745; 13,732,719; and 13,877,302; shares respectively		3,757		4,218		5,909
Retained earnings		168,570		164,779		164,161
TOTAL STOCKHOLDERS' EQUITY		172,327		168,997		170,070
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	232,460	$	226,330	$	244,930

See notes to Consolidated Condensed Financial Statements.

ESCALADE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended						Nine Months Ended
All Amounts in Thousands Except Per Share Data	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024

Net sales	$	67,786		$	67,738		$	177,598		$	187,568

Costs and Expenses
Cost of products sold		48,720			50,947			130,305			141,312
Selling, administrative and general expenses		11,198			11,675			32,018			32,439
Amortization		567			1,047			1,701			2,231
Gain on sale of assets held for sale		-			(3,905	)		-			(3,905	)

Operating Income		7,301			7,974			13,574			15,491

Other Income (Expense)
Interest expense		(204	)		(530	)		(661	)		(1,995	)
Other income		21			7			103			13

Income Before Income Taxes		7,118			7,451			13,016			13,509

Provision for Income Taxes		1,564			1,784			3,018			3,223

Net Income	$	5,554		$	5,667		$	9,998		$	10,286

Earnings Per Share Data:
Basic earnings per share	$	0.40		$	0.41		$	0.73		$	0.74
Diluted earnings per share	$	0.40		$	0.40		$	0.72		$	0.73

Dividends declared	$	0.15		$	0.15		$	0.45		$	0.45

See notes to Consolidated Condensed Financial Statements.

ESCALADE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

	Common Stock				Retained
All Amounts in Thousands	Shares		Amount		Earnings			Total

Balances at June 30, 2024		13,877	$	5,406	$	160,576		$	165,982

Net income		-		-		5,667			5,667
Expense of restricted stock units		-		503		-			503
Dividends declared		-		-		(2,082	)		(2,082	)

Balances at September 30, 2024		13,877	$	5,909	$	164,161		$	170,070


Balances at December 31, 2023		13,737	$	4,480	$	160,099		$	164,579

Net income		-		-		10,286			10,286
Expense of restricted stock units		-		1,429		-			1,429
Settlement of restricted stock units		140		-		-			-
Dividends declared		-		-		(6,224	)		(6,224	)

Balances at September 30, 2024		13,877	$	5,909	$	164,161		$	170,070

	Common Stock						Retained
All Amounts in Thousands	Shares			Amount			Earnings			Total

Balances at June 30, 2025		13,804		$	3,251		$	165,087		$	168,338

Net income		-			-			5,554			5,554
Expense of restricted stock units		-			506			-			506
Dividends declared		-			-			(2,071	)		(2,071	)

Balances at September 30, 2025		13,804		$	3,757		$	168,570		$	172,327


Balances at December 31, 2024		13,733		$	4,218		$	164,779		$	168,997

Net income		-			-			9,998			9,998
Expense of restricted stock units		-			1,468			-			1,468
Settlement of restricted stock units		165			-			-			-
Issuance of restricted stock awards		35			-			-			-
Dividends declared		-			-			(6,207	)		(6,207	)
Purchase of stock		(145	)		(2,171	)		-			(2,171	)
Issuance of common stock for service		16			242			-			242

Balances at September 30, 2025		13,804		$	3,757		$	168,570		$	172,327

See notes to Consolidated Condensed Financial Statements.

ESCALADE, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended
All Amounts in Thousands	September 30, 2025			September 30, 2024

Operating Activities:
Net income	$	9,998		$	10,286
Depreciation and amortization		3,767			4,691
Allowance for credit losses		630			574
Stock-based compensation		1,468			1,429
Loss (gain) on disposal of assets		7			(3,852	)
Common stock issued in lieu of bonus to officers		124			-
Director stock compensation		118			-
Changes in assets and liabilities		6			10,631
Net cash provided by operating activities		16,118			23,759

Investing Activities:
Purchase of property and equipment		(1,267	)		(1,482	)
Acquisition		(1,800	)		-
Proceeds from sale of property and equipment		-			5,757
Net cash (used in) provided by investing activities		(3,067	)		4,275

Financing Activities:
Proceeds from issuance of long-term debt		25,061			86,651
Payments on long-term debt		(30,419	)		(108,051	)
Cash dividends paid		(6,207	)		(6,224	)
Purchase of stock		(2,171	)		-
Net cash used in financing activities		(13,736	)		(27,624	)
Net (decrease) increase in cash and cash equivalents		(685	)		410
Cash and cash equivalents, beginning of period		4,194			16
Cash and cash equivalents, end of period	$	3,509		$	426

Supplemental Cash Flows Information
Interest paid	$	627		$	1,893
Income taxes paid, net	$	1,682		$	3,380

See notes to Consolidated Condensed Financial Statements.

ESCALADE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note A – Summary of Significant Accounting Policies

Presentation of Consolidated Condensed Financial Statements – The significant accounting policies followed by the Company and its wholly owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for its annual financial reporting. All adjustments that are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported have been included in the accompanying consolidated condensed financial statements. The consolidated condensed balance sheet of the Company as of December 31, 2024 has been derived from the audited consolidated balance sheet of the Company as of that date. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2024 filed with the Securities and Exchange Commission.

Goodwill – We perform our annual goodwill impairment analysis in the fourth quarter of each fiscal year, or more often if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable, in accordance with guidance in Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 350, “Intangibles – Goodwill and Other” (“ASC 350”). During the three months ended September 30, 2025, we identified a potential indicator of impairment due to the increase in tariff-related costs which led to the conclusion that a triggering event had occurred and therefore we performed a quantitative test for the single reporting unit.

We measure the fair value of our reporting unit based on a guideline company method and discounted cash flow method using a discount rate determined by Management to be commensurate with the risk inherent in our reporting unit’s current business model. The fair market value was determined by weighting the two methods equally. Our estimates of discounted cash flows, selected multiples and market value of invested capital to derive the fair value were measured in accordance with ASC 350. Inputs to determine the fair value are considered to be level 3 inputs. We are using estimates of discounted cash flows that may change, and if they change negatively it could result in the need to write down those assets to fair value. Based on our interim impairment test of goodwill as of September 1, 2025, it was determined that the fair value of the reporting unit was in excess of the carrying value.

Although there was no impairment of goodwill, we noted that the fair value of the reporting unit exceeded its carrying value by approximately 6%. If there is a continued increase in costs or other adverse events that could negatively impact the future cash flows of our business and its fair value, goodwill may be at risk of impairment in future periods.

Note B ‑ Seasonal Aspects

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

Note C ‑ Inventories

In thousands	September 30, 2025		December 31, 2024		September 30, 2024

Raw materials	$	3,700	$	2,721	$	3,663
Work in progress		3,447		2,370		2,948
Finished goods		73,515		70,934		78,874
	$	80,662	$	76,025	$	85,485

Note D – Fair Values of Financial Instruments

ASC 820, “Fair Value Measurement and Disclosures,” outlines a valuation framework and creates a fair value hierarchy for assets and liabilities as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3: 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 September 30, 2025, December 31, 2024 and September 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:

	September 30, 2025				December 31, 2024				September 30, 2024
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value

Term Loan Facility	$	20,238	$	19,231	$	25,595	$	23,528	$	27,381	$	25,275

Note E – Stock Compensation

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

During the nine months ended September 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 nine months ended September 30, 2025, the Company recognized stock based compensation expense of $506 thousand and $1,468 thousand, respectively compared to stock based compensation expense of $503 thousand and $1,429 thousand for the same periods in the prior year.

At September 30, 2025 and September 30, 2024, there was $2.3 million and $1.8 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 September 30, 2025 is expected to be recognized over the weighted average period of 2.1 years.

Note F ‑ Segment Information

The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its president and chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated net sales and consolidated net income to assess financial performance and allocate resources.

	As of and for the Three Months Ended September 30, 2025
In thousands	Sporting Goods			Corp.			Total

Revenues from external customers	$	67,786		$	-		$	67,786
Cost of product sold		48,720			-			48,720
Other operating expenses		11,224			541			11,765
Operating income (loss)		7,842			(541	)		7,301
Interest expense		(204	)		-			(204	)
Other income		21			-			21
Provision (benefit) for Income Taxes		2,103			(539	)		1,564
Net income (loss)		5,556			(2	)		5,554

Depreciation and Amortization	$	1,266			-		$	1,266
Total assets	$	226,362		$	6,098		$	232,460

	As of and for the Nine Months Ended September 30, 2025
In thousands	Sporting Goods			Corp.			Total

Revenues from external customers	$	177,598		$	-		$	177,598
Cost of product sold		130,305			-			130,305
Other operating expenses		31,743			1,976			33,719
Operating income (loss)		15,550			(1,976	)		13,574
Interest expense		(661	)		-			(661	)
Other income		103			-			103
Provision (benefit) for Income Taxes		4,119			(1,101	)		3,018
Net income (loss)		10,873			(875	)		9,998

Depreciation and Amortization	$	3,767			-		$	3,767
Total assets	$	226,362		$	6,098		$	232,460

	As of and for the Three Months Ended September 30, 2024
In thousands	Sporting Goods			Corp.			Total

Revenues from external customers	$	67,738		$	-		$	67,738
Cost of product sold		50,947			-			50,947
Other operating expenses		8,035			782			8,817
Operating income (loss)		8,756			(782	)		7,974
Interest expense		(530	)		-			(530	)
Other income		7			-			7
Provision (benefit) for Income Taxes		2,263			(479	)		1,784
Net income (loss)		5,970			(303	)		5,667

Depreciation and Amortization	$	1,940			-		$	1,940
Total assets	$	241,347		$	3,583		$	244,930

	As of and for the Nine Months Ended September 30, 2024
In thousands	Sporting Goods			Corp.			Total

Revenues from external customers	$	187,568		$	-		$	187,568
Cost of product sold		141,312			-			141,312
Other operating expenses		28,294			2,471			30,765
Operating income (loss)		17,962			(2,471	)		15,491
Interest expense		(1,995	)		-			(1,995	)
Other income		13			-			13
Provision (benefit) for Income Taxes		4,392			(1,169	)		3,223
Net income (loss)		11,588			(1,302	)		10,286

Depreciation and Amortization	$	4,691			-		$	4,691
Total assets	$	241,347		$	3,583		$	244,930

Note G – Dividend Payment

On January 13, 2025, the Company paid a quarterly dividend of $0.15 per common share to all shareholders of record on January 6, 2025. The total amount of the dividend was approximately $2.1 million and was charged against retained earnings.

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

On October 13, 2025, the Company paid a quarterly dividend of $0.15 per common share to all shareholders of record on October 6, 2025. The total amount of the dividend was approximately $2.1 million and was charged against retained earnings.

Note H ‑ Earnings Per Share

The shares used in computation of the Company’s basic and diluted earnings per common share are as follows:

	Three Months Ended				Nine Months Ended
In thousands	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024

Weighted average common shares outstanding		13,769		13,877		13,751		13,845
Dilutive effect of restricted stock units		102		156		121		162
Weighted average common shares outstanding, assuming dilution		13,871		14,033		13,872		14,007

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 nine months ended September 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): Improvements to Income Tax Disclosures, which expands the disclosures required in an entity’s income tax rate reconciliation table and requires disclosure of income taxes paid in both U.S. and foreign jurisdictions. The amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, to be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact the adoption of ASU 2023-09 will have on its annual consolidated financial statements.

Note J – Revenue from Contracts with Customers

Revenue Recognition – Revenue is recognized when a contract exists with a customer that specifies the goods to be provided at an agreed upon sales price and when the performance obligations under the terms of the contract are satisfied; generally, this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title. Sales are made on normal and customary short-term credit terms or upon delivery of point-of-sale transactions. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts. These costs are recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue.

The Company enters into contractual arrangements with customers in the form of customer orders that specify goods, quantity, pricing, and associated order terms. The Company does not have long-term contracts that are satisfied over time. Due to the nature of the contracts, no significant judgment exists in relation to the identification of the customer contract, satisfaction of the performance obligations, or transaction price.

Gross-to-net sales adjustments – We recognize revenue net of various sales adjustments to arrive at net sales as reported on the statement of operations. These adjustments are referred to as gross-to-net sales adjustments and primarily fall into one of three categories: returns, warranties and customer allowances.

Returns – The Company records an accrued liability and reduction in sales for estimated product returns based upon historical experience. An accrued liability and reduction in sales is also recorded for approved return authorizations that have been communicated by the customer.

Warranties – Limited warranties are provided on certain products for varying periods. We record an accrued liability and reduction in sales for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims. 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 September 30, 2025. There were no changes to the accrual due to a change in estimate during the current period.

Customer Allowances – Customer allowances are common practice in the industries in which the Company operates. These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales. 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 $6,179 thousand, $6,708 thousand and $5,325 thousand as of September 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. These products are sold through multiple sales channels that include: mass merchants, specialty dealers, key on-line retailers (“E-commerce”) and international. The following table depicts the disaggregation of revenue according to sales channel:

	Three Months Ended				Nine Months Ended
All Amounts in Thousands	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024

Gross Sales by Channel:
Mass Merchants	$	31,212	$	32,725	$	68,722	$	72,877
Specialty Dealers		17,799		17,238		56,010		59,511
E-commerce		22,493		22,122		61,257		65,927
International		3,190		3,355		9,680		9,879
Other		601		881		2,247		2,683
Total Gross Sales		75,295		76,321		197,916		210,877

Less: Gross-to-Net Sales Adjustments
Returns		2,002		2,650		5,089		6,451
Warranties		252		336		784		1,191
Customer Allowances		5,255		5,597		14,445		15,667
Total Gross-to-Net Sales Adjustments		7,509		8,583		20,318		23,309
Total Net Sales	$	67,786	$	67,738	$	177,598	$	187,568

Note K – Leases

We have operating leases for office, manufacturing and distribution facilities as well as for certain equipment. Our leases have remaining lease terms of 1 year to 4 years. As of September 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. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and operating lease liabilities on our consolidated balance sheet. The Company has elected an accounting policy to not recognize short-term leases (one year or less) on the balance sheet. The Company also elected the package of practical expedients which applies to leases that commenced before the adoption date. By electing the package of practical expedients, the Company did not need to reassess the following; whether any existing contracts are or contain leases, the lease classification for any existing leases and initial direct costs for any existing leases.

ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot be determined, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Lease terms may include options to extend or terminate the lease and are recognized in the presentation of the ROU assets and operating lease liabilities when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Components of lease expense and other information are as follows:

	Three Months Ended				Nine Months Ended
All Amounts in Thousands	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024

Lease Expense
Operating Lease Cost	$	154	$	374	$	440	$	1,125
Short-term Lease Cost		240		249		782		988
Variable Lease Cost		42		110		142		418
Total Operating Lease Cost	$	436	$	733	$	1,364	$	2,531

Operating Lease – Operating Cash Flows	$	158	$	267	$	449	$	782
New ROU Assets – Operating Leases	$	48	$	-	$	535	$	52

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

	Nine Months Ended
All Amounts in Thousands	September 30, 2025			September 30, 2024

Weighted Average Remaining Lease Term – Operating Leases (in years)		3.08			7.47
Weighted Average Discount Rate – Operating Leases		6.68	%		5.18	%

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

All Amounts in Thousands

Remainder of Year 1	$	145
Year 2		569
Year 3		461
Year 4		191
Year 5		124
Thereafter		45
Total future minimum lease payments		1,535
Less imputed interest		(153	)
Total	$	1,382

Reported as of September 30, 2025
Current operating lease liabilities		496
Long-term operating lease liabilities		886
Total	$	1,382

Note L – Commitments and Contingencies

The Company is involved in litigation arising in the normal course of its business, but the Company does not believe the disposition or ultimate resolution of such claims or lawsuits will have a material adverse effect on the business or financial condition of the Company. Based on current information, available insurance coverage and established reserves, the Company believes that the eventual outcome of existing litigation against the Company will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to the Company’s results of operations for any particular period, depending, in part, upon the size of the loss or liability imposed and the operating results for the applicable period.

Note M – Debt

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. and the other lenders identified therein (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, 2025.

As of September 30, 2025, the outstanding principal amount of the term loan was $20.2 million and total amount drawn under the Revolving Facility was zero. The term loan and Revolving Facility have a maturity date of January 21, 2027.

Note N – Provision for Taxes

The effective tax rate for the three months ending September 30, 2025, was 22.0% compared to 23.9% for the same three month period last year. The effective tax rate for the first nine months ending September 30, 2025, was 23.2% compared to 23.9% for the same period last year. The lower tax rate for 2025 was primarily driven by tax windfall adjustments on stock incentives and favorable return to provision adjustments.

On July 4, 2025, 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 evaluating the impact of these provisions; however, there were no discrete effects in the third quarter, and we do not expect a material impact on our 2025 consolidated financial statements.

Note O – Acquisition

During the three months ended September 30, 2025, the Company acquired substantially all of the Gold Tip assets from Revelyst, Inc. Gold Tip is a leading brand for target archery, bow and crossbow hunting products. The Gold Tip assets acquired at close included $1.5 million in trademarks and immaterial amounts of other assets. The acquired trademarks will be amortized using the straight-line method over 20 years.

This acquisition was not and would not have been material to the Company’s net sales, results of operations or total assets during the three months ended September 30, 2025. Accordingly, our consolidated results from operations do not differ materially from historical performance as a result of this acquisition, and therefore, pro-forma results are not presented.

Note P – Subsequent Events

On October 30, 2025, Escalade, Incorporated (“Escalade” or the “Company”) announced that Patrick J. Griffin, the Company’s Vice President, Corporate Development and Investor Relations and a Director, has been appointed as the Company’s Interim President and Chief Executive Officer effective October 29, 2025. Mr. Griffin replaces Armin Boehm, who resigned as of the same date. Mr. Griffin, age 56, has served as Director at Escalade and Vice President, Corporate Development and Investor Relations for Escalade since August 2012. Prior to that, Mr. Griffin served as President of Martin Yale Group, a former subsidiary of Escalade. Mr. Griffin has held various other roles at Escalade since 2002.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. All statements, other than statements of historical fact, are forward-looking statements. These statements relate to our financial condition, results of operations, plans, objectives, future performance, capital actions or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “potential,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. These risks include, but are not limited to: 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 ability to protect its intellectual property; Escalade’s ability to develop and implement our own direct to consumer e-commerce distribution channel; the impact of competitive products and pricing; product demand and market acceptance; new product development; Escalade’s ability to successfully negotiate the shifting retail environment and changes in consumer buying habits; 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, 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; the potential identification of one or more additional material weaknesses in the Company’s internal control of which the Company is not currently aware or that have not yet been detected; Escalade’s ability to control costs, including managing inventory levels; general economic conditions, including inflationary pressures; fluctuation in operating results; changes in foreign currency exchange rates; changes in the securities markets; continued listing of the Company’s common stock on the NASDAQ Global Market; the Company’s inclusion or exclusion from certain market indices; Escalade’s ability to obtain financing, to maintain compliance with the terms of such financing and to manage debt levels; the availability, integration and effective operation of information systems and other technology, and the potential interruption of such systems or technology; the potential impact of actual or perceived defects in, or safety of, our products, including any impact of product recalls or legal or regulatory claims, proceedings or investigations involving our products; risks related to data security of privacy breaches; 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. Escalade’s future financial performance could differ materially from the expectations of management contained herein. Escalade undertakes no obligation to release revisions to these forward-looking statements after the date of this report.

Overview

Escalade, Incorporated (Escalade, the Company, we, us or our) is focused on growing its Sporting Goods business through organic growth of existing categories, strategic acquisitions, and new product development. The Sporting Goods business competes in a variety of categories including basketball goals, archery, billiards, indoor and outdoor game recreation and fitness products. Strong brands and on-going investment in product development provide a solid foundation for building customer loyalty and continued growth.

Within the sporting goods industry, the Company has successfully built a robust market presence in several niche markets. This strategy is heavily dependent on expanding our customer base, barriers to entry, strong brands, excellent customer service and a commitment to innovation. A key strategic advantage is the Company’s established relationships with major customers that allow the Company to bring new products to market in a cost effective manner while maintaining a diversified portfolio of products to meet the demands of consumers. In addition to strategic customer relations, the Company has substantial manufacturing and import experience that enable it to be a low cost supplier.

To enhance growth opportunities, the Company has focused on promoting new product innovation and development and brand marketing. In addition, the Company has embarked on a strategy of acquiring companies or product lines that complement or expand the Company's existing product lines or provide expansion into new or emerging categories in sporting goods. A key objective is the acquisition of product lines with barriers to entry that the Company can take to market through its established distribution channels or through new market channels. Significant synergies are achieved through assimilation of acquired product lines into the existing Company structure.

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 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. However, recent announcements from China and the US have reignited concerns over a potential trade war. 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. General economic conditions, inflation, recessionary fears, rising interest rates, changes in the housing market and declining consumer confidence also may impact the Company adversely. 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 September 30, 2025 are not necessarily indicative of the results to be expected for fiscal year 2025.

Results of Operations

The following schedule sets forth certain consolidated statement of operations data as a percentage of net revenue:

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
Net revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		71.9	%		75.2	%		73.4	%		75.3	%
Gross margin		28.1	%		24.8	%		26.6	%		24.7	%
Selling, administrative and general expenses		16.5	%		17.2	%		18.0	%		17.3	%
Amortization		0.8	%		1.6	%		1.0	%		1.2	%
Gain on sale of assets held for sale		-			(5.8	%)		-			(2.1	%)
Operating income		10.8	%		11.8	%		7.6	%		8.3	%

Revenue and Gross Margin

Sales increased 0.1% for the third quarter of 2025, compared with the same period in the prior year, primarily due to increased sales within the archery, table tennis, billiards and safety categories, partially offset by softer market demand in our basketball category as well as the strategic phase out of certain categories.

For the nine months ended September 30, 2025, net sales decreased 5.3% compared with the same period in the prior year, driven by the same factors that impacted the third quarter.

Gross margin increased 334 basis points to 28.1% for the third quarter of 2025 compared to 24.8% 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. For the nine months ended September 30, 2025, gross margin increased to 26.6% compared to 24.7% 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 $11.2 million for the third quarter of 2025 compared to $11.7 million for the same period in the prior year, a decrease of $0.5 million or 4.1%. SG&A as a percent of sales is 16.5% for the third quarter of 2025 compared with 17.2% for the same period in the prior year.

For the nine months ended September 30, 2025, SG&A were $32.0 million compared to $32.4 million for the same period in the prior year. SG&A as a percent of sales is 18.0% for the nine months ended September 30, 2025 compared with 17.3% for the same period in the prior year.

Provision (Benefit) for Income Taxes

The effective tax rate for the three months ending September 30, 2025 was 22.0% compared to 23.9% for the same three month period last year. The effective tax rate for the nine months ended September 30, 2025 was 23.2% compared to 23.9% for the same period last year.

Financial Condition and Liquidity

Total debt as of September 30, 2025 was $20.2 million, a decrease of $5.4 million from December 31, 2024. The following schedule summarizes the Company’s total debt:

In thousands	September 30, 2025		December 31, 2024		September 30, 2024

Current portion of long-term debt	$	7,143	$	7,143	$	7,143
Long term debt		13,095		18,452		22,353
Total Debt	$	20,238	$	25,595	$	29,496

As a percentage of stockholders’ equity, total debt was 11.7%, 15.1% and 17.3% at September 30, 2025, December 31, 2024, and September 30, 2024 respectively.

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

As of September 30, 2025, the outstanding principal amount of the term loan was $20.2 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. The Company expects that cash generated from its 2025 operations and its access to adequate levels of revolving credit will provide it with sufficient cash flows for its operations and to meet growth needs.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Required.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Escalade maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, could provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. 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.

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 third quarter of 2025.

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

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

Refer to Note L of the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 for information regarding legal proceedings.

Item 1A. RISK FACTORS.

In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These risks and uncertainties could materially and adversely affect our business, consolidated financial condition, results of operations, or cash flows. Our operations could also be affected by additional risks or uncertainties that are not presently known to us or that we currently do not consider material to our business. As of the date of this filing, except as set forth below, there have been no material changes in our risk factors from those disclosed in the above-referenced Form 10-K, which risk factors are incorporated herein by reference.

The Company is currently transitioning to a new Chief Executive Officer which may result in some disruption to the Company.

On October 30, 2025, the Company announced the appointment of an Interim President and Chief Executive Officer and the immediate departure of its prior President and Chief Executive Officer. Both changes were effective as of October 29, 2025. This change in executive management may result in some changes and/or disruptions to the Company’s ordinary course of operations. Additionally, the transition to a new Chief Executive Officer requires substantial effort and time of the Company’s Board of Directors and of other Company executives, which may divert attention from other matters. The change in Chief Executive Officer may also give rise to questions, concerns and/or other risks among investors, customers, suppliers and/or employees.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

c) Issuer Purchases of Equity Securities

Period

(a) Total

Number of

Shares (or

Units)

Purchased

(b) Average

Price Paid

per Share

(or Unit)

of Shares (or Units)

Purchased as Part

of Publicly

Announced Plans

or Programs

(d) Maximum Number

(or Approximate Dollar

Value) of Shares (or

Units) that May Yet Be

Purchased Under the

Plans or Programs

Share purchases prior to 6/30/2025 under the current repurchase program.

2,443,316

13.58

2,443,316

19,133,817

Third quarter purchases:

7/1/2025-7/31/2025

None

No Change

8/1/2025-8/31/2025

None

No Change

9/1/2025-9/30/2025

None

No Change

Total share purchases under the current program

2,443,316

13.58

2,443,316

19,133,817

The Company has one stock repurchase program which was established in February 2003 by the Board of Directors and which initially authorized management to expend up to $3,000,000 to repurchase shares on the open market as well as in private negotiated transactions. Since the program’s inception, the Board has replenished and increased the dollar amount of authorized stock repurchases on multiple occasions. Most recently, in February 2025, the Board of Directors increased the stock repurchase program to $20,000,000. From its inception date through September 30, 2025, the Company has repurchased 2,443,316 shares of its common stock under this repurchase program for an aggregate price of $33,178,513. The repurchase program has no termination date and there have been no share repurchases that were not part of a publicly announced program.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

None.

Item 4. MINE SAFETY DISCLOSURES.

Not applicable.

Item 5. OTHER INFORMATION.

None.

Item 6. EXHIBITS

Number	Description
3.1	Articles of Incorporation of Escalade, Incorporated. Incorporated by reference from Exhibit 3.1 to the Company’s 2007 First Quarter Report on Form 10-Q filed on April 13, 2007.

3.2	Amended By-laws of Escalade, Incorporated, as amended August 10, 2022. Incorporated by reference from Exhibit 3.2 to the Company’s 2022 Third Quarter Report on Form 10-Q filed on October 27, 2022.

31.1	Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification.

31.2	Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification.

32.1	Chief Executive Officer Section 1350 Certification.

32.2	Chief Financial Officer Section 1350 Certification.

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 30, 2025

ESCALADE, INCORPORATED

By: /s/ Stephen R. Wawrin

Vice President and Chief Financial Officer

(On behalf of the registrant and in his

capacities as Principal Financial Officer

and Principal Accounting Officer)

ESCALADE INC 10-Q