Our Statement on COVID 19. READ MORE HERE NASDAQ: ESCA $15.64 -0.75 (-4.58%) UPDATED: DEC 03, 4:00 PM EST REPORTS & LETTERS ANNUAL REPORTS Escalade, Inc. 2020 Annual Report Previous Reports Escalade, Inc. 2019 Annual Report Escalade, Inc. 2018 Annual Report Escalade, Inc. 2017 Annual Report Escalade, Inc. 2016 Annual Report Escalade, Inc. 2015 Annual Report SHAREHOLDER LETTERS 2020 2019 2018 2017 2016 2015 View as PDF March 29, 2021 This past year brought many changes to our day-to-day activities. People around the world were forced to adjust the way they worked, communicated, and socialized. These changes drove the need to find in-home fitness and recreation solutions as we all adjusted to life under lock-downs. The Escalade family of brands fit squarely into the needs for fitness, recreation, and social distancing products. Throughout 2020, it became clear that our previous strategic investments, nimble global supply chain, financial flexibility, and our talented team would have an opportunity to come together to meet the unprecedented demand. From the beginning of stay-at-home orders, our employees were challenged to maintain the health and well-being of their families, while at the same time ensuring we fulfilled the strong demand for our product. Some inspiring examples: In March, we reduced operations in our Evansville, Indiana warehouse to help slow the spread of the virus. To ensure our customers received their critical orders, many of the leadership team members volunteered to help out in the distribution center operating forklifts to unload inbound containers of merchandise, picking orders, and shipping essential goods. This team kept the company moving until it was deemed safe to reopen the warehouse with appropriate health and safety protocols for full operations. In April, our manufacturing facility in Gainesville, Florida was shuttered because of growing numbers of positive COVID-19 tests. Over the course of the next several weeks, our leadership team worked diligently with local and state officials to develop a plan to reopen the facility. During the shutdown we paid all employees their full pay, rather than deploying layoffs, furloughs, or pay cuts. We reopened the facility after three weeks and began fulfilling substantial backlogs of Archery product and key components for our Victory Tailgate business. Our facilities in Orlando, Olney, and Rosarito, Mexico were significantly impacted by the virus and experienced daily challenges related to COVID-19. The leadership teams in each of these facilities developed strategies to ensure the balance between the health and well-being of our employees and the need to keep our supply chain in motion. As we ended the year, all our production and distribution facilities were open and operating. I cannot thank all our employees enough for their inspiring efforts to respond to the needs of our customers. We are fortunate to have such a hard-working team and it is heartwarming to see the results of their valiant effort. The culmination was a record-breaking year. Some of the financial highlights include: Record revenue of $273.6 million, an increase of 51.6% Gross Margin of 27.3%, an improvement of 380 basis points from 23.5% in 2019 Operating Margin improved from 5.1% to 12.1% Earnings per Share increased 264% from $.50 to $1.82 Return on Assets was 14.0% compared to 4.9% last year Return on Equity was 19.5%, up from 5.7% in 2019 In 2022 we will celebrate the centennial of our predecessor company, Williams Manufacturing, and are already laying the groundwork for the next 100 years. We continue to develop our strategic plan, which guides Escalade as we continue our journey of profitable growth. The key elements include staying close to the consumer, serving our trade partners, investing in our people, strengthening our supply chain, integrating new digital technologies throughout our business units, and maintaining a sound financial structure. Decentralized Management Organization Escalade’s business units are managed by leaders who live and breathe their categories every day. They have different backgrounds, skills, and styles; yet all share a passion for their business, for serving their customers, and for working together to achieve the best results for Escalade. These General Managers (GMs) have the authority, and the responsibility, to lead their respective units with the primary goal of building the long-term value of their brands, and thus Escalade. They are supported by a relatively lean and talented corporate staff who assist with Global Sourcing & Logistics, Financial resources, Human Resources expertise, Information Technology Infrastructure & Support, Legal and Corporate Development assistance. The result is individually entrepreneurial, responsive, and consumer-driven businesses that share best practices among each other while enjoying the benefits that come from being part of a larger, stronger organization. Capital Allocation A key obligation of any successful company is the responsible allocation of capital resources. At Escalade we continually evaluate the relative merits of reinvesting in our core business, acquiring other businesses, paying cash dividends to our shareholders, and repurchasing our stock in the open market. Over the past ten years we have: Invested $31 million in capital expenditures to support our businesses, Spent $64 million on acquisitions, and received $42 million from businesses sold, Paid $59 million in cash dividends, and Repurchased $10 million of company shares. Reinvestment in our Core Businesses There is nothing more important than the satisfaction of our existing customers, consumers, and valuable team members. In 2020, we increased the investments in our existing businesses: In our Evansville headquarters and distribution center, we renovated much of our facility to enhance collaboration, improve efficiencies, and expand throughput. We used the COVID-19 work-from-home time to complete the renovations with minimal disruption to our team members and are now prepared for the day when our customers will again visit us to review the innovative and exciting products, we introduce each season. The new showroom will help us display and sell our expanding range of products, while the offices and common areas will help us retain and attract top talent. In our Olney facility, we further invested in tooling and machinery to expand production, enhance efficiencies, and further fortify our supply chain. Olney is a globally competitive manufacturing facility that continuously works to become even more productive and efficient. We also invested in key talent and leadership to help us drive closer relationships with customers and consumers, while setting up the business for growth now and in the future. Specifically, we added key talent in our emerging digital business as well as product development and engineering; all with an eye to bringing compelling products to our consumers. Critical to our growth is the understanding of consumer trends. In 2020, we invested in tools to help us learn more about and move closer to our consumer. We intend to arm our teams and our customers with the latest business intelligence to navigate the rapidly changing consumer landscape. Acquisitions A glance at the Escalade history timeline on the following pages shows how we have benefited from strategic acquisitions (and divestitures) over many years. Our corporate development team along with our General Managers uncover and analyze dozens of opportunities each year. When we find the proverbial needle in the haystack—a business that fits with our overall strategy, will be accretive to earnings in the near term, strengthens our customer relationships, and builds upon our capabilities—we have the financial strength and experience to complete complex acquisitions quickly and efficiently. Unlike many acquirers who immediately impose their systems and ideas on the new business, we look for cross-fertilization and sharing of knowledge to find the best from both sides. In late 2020, we made two key acquisitions that fit squarely into our acquisition strategy. RAVE® Sports originated the inflatable water trampoline and has expanded into a wide range of water sports and inflatable products.This acquisition marks our entry into the growing Water Sports and Recreation category. American Heritage Billiards® offers Escalade the opportunity to further expand into the Game Room and pairs nicely with our Cue & Case billiards accessory business. Both transactions are expected to help us further customer relationships, increase revenue, and contribute to earnings. Cash Dividends Escalade instituted a regular cash dividend policy in 2012 and has now paid dividends for 36 quarters in a row. From 8 cents in 2012 to 14 cents in 2020, the quarterly dividend has grown at just over 7% compounded annual rate. Your Board of Directors evaluates the dividend at each board meeting with the goal of delivering consistent dividend income to our shareholders while maintaining a prudent financial condition and funding further growth of the business. Share Repurchase Our policy is to buy back shares of our stock if, and only if, we believe the market price of Escalade stock is well below the intrinsic value of our company. While often misunderstood or maligned by those with an axe to grind, prudent share repurchase programs can be an effective tool to enhance shareholder value and provide additional liquidity to stockholders who choose to sell. In the past two years, we have bought back nearly 5% of our shares at an average price of $14.27 per share. These buybacks added 8 cents to 2020 earnings per share, increases our cash flow by over $350,000 annually, and enhances our Return on Equity. A COVID-19 bump or persistent change in habits? While there can be no doubt that Escalade benefited from the stay-at-home orders and consumers’ needs to remain fit and active in 2020, our teams are challenging themselves to grow from a new, higher plateau. Our experience after 9/11 was that it took several years for travel to resume to prior levels. Consumers engaged in more at-home and in-town activities with family and friends. Escalade is all about creating great memories and building relationships through recreation. The post-COVID-19 new normal will likely take some time to fully emerge. We are fortunate to partner with some of the world’s best retailers. When consumer demand spiked and supply chains ground to a halt, the Escalade team pulled out all the stops and helped our retail partners refill their empty shelves with great product. We were able to win shelf space and expand our market share and are working hard to continue that trend. Our retail partners know they can rely on Escalade to deliver compelling products on time through our dynamic domestic and offshore supply chain. The move from densely populated city living to suburban and rural locations is well underway. Bigger houses and larger yards lead to demand for game room and outdoor recreation products. Working from home and shorter commutes mean more time for recreation with family and friends. Our new acquisitions provide additional revenue and profit opportunities. It is worth noting that RAVE® Sports has historically generated significant revenue from water parks and summer camps, two channels that were shut down in 2020. The next several years will be an exciting time for Escalade. We have many competitive advantages, a solid strategy, and a team that has proven it can overcome daunting challenges and capitalize on great opportunities. When reflecting on our brand lineup, our passionate and committed team, our loyal customers, and our strategy for sustainable growth, I do believe our best is yet to come. Sincerely, Walter P. Glazer, Jr. Chairman, Interim Chief Executive Officer and President Escalade Inc. © 2021 Escalade Inc. Privacy Policy  | Terms of Use  | Accessibility Statement  | CPSIA Certifications  | Patents By clicking "I Agree" you are agreeing to our Terms of Use & Privacy Policy. I Agree