Escalade, Incorporated

Good day and welcome to the Escalade first quarter 2025 results conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Vice President of Business Development and Investor Relations, Patrick Griffin. Please go ahead.

Thank you, Operator. On behalf of the entire team at Escalade, I'd like to welcome you to our first quarter 2025 results conference call. Leading the call with me today are Board Chairman Walt Glazer, President and CEO Armand Bohm, and Stephen Warren, our Chief Financial Officer. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Walt.

Thank you, Patrick, and welcome to everyone joining us on today's call. I'll begin with an overview of our first quarter results before turning the call over to Armin for a strategic update. As many of you know, Armin joined Escalade as our president and CEO at the beginning of April and has been actively engaged with the team as we continue to navigate a dynamic operating environment. I am very pleased we were able to recruit Armin, have enjoyed working with him to plan a smooth transition, and look forward to his leadership and contributions to escalate success in the years ahead. Our strong first quarter results reflect the continued benefits of our operational discipline and strategic focus. Over the past few years, we've implemented a series of initiatives designed to streamline our cost structure, improve operating efficiency, and position the business for sustainable, profitable growth across the economic cycle. These efforts drove a meaningful improvement in our gross margins during the quarter, despite ongoing softness in discretionary spending and declining consumer sentiment. Net sales declined approximately 3% year over year, as anticipated, but we expanded gross margins by more than 160 basis points, driven primarily by lower manufacturing and logistics costs resulting from facility consolidations and our cost rationalization program. Importantly, we view this margin improvement as durable and reflective of the leaner, more agile operating model we built. While overall consumer demand for discretionary goods remained soft, we saw encouraging growth in several key categories, archery, safety, darting, and outdoor games, all of which outperformed the prior year period. These results highlight the advantage of our diversified portfolio and the resonance of our market-leading brands with consumers. We maintained a sharp focus on working capital efficiency. Inventory levels rose bonusly during the quarter as we selectively built ahead of the spring selling season for our archery, basketball, and playground categories. Despite this, we generated nearly $4 million in operating cash flow, driven by our enhanced profitability and disciplined working capital management. Consistent with our capital allocation strategy, we deployed this cash to reduce debt and return capital to shareholders. In the quarter, we reduced our bank debt by $1.8 million, paid a quarterly dividend of $2.1 million, and repurchased $1.4 million of Escalade shares. Over the past 12 months, We reduced our debt by nearly $30 million, driving our net leverage ratio down to 0.8 times trailing 12 months EBITDA. With cost of debt of just 2.97%, we continue to have opportunities to benefit from positive cash arbitrage. We believe low leverage with low cost debt is a good place to be in today's environment. To summarize, Our first quarter results reflect strong execution and reinforce the progress we've made toward building a leaner, more resilient organization. On behalf of the Escalade Board of Directors and the entire Escalade team, I want to reaffirm our longstanding commitment to delivering innovation, operational excellence, and long-term value creation for our shareholders and customers alike. With that, I'll turn the call over to Armen for a strategic update and a look at the road ahead.