Escalade, Incorporated

Good day and welcome to the Escalade second quarter 2026 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And 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 Mr. Wes Smith, Vice President of Financial Reporting and Investor Relations. Please go ahead.

Thank you, operator. On behalf of the entire team at Escalade, I'd like to welcome you to our second quarter 2026 results conference call. Leading the call with me today is President and CEO Patrick Griffin and Stephen Wawrin, 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 Patrick.

Thank you, Wes, and welcome to everyone joining us on today's call. Our second quarter results reflected the strength of our innovative product offering, growing market share across a broad range of customers, disciplined cost management, strong operational execution, and effective capital allocation. We delivered solid year-over-year improvements on both top and bottom line as compared to the second quarter of last year. These results were further enhanced by non-recurring refund of tariffs paid in prior quarters that had weighed on those periods. The recovery of those refunds strengthens our ability to execute the strategic priorities I will discuss later in the call. Net sales increased 6% in the second quarter compared to the prior year. This growth was driven by stronger sales of our new archery products and the incremental contribution from our September 2025 Gold Tip archery acquisition, along with continued strength in our safety, table tennis, and basketball categories. This was partially offset by softer demand in our outdoor games category. The operating leverage we have built over the past several quarters was evident in our second quarter profitability. Gross margin expanded by approximately 146 basis points year-over-year to 26.2%. This expansion was driven by higher fixed cost absorption on increased sales volumes. Gross margin also benefited from a favorable sales mix. We also continue to make progress improving asset utilization. Despite the additional inventory from the two acquisitions completed in the second half of last year, total inventory declined $1.5 million year-over-year in the second quarter, reflecting our ongoing focus on working capital efficiency as a driver of free cash flow generation. We expect inventory levels to decline further in the second half of this year as we progress toward our longer-term target of approximately three times inventory terms. Our second quarter operating income in EBITDA included approximately $9.9 million of recovered tariff costs incurred in prior quarters, further strengthening our already solid results for the period. We plan to deploy these refunds to help offset higher costs, particularly freight, commodity prices, and announce the potential new tariffs. We also intend to invest a portion of the refund in the growth of our business through consumer and trade promotions and product innovation. In addition, we plan to invest in capital improvements at our facilities in order to increase the efficiency of our operations. Looking ahead to the second half of 2026, we remain mindful of potential macroeconomic headwinds, including inflationary pressures such as the higher energy costs and elevated prices across the broader economy, which could weigh on consumer spending while creating incremental pressure on our cost structure. That said, we believe our business is well positioned to manage through this environment. Our planned new product launches, the operating leverage we had built into the business, and our continued focus on execution should enable us to keep growing our top line profitably despite ongoing macroeconomic uncertainty. During the second quarter, we continued to build our pipeline of fresh and innovative new products across our portfolio. Onyx Pickleball introduced several new pickleball paddles during the second quarter. These include the Hype Light Pickleball Paddle, which builds on earlier Hype launch but is lighter weight, making it easier to control, limiting fatigue to maximize performance on the court. We also launched the Adapt Max Pickleball Paddle with MaxRev technology for enhanced spin, a raw carbon fiber surface, and patented carbon fiber power frame. The Adapt Max is built for players who demand precision and durability, combining advanced paddle technology with performance-driven construction to help athletes play with greater confidence and control. The Adapt Max Paddle is now available in bold blue and sunset colorways. We also expanded product offerings within our basketball category, introducing the Gorilla HydroDunk pool hoop. The new Gorilla HydroDunk hoop brings our pro-game basketball engineering poolside with a corrosion-resistant salt and chlorine safe hoop system. The regulation size rim, backboard, and anchor mount make it perfect for new pool installations. That's how we're expanding Gorilla beyond the driveway into the backyard pool market. Within billiards, we launched the Lucasi Halo carbon fiber shaft during the second quarter. This shaft is engineered with T700 carbon fiber to deliver low deflection performance, repeatable cue ball control, and a smooth, consistent stroke for serious billiards players. These new product launches are just a few examples of how we use innovation to expand market share in our core categories. Strengthening balance sheet remains a priority. During the second quarter, we repaid nearly $1.8 million of long-term debt while increasing our cash balance by $3.3 million Thank you for joining us today. We are encouraged by our growing pipeline of acquisition opportunities that meet these criteria. In closing, our second quarter provided further validation of our strategy to deliver profitable growth, even in the face of a difficult and uncertain macroeconomic environment. We delivered margin expansion while improving our working capital efficiency and strengthening our balance sheet. Looking ahead to the second half of 2026 and beyond, we expect our operating model, robust capital allocation, Strong execution and financial flexibility to drive continued growth, generating long-term value for our shareholders. With that, I will turn the call over to Stephen to walk through our second quarter financial results.