Escalade, Incorporated

Good morning and welcome to the Escalating Third Quarter 2026 Results Conference Call. All participants will be in 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 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 third quarter 2026 results conference call. Leading the call with me today are 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 third quarter results demonstrated the effectiveness of our more efficient operating model in generating earnings and cash flow growth, even in the face of deteriorating consumer sentiment and a difficult year-over-year comparison. The strength of our innovative product offering, favorable sales and customer mix, disciplined cost management, and strong operational execution combined to help us deliver a healthy improvement in gross margin compared to the third quarter of last year. Net sales declined 3%, over year over year, reflecting softness in our basketball, indoor games, and table tennis categories, as well as a challenging comparison with last year's third quarter, which benefited from shipments delayed from the second quarter by tariff-related market volatility. Our strategic exit from certain lower margin product lines also contributed to the net sales decline. The decline was partially offset by growth in archery, driven by strong vertical bow demand, and the incremental contribution from our September 2025 acquisition of Gold Tip, along with increased demand in the safety and outdoor games categories. Gross margin expanded by approximately 123 basis points year over year to 29.4%. This expansion was driven by a favorable sales mix, higher fixed cost absorption and strong operational execution. We also continue to make progress improving asset utilization Despite the additional inventory from the Gold Tip and all Cornell acquisitions in the second half of last year and the ASL Solutions acquisition during this year's third quarter, total inventory was $2.9 million below the prior year level. This progress reflects our focus on driving working capital efficiency and generating free cash flow. We continue to work towards our longer-term inventory turn target at three times. As we move towards the heart of the holiday season, we continue to collaborate with our retail partners to deliver a more frequent cadence of promotions that highlight newness as well as value and engage consumers to accelerate sell-through. Although inflation and broader economic uncertainty continue to pressure discretionary consumer spending, our more resilient operating model gives us confidence in our ability to manage through these challenging market conditions. We expect recent and upcoming new product introductions to support market share gains across several key categories as we move into 2027. In Pickleball, we had several new paddle launches from Onyx, including the Praxis. The Praxis features an Endurofoam core designed for durability and a raw carbon fiber surface that enhances spin and control. The new Onyx Ares offers an accessible entry price, a range of colors, and lightweight construction that helps players react quickly and stay comfortable during extended play. We've also been active in the game room with several new products in both table tennis and billiards. The Stiga Onyx 18 tennis table features a quick play design that symbols in minutes and has premium features such as integrated ball storage and locking caster wheels for easy mobility. Our new pro carbon cyber shape brackets unique profile combines a larger optimal hitting area with carbon powered performance. Within billiards, we launched the American Heritage Ann Arbor eight foot table. which features a modern architectural design that makes it a showpiece for the home game room. One inch three-piece slate delivers exceptional playability and consistent ball roll. These launches illustrate our increased investment in product innovation across our portfolio. We expect our current and ongoing investments in innovation to drive an acceleration in new product introductions as we move into 2027. Strengthening the balance sheet remains a priority. During the third quarter, we repaid 1.8 million dollars of debt and increased our cash balance by 8.1 million dollars ending the quarter with the net cash position of 11.4 million dollars. Our low cost fixed rate debt and higher cash balances also contributed to increased net interest income. Our consistent free cash flow and strong balance sheet also positions us to invest in innovation, accretive acquisitions, and our facilities to improve capacity as well as efficiency to support future growth. We remain focused on strategic, accretive acquisitions that enhance our existing platforms, expand our presence in attractive new categories, and strengthen our competitive positioning. We are encouraged by our growing pipeline of acquisitions opportunities that meet this criteria. In closing, our third quarter results demonstrated our ability to improve gross margins and cash generation in a challenging macroeconomic and geopolitical environment, that has impacted consumer discretionary spending. We expanded margins, improved working capital efficiency, and strengthened our balance sheet. Looking ahead, we believe our more efficient operating model, recent acquisitions, disciplined capital allocation, and financial flexibility position us to continue to pursue growth opportunities and create long-term shareholder value. With that, I will turn the call over to Stephen to walk through our third quarter financial results.