Q3 2025 Escalade Inc Earnings Call
Speaker #3: Good day , and welcome to the Escalade incorporated . Third quarter 2020 results conference call . All participants will be in listen only mode .
Operator: Good day and welcome to the Escalade, Inc. third quarter 2025 results conference call.
Operator: All participants will be in the listen-only mode. Should you need assistance during the conference call, please signal a conference specialist by pressing.
Speaker #3: Should you during the conference call , 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 , press star one , then one on your telephone keypad .
Operator: The star key followed by zero.
Operator: After today's presentation, there will be an opportunity for questions.
Operator: Opportunity to ask questions. To ask a question, you press star and then one on your telephone keypad. To withdraw your question, you may press star and then two.
Speaker #3: To withdraw your question , you may press star and then two . Please note that this conference is being recorded . I would now like to turn the conference over to Wes Smith , Vice President of financial reporting and investor Relations .
Operator: Star and then two. Please note that this conference is being recorded. I would now like to turn the conference over.
Operator: Wes Smith, Vice President of Financial Reporting and Investor Relations.
Speaker #3: Please go ahead .
Operator: Please go ahead.
Speaker #4: Thank you . Operator . On behalf of the entire team at Escalade , I'd like to welcome you to our third quarter 2020 financial results conference call .
Wes Smith: Thank you, operator. On behalf of the entire team at Escalade, I'd like to welcome you to our third quarter 2025 results conference call. Leading the call with me today is Interim 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 lines for questions. With that, I would like to turn.
Speaker #4: Leading the call with me today is interim 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 .
Speaker #4: 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.
Speaker #4: 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 lines for questions .
Speaker #4: With that , I would like to turn the call over to Patrick .
Patrick Griffin: The call over to Patrick. Thank you, Wes.
Speaker #5: Thank you , Wes , and welcome to everyone joining us on today's call . Before I discuss our third quarter results , I'd like to address the leadership transition that we announced this morning , effective October 29th .
Patrick Griffin: Welcome to everyone joining us on today's call. Before I discuss our third quarter results.
Patrick Griffin: I'd like to address the leadership transition.
Patrick Griffin: That we announced this morning. Effective October 29, I was appointed interim.
Speaker #5: I was appointed interim president and CEO by the board and replaced Armin Boehm , who departed the company on that same date . On behalf of the company , I want to thank Armin for his contributions over the last several months .
Patrick Griffin: President and CEO by the Board and replaced Armin Boehm who departed the company on that same date.
[Analyst 2]: I.
Patrick Griffin: On behalf of the company, I want to thank Armin for his contributions over the last several months. We wish him the best in his future endeavors.
Speaker #5: We wish him the best in his future endeavors . I want to assure our investors , employees and customers that this transition does not reflect any disruption to our strategic direction or our operations .
Patrick Griffin: I want to assure our investors, employees.
Patrick Griffin: Customers, this transition does not reflect any disruption to our strategic direction or our operations.
Speaker #5: The board and leadership team remain fully aligned and committed to executing our long term vision , and we remain focused on delivering exceptional consumer experiences , building enduring brand loyalty , and maintaining operational excellence .
Patrick Griffin: The board and leadership team remain fully.
Patrick Griffin: Aligned and committed to executing our long.
Patrick Griffin: Term vision, and we remain focused on.
Patrick Griffin: Delivering exceptional consumer experiences, building enduring brand loyalty, and maintaining operational excellence.
Speaker #5: These principles have defined who we have been for more than five decades as a public company , and they continue to guide us today .
Patrick Griffin: These principles have defined who we are.
Patrick Griffin: Been for more than five decades.
Patrick Griffin: A public company, and they continue to guide us today.
Speaker #5: As many of you know , I've had the privilege of working at Escalade for the past 23 years and have served as a member of the board of directors since 2009 .
Patrick Griffin: As many of you know, I've had the privilege of working at Escalade for the past 23 years and have served.
Patrick Griffin: As a member of the Board of Directors since 2009.
Speaker #5: As a result , I will work to ensure that this leadership transition will be as seamless as possible for all stakeholders . Finally , the board and executive leadership team are confident in our path forward and we remain sharply focused on creating value for our shareholders .
Patrick Griffin: As a result, I will work to ensure that this leadership transition will be as seamless as possible for all stakeholders.
Patrick Griffin: Finally, the Board and executive leadership team.
Patrick Griffin: are confident in our path forward, and we remain sharply focused on creating value for our shareholders.
Speaker #5: Turning now to our results , we experienced improved results driven by solid demand across most of our portfolio , of leading brands , as well as cost , discipline and operational efficiency .
Patrick Griffin: Turning now to our third quarter results.
Patrick Griffin: We experienced improved results driven by solid demand across most of our portfolio of leading brands, as well as cost discipline and operational efficiency.
Speaker #5: We achieved these results despite heightened consumer uncertainty and ongoing tariff related costs . Net sales . Of net sales margin improvement was driven by lower manufacturing and logistics costs .
Stephen Wawrin: We achieved these results despite heightened consumer.
Patrick Griffin: Uncertainty and ongoing tariff-related costs.
Stephen Wawrin: Net sales.
Patrick Griffin: Net sales margin improvement was driven by lower manufacturing and logistics costs, benefits from our ongoing footprint rationalization and tariff mitigation initiatives.
Speaker #5: Benefits from our ongoing footprint rationalization and tariff mitigation initiatives . Importantly , we believe our third quarter margins represent a sustainable level of performance absent any unforeseen cost or tariff pressures .
Patrick Griffin: Importantly, we believe our third quarter margins represent a sustainable level of performance absent.
Patrick Griffin: Any unforeseen cost or tariff pressures.
Speaker #5: Top line growth was led by . Continued investment in innovative , high quality products positions us well in an environment where consumers are increasingly focused on both value and quality .
Patrick Griffin: Top line growth was led by.
Patrick Griffin: Continued.
Patrick Griffin: Investment in innovative high quality products positions.
Patrick Griffin: Us well in an environment where consumers.
Patrick Griffin: Are increasingly focused on both value and quality. These efforts have enabled us to gain.
Speaker #5: These efforts have enabled us to gain market share in this dynamic market environment . As discussed on our prior calls , we have executed a proactive tariff mitigation and supply chain readiness strategy .
Patrick Griffin: Market share in this dynamic market environment.
Patrick Griffin: As discussed on our prior calls, we.
Patrick Griffin: Have executed a proactive tariff mitigation and supply chain readiness strategy.
Speaker #5: This playbook not only supported margin expansion this quarter , but has also positioned us well for the holiday shopping season as we strategically manage our inventory levels and assortment .
Patrick Griffin: This playbook not only supported margin expansion.
Patrick Griffin: This quarter has also positioned us well for the holiday shopping season as we strategically manage our inventory levels and assortment.
Speaker #5: Beginning in July , we implemented a series of targeted price increases across our portfolio . Our approach with surgical grounded in careful analysis of price elasticity and market dynamics .
Patrick Griffin: Beginning in July, we implemented a series.
Patrick Griffin: Of targeted price increases across our portfolio.
Patrick Griffin: Our approach was surgical, grounded in careful.
Patrick Griffin: Analysis of price elasticity and market dynamics.
Speaker #5: These price increases reflect a balanced approach to share the impact of tariffs across the supply chain . While preserving competitiveness and protecting margins .
Patrick Griffin: These price increases reflect a balanced approach.
Patrick Griffin: To share the impact of tariffs across the supply chain while preserving competitiveness and protecting margins.
Speaker #5: Our teams continue to closely monitor trade policy developments and will recalibrate as needed . Looking ahead to the fourth quarter , we anticipate consumer spending to remain cautious , consistent with broader retail trends , which are likely to result in softer holiday sales compared to recent years .
Patrick Griffin: Our teams continue to closely monitor trade.
Patrick Griffin: Policy developments and will recalibrate as needed.
Patrick Griffin: Looking ahead to the fourth quarter, we.
Patrick Griffin: Anticipate consumer spending to remain cautious, consistent with broader retail trends, which are likely to result in softer holiday sales compared to recent years.
Speaker #5: Notably , we have observed a shift in consumer spending patterns across our portfolio with strong demand for premium products , while demand for lower priced products is softening .
Patrick Griffin: Notably, we have observed a shift in.
Patrick Griffin: Consumer spending patterns across our portfolio, with strong demand for premium products.
Patrick Griffin: While demand for lower priced products is softening, persistent economic and geopolitical volatility has weighed on consumer confidence and sentiment, particularly with.
Speaker #5: Persistent economic and geopolitical volatility has weighed on consumer confidence and sentiment , particularly with middle and lower income consumers . With price sensitivity elevated , many of these consumers are delaying higher ticket purchases .
Patrick Griffin: Middle and lower income consumers.
Patrick Griffin: With price sensitivity elevated, many of these.
Patrick Griffin: Consumers are delaying higher ticket purchases, trading down, or waiting for promotional opportunities.
Speaker #5: Trading down or waiting for promotional opportunities . In response , we are collaborating closely with our retail partners to drive value oriented marketing and promotional strategies for certain segments of the market , highlighting products that resonate most with consumers and aligning pricing and inventory with demand trends .
Patrick Griffin: In response, we are collaborating closely with our retail partners to drive value-oriented initiatives.
Patrick Griffin: Marketing promotional strategies for certain segments of the market, highlighting products that resonate most with consumers, and aligning pricing and inventory with demand trends.
Speaker #5: Our proactive supply chain management over the past six months ensured that we are well prepared for the holiday season . We are ahead of schedule from an inventory delivery perspective and are fully prepared to capitalize on the entire holiday shopping season while navigating through near-term headwinds .
Patrick Griffin: Our proactive supply chain management over the.
Patrick Griffin: Past six months ensured that we are well prepared for the holiday season.
Patrick Griffin: We are ahead of schedule from an operational standpoint.
Patrick Griffin: Inventory delivery perspective, and are fully prepared to capitalize on the entire holiday shopping season while navigating through near-term headwinds. We remain firmly focused on our long-term strategy of investing in product innovation.
Speaker #5: We remain firmly focused on our long term strategy of investing in product innovation and brand development to strengthen our market leadership and to enhance the consumer experience through our investments , we are positioning Escalade for above market growth and long term value creation , anchored by leading brands defined by quality , innovation and durability .
Patrick Griffin: Brand development to strengthen our market.
Patrick Griffin: Leadership and to enhance the consumer experience.
Patrick Griffin: Through our investments, we are positioning Escalade.
Patrick Griffin: For above market growth and long-term value creation.
Patrick Griffin: Anchored by leading brands defined by quality, innovation, and durability, we are focused on strengthening our brands through strategic partnerships.
Speaker #5: We are focused on strengthening our brands through strategic partnerships . Recent collaborations and archery , basketball and billiards are helping elevate visibility and consumer engagement .
Patrick Griffin: Recent collaborations in archery, basketball, and billiards.
Patrick Griffin: Are helping elevate visibility and consumer engagement.
Speaker #5: We've seen this model succeed with our pickleball and cornhole brands , and we expect similar results as we expand this strategy across our brand portfolio .
Patrick Griffin: We've seen this model succeed with ours.
Patrick Griffin: Pickleball and cornhole brands, and we expect.
Patrick Griffin: Similar results as we expand this strategy across our brand portfolio.
Speaker #5: During the quarter , we launched our 2026 archery assortment , which included over 30 products across our Bear Trophy Ridge and Cajun brands .
Patrick Griffin: During the quarter we launched our 2026.
Patrick Griffin: Archery assortment which included over 30 products across our Bear Archery, Trophy Ridge, and Cajun Bowfishing brands.
Speaker #5: Early response from consumers to these new products and cutting edge innovations has been good . These new products include the Redeem and Alaskan Pro Archery bows offer advanced technology and performance at unparalleled price points , within Trophy Ridge .
Patrick Griffin: Early response from consumers to these new.
Patrick Griffin: Products and cutting edge innovations have been good.
Patrick Griffin: These new products include the Redeem and Alaskan Pro Archery Bows, offer advanced technology.
Patrick Griffin: Performance at unparalleled price points.
Patrick Griffin: Within Trophy Ridge, our refreshed accessory lineup includes the number one selling Whisker Biscuit Arrow Rest, which continues to reinforce our market leadership in the archery category. During the third quarter, we also completed.
Speaker #5: Our refreshed accessory lineup includes the number one selling whisker biscuit rest continues to reinforce our market leadership in the archery category during the third quarter .
Speaker #5: We also completed the acquisition of Gold Tip from Revelstoke . This acquisition aligns closely with our long term strategic and financial criteria , and will allow us to achieve greater scale and unlock additional synergies .
Patrick Griffin: The acquisition of Gold Tip from Revelyst.
Patrick Griffin: This acquisition aligns closely with our long.
Patrick Griffin: Term strategic and financial criteria and will allow us to achieve greater scale and unlock additional synergies.
Speaker #5: Gold tips , 20 year heritage and carbon arrows , along with bee Stingers , premium Stabilizers , enhances our category leadership and broadens our product offering to archery and bow hunting customers .
Patrick Griffin: Gold Tip's 20-year heritage in carbon arrows along with Bee Stinger's premium stabilizers enhances.
Patrick Griffin: Our category leadership and broadens our product offering to archery and bowhunting customers.
Speaker #5: We are actively integrating this business into our operations and expect this acquisition will be accretive to earnings in 2026 . Looking ahead , we will continue to pursue additional tech and acquisitions that are both financially accretive and strategically aligned at the same time , we will maintain a disciplined focus on balance sheet strength by prioritizing debt reduction , consistent dividends and opportunistic share repurchases to support shareholder value creation .
Patrick Griffin: We are actively integrating this business into Escalade.
Patrick Griffin: Our operations and expect this acquisition will be accretive to earnings in 2026.
Patrick Griffin: Looking ahead, we will continue to pursue.
Patrick Griffin: Additional tuck-in acquisitions that are both financially accretive and strategically aligned. At the same time, we will maintain a disciplined focus on balance sheet strength by prioritizing debt reduction, consistent dividends, and opportunistic share repurchases to support shareholder value creation.
Speaker #5: We also continue to emphasize community engagement as an organization and with our team members . We are particularly passionate about supporting initiatives that foster positive change , bring people together , and encourage healthy , active lifestyles .
Patrick Griffin: We also continue to emphasize community engagement.
Patrick Griffin: As an organization and with our team members, we are particularly passionate about supporting initiatives that foster positive change, bring people together, and encourage healthy, active lifestyles.
Speaker #5: As the latest example , we partnered with Project Blackboard and the Chicago Sky WNBA team to completely transform the basketball court at the Anna , R Langford Community Academy in Chicago .
Patrick Griffin: As the latest example, we partnered with Project Blackboard and the Chicago Sky WNBA.
Patrick Griffin: Team to completely transform the basketball court.
Patrick Griffin: At the Anna R. Langford Community Academy in Chicago.
Speaker #5: We look forward to continuing our community outreach efforts . In summary , I am proud of our team's continued discipline , execution , and strategic progress in the third quarter .
Patrick Griffin: We look forward to continuing our community outreach efforts.
Patrick Griffin: In summary, I am proud of our.
Patrick Griffin: Team's continued discipline, execution, and strategic progress in the third quarter.
Speaker #5: While the consumer environment remains challenging , we are well positioned to navigate near-term uncertainty and deliver long term value for our customers and shareholders .
Patrick Griffin: While the consumer environment remains challenging, we.
Patrick Griffin: Are well positioned to navigate near term.
Patrick Griffin: Uncertainty and deliver long-term value.
Patrick Griffin: Our customers and shareholders.
Speaker #5: With that , I'll turn the call over to Steven for a review of our third quarter financial results .
Patrick Griffin: With that, I'll turn the call over.
Patrick Griffin: To Stephen for a review of our third quarter financial results.
Speaker #6: Thank you . Patrick , for the three months ended September 30th , 2025 . Escalade reported net income of $5.6 million , or $0.40 per diluted share .
Stephen Wawrin: Thank you Patrick. For the three months ended September 30, 2025, Escalade reported net income of $5.6 million or $0.40 per diluted share on net sales of $67.8 million. For the third quarter, the company reported gross margins of 28.1% compared to 24.8% in the prior year period. The 344 basis point increase in gross margin was primarily the result of lower operational costs driven by our facility consolidation and cost rationalization program. A reduction in storage and handling costs was partially offset by $4.3 million in tariff-related costs. Selling, general and administrative expenses during the third quarter decreased by 4.1% or $0.5 million compared to the prior year period to $11.2 million. Earnings before interest, taxes, depreciation and amortization decreased by $1.3 million to $8.6 million in the third quarter of 2025 versus $9.9 million in the prior year period.
Speaker #6: On net sales of $67.8 million for the third quarter , the company reported gross margins of 28.1% , compared to 24.8% in the prior year period .
Speaker #6: The 344 basis point increase in gross margin was primarily the result of lower operational costs , driven by our facility consolidation and cost rationalization program , a reduction in storage and handling costs , partially offset by $4.3 million in tariff related costs .
Speaker #6: Selling , general and administrative expenses during the third quarter decreased by 4.1% , or $0.5 million , compared to the prior year period , to $11.2 million .
Speaker #6: Earnings before interest, taxes, depreciation, and amortization decreased by $1.3 million to $8.6 million in the third quarter of 2025, compared to $9.9 million in the prior period.
Speaker #6: This decline primarily reflects the absence of a one time , $3.9 million gain on the sale of assets recognized in the third quarter of last year .
Stephen Wawrin: This decline primarily reflects the absence of a one-time $3.9 million gain on the sale of assets recognized in the third quarter of last year. Total cash used from operations for the third quarter of 2025 was $1 million compared to cash provided by operations of $10.5 million in the prior year period. The year-over-year decline in operating cash flow primarily reflects increased working capital usage driven by the timing of quarter end, accounts receivable collections and our strategic inventory investments in preparation for the ramp up to the holiday season. As of September 30, 2025, the company had total cash and equivalents of $3.5 million at the end of the third quarter of 2025. Net leverage was 0.7 times. As of September 30, 2025, we had $20.2 million of total debt outstanding. With that, operator, we will open the call for questions.
Speaker #6: Total cash used from operations for the third quarter of 2025 was $1 million , compared to cash provided by operations of $10.5 million in the prior year period .
Speaker #6: The year over year decline in operating cash flow , primarily reflects increased working capital usage , driven by the timing of quarter end accounts receivable collections and our strategic inventory investments .
Speaker #6: In preparation for the ramp up to the holiday season . As of September 30th , 2025 , the company had total cash and equivalents of $3.5 million .
Speaker #6: At the end of the third quarter of 2025 . Net leverage was 0.7 times as of September 30th , 2025 . We had $20.2 million of total debt outstanding .
Speaker #6: With that operator , we will open the call for questions .
Speaker #3: Thank you . We will now begin the question and answer session . To ask a question , you may press star one on your touchtone phone .
Operator: Thank you. We will now begin the question and answer session. To ask a question, you will press STAR and one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.
Speaker #3: If you are using a speakerphone , please pick up your handset before pressing the keys . If at any time your question has been addressed and you would like to withdraw your question , please press star and then two .
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press STAR and then 2.
Speaker #3: At this time we will pause momentarily to assemble our roster . We have the first question from the line of Romel D from Aegis Capital .
Operator: At this time, we will pause momentarily to assemble our roster.
Operator: We have the first question on the line of Rommel Dionisio from Aegis Capital.
Speaker #3: Please go ahead .
Operator: Please go ahead.
Speaker #7: Good morning. Thanks for taking my question. I wonder if you could just provide a little more granularity in these really strong market gains.
[Analyst 1]: Good morning, thanks for taking my question. I wonder if you could just provide a little more granularity in these really strong market gains you guys are obviously displaying here with such solid top line performance despite a somewhat sluggish overall environment.
Speaker #7: You guys are obviously displaying here with such solid top line performance , despite a somewhat sluggish overall environment . You talked about archery , some new major new product launches there .
Stephen Wawrin: You talked about archery.
[Analyst 1]: Some new, major new product launches there. I wonder if you could just maybe touch on a couple of the other categories where you're seeing market share gains despite taking the price increase in July. Thank you.
Speaker #7: I wonder if you could just maybe touch on a couple of the other categories . We're seeing market share gains despite taking the price increase in July .
Speaker #7: Thank you .
Speaker #5: Thank you . Rommel . We've had pretty good success in other categories . Just an example . Our safety category , we're taking market share there .
Stephen Wawrin: Thank you, Rommel.
Patrick Griffin: We've had pretty good success in other categories.
Stephen Wawrin: Just an example, our safety category, we're
Patrick Griffin: Taking market share there where domestic manufacturer.
Speaker #5: We're domestic manufacturer and we've taken new opportunities against you know , competitors that we're bringing in products . So we continue to see opportunities there .
Stephen Wawrin: We have taken new opportunities against competitors.
Patrick Griffin: That we're bringing in products.
Stephen Wawrin: We continue to see opportunities there.
Speaker #5: And then some of our other categories and our games have done well as well . So we're I think , poised for success with new that are going to continue to come out .
Patrick Griffin: Some of our other categories.
Stephen Wawrin: Our games have done well as well.
Patrick Griffin: I think we're poised for success with new products that are going to continue to come out, looking into the first quarter as well as in the fourth quarter.
Speaker #5: Looking into the first quarter as well , in the fourth quarter .
Speaker #7: Okay , great . And maybe just a follow up on that . You highlight some some the strong strong categories . Archery , table tennis , billiards and safety .
[Analyst 1]: Okay, great. Maybe just to follow up on that, you highlight some of the stronger categories: Archery, table tennis, billiards, and safety. I just happen to notice Pickleball wasn't in that list despite the growth in that market. Could you just maybe talk about if that was just maybe an off quarter or is it the timing of new product launches? I wonder if you could just touch base on that category in particular. Thanks.
Speaker #7: I just happened to notice pickleball wasn't in that list . Just like the growth in that market . Could you just maybe talk about that was just maybe an off quarter or timing of new product launches ?
Speaker #7: I wonder if you could just touch base on that category in particular . Thanks .
Stephen Wawrin: Yeah, no, Rommel.
Speaker #5: Thanks . On pickleball , we've been in pickleball a long time . It's a growing overall market and you read about it in the in the news and so on .
[Analyst 1]: Thanks.
Patrick Griffin: Pickleball.
Stephen Wawrin: We've been at Pickleball a long time.
Patrick Griffin: It's a growing overall market and you.
Stephen Wawrin: Read about it in the news.
Patrick Griffin: When they're building Quartz, they're.
Speaker #5: They're building courts . They're converting courts . And it's also a competitive category . So we're continuing to maintain the market share that we have at retail .
Stephen Wawrin: Converting quartz, and it's also a competitive category. We're continuing to maintain the market.
Patrick Griffin: Share that we have at retail.
Speaker #5: If you go into a Dick's and Academy and we're continuing to invest with new products , you know , at the hype we just launched and that was well received .
Stephen Wawrin: If you go into a Dick's, an Academy, we're continuing to invest with new products, you know, with the Hype we.
Patrick Griffin: Just launched, and that was well received.
Speaker #5: So over the long term we're going to maintain , you know , maintain our position and pickleball will continue to invest there . We think long term it's going to be a sport that's going to be around for a long time .
Stephen Wawrin: Over the long term, you know, we're going to maintain, you know, to maintain our position and Pickleball will continue to invest there.
Patrick Griffin: We think long term it's going to be a sport that's going to be around for a long time.
Speaker #5: It's fun . It's easy to learn and it's enjoyable .
Stephen Wawrin: It's fun, it's easy to learn, and it's enjoyable.
Speaker #7: Great . Maybe I could just do one last one on costs . In the first quarter , I think you highlighted 1.6 million impact from tariff and this quarter is 4.3 .
Operator: Great.
[Analyst 1]: Maybe I could just do one last one on costs in the first quarter. I think you highlighted a $1.6 million impact from tariff in this quarter's $4.3 million. A lot of moving parts there. It seems to change on a weekly basis. Can you provide any insight on what the impact could be going into the fourth quarter? Is it roughly in that $4 million range or is that going to drop off if some of the recent negotiations are delivering some benefits?
Speaker #7: A lot of moving parts there . It seems to change on a weekly basis . But can you provide any insight on what the the impact could be going into the fourth quarter ?
Speaker #7: Is it roughly in that $4 million range, or is it? Is that going to drop off with some of the recent negotiations delivering some benefits?
Speaker #7: Thanks .
Patrick Griffin: Thanks. Yeah, no, that's a great question.
Speaker #5: Yeah . No , that's a great question . As you know , that's a dynamic , you know , situation right now as you read the news this morning with , you know , what's , you supposedly been negotiated , you know , with the meeting with Trump .
Stephen Wawrin: As you know, that's a dynamic situation right now, as you read the news this morning, with what's supposedly been negotiated.
Patrick Griffin: With the meeting with Trump and GE.
Speaker #5: And so , you know , we'll watch that and see how that impacts , you know , what we're purchasing . And that will maybe take some time to get implemented .
Stephen Wawrin: We will watch that and see how that impacts what we're purchasing. That'll maybe take some time to get implemented, but directionally, we're expecting the.
Speaker #5: But directionally we're expecting the impact to be lower in the fourth quarter . Relative to the third quarter .
Patrick Griffin: Impact to be lower in the fourth quarter relative to the third quarter. Great.
Speaker #7: Great . That's very helpful . Thank you very much .
[Analyst 1]: That's very helpful. Thank you very much.
Speaker #5: You're welcome . Robert .
Patrick Griffin: You're welcome, Rahul.
Speaker #3: Thank you . To ask a question , you may press star and then one on your touch tone phone . We have the next question from the line of David Cohen from Minerva .
Operator: Thank you.
Operator: To ask a question, you may press.
Operator: Star and then one on your touch-tone phone.
Operator: We have the next question from the line of David Cohen from Minerva. Please go ahead.
Speaker #3: Please go ahead .
Speaker #8: Thank you . Hi , Patrick . Good morning . Hi , Stephen . A couple of questions unrelated to one another . First of all , could you give us a little more color on the .
[Analyst 2]: Thank you. Hi, Patrick. Good morning. Hi, Stephen. A couple of questions unrelated to one another. First of all, could you give us a little more color on the management transition, what the timeline is for hiring a permanent CEO, and what traits you're going to be looking for in the new CEO?
Speaker #8: Management transition ? What ? The timeline is for hiring a permanent CEO and what traits you're going to be looking for in the new CEO .
Speaker #5: Yeah . Thanks , David , for the questions . So , you know , I think the main colors to refer to the press release that we announced and , you know , the board will gather and look , you know , for the permanent CEO and the traits that they want to focus on .
Patrick Griffin: Yeah, thanks, David, for the question.
Stephen Wawrin: I think the main.
Patrick Griffin: Caller is to refer to the press.
Stephen Wawrin: Release that we announced, and the board will gather and look for the permanent CEO and the traits that they want to focus on. I would say it's one where there's a focus that's aligned with our culture as a company that has a growth mindset and that is focused on the business.
Speaker #5: But I would say it's one where there's a focus on that's aligned with our culture as a company that has a growth mindset and that, you know, is focused on the business.
Speaker #8: Okay . The second question just relates to the comment about capital allocation and the continued focus on debt . Pay down the debt level .
[Analyst 2]: Okay. The second question just relates to the comment about capital allocation and the continued focus on debt pay down. The debt level at this point is the lowest it's been in a long time. We're getting to a point where there's not going to be much more debt to pay down, which is obviously a happy problem. In your mind, does that change the priority list as to what we're going to be spending free cash flow on over the next 12 months?
Speaker #8: At this point is the lowest it's been in a long time . We're getting to a point where there's not going to be much more debt to pay down , which is obviously a happy problem in your mind .
Speaker #8: Does that change the priority list as to what we're going to be spending free cash flow on over the next 12 months?
Speaker #5: That's a great question . You know , when we think about leverage , you know , we you know , we feel like we're in a good spot , but we we don't mind having cash on the balance sheet as well .
Patrick Griffin: That's a great question.
Stephen Wawrin: When we think about leverage, you.
Patrick Griffin: We feel like we're in a.
Stephen Wawrin: Good spot, but we don't mind having.
Patrick Griffin: Cash on the balance sheet as well.
Speaker #5: So we may be in a position where building a cash position , we continue to look for acquisitions . We've got a nice pipeline of acquisitions .
Stephen Wawrin: We may be in a position where building a cash position, we continue.
Patrick Griffin: To look for acquisitions.
Stephen Wawrin: We've got a nice pipeline of acquisitions.
Speaker #5: We were pleased to get the gold tip acquisition done this past quarter , and we think that's going to be , you know , a significant addition to our archery portfolio , which will start to play out in 2026 .
Patrick Griffin: We were pleased to get the Gold Tip.
Stephen Wawrin: Tip acquisition done this past quarter, and we think that's going to be a.
Patrick Griffin: Significant addition to our archery portfolio, which.
Stephen Wawrin: Will start to play out in 2026. We're continuing to pay a dividend.
Speaker #5: We're continuing to pay a dividend . And we think that's important . And then we'll look for share buybacks opportunistically you know as well .
Patrick Griffin: We think that's important.
Stephen Wawrin: We will look for share repurchases opportunistically as well.
Speaker #5: So that's another lever that we have . And then finally you know we're investing in our businesses as well in terms of domestic , you know , production here and warehousing and other things , along with brand building and tooling and other things .
Patrick Griffin: That's another lever that we have. Finally, we're investing in our.
Stephen Wawrin: Businesses as well in terms of domestic production here, warehousing, brand building, tooling, and other things.
Speaker #5: So, we're pushing all the levers, you know, from a capital allocation point of view.
Patrick Griffin: We're pushing all the levers from a capital allocation point of view.
Speaker #8: Okay . All right . Thank you .
Operator: Okay. All right.
[Analyst 2]: Thank you.
Speaker #5: You're welcome David .
Stephen Wawrin: You're welcome, David.
Speaker #3: Thank you . This concludes our question and answer session . I would like to turn the conference back over to Wes Smith for any closing remarks .
Operator: Thank you. This concludes our question and answer session.
Operator: I would like to turn the conference back over to Wes Smith for any closing remarks.
Speaker #4: Thank you . Operator . Once again , thank you for your interest in Escalade and joining our call . Should you have any questions , please feel free to contact us at IR at Escalade .
Wes Smith: Thank you, operator. Once again, thank you for your interest in Escalade and joining our call. Should you have any questions, please feel free to contact us at ir@escaladeinc.com and a member of our team will follow up with you. This concludes our call today. You may now disconnect.
Speaker #4: Inc.com and a member of our team will follow up with you . This concludes our call today . You may now disconnect .
Operator: Thank you.
Operator: The conference call has now concluded.
Operator: Thank you for editing today's presentation. You may now disconnect.
[Analyst 2]: Sam.