Good morning, and welcome to the Escalade Second Quarter 2024 Results Conference Call. All participants will be in a 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 on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I will now like to turn the conference over to Patrick Griffin, VP, Corporate Development 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 2024 results conference call. Leading the call with me today are President and CEO, Walt Glazer, 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 Walt. Thank you, Patrick, and welcome to those joining us on the call today. We demonstrated strong operational discipline in the second quarter, as highlighted by our ongoing actions to reduce fixed overhead costs, improve manufacturing efficiency, reduce working capital, and further strengthen our balance sheet amid a softer consumer spending environment. While net sales declined 7.7% versus the prior year, we delivered a 24.2% gross margin, which was a modest decline versus the prior year period. We continue to focus on operational efficiencies to enhance our margins. While we effectively managed fixed overhead costs within our control, these efforts were offset by higher promotional activity with our retail partners, together with one-time, nonrecurring impacts related to the ongoing rationalization of our existing manufacturing footprint. Importantly, our second quarter cash flow from operations increased nearly 60% on a year-over-year basis in Q2, which allowed us to repay $8.6 million of high-interest variable rate debt in the period. At the end of the second quarter, our net leverage was 1.7x our trailing twelve months EBITDA, which is near the low end of our long-term leverage ratio of 1.5x to 2.5x that we have previously discussed. We continue to progress with our plans to divest our Rosarito property and facility. Meanwhile, we have reduced the operating costs at this facility and are evaluating other cost rationalization opportunities across our broader corporate footprint as we seek to drive increased operating leverage and profitability. As we look to the second half of 2024, we continue to expect our ongoing cost rationalization and other initiatives will position us to deliver a full-year gross margin rate above full year 2023, despite the overall softness in spending for consumer discretionary purchases. Importantly, we have seen continued consumer demand for our leading brands, particularly STIGA Table Tennis, along with Bear Archery and Brunswick Billiards. We believe this reflects the strength of those brands and consumers searching for high quality combined with good value. Additionally, our owned DTC e-commerce volumes continue to increase, up 28% year-over-year during the quarter. We believe consumer loyalty to our market-leading, differentiated recreational brands continues to position us to deliver above-market performance as we move through the next phase of the retail cycle. As before, we continue to invest in connecting more deeply with consumers through our own e-commerce initiatives, marketing programs, corporate partnerships, while continuing to deliver category-leading innovative products that build loyalty across our diverse base of established and emerging recreational sports brands. Looking ahead, we continue to closely monitor consumer discretionary spending, the relative health of household balance sheets, and employment conditions. While U.S. consumer discretionary spending is softening, we believe that our brands position us among a higher income, more durable cohort of consumers capable of maintaining a base level of discretionary spending. Given current market conditions, we continue to focus on inventory rationalization, which supports improved cash conversion. Our cash flow seasonality has normalized this year, which was a factor behind our second quarter cash generation. We expect cash generation to be seasonally softer in the third quarter, followed by stronger cash flow in the fourth quarter amid the seasonal holiday demand. As we continue to generate strong cash flow, we are prioritizing the continued repayment of our high-interest variable rate debt. As we reduce our leverage, we will evaluate additional opportunities to maximize shareholder value consistent with our long-term capital allocation strategy. We believe Escalade is well positioned to manage through this current environment of soft consumer discretionary spending while continuing to invest in our business to drive future growth. Our vision to build and strengthen our brand portfolio, centered on helping consumers create great memories while engaging in healthy activities with their family and friends. I believe we have the strongest team in the 100-year history of our company, and we are working together to overcome industry and economic challenges today and to create opportunities for the next 100 years.... We look forward to updating you with all our progress next quarter. With that, I turn the call over to Stephen for his prepared remarks. Thank you, Walt. For the three months ended June 30th, 2024, Escalade reported net income of $2.8 million, or $0.20 for diluted share on net sales of $62.5 million. For the second quarter, the company reported gross margins of 24.2% compared to 24.6% in the prior year period. The 40 basis point decrease was primarily the result of lower net sales, higher promotional activity, partly offset by lower inventory handling costs and a reduction in fixed costs associated with our facility in Mexico. Selling, general, and administrative expenses during the second quarter increased by 3% compared to the prior year period to $10.1 million. As a percentage of net sales, SG&A increased by 168 basis points year-over-year to 16.1% in the second quarter of 2024, compared to 14.4% in the second quarter of 2023. Second quarter SG&A increase was driven by additional selling and marketing spending in a more promotional retail environment. Earnings before interest, taxes, depreciation, and amortization decreased by $1.8 million to $5.8 million in the second quarter of 2024, versus $7.7 million in the prior year period. Total cash provided by operations for the second quarter of 2024 was $13.3 million for the quarter, compared to $8.4 million in the prior year period. The increase in cash flow from operations primarily reflects an increase in cash flow generated from lower net working capital, specifically lower inventory and accounts receivable in the second quarter of 2024, due to our inventory reduction efforts and normalizing sales levels. As of June 30th, 2024, the company had total cash and equivalents of $362,000, together with $71 million of availability on our senior secured revolving credit facility maturing in 2027. At the end of the second quarter of 2024, net debt outstanding, or total debt plus cash, was 1.7x trailing twelve-month EBITDA. As of June 30th, 2024, we had $43.2 million of total debt outstanding, including $14 million of high interest variable rate debt. We will continue to focus on repaying the remainder of this variable rate debt during 2024, while managing our total net leverage within our long-term target range of 1.5x to 2.5x EBITDA. With that, operator, we will open the call for questions. We will now begin the question and answer session. To ask a question, you may press star on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw from the question queue, you may press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question will come from David Cohen with Minerva. You may now go ahead. Morning, guys. Thanks for carefully stewarding the ship through some choppy waters. And thanks in particular for pointing out that your leverage ratios are now toward the lower end of what you've laid out as target. And then you made some small allusions in the press release to ways you might deploy capital going forward, but could you give us a little more granular look? Because obviously, if things go as planned, by the end of the year, you'll be probably butting up right on that 1.5x leverage ratio. So if you could sort through buyback, acquisition, internal CapEx, dividend policy, that would be great. Thanks. Yeah. Good morning, David, and thanks for your questions. Yeah, so as you point out, we do believe we'll be actually below the 1.5x by the end of the year if we don't do something different. We do, as Stephen mentioned, expect to be out of the higher cost variable rate piece of our debt structure. So, you know, traditionally we've used all the levers, acquisition, share repurchase, dividends, internal investment. We continue, for now, to focus on the debt repayments. We're paying about 7% on the variable piece and a little bit less than 3% on the fixed piece, so, you know, we're motivated to pay off that higher cost as part of our debt structure. But, I would say our priorities would be, you know, first, internal investment in our business. Secondly, would be probably maintaining the dividend, of course, share repurchase, which we've used in the past, and, you know, we think it can be an effective tool. And then, you know, lastly, would be acquisitions. We have made a number of acquisitions over the years, and it's been an effective strategy for us. I guess, David, I would say we feel really good about the portfolio we have today. We don't feel like we have to do anything to round out our portfolio. But of course, we see a lot of deals, and I would say the deal activity has picked up some. So we would be very selective and cautious on the acquisition front. Okay, and if I could ask a follow-up. Could you talk a little about the pickleball opportunity as you see it going forward? Is that an area where you think you need to bolt on other brands, other equipment types, or do you think you can sort of address that organically? ... Sure, you know, and pickleball is really an interesting area. We've been in that business for about 10 years, we feel like we've got a strong brand in paddles, you know, with Onix, one of the leading brands and a legitimate, effective brand in the space. You know, it has been a bit of a gold rush. I mean, everybody has been trying to get into the pickleball business. There's not much barrier to entry in paddles at the low end. You know, you can buy cheap honeycomb material and cut out a paddle and wrap a handle around it and sell it. At the upper, mid, and higher end, where we play, there's, you know, a remarkable amount of technology involved in, so we spend a lot of time and energy, you know, on, you know, technology advances, you know, on the paddle front. So, we like, we love our Onix brand and, and think it's well positioned. On the ball side, we have, the Onix ball and then the Dura Fast ball, which is the preferred tournament ball for the pros. Here, again, there's more technology in making a pickleball than you might imagine. You know, maybe it looks just like a plastic ball, but, you know, is it, you know, what type of plastic are you using? You know, what are the tolerances? Is it injection molded? Is it roto molded? You know, how are you processing the ball? So, we feel like, here, again, we've got good technology there. And then, you know, to your point, add-on product categories, we've expanded into eye protection, which is increasingly, you know, an important area. We're getting good uptake there. Nets, we make a variety of nets for people to use at their home or in, you know, in a tournament type of environment. So, I would say we're probably not gonna get into apparel. That's not an area that we're, you know, have a particular expertise in, but, you know, there are others that are certainly addressing that side of it. Does that answer your question fully? Yeah, yeah, yeah. Thanks. Thanks very much. You're very welcome. Our final question will come from Rommel Dionisio with Aegis. You may now go ahead. Thanks for taking my question, and good morning. You alluded to seemingly a rise in competitive promotions. Yeah, I wonder if you could just give us a little more granularity on that. Obviously, there's some retail inventory destocking, so maybe that'll help a little. But, obviously, you guys continued to invest in your brand. So there are particular categories where you're seeing that, those competitive promotions worse than others? And maybe some thoughts going into the holiday season, how you would look to position from a brand perspective, you obviously kept up new product introductions and your marketing efforts, but would you expect to, you know, continue to promote to the level of competition? Thank you. Sure. Thank you, Rommel, and good morning. Yeah, so, you know, as we pointed out, we are investing more in advertising and promotion, and, you know, that kind of fits with both our emphasis on managing our inventory levels and then also, you know, the current environment. You know, it's just a little. I would say it's a more competitive, more promotional environment, and we would expect that to continue. You know, looking into the holiday season, I would say that our expectations are that inventories will be in good shape, you know, during the holiday season. Our POS is better than our factory sales. Many of our retailers are cautious and managing their inventories closely. So, you know, if the consumer surprises us and comes back strongly during the holiday season, I think there'll be a big opportunity for, you know, for much higher factory sales as we refill the channel. So that's... You know, we're entering the holiday period cautiously, optimistic. We again feel like inventories are in decent shape. You know, how the consumer behaves is really pretty much anybody's guess. Okay, and maybe just a quick follow-up. You mentioned that international sales were a real highlight for you, up 15% in the quarter. I wonder if you could just maybe provide a little more detail on that. Was there a particular region that was strong or new product or product line that was particularly strong for you there in international? Thanks. Yeah, and I, Rommel, I would say that, you know, we're coming off a pretty low base there, but it's an area of focus for us. And I would, you know, point out basketball, pickleball, I would point out Europe and Australia, New Zealand, those kind of markets have been good for us. We do have a budding effort in China. We're selling some of our branded products in China through our partnership there. So, again, it's an area of focus. It's coming off a low base, and we think it's an opportunity with a long runway for Escalade. Great. Thanks very much. This concludes our question and answer session. I would like to turn the conference back over to Patrick Griffin for any closing remarks. 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.