RGR Sturm Ruger and Co

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2023, net sales were $142.8 million and diluted earnings were 91¢ per share. For the corresponding period in 2022, net sales were $140.7 million and diluted earnings were $1.17 per share.

For the six months ended July 1, 2023, net sales were $292.3 million and diluted earnings were $1.72 per share. For the corresponding period in 2022, net sales were $307.2 million and diluted earnings were $2.87 per share.

The Company also announced today that its Board of Directors declared a dividend of 36¢ per share for the second quarter for stockholders of record as of August 15, 2023, payable on August 30, 2023. This dividend varies every quarter because the Company pays a percentage of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Christopher J. Killoy commented on the second quarter of 2023, “Our second quarter sales were flat compared to last year despite the softening demand in some product categories, including polymer pistols, bolt action rifles, and modern sporting rifles. We continually review independent distributor sell-through data and inventory trends, and channel inventories of several of our product families remain below desired levels. We continue to adjust our level of production and product mix to better align our output with current, and expected, consumer demand as we strive to capitalize on these opportunities and better satisfy demand. While down from the prior year quarter, we are pleased that our profitability this quarter improved from the first quarter of 2023 on essentially flat sales.”

Mr. Killoy discussed some of the Company’s recent new product development initiatives, “The first half of the year saw several new product introductions. Most notably, we launched two new additions to the Marlin lever-action rifle family - the 336 Classic, chambered in 30-30 Winchester and the 1894 Classic, chambered in .44 Magnum. These products were received with great excitement by our customers and Marlins continue to be the most talked about and requested products in our lineup. In April, we launched the Super Wrangler steel frame single-action revolver, which comes with two cylinders, one for inexpensive .22LR ammunition and one for the more powerful 22 WMR. The moderately-priced Wrangler family has remained popular since its introduction in 2019.”

Mr. Killoy concluded his remarks on new product introductions, “Recently, there were some changes to the requirements for pistols to be sold in California. Consequently, three Ruger pistols were added to the California roster of certified handguns, including a Mark IV pistol, SR22 pistol, and LCP pistol. This is the first time in 10 years that we have been able to offer new quality Ruger pistols to our customers in California and we hope to add more in the second half of the year.”

Mr. Killoy made the following observations related to the Company’s second quarter 2023 performance:

• The estimated unit sell-through of the Company’s products from independent distributors to retailers decreased 7% in the first half of 2023 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 4%.
• Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin lever-action rifles, LC Carbine, Small-Frame Autoloading Rifle, Super Wrangler revolver, and the Security-380 pistol, represented $63.3 million or 23% of firearm sales in the first half of 2023. New product sales include only major new products that were introduced in the past two years.
• Our profitability declined in the second quarter of 2023 from the second quarter of 2022 as our gross margin decreased from 31% to 27%. The lower margin was driven by:
  • a product mix shift toward products with relatively lower margins that remain in stronger demand,
  • inflationary cost increases in materials, commodities, services, energy, fuel and transportation,
  • unfavorable deleveraging of fixed costs resulting from decreased production, and
  • increased sales promotional costs.
• During the second quarter of 2023, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 51,100 units and 13,400 units, respectively.
• Cash provided by operations during the first half of 2023 was $21.8 million. At July 1, 2023, our cash and short-term investments totaled $137.7 million. Our current ratio is 4.5 to 1 and we have no debt.
• In the first half of 2023, capital expenditures totaled $4.9 million related to new product introductions and upgrades to our manufacturing equipment and facilities. We expect our 2023 capital expenditures to approximate $20 million.
• In the first half of 2023, the Company returned $101.4 million to its shareholders through the payment of our quarterly dividends and a $5.00 per share special dividend paid in January.
• At July 1, 2023, stockholders’ equity was $333.2 million, which equates to a book value of $18.80 per share, of which $7.77 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the second quarter of 2023. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

On Thursday, August 3, 2023, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second quarter 2023 operating results. Interested parties can listen to the webcast via this link or by visiting Ruger.com/corporate. Those who wish to ask questions during the webcast will need to pre-register prior to the meeting.

The Quarterly Report on Form 10-Q for the second quarter of 2023 is available on the SEC website at SEC.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Quarterly Report on Form 10-Q to ensure that they have adequate information to make informed investment judgments.

About Sturm, Ruger & Co., Inc.

Sturm, Ruger & Co., Inc. is one of the nation's leading manufacturers of rugged, reliable firearms for the commercial sporting market. With products made in America, Ruger offers consumers almost 800 variations of more than 40 product lines, across both the Ruger and Marlin brands. For almost 75 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens®,” echoes our commitment to these principles as we work hard to deliver quality and innovative firearms.

The Company may, from time to time, make forward-looking statements and projections concerning future expectations. Such statements are based on current expectations and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company, the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

 

 

July 1, 2023

December 31, 2022

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets

 

 

Cash

$

11,456

 

$

65,173

 

Short-term investments

 

126,211

 

 

159,132

 

Trade receivables, net

 

53,066

 

 

65,449

 

 

 

 

Gross inventories

 

137,251

 

 

129,294

 

Less LIFO reserve

 

(62,606

)

 

(59,489

)

Less excess and obsolescence reserve

 

(5,229

)

 

(4,812

)

Net inventories

 

69,416

 

 

64,993

 

 

 

 

Prepaid expenses and other current assets

 

7,912

 

 

7,091

 

Total Current Assets

 

268,061

 

 

361,838

 

 

 

 

Property, plant and equipment

 

451,710

 

 

447,126

 

Less allowances for depreciation

 

(382,444

)

 

(370,273

)

Net property, plant and equipment

 

69,266

 

 

76,853

 

 

 

 

Deferred income taxes

 

10,059

 

 

6,109

 

Other assets

 

49,512

 

 

39,963

 

Total Assets

$

396,898

 

$

484,763

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data)

 

 

July 1, 2023

December 31, 2022

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

Trade accounts payable and accrued expenses

$

30,348

 

$

35,658

 

Dividends payable

 

-

 

 

88,343

 

Contract liabilities with customers

 

100

 

 

1,031

 

Product liability

 

460

 

 

235

 

Employee compensation and benefits

 

22,877

 

 

30,160

 

Workers’ compensation

 

6,109

 

 

6,469

 

Income taxes payable

 

-

 

 

1,171

 

Total Current Liabilities

 

59,894

 

 

163,067

 

 

 

 

Employee compensation

 

1,054

 

 

1,846

 

Product liability accrual

 

47

 

 

73

 

Lease liability

 

2,727

 

 

3,039

 

 

 

 

Contingent liabilities

 

-

 

 

-

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

Common Stock, non-voting, par value $1:

 

 

Authorized shares 50,000; none issued

 

-

 

 

-

 

Common Stock, par value $1:

 

 

Authorized shares – 40,000,000

 

 

2023 – 24,437,020 issued,

 

 

17,722,682 outstanding

 

 

2022 – 24,378,568 issued,

 

 

17,664,230 outstanding

 

24,437

 

 

24,378

 

Additional paid-in capital

 

44,808

 

 

45,075

 

Retained earnings

 

409,743

 

 

393,097

 

Less: Treasury stock – at cost

 

 

2023 – 6,714,338 shares

 

 

2022 – 6,714,338 shares

 

(145,812

)

 

(145,812

)

Total Stockholders’ Equity

 

333,176

 

 

316,738

 

Total Liabilities and Stockholders’ Equity

$

396,898

 

$

484,763

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

 

 

Three Months Ended

Six Months Ended

 

July 1, 2023

July 2, 2022

July 1, 2023

July 2, 2022

 

 

 

 

 

Net firearms sales

$

141,853

 

$

139,911

 

$

290,746

 

$

305,844

 

Net castings sales

 

951

 

 

742

 

 

1,511

 

 

1,384

 

Total net sales

 

142,804

 

 

140,653

 

 

292,257

 

 

307,228

 

 

 

 

 

 

Cost of products sold

 

104,656

 

 

97,099

 

 

215,623

 

 

205,566

 

 

 

 

 

 

Gross profit

 

38,148

 

 

43,554

 

 

76,634

 

 

101,662

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling

 

9,808

 

 

8,630

 

 

19,033

 

 

17,065

 

General and administrative

 

9,925

 

 

9,734

 

 

22,165

 

 

20,680

 

Total operating expenses

 

19,733

 

 

18,364

 

 

41,198

 

 

37,745

 

 

 

 

 

 

Operating income

 

18,415

 

 

25,190

 

 

35,436

 

 

63,917

 

 

 

 

 

 

Other income:

 

 

 

 

Interest income

 

1,479

 

 

190

 

 

2,693

 

 

221

 

Interest expense

 

(30

)

 

(26

)

 

(55

)

 

(117

)

Other income, net

 

369

 

 

750

 

 

651

 

 

1,602

 

Total other income, net

 

1,818

 

 

914

 

 

3,289

 

 

1,706

 

 

 

 

 

 

Income before income taxes

 

20,233

 

 

26,104

 

 

38,725

 

 

65,623

 

 

 

 

 

 

Income taxes

 

4,048

 

 

5,347

 

 

8,190

 

 

14,634

 

 

 

 

 

 

Net income and comprehensive income

$

16,185

 

$

20,757

 

$

30,535

 

$

50,989

 

 

 

 

 

 

Basic earnings per share

$

0.91

 

$

1.18

 

$

1.73

 

$

2.89

 

 

 

 

 

 

Diluted earnings per share

$

0.91

 

$

1.17

 

$

1.72

 

$

2.87

 

 

Weighted average number of common shares outstanding - Basic

 

17,714,471

 

 

17,652,148

 

 

17,696,579

 

 

17,631,060

 

 

Weighted average number of common shares outstanding - Diluted

 

17,826,205

 

 

17,799,707

 

 

17,798,521

 

 

17,762,765

 

 

 

 

 

 

Cash dividends per share

$

0.32

 

$

0.68

 

$

5.74

 

$

1.54

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

 

Six Months Ended

 

July 1, 2023

July 2, 2022

 

 

 

Operating Activities

 

 

Net income

$

30,535

 

$

50,989

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

Depreciation and amortization

 

13,046

 

 

13,464

 

Stock-based compensation

 

1,948

 

 

3,356

 

Gain on sale of assets

 

(2

)

 

(56

)

Deferred income taxes

 

(3,950

)

 

245

 

Changes in operating assets and liabilities:

 

 

Trade receivables

 

12,383

 

 

793

 

Inventories

 

(4,423

)

 

(13,295

)

Trade accounts payable and accrued expenses

 

(5,654

)

 

(9,662

)

Contract liability with customers

 

(931

)

 

-

 

Employee compensation and benefits

 

(8,882

)

 

(13,019

)

Product liability

 

199

 

 

(333

)

Prepaid expenses, other assets and other liabilities

 

(11,285

)

 

(103

)

Income taxes payable

 

(1,171

)

 

-

 

Cash provided by operating activities

 

21,813

 

 

32,379

 

 

 

 

Investing Activities

 

 

Property, plant and equipment additions

 

(4,873

)

 

(14,330

)

Proceeds from sale of assets

 

3

 

 

16

 

Purchases of short-term investments

 

(117,977

)

 

(199,992

)

Proceeds from maturities of short-term investments

 

150,898

 

 

234,963

 

Cash provided by investing activities

 

28,051

 

 

20,657

 

 

 

 

Financing Activities

 

 

Remittance of taxes withheld from employees related to share-based compensation

 

(2,156

)

 

(3,371

)

Dividends paid

 

(101,425

)

 

(27,170

)

Cash used for financing activities

 

(103,581

)

 

(30,541

)

 

 

 

(Decrease) increase in cash and cash equivalents

 

(53,717

)

 

22,495

 

 

 

 

Cash and cash equivalents at beginning of period

 

65,173

 

 

21,044

 

 

 

 

Cash and cash equivalents at end of period

$

11,456

 

$

43,539

 

Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding its financial results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and two non-GAAP financial measures, EBITDA and EBITDA margin, which management believes provides useful information to investors. These non-GAAP financial measures may not be comparable to similarly titled financial measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA and EBITDA margin are useful to understanding its operating results and the ongoing performance of its underlying business, as EBITDA provides information on the Company’s ability to meet its capital expenditure and working capital requirements, and is also an indicator of profitability. The Company believes that this reporting provides better transparency and comparability to its operating results. The Company uses both GAAP and non-GAAP financial measures to evaluate the Company’s financial performance.

EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. The Company calculates this by adding the amount of interest expense, income tax expense, and depreciation and amortization expenses that have been deducted from net income back into net income, and subtracting the amount of interest income that was included in net income from net income to arrive at EBITDA. The Company calculates EBITDA margin by dividing EBITDA by total net sales.

Non-GAAP Reconciliation – EBITDA

 

EBITDA

 

(Unaudited, dollars in thousands)

 

 

Three Months Ended

Six Months Ended

 

July 1, 2023

July 2, 2022

July 1, 2023

July 2, 2022

 

 

 

 

Net income

$

16,185

 

$

20,757

 

$

30,535

 

$

50,989

 

 

 

 

 

Income tax expense

4,048

5,347

8,190

14,634

 

Depreciation and amortization expense

 

6,510

 

 

6,709

 

 

13,046

 

 

13,464

 

Interest income

 

(1,479

)

 

(190

)

 

(2,693

)

 

(221

)

Interest expense

 

30

 

 

26

 

 

55

 

 

117

 

EBITDA

$

25,294

 

$

32,649

 

$

49,133

 

$

78,983

 

EBITDA margin

 

17.7

%

 

23.2

%

 

16.8

%

 

25.7

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230802128149/en/

Sturm, Ruger & Company, Inc. One Lacey Place Southport, CT 06890 www.ruger.com 203-259-7843