RGR Sturm Ruger and Co

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the third quarter of 2023, net sales were $120.9 million and diluted earnings were 42¢ per share. For the corresponding period in 2022, net sales were $139.4 million and diluted earnings were $1.03 per share.

For the nine months ended September 30, 2023, net sales were $413.2 million and diluted earnings were $2.13 per share. For the corresponding period in 2022, net sales were $446.6 million and diluted earnings were $3.90 per share.

The Company also announced today that its Board of Directors declared a dividend of 17¢ per share for the third quarter for stockholders of record as of November 15, 2023, payable on November 29, 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 third quarter of 2023, “Our third quarter sales and profitability decreased from last year, as overall firearms demand declined, creating a challenging, promotion-rich marketplace. We remained focused on the long-term, offering only modest promotions and adjusting the production rates on various product lines to better match demand, which reduced our overall production. While our decreased production hindered current period profitability, it resulted in only a nominal increase in our inventories and essentially flat distributor inventories during this seasonally slow quarter. Our debt-free balance sheet and diverse product offerings have us well positioned to capitalize when the firearms market rebounds.”

Mr. Killoy continued, “Our strategy remains unchanged as we stay focused on long-term shareholder value. To that end, new product development continues to be our priority. Earlier this week, we introduced the Ruger-made Marlin Dark Series lever-action rifles that will appeal to a broad variety of firearms enthusiasts interested in a more modern look and features to enhance the rifles’ classic design. In addition to our traditional new product introductions in 2023, including the Marlin 336 and 1894 Classic lever-action rifles and the Super Wrangler revolver, we continue to offer a variety of limited run distributor exclusive models across many of our product lines. We are also capitalizing on the opportunity to offer new Ruger pistols in California for the first time in 10 years, brought about by some recent changes in the pistol requirements. To date, four Ruger pistols were added to the California roster of certified handguns, including a Mark IV pistol, SR22 pistol, LCP pistol, and MAX-9 pistol. We look forward to introducing exciting new firearms in both the Ruger and Marlin brands and offering additional pistols to the California market in the coming months.”

Mr. Killoy concluded with an update from last week’s National Association of Sporting Goods Wholesalers Annual Exposition, “We were thrilled to be recognized by our wholesale customers with three industry awards at this year’s NASGW Show in Columbus, Ohio. We were named “Firearms Manufacturer of the Year”, and awarded “Best New Rifle” and “Best New Overall Product” for the Marlin Model 336. This was a great testament to our 1,800 loyal and hard-working associates.”

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

• The estimated unit sell-through of the Company’s products from independent distributors to retailers decreased 8% in the first nine months of 2023 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 7%.
• 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 $90.5 million or 22.7% of firearm sales in the first nine months of 2023. New product sales include only major new products that were introduced in the past two years.
• Our profitability declined in the third quarter of 2023 from the third quarter of 2022 as our gross margin decreased from 28% to 20%. The lower margin was driven by:
  • unfavorable deleveraging of fixed costs resulting from decreased production,
  • increased sales promotional activity,
  • cost increases in materials, commodities, services, wages, energy, fuel and transportation, and
  • a product mix shift toward products with relatively lower margins.
• During the third quarter of 2023, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 16,100 units and 1,000 units, respectively.
• Cash provided by operations during the nine months of 2023 was $17.3 million. At September 30, 2023, our cash and short-term investments totaled $120 million. Our current ratio is 4.5 to 1 and we have no debt.
• In the first nine months of 2023, capital expenditures totaled $11.6 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 nine months of 2023, the Company returned $107.8 million to its shareholders through the payment of our quarterly dividends and a $5.00 per share special dividend paid in January.
• At September 30, 2023, stockholders’ equity was $335.5 million, which equates to a book value of $18.92 per share, of which $6.77 per share was cash and short-term investments.

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

Tomorrow, November 2, 2023, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the third quarter 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 third 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)

 

 

September 30, 2023

December 31, 2022

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets

 

 

Cash

$

13,559

 

$

65,173

 

Short-term investments

 

106,451

 

 

159,132

 

Trade receivables, net

 

59,899

 

 

65,449

 

 

 

 

Gross inventories

 

150,021

 

 

129,294

 

Less LIFO reserve

 

(64,969

)

 

(59,489

)

Less excess and obsolescence reserve

 

(5,781

)

 

(4,812

)

Net inventories

 

79,271

 

 

64,993

 

 

 

 

Prepaid expenses and other current assets

 

14,780

 

 

7,091

 

Total Current Assets

 

273,960

 

 

361,838

 

 

 

 

Property, plant and equipment

 

458,332

 

 

447,126

 

Less allowances for depreciation

 

(388,531

)

 

(370,273

)

Net property, plant and equipment

 

69,801

 

 

76,853

 

 

 

 

Deferred income taxes

 

10,167

 

 

6,109

 

Other assets

 

46,422

 

 

39,963

 

Total Assets

$

400,350

 

$

484,763

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data)

 

 

September 30, 2023

December 31, 2022

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

Trade accounts payable and accrued expenses

$

29,736

 

$

35,658

 

Dividends payable

 

-

 

 

88,343

 

Contract liabilities with customers

 

1,436

 

 

1,031

 

Product liability

 

406

 

 

235

 

Employee compensation and benefits

 

23,142

 

 

30,160

 

Workers’ compensation

 

6,467

 

 

6,469

 

Income taxes payable

 

-

 

 

1,171

 

Total Current Liabilities

 

61,187

 

 

163,067

 

 

 

 

Employee compensation

 

1,484

 

 

1,846

 

Product liability accrual

 

46

 

 

73

 

Lease liability

 

2,328

 

 

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

 

45,828

 

 

45,075

 

Retained earnings

 

410,852

 

 

393,097

 

Less: Treasury stock – at cost

 

 

 

 

 

 

2023 – 6,714,338 shares

 

 

 

 

 

 

2022 – 6,714,338 shares

 

(145,812

)

 

(145,812

)

Total Stockholders’ Equity

 

335,305

 

 

316,738

 

Total Liabilities and Stockholders’ Equity

$

400,350

 

$

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

Nine Months Ended

 

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

 

 

 

 

 

Net firearms sales

$

120,368

 

$

138,771

 

$

411,114

 

$

444,615

 

Net castings sales

 

525

 

 

619

 

 

2,036

 

 

2,003

 

Total net sales

 

120,893

 

 

139,390

 

 

413,150

 

 

446,618

 

 

 

 

 

 

Cost of products sold

 

96,165

 

 

100,521

 

 

311,788

 

 

306,087

 

 

 

 

 

 

Gross profit

 

24,728

 

 

38,869

 

 

101,362

 

 

140,531

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling

 

8,669

 

 

8,763

 

 

27,702

 

 

25,828

 

General and administrative

 

9,733

 

 

10,247

 

 

31,898

 

 

30,927

 

Total operating expenses

 

18,402

 

 

19,010

 

 

59,600

 

 

56,755

 

 

 

 

 

 

Operating income

 

6,326

 

 

19,859

 

 

41,762

 

 

83,776

 

 

 

 

 

 

Other income:

 

 

 

 

Interest income

 

1,454

 

 

730

 

 

4,147

 

 

951

 

Interest expense

 

(122

)

 

(88

)

 

(177

)

 

(205

)

Other income, net

 

431

 

 

490

 

 

1,082

 

 

2,092

 

Total other income, net

 

1,763

 

 

1,132

 

 

5,052

 

 

2,838

 

 

 

 

 

 

Income before income taxes

 

8,089

 

 

20,991

 

 

46,814

 

 

86,614

 

 

 

 

 

 

Income taxes

 

658

 

 

2,602

 

 

8,848

 

 

17,236

 

 

 

 

 

 

Net income and comprehensive income

$

7,431

 

$

18,389

 

$

37,966

 

$

69,378

 

 

 

 

 

 

Basic earnings per share

$

0.42

 

$

1.04

 

$

2.14

 

$

3.93

 

 

 

 

 

 

Diluted earnings per share

$

0.42

 

$

1.03

 

$

2.13

 

$

3.90

 

 

Weighted average number of common shares outstanding - Basic

 

 

 

 

 

17,722,682

 

 

 

 

 

 

 

 

17,668,435

 

 

 

 

 

 

 

 

17,705,280

 

 

 

 

 

 

 

 

17,643,473

 

 

 

 

Weighted average number of common shares outstanding - Diluted

 

 

 

 

 

17,889,089

 

 

 

 

 

 

 

 

17,825,797

 

 

 

 

 

 

 

 

17,828,710

 

 

 

 

 

 

 

 

17,770,120

 

 

 

 

 

 

 

 

Cash dividends per share

$

0.36

 

$

0.47

 

$

6.10

 

$

2.01

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

 

Nine Months Ended

 

September 30, 2023

October 1, 2022

 

 

 

Operating Activities

 

 

Net income

$

37,966

 

$

69,378

 

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

 

 

Depreciation and amortization

 

19,576

 

 

20,120

 

Stock-based compensation

 

2,968

 

 

5,053

 

(Gain) loss on sale of assets

 

(4

)

 

15

 

Deferred income taxes

 

(4,058

)

 

(1,908

)

Changes in operating assets and liabilities:

 

 

Trade receivables

 

5,550

 

 

(4,326

)

Inventories

 

(14,278

)

 

(17,655

)

Trade accounts payable and accrued expenses

 

(5,967

)

 

(5,315

)

Contract liability with customers

 

405

 

 

-

 

Employee compensation and benefits

 

(8,129

)

 

(11,774

)

Product liability

 

144

 

 

(340

)

Prepaid expenses, other assets and other liabilities

 

(15,704

)

 

(2,985

)

Income taxes payable

 

(1,171

)

 

-

 

Cash provided by operating activities

 

17,298

 

 

50,263

 

 

 

 

Investing Activities

 

 

Property, plant and equipment additions

 

(11,637

)

 

(17,206

)

Proceeds from sale of assets

 

5

 

 

41

 

Purchases of short-term investments

 

(141,410

)

 

(200,378

)

Proceeds from maturities of short-term investments

 

194,091

 

 

235,041

 

Cash provided by investing activities

 

41,049

 

 

17,498

 

 

 

 

Financing Activities

 

 

Remittance of taxes withheld from employees related to

 

 

 

 

 

 

share-based compensation

 

(2,156

)

 

(3,371

)

Repurchase of common stock

 

-

 

 

(107

)

Dividends paid

 

(107,805

)

 

(35,474

)

Cash used for financing activities

 

(109,961

)

 

(38,952

)

 

 

 

(Decrease) increase in cash and cash equivalents

 

(51,614

)

 

28,809

 

 

 

 

Cash and cash equivalents at beginning of period

 

65,173

 

 

21,044

 

 

 

 

Cash and cash equivalents at end of period

$

13,559

 

$

49,853

 

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

Nine Months Ended

 

September 30, 2023

October 1,  2022

September 30, 2023

October 1,  2022

 

 

 

 

Net income

$

7,431

 

$

18,389

 

$

37,966

 

$

69,378

 

 

 

 

 

 

Income tax expense

 

658

 

 

2,602

 

 

8,848

 

 

17,236

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

expense

 

6,530

 

 

6,656

 

 

19,576

 

 

20,120

 

Interest income

 

(1,454

)

 

(730

)

 

(4,147

)

 

(951

)

Interest expense

 

122

 

 

88

 

 

177

 

 

205

 

EBITDA

$

13,287

 

$

27,005

 

$

62,420

 

$

105,988

 

EBITDA margin

 

11.0

%

 

19.4

%

 

15.1

%

 

23.7

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231101157893/en/

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