Sturm, Ruger & Company, Inc. Reports Second Quarter Diluted Earnings of 35¢ Per Share and Declares Dividend of 14¢ Per Share

SOUTHPORT, Conn.--()--Sturm, Ruger & Company, Inc. (NYSE:RGR) announced today that for the second quarter of 2019 the Company reported net sales of $96.3 million and diluted earnings of 35¢ per share, compared with net sales of $128.4 million and diluted earnings of 86¢ per share in the second quarter of 2018.

For the six months ended June 29, 2019, net sales were $210.4 million and diluted earnings were $1.09 per share. For the corresponding period in 2018, net sales were $259.6 million and diluted earnings were $1.68 per share.

The Company also announced today that its Board of Directors declared a dividend of 14¢ per share for the second quarter for stockholders of record as of August 15, 2019, payable on August 30, 2019. 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 results, “Thus far, 2019 has been challenging for the firearms industry. Our internal surveys of distributors and retailers indicate that the overall market for new firearms in the first half of the year may have declined more than the adjusted NICS data would indicate. Despite the softness in demand, we will not go down the path of quick fixes, deep discounting and reckless extension of payment terms in an effort to generate better short term results - at the expense of the long term, disciplined execution of our strategy. Our strategy remains focused and consistent. We will continue to develop innovative and exciting new products, optimize our cost efficiency through our commitment to lean business practices, and employ a disciplined approach to capital allocation.”

Mr. Killoy, concluded, “We have $132 million of cash and short-term investments and no debt, which puts us in a unique position in our industry. We remain financially strong, fiscally disciplined, and focused on delivering long-term value to our shareholders.”

Mr. Killoy made the following additional observations related to the Company’s 2019 second quarter performance:

  • The estimated unit sell-through of the Company’s products from the independent distributors to retailers decreased 26% in the first half of 2019 compared to the prior year period. For the same period, the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) decreased 5%. The greater reduction in the sell-through of the Company’s products relative to adjusted NICS background checks may be attributable to the following:
    • The aforementioned discounting and extension of payment terms offered by our competitors,
    • Relatively fewer new product shipments compared to the first half of 2018, which benefitted from the launch of four major products in December of 2017,
    • The loss of a formerly significant distributor that ultimately filed for bankruptcy protection in June 2019,
    • Increased sales of used firearms at retail, which are included in adjusted NICS checks, and
    • Decreased retailer inventories as the anticipation of further discounting led to cautious buying behavior by retailers.
  • Sales of new products, including the Wrangler, which was introduced in April 2019, the Pistol Caliber Carbine, the EC9s pistol, the Security-9 pistol, and the Precision Rimfire Rifle, represented $22 million or 25% of firearm sales in the second quarter of 2019. New product sales include only major new products that were introduced in the past two years.
  • During the second quarter of 2019, total Company and distributor inventories decreased by 18,400 units.
  • Cash used by operations during the first half of 2019 was $6.4 million. At June 29, 2019, our cash and short-term investments totaled $132 million. Our current ratio is 5.1 to 1 and we have no debt.
  • In the first half of 2019, capital expenditures totaled $3.9 million. We expect our 2019 capital expenditures to total approximately $15 million, most of which relate to new product introductions.
  • In the first half of 2019, the Company returned $10.0 million to its stockholders through the payment of dividends.
  • At June 29, 2019, stockholders’ equity was $275.8 million, which equates to a book value of $15.76 per share, of which $7.53 per share is cash and short-term investments.

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

Tomorrow, August 1, 2019, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second quarter operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 5546806.

The Quarterly Report on Form 10-Q 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. As a full-line manufacturer of American-made firearms, Ruger offers consumers over 700 variations of more than 40 product lines. For 70 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)

 

June 29, 2019

December 31, 2018

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets

 

 

Cash

$

32,220

 

$

38,492

 

Short-term investments

 

99,562

 

 

114,326

 

Trade receivables, net

 

41,494

 

 

45,031

 

 

 

 

Gross inventories

 

92,619

 

 

80,288

 

Less LIFO reserve

 

(47,529

)

 

(46,341

)

Less excess and obsolescence reserve

 

(3,623

)

 

(2,527

)

Net inventories

 

41,467

 

 

31,420

 

 

 

 

Prepaid expenses and other current assets

 

5,742

 

 

2,920

 

Total Current Assets

 

220,485

 

 

232,189

 

 

 

 

Property, plant and equipment

 

357,771

 

 

358,756

 

Less allowances for depreciation

 

(286,056

)

 

(276,045

)

Net property, plant and equipment

 

71,715

 

 

82,711

 

 

 

 

Deferred income taxes

 

1,844

 

 

2,969

 

Other assets

 

26,873

 

 

17,663

 

Total Assets

$

320,917

 

$

335,532

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data)

 

June 29, 2019

December 31, 2018

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

Trade accounts payable and accrued expenses

$

22,528

 

$

33,021

 

Contract liabilities with customers

 

1,275

 

 

7,477

 

Product liability

 

1,217

 

 

1,073

 

Employee compensation and benefits

 

12,716

 

 

20,729

 

Workers’ compensation

 

5,240

 

 

5,551

 

Income taxes payable

 

-

 

 

3,340

 

Total Current Liabilities

 

42,976

 

 

71,191

 

 

 

 

Product liability

 

73

 

 

99

 

Lease liability

 

2,028

 

 

-

 

 

 

 

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

 

 

 

 

 

 

2019 – 24,150,728 issued,

 

 

 

 

 

 

17,485,330 outstanding

 

 

 

 

 

 

2018 – 24,123,418 issued,

 

 

 

 

 

 

17,458,020 outstanding

 

24,151

 

 

24,123

 

Additional paid-in capital

 

35,657

 

 

33,291

 

Retained earnings

 

359,627

 

 

350,423

 

Less: Treasury stock – at cost

 

 

 

 

 

 

2019 – 6,665,398 shares

 

 

 

 

 

 

2018 – 6,665,398 shares

 

(143,595

)

 

(143,595

)

Total Stockholders’ Equity

 

275,840

 

 

264,242

 

Total Liabilities and Stockholders’ Equity

$

320,917

 

$

335,532

 

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

 

June 29,
2019

June 30,
2018

June 29,
2019

June 30,
2018

 

 

 

 

 

Net firearms sales

$

94,971

 

$

127,017

 

$

207,903

 

$

256,899

 

Net castings sales

 

1,358

 

 

1,394

 

 

2,464

 

 

2,670

 

Total net sales

 

96,329

 

 

128,411

 

 

210,367

 

 

259,569

 

 

 

 

 

 

Cost of products sold

 

74,027

 

 

91,812

 

 

155,467

 

 

187,150

 

 

 

 

 

 

Gross profit

 

22,302

 

 

36,599

 

 

54,900

 

 

72,419

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling

 

7,265

 

 

9,785

 

 

15,396

 

 

18,123

 

General and administrative

 

7,572

 

 

7,446

 

 

15,586

 

 

16,332

 

Total operating expenses

 

14,837

 

 

17,231

 

 

30,982

 

 

34,455

 

 

 

 

 

 

Operating income

 

7,465

 

 

19,368

 

 

23,918

 

 

37,964

 

 

 

 

 

 

Other income:

 

 

 

 

Interest income

 

682

 

 

-

 

 

1,361

 

 

-

 

Interest expense

 

(25

)

 

(22

)

 

(51

)

 

(49

)

Other income, net

 

288

 

 

703

 

 

582

 

 

1,035

 

Total other income, net

 

945

 

 

681

 

 

1,892

 

 

986

 

 

 

 

 

 

Income before income taxes

 

8,410

 

 

20,049

 

 

25,810

 

 

38,950

 

 

 

 

 

 

Income taxes

 

2,177

 

 

4,860

 

 

6,544

 

 

9,497

 

 

 

 

 

 

Net income and comprehensive income

$

6,233

 

$

15,189

 

$

19,266

 

$

29,453

 

 

 

 

 

 

Basic earnings per share

$

0.36

 

$

0.87

 

$

1.10

 

$

1.69

 

 

 

 

 

 

Diluted earnings per share

$

0.35

 

$

0.86

 

$

1.09

 

$

1.68

 

 

 

 

 

 

Cash dividends per share

$

0.29

 

$

0.32

 

$

0.57

 

$

0.55

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

Six Months Ended

 

June 29, 2019

June 30, 2018

 

 

 

Operating Activities

 

 

Net income

$

19,266

 

$

29,453

 

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

 

 

Depreciation and amortization

 

14,972

 

 

16,344

 

Slow moving inventory valuation adjustment

 

1,096

 

 

(348

)

Stock-based compensation

 

3,174

 

 

2,668

 

(Gain) loss on sale of assets

 

53

 

 

(4

)

Deferred income taxes

 

1,125

 

 

(513

)

Changes in operating assets and liabilities:

 

 

Trade receivables

 

3,537

 

 

9,944

 

Inventories

 

(11,143

)

 

16,049

 

Trade accounts payable and accrued expenses

 

(10,804

)

 

(3,736

)

Contract liability to customers

 

(6,202

)

 

4,447

 

Employee compensation and benefits

 

(8,119

)

 

5,242

 

Product liability

 

117

 

 

73

 

Prepaid expenses, other assets and other liabilities

 

(10,157

)

 

155

 

Income taxes payable

 

(3,340

)

 

1,221

 

Cash (used for) provided by operating activities

 

(6,425

)

 

80,995

 

 

 

 

Investing Activities

 

 

Property, plant and equipment additions

 

(3,890

)

 

(2,360

)

Proceeds from sale of assets

 

14

 

 

4

 

Purchases of short-term investments

 

(118,972

)

 

-

 

Proceeds from maturities of short-term investments

 

133,736

 

 

-

 

Cash provided by (used for) investing activities

 

10,888

 

 

(2,356

)

 

 

 

Financing Activities

 

 

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

(779

)

(816

)

Dividends paid

 

(9,956

)

 

(9,599

)

Cash used for financing activities

 

(10,735

)

 

(10,415

)

 

 

 

(Decrease) increase in cash and cash equivalents

 

(6,272

)

 

68,224

 

 

 

 

Cash and cash equivalents at beginning of period

 

38,492

 

 

63,487

 

 

 

 

Cash and cash equivalents at end of period

$

32,220

 

$

131,711

 

Non-GAAP Financial Measure

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 one non-GAAP financial measure, EBITDA, which management believes provides useful information to investors. This non-GAAP financial measure may not be comparable to similarly titled financial measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measure should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA is 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 its EBITDA 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.

Non-GAAP Reconciliation – EBITDA

EBITDA

(Unaudited, dollars in thousands)

 

 

Three Months Ended

Six Months Ended

 

June 29,
2019

June 30,
2018

June 29,
2019

June 30,
2018

 

 

 

 

Net income

$

 

6,233

 

$

 

15,189

$

 

19,266

 

$

 

29,453

 

 

 

 

 

Income tax expense

 

2,177

 

 

4,860

 

 

6,544

 

 

9,497

 

Depreciation and amortization expense

7,486

8,172

14,972

16,344

Interest income

 

(682

)

 

-

 

 

(1,361

)

 

-

 

Interest expense

 

25

 

 

22

 

 

51

 

 

49

 

EBITDA

$

 

15,239

 

$

 

28,243

 

$

 

39,472

 

$

 

55,343

 

 

Contacts

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

Contacts

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