Sturm, Ruger & Company, Inc. Reports 2022 Diluted Earnings of $4.96 Per Share and Declares Dividend of 42¢ Per Share

SOUTHPORT, Conn.--()--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2022 the Company reported net sales of $595.8 million and diluted earnings of $4.96 per share, compared with net sales of $730.7 million and diluted earnings of $8.78 per share in 2021.

For the fourth quarter of 2022, net sales were $149.2 million and diluted earnings were $1.06 per share. For the corresponding period in 2021, net sales were $168.0 million and diluted earnings were $2.14 per share.

The Company also announced today that its Board of Directors declared a dividend of 42¢ per share for the fourth quarter for stockholders of record as of March 10, 2023, payable on March 24, 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 financial results for the year, “Consumer demand in 2022 was below the level of demand in 2021, dampened in part by inflationary pressures, which often constrain discretionary spending. This led to an 18% reduction in our sales from the prior year. Nevertheless, we are encouraged by our increased quarterly sales and production in the fourth quarter. Our disciplined approach and long-term focus yielded strong cash flow, investment in our new product development, and a robust, debt-free balance sheet.”

Mr. Killoy reiterated the Company’s commitment to new product development, “We continue to enhance our catalog of products with exciting and innovative new firearms that were met with strong demand in the marketplace. Our major new product launches in 2022 included:

  • Marlin Model 1895 Guide Gun, chambered in 45-70 Govt, which was our first reintroduction in the Marlin Guide Gun family of lever-action rifles,
  • Marlin Model 1895 Trapper stainless steel lever-action rifle, chambered in .45-70 Govt.,
  • LC Carbine, chambered in 5.7x28mm, a companion to the Ruger-5.7 pistol,
  • Security-380 Lite Rack Pistol, a full-featured pistol chambered in light-recoiling .380 Auto, and
  • Small-Frame Autoloading Rifle, or SFAR, chambered in 7.62 NATO / .308 Win., which combines the ballistic advantages of .308 Win. with the size and weight of a traditional modern sporting rifle.

Mr. Killoy concluded by reaffirming the Company’s capital philosophy, “Our focus on financial discipline and the cultivation of long-term shareholder value is unwavering. We continue to evaluate opportunities, but will pursue them only if they provide long-term value to our shareholders. When we believe our cash position significantly exceeds our foreseeable funding requirements for operations, including capital investment, quarterly dividends, and working capital needs, we will return cash to our shareholders, as we did most recently in January with a $5.00 per share special dividend.”

Mr. Killoy made the following observations related to the Company’s 2022 performance:

  • The estimated unit sell-through of the Company’s products from the independent distributors to retailers decreased 25% in 2022 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 11%. These decreases are attributable to decreased consumer demand for firearms from the unprecedented levels of the surge that began in 2020 and remained for most of 2021.The greater reduction in the sell-through of the Company’s products relative to adjusted NICS background checks may be attributable to the following:
    • More aggressive promotions, discounts, rebates, and the extension of payment terms offered by our competitors,
    • An apparent increase in sales of used firearms at retail, which are included in the adjusted NICS checks, but are not distinguished from new gun sales, and
    • Decreased retailer inventories as the anticipation of further discounting may be encouraging cautious buying behavior by retailers.
  • Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin 1895 lever-action rifles, LC Carbine, PC Charger, and Small-Frame Autoloading Rifle represented $78.4 million or 14% of firearm sales in 2022. New product sales include only major new products that were introduced in the past two years.
  • Our profitability declined in 2022 from 2021 as our gross margin decreased from 38% to 30%. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales, as well as inflationary cost increases in materials, commodities, services, energy, fuel and transportation, which were partially offset by increased pricing.
  • In 2022, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 92,200 units and 134,200 units, respectively, returning to a reasonable level that will allow for the rapid fulfillment of retailer demand.
  • Cash provided by operations during 2022 was $77.2 million. At December 31, 2022, our cash and short-term investments totaled $224.3 million. Our current ratio is 2.2 to 1 and we have no debt.
  • In 2022, capital expenditures totaled $27.7 million related to new product introductions, upgrades to our manufacturing equipment and facilities, and the purchase of a previously leased 225,000 square foot facility in Mayodan, North Carolina for $8.3 million for use in the Company’s manufacturing and warehousing operations.
  • In 2022, the Company returned $42.9 million to its shareholders, primarily through the payment of dividends. An additional $88.3 million was returned to its shareholders on January 5, 2023 through the payment of a $5.00 per share special dividend to shareholders.
  • At December 31, 2022, stockholders’ equity was $316.7 million, which equates to a book value of $17.93 per share, of which $12.70 per share was cash and short-term investments.

Today, the Company filed its Annual Report on Form 10-K for 2022. The financial statements included in this Annual Report on Form 10-K are attached to this press release.

On Thursday, February 23, 2023, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the fourth quarter and year-end 2022 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 Annual Report on Form 10-K for 2022 is available on the SEC website at SEC.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Annual Report on Form 10-K 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.

 

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

 

December 31,

 

2022

 

 

2021

 

 

 

 

Assets

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

65,173

 

$

21,044

 

Short-term investments

 

159,132

 

 

199,971

 

Trade receivables, net

 

65,449

 

 

57,036

 

 

 

 

Gross inventories

 

129,294

 

 

100,023

 

Less LIFO reserve

 

(59,489

)

 

(51,826

)

Less excess and obsolescence reserve

 

(4,812

)

 

(4,347

)

Net inventories

 

64,993

 

 

43,850

 

 

 

 

Prepaid expenses and other current assets

 

7,091

 

 

6,832

 

Total Current Assets

 

361,838

 

 

328,733

 

 

 

 

Property, Plant, and Equipment

 

447,126

 

 

421,282

 

Less allowances for depreciation

 

(370,273

)

 

(347,651

)

Net property, plant and equipment

 

76,853

 

 

73,631

 

 

 

 

Deferred income taxes

 

6,109

 

 

536

 

Other assets

 

39,963

 

 

39,443

 

Total Assets

$

484,763

 

$

442,343

 

STURM, RUGER & COMPANY, INC.

 

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

 

December 31,

 

2022

 

 

2021

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current Liabilities

 

 

 

 

 

Trade accounts payable and accrued expenses

$

35,658

 

$

36,400

 

Dividends Payable

 

88,343

 

 

-

 

Contract liabilities with customers

 

1,031

 

 

-

 

Product liability

 

235

 

 

795

 

Employee compensation and benefits

 

30,160

 

 

33,154

 

Workers’ compensation

 

6,469

 

 

6,760

 

Income taxes payable

 

1,171

 

 

-

 

Total Current Liabilities

 

163,067

 

 

77,109

 

 

 

 

Lease liability

 

3,039

 

 

1,476

 

Employee compensation

 

1,846

 

 

-

 

Product liability accrual

 

73

 

 

97

 

 

 

 

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

 

 

 

 

 

 

2022 – 24,378,568 issued,

 

 

 

 

 

 

17,664,230 outstanding

 

 

 

 

 

 

2021 – 24,306,486 issued,

 

 

 

 

 

 

17,596,588 outstanding

 

24,378

 

 

24,306

 

Additional paid-in capital

 

45,075

 

 

46,847

 

Retained earnings

 

393,097

 

 

438,098

 

Less: Treasury stock – at cost

 

 

 

 

 

 

2022 – 6,714,338 shares

 

 

 

 

 

 

2021 – 6,709,898 shares

 

(145,812

)

 

(145,590

)

Total Stockholders’ Equity

 

316,738

 

 

363,661

 

Total Liabilities and Stockholders’ Equity

$

484,763

 

$

442,343

 

STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

 

Year ended December 31,

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

Net firearms sales

$

593,289

 

$

728,141

 

$

565,863

 

Net castings sales

 

2,553

 

 

2,595

 

 

3,005

 

Total net sales

 

595,842

 

 

730,736

 

 

568,868

 

 

 

 

 

Cost of products sold

 

415,757

 

 

451,179

 

 

377,427

 

 

 

 

 

Gross profit

 

180,085

 

 

279,557

 

 

191,441

 

 

 

 

 

Operating Expenses (Incomes):

 

 

 

Selling

 

36,114

 

 

33,259

 

 

33,332

 

General and administrative

 

40,551

 

 

43,289

 

 

39,013

 

Other operating expense (income), net

 

(36

)

 

(127

)

 

(52

)

Total operating expenses

 

76,629

 

 

76,421

 

 

72,293

 

 

 

 

 

Operating income

 

103,456

 

 

203,136

 

 

119,148

 

 

 

 

 

Other income:

 

 

 

Royalty income

 

837

 

 

1,975

 

 

814

 

Interest income

 

2,552

 

 

49

 

 

1,126

 

Interest expense

 

(256

)

 

(164

)

 

(191

)

Other income, net

 

1,690

 

 

1,598

 

 

84

 

Total other income, net

 

4,823

 

 

3,458

 

 

1,833

 

 

 

 

 

Income before income taxes

 

108,279

 

 

206,594

 

 

120,981

 

 

 

 

 

Income taxes

 

19,947

 

 

50,695

 

 

30,583

 

 

 

 

 

Net income and comprehensive income

$

88,332

 

$

155,899

 

$

90,398

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

5.00

 

$

8.87

 

$

5.17

 

 

 

 

 

Diluted Earnings Per Share

$

4.96

 

$

8.78

 

$

5.09

 

 

 

 

 

Weighted average number of common shares outstanding – Basic

 

 

 

17,648,850

 

 

 

 

 

17,585,604

 

 

 

 

 

17,486,054

 

 

 

 

 

 

Weighted average number of common shares outstanding – Diluted

 

 

 

17,793,348

 

 

 

 

 

17,757,834

 

 

 

 

 

17,769,856

 

 

 

 

 

 

Cash Dividends Per Share

$

2.42

 

$

3.36

 

$

6.51

 

STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Cash Flows

(In thousands)

 

Year ended December 31,

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

Operating Activities

 

 

 

Net income

$

88,332

 

$

155,899

 

$

90,398

 

Adjustments to reconcile net income to cash

provided by operating activities, net of effects of acquisition:

 

 

 

Depreciation and amortization

 

25,789

 

 

26,152

 

 

27,576

 

Stock-based compensation

 

1,671

 

 

8,280

 

 

6,128

 

Excess and obsolescence inventory reserve

 

501

 

 

953

 

 

-

 

Gain on sale of assets

 

(36

)

 

(127

)

 

(52

)

Deferred income taxes

 

(5,573

)

 

994

 

 

3,863

 

Changes in operating assets and liabilities:

 

 

 

Trade receivables

 

(8,413

)

 

840

 

 

(5,236

)

Inventories

 

(21,644

)

 

(15,726

)

 

10,624

 

Trade accounts payable and accrued expenses

 

(640

)

 

(392

)

 

7,954

 

Contract liability with customers

 

1,031

 

 

(84

)

 

(9,539

)

Employee compensation and benefits

 

(3,420

)

 

(5,433

)

 

20,910

 

Product liability

 

(584

)

 

(234

)

 

308

 

Prepaid expenses, other assets and other liabilities

(954

)

 

1,217

 

(7,905

)

Income taxes receivable/payable

 

1,171

 

 

-

 

 

(1,223

)

Cash provided by operating activities

 

77,231

 

 

172,339

 

 

143,806

 

 

 

 

 

Investing Activities

 

 

 

Property, plant, and equipment additions

 

(27,730

)

 

(28,776

)

 

(24,229

)

Purchase of Marlin assets

 

-

 

 

-

 

 

(28,316

)

Purchases of short-term investments

 

(365,480

)

 

(681,940

)

 

(369,439

)

Proceeds from maturity of short-term investments

 

406,319

 

 

602,976

 

 

377,920

 

Net proceeds from sale of assets

 

100

 

 

203

 

 

178

 

Cash provided by (used for) investing activities

 

13,209

 

 

(107,537

)

 

(43,886

)

 

 

 

 

Financing Activities

 

 

 

Dividends paid

 

(42,718

)

 

(59,104

)

 

(113,896

)

Repurchase of common stock

 

(222

)

 

-

 

 

-

 

Payment of employee withholding tax related to share-based compensation

 

(3,371

 

(4,801

 

(1,297

)

Cash used for financing activities

 

(46,311

)

 

(63,905

)

 

(115,193

)

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

44,129

 

 

897

 

 

(15,273

)

Cash and cash equivalents at beginning of year

 

21,044

 

 

20,147

 

 

35,420

 

Cash and cash equivalents at end of year

$

65,173

 

$

21,044

 

$

20,147

 

Non-GAAP Financial Measure

In an effort to provide investors with additional information regarding its 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 measures may not be comparable to similarly titled 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 its financial performance.

Non-GAAP Reconciliation – EBITDA

 

EBITDA

 

(Unaudited, dollars in thousands)

 

Year ended December 31,

 

2022

 

 

2021

 

 

 

 

Net income

$

88,332

 

$

155,899

 

 

 

 

Income tax expense

 

19,947

 

 

50,695

 

Depreciation and amortization expense

 

25,789

 

 

26,152

 

Interest expense

 

256

 

 

164

 

Interest income

 

(2,552

)

 

(49

)

EBITDA

$

131,772

 

$

232,861

 

EBITDA margin

 

22.1

%

 

31.9

%

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’s EBITDA calculation also excludes any one-time non-cash, non-operating expense.

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