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Sturm, Ruger & Company, Inc. Reports Third Quarter Diluted Earnings of $1.03 Per Share and Declares Quarterly Dividend of 41¢ Per Share

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the third quarter of 2022 the Company reported net sales of $139.4 million and diluted earnings of $1.03 per share, compared with net sales of $178.2 million and diluted earnings of $1.98 per share in the third quarter of 2021.

For the nine months ended October 1, 2022, net sales were $446.6 million and diluted earnings were $3.90 per share. For the corresponding period in 2021, net sales were $562.7 million and diluted earnings were $6.64 per share.

The Company also announced today that its Board of Directors declared a dividend of 41¢ per share for the third quarter for stockholders of record as of November 16, 2022, payable on November 30, 2022. 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 2022, “Consumer demand remained consistent with the second quarter, which was below the level of demand in 2021, dampened in part by inflationary pressures which often constrain discretionary spending. This resulted in a 22% reduction in our sales from the prior year. Nevertheless, our continued focus on financial discipline and the cultivation of long-term shareholder value is evident in our strong, debt-free balance sheet.”

Mr. Killoy discussed some of the Company’s most recent new product introductions, “Our new product development teams continue to deliver innovative products, as evidenced by three exciting product launches in the third quarter:

  • the LC Carbine, a companion carbine to the successful Ruger-5.7 pistol, both chambered in 5.7x28mm,
  • the Small-Frame Autoloading Rifle, or SFAR, chambered in 7.62 NATO / .308 Win., which combines the ballistic advantages of .308 Win. with the compact size and light weight of a traditional modern sporting rifle, and
  • the Marlin Model 1895 Guide Gun, chambered in 45-70 Govt, which is our first reintroduction in the Marlin Guide Gun family of lever-action rifles and our first introduction of an alloy steel Marlin rifle with a blued finish.

We remain hard at work and look forward to introducing additional Ruger and Ruger-made Marlin firearms.”

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

  • The estimated unit sell-through of the Company’s products from the independent distributors to retailers decreased 29% in the first nine months of 2022 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 14%. 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.
  • Sales of new products, including the PC Charger, MAX-9 pistol, LCP MAX pistol, Marlin 1895 lever-action rifles, LC Carbine, and Small-Frame Autoloading Rifle represented $54.9 million or 13% of firearm sales in the first nine months of 2022. New product sales include only major new products that were introduced in the past two years. Several popular firearms that were considered new products in 2021, including the Wrangler revolver, Ruger-5.7 pistol, and LCP II in .22 LR pistol, have now been in production for over two years and are no longer included in new product sales for 2022.
  • Our profitability declined in the third quarter of 2022 from the third quarter of 2021 as our gross margin decreased from 36% to 28%. 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.
  • During the third quarter of 2022, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 8,900 units and 30,300 units, respectively.
  • Cash provided by operations during the first nine months of 2022 was $50.3 million. At October 1, 2022, our cash and short-term investments totaled $215.2 million. Our current ratio is 5.8 to 1 and we have no debt.
  • In the first nine months of 2022, capital expenditures totaled $17.2 million. We expect our 2022 capital expenditures related to new product introductions and upgrades to our manufacturing equipment and facilities to total approximately $25 million. In addition to these investments, in the fourth quarter of 2022 the Company purchased a 225,000 square foot facility in Mayodan, North Carolina for $8.3 million for use in its manufacturing and warehousing operations.
  • In the first nine months of 2022, the Company returned $35.6 million to its shareholders, primarily through the payment of dividends.
  • At October 1, 2022, stockholders’ equity was $398.5 million, which equates to a book value of $22.56 per share, of which $12.18 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2022. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

Tomorrow, November 3, 2022, 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 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 Quarterly Report on Form 10-Q for the third quarter of 2022 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)

 

 

October 1, 2022

December 31, 2021

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets

 

 

Cash

$

49,853

 

$

21,044

 

Short-term investments

 

165,308

 

 

199,971

 

Trade receivables, net

 

61,362

 

 

57,036

 

 

 

 

Gross inventories

 

120,743

 

 

100,023

 

Less LIFO reserve

 

(54,390

)

 

(51,826

)

Less excess and obsolescence reserve

 

(4,848

)

 

(4,347

)

Net inventories

 

61,505

 

 

43,850

 

 

 

 

Prepaid expenses and other current assets

 

12,998

 

 

6,832

 

Total Current Assets

 

351,026

 

 

328,733

 

 

 

 

Property, plant and equipment

 

437,170

 

 

421,282

 

Less allowances for depreciation

 

(365,555

)

 

(347,651

)

Net property, plant and equipment

 

71,615

 

 

73,631

 

 

 

 

Deferred income taxes

 

2,444

 

 

536

 

Other assets

 

35,817

 

 

39,443

 

Total Assets

$

460,902

 

$

442,343

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data)

 

 

October 1, 2022

December 31, 2021

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

Trade accounts payable and accrued expenses

$

31,374

 

$

36,400

 

Contract liabilities with customers

 

-

 

 

-

 

Product liability

 

434

 

 

795

 

Employee compensation and benefits

 

22,014

 

 

33,154

 

Workers’ compensation

 

6,380

 

 

6,760

 

Total Current Liabilities

 

60,202

 

 

77,109

 

 

 

 

Product liability accrual

 

118

 

 

97

 

Lease liability

 

2,076

 

 

1,476

 

 

 

 

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,

           17,666,534 outstanding

2021 – 24,306,486 issued,

           17,596,588 outstanding

 

 

 

 

 

 

 

 

 

24,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,306

 

 

 

 

 

Additional paid-in capital

 

48,457

 

 

46,847

 

Retained earnings

 

471,368

 

 

438,098

 

Less: Treasury stock – at cost

2022 – 6,712,034 shares

2021 – 6,709,898 shares

 

 

 

 

 

(145,697

 

 

)

 

 

 

 

 

(145,590

 

 

)

Total Stockholders’ Equity

 

398,506

 

 

363,661

 

Total Liabilities and Stockholders’ Equity

$

460,902

 

$

442,343

 

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

 

October 1,

2022

October 2,

2021

October 1,

2022

October 2,

2021

 

 

 

 

 

Net firearms sales

$138,771

 

$177,529

 

$444,615

 

$560,578

 

Net castings sales

619

 

717

 

2,003

 

2,116

 

Total net sales

139,390

 

178,246

 

446,618

 

562,694

 

 

 

 

 

 

Cost of products sold

100,521

 

113,444

 

306,087

 

346,569

 

 

 

 

 

 

Gross profit

38,869

 

64,802

 

140,531

 

216,125

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling

8,763

 

7,753

 

25,828

 

24,290

 

General and administrative

10,247

 

10,323

 

30,927

 

33,484

 

Total operating expenses

19,010

 

18,076

 

56,755

 

57,774

 

 

 

 

 

 

Operating income

19,859

 

46,726

 

83,776

 

158,351

 

 

 

 

 

 

Other income:

 

 

 

 

Interest income

730

 

11

 

951

 

31

 

Interest expense

(88

)

(114

)

(205

)

(164

)

Other income, net

490

 

1,401

 

2,092

 

2,462

 

Total other income, net

1,132

 

1,298

 

2,838

 

2,329

 

 

 

 

 

 

Income before income taxes

20,991

 

48,024

 

86,614

 

160,680

 

 

 

 

 

 

Income taxes

2,602

 

12,822

 

17,236

 

42,902

 

 

 

 

 

 

Net income and comprehensive income

$ 18,389

 

$ 35,202

 

$ 69,378

 

$117,778

 

 

 

 

 

 

Basic earnings per share

$1.04

 

$2.00

 

$3.93

 

$6.70

 

 

 

 

 

 

Diluted earnings per share

$1.03

 

$1.98

 

$3.90

 

$6.64

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - Basic

17,668,435

17,596,588

17,643,473

17,582,009

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - Diluted

17,825,797

 

17,778,177

 

17,770,120

 

17,749,897

 

 

 

 

 

 

Cash dividends per share

$0.47

 

$1.00

 

$2.01

 

$2.57

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

 

Nine Months Ended

 

October 1, 2022

October 2, 2021

 

 

 

Operating Activities

 

 

Net income

$ 69,378

 

$ 117,778

 

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

 

 

Depreciation and amortization

20,120

 

22,001

 

Stock-based compensation

5,053

 

6,672

 

Gain on sale of assets

15

 

(111

)

Deferred income taxes

(1,908

)

1,519

 

Changes in operating assets and liabilities:

 

 

Trade receivables

(4,326

)

(13,985

)

Inventories

(17,655

)

(10,038

)

Trade accounts payable and accrued expenses

(5,315

)

1,720

 

Contract liability with customers

-

 

(84

)

Employee compensation and benefits

(11,774

)

(6,569

)

Product liability

(340

)

(161

)

Prepaid expenses, other assets and other liabilities

(2,985

)

(4,282

)

Income taxes payable

-

 

2,544

 

Cash provided by operating activities

50,263

 

117,004

 

 

 

 

Investing Activities

 

 

Property, plant and equipment additions

(17,206

)

(15,617

)

Proceeds from sale of assets

41

 

135

 

Purchases of short-term investments

(200,378

)

(376,979

)

Proceeds from maturities of short-term investments

235,041

 

332,990

 

Cash provided by (used for) investing activities

17,498

 

(59,471

)

 

 

 

Financing Activities

 

 

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

(3,371

)

(4,801

)

Repurchase of common stock

(107

)

-

 

Dividends paid

(35,474

)

(45,202

)

Cash used for financing activities

(38,952

)

(50,003

)

 

 

 

Increase in cash and cash equivalents

28,809

 

7,530

 

 

 

 

Cash and cash equivalents at beginning of period

21,044

 

20,147

 

 

 

 

Cash and cash equivalents at end of period

$ 49,853

 

$ 27,677

 

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

 

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

 

 

 

 

Net income

$18,389

 

$35,202

 

$ 69,378

 

$117,778

 

 

 

 

 

 

Income tax expense

2,602

 

12,822

 

17,236

 

42,902

 

Depreciation and amortization expense

6,656

7,250

20,120

22,001

Interest income

(730

)

(11

)

(951

)

(31

)

Interest expense

88

 

114

 

205

 

164

 

EBITDA

$27,005

 

$55,377

 

$105,988

 

$182,814

 

EBITDA margin

19.4

%

31.1

%

23.7

%

32.5

%

 

Contacts

Sturm, Ruger & Company, Inc.

One Lacey Place

Southport, CT 06890

www.ruger.com

203-259-7843

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