I wondered whether Ruger could increase production if demand increased. For example, the May 2012 Analyst Day presentation stated that they were operating 20+ hours/day, 6 days a week, That was almost one year ago.
Elsewhere in Conference Calls, Mr. Fifer said assembly units are running one shift per day (out of three possible), but the minimill and foundry operate two shifts. There is a plan to replace the foundry with 5 minimills, and there is [only] one minimill running in addition to the foundry, and there is some excess capacity in melting metal. However, there are part shortages for sports rifles, Many parts are outsourced to small unaffiliated machine shops, and these are having difficulty keeping up with demand.
It takes 5 minimills to replace the foundry, and there is a metallurgy problem, in that the minimills can't use scrap metal, and need expensive "virgin metal". So the labor savings from the efficient minimills is offset by the cost of materials.
Capital expenditure was about $27 million in 2012, and will be about $30 million in 2013.
Taking all this into account, I do not believe Ruger can increase production beyond the Q4 rate of 463,500 units produced, unless parts shortages disappear. If production could be sustained at the record Q4 rate, however, it would increase 9% versus 2012. Profits would increase more than this because of price increases which occur in January, and sometimes in July.
When first quarter earning are published, it will be very important whether the units produced exceed 463,500.
You conveniently left out the part of capacity increases due to over 40$ mil in capex. They also stated that subcontractor capabilities were being refined and improved constantly. I wouldn't worry about production.
Actually, I'm just researching Ruger for myself, not trying to prove anything or convince anybody of any theory. The $40 million capex figure you mentioned was not one that I noticed in any public document. Usually, isn't capex discussed on Analyst Day in May, 2013?