Sturm, Ruger & Company, Inc. Reports Second Quarter Fully Diluted Earnings of $1.63 Per Share and Dividend of 65¢ Per Share

Business Wire

SOUTHPORT, Conn.--(BUSINESS WIRE)--

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2013 the Company reported net sales of $179.5 million and fully diluted earnings of $1.63 per share, compared with net sales of $119.6 million and fully diluted earnings of 91¢ per share in the second quarter of 2012.

For the six months ended June 29, 2013, net sales were $335.4 million and fully diluted earnings were $2.83 per share. For the corresponding period in 2012, net sales were $231.9 million and fully diluted earnings were $1.71 per share.

The Company also announced today that its Board of Directors declared a dividend of 65¢ per share for the second quarter, for shareholders of record as of August 16, 2013, payable on August 30, 2013. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Michael O. Fifer made the following observations related to the Company’s results:

  • Our earnings increased 79% from the second quarter of 2012, driven by the 50% growth in sales and our ongoing focus on continuous improvement in our operations.
  • New product introductions were a significant component of our sales growth as new product sales represented $102.7 million or 31% of firearm sales in the first half of 2013. New product introductions in the first half of 2013 included the LC380 pistol and the SR45 pistol.
  • During the second quarter and first half of 2013, the estimated unit sell-through of our products from the independent distributors to retailers increased 37% and 23% from the comparable prior year periods. Insufficient distributor inventory at December 31, 2012 severely limited the estimated sell-through from independent distributors to retailers in the first half of 2013. For the same periods, National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 16% and 33%, respectively.
  • Cash generated from operations during the six months ended June 29, 2013 was $69.8 million. At June 29, 2013, our cash totaled $64.8 million. Our current ratio is 1.8 to 1 and we have no debt.
  • In the first half of 2013, capital expenditures totaled $18.8 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $35 million on capital expenditures during 2013.
  • In the first half of 2013, the Company returned $17.3 million to its shareholders through the payment of dividends.
  • At June 29, 2013, stockholders’ equity was $135.8 million, which equates to a book value of $7.02 per share, of which $3.35 per share was cash and equivalents.

Today, the Company filed its Quarterly Report on Form 10-Q for the second quarter of 2013. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

Tomorrow, August 1, 2013, Sturm, Ruger will host a webcast at 9:00 a.m. EDT to discuss the second quarter operating results. Interested parties can access the webcast at www.ruger.com/corporate or www.earnings.com or by dialing 866-825-1709, participant code 14272752.

The Quarterly Report on Form 10-Q is available on the SEC website at www.sec.gov and the Ruger website at www.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

Sturm, Ruger & Co., Inc. is one of the nation’s leading manufacturers of rugged, reliable firearms for the commercial sporting market. The only full-line manufacturer of American-made firearms, Ruger offers consumers over 400 variations of more than 30 product lines. For more than 60 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens,” echoes the importance of 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 BALANCE SHEETS

(Dollars in thousands)

 
  June 29,

2013

 

December 31,

2012

 
 
Assets
 
Current Assets
Cash $ 64,781 $ 30,978
Trade receivables, net 57,344 43,018
 
Gross inventories 56,153 55,827
Less LIFO reserve (38,631 ) (38,089 )
Less excess and obsolescence reserve   (1,468 )     (1,729 )
Net inventories   16,054       16,009  
 
Deferred income taxes 7,508 5,284
Prepaid expenses and other current assets   693       1,632  
Total Current Assets 146,380 96,921
 
Property, plant and equipment 214,369 195,713
Less allowances for depreciation   (138,570 )     (129,720 )
Net property, plant and equipment   75,799       65,993  
 
Deferred income taxes 2,471 2,004
Other assets   11,893       9,568  
Total Assets $ 236,543     $ 174,486  

STURM, RUGER & COMPANY, INC.

 

CONDENSED BALANCE SHEETS (Continued)

(Dollars in thousands, except share data)

 
  June 29,

2013

 

December 31,

2012

 
 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Trade accounts payable and accrued expenses $ 44,033 $ 38,500
Product liability 989 720
Employee compensation and benefits 26,701 15,182
Workers’ compensation 4,550 4,600
Income taxes payable 6,123   489
Total Current Liabilities 82,396 59,491
 
Accrued pension liability 18,136 19,626
Product liability 238 337
 
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

2013 – 23,640,804 issued,

19,341,370 outstanding

2012 – 23,562,422 issued,

19,262,988 outstanding

 

 

 

23,641

 

 

 

23,563

Additional paid-in capital 18,108 15,531
Retained earnings 161,528 123,442
Less: Treasury stock – at cost

2013 and 2012 – 4,299,434 shares

(37,884)

(37,884)

Accumulated other comprehensive loss (29,620)   (29,620)
Total Stockholders’ Equity 135,773   95,032
Total Liabilities and Stockholders’ Equity $236,543   $174,486

STURM, RUGER & COMPANY, INC.

 

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

 
  Three Months Ended   Six Months Ended
June 29,

2013

  June 30,

2012

 

June 29,

2013

 

June 30,

2012

   
 
Net firearms sales

$

176,787 $ 118,147 $ 330,227 $ 228,934
Net castings sales   2,741       1,422       5,207       2,972  
Total net sales 179,528 119,569 335,434 231,906
 
Cost of products sold 108,804 74,435 203,401 144,979
               
Gross profit   70,724       45,134       132,033       86,927  
 
Operating expenses:
Selling 11,823 9,107 27,588 20,107
General and administrative 8,317 7,526 16,760 13,904
Other operating expenses (income), net   (168 )     189       (238 )     190  
Total operating expenses   19,972       16,822       44,110       34,201  
 
Operating income   50,752       28,312       87,923       52,726  
 
Other income:
Interest expense, net (39 ) (21 ) (55 ) (44 )
Other income, net   166       303       361       483  
Total other income, net   127       282       306       439  
 
Income before income taxes 50,879 28,594 88,229 53,165
 
Income taxes   18,571       10,580       32,203       19,671  
 
Net income and comprehensive income $ 32,308     $ 18,014     $ 56,026     $ 33,494  
 
Basic earnings per share $ 1.67     $ 0.94     $ 2.90     $ 1.75  
 
Fully diluted earnings per share $ 1.63     $ 0.91     $ 2.83     $ 1.71  
 
Cash dividends per share $ 0.490     $ 0.324     $ 0.894     $ 0.536  

STURM, RUGER & COMPANY, INC.

 

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

   
    Six Months Ended
June 29,

2013

  June 30,

2012

 
Operating Activities
Net income $ 56,026 $ 33,494
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 9,434 6,774
Slow moving inventory valuation adjustment (261 ) (64 )
Stock-based compensation 2,659 2,104
Gain on sale of assets (70 ) (13 )
Deferred income taxes (2,691 ) (1,350 )
Changes in operating assets and liabilities:
Trade receivables (14,326 ) (5,107 )
Inventories 216 1,071
Trade accounts payable and accrued expenses 5,483 (1,400 )
Employee compensation and benefits 10,861 (670 )
Product liability 170 (366 )
Prepaid expenses, other assets and other liabilities (3,296 ) 2,054
Income taxes payable     5,634       977  
Cash provided by operating activities     69,839       37,504  
 
Investing Activities
Property, plant and equipment additions (18,820 ) (12,339 )
Proceeds from sale of assets 70 13
Purchases of short-term investments - (29,993 )
Proceeds from maturities of short-term investments     -       9,999  
Cash used for investing activities     (18,750 )     (32,320 )
 
Financing Activities
Tax benefit from exercise of stock options and vesting of RSU’s 2,078 1,037
Remittance of taxes withheld from employees related to

share-based compensation

(2,082

)

(1,045

)

Dividends paid     (17,282 )     (10,272 )
Cash used for financing activities     (17,286 )     (10,280 )
 
Increase (decrease) in cash and cash equivalents 33,803 (5,096 )
 
Cash and cash equivalents at beginning of period 30,978 81,056
         
Cash and cash equivalents at end of period   $ 64,781     $ 75,960  

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