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Is Smith & Wesson Still the Biggest Gunmaker in the U.S.?

Rich Duprey, The Motley Fool

The fiscal third-quarter earnings report from American Outdoor Brands (NASDAQ: AOBC) showed just how difficult the environment still is for firearms manufacturers, well over two years into the so-called Trump slump.

Not surprisingly, the industry downturn has caused manufacturers like American Outdoor's Smith & Wesson, Sturm, Ruger (NYSE: RGR), and Sig Sauer to significantly cut back on production. Up-to-date data is not available, but according to the latest Annual Manufacturing and Export Report from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE), there were 28% fewer firearms produced in 2017 than the year before. (The agency delays the release of its data by one year for competitive reasons.)

Handgun laying on the Constitution

Image source: Getty Images.

Locked and loaded

The table below shows how production dropped from 2016 to 2017. 

Annual Firearms Production

Year

Pistol

Revolver

Rifle

Shotgun

2008

1,387,271

431,753

1,746,139

630,710

2009

1,868,258

547,195

2,248,851

762,699

2010

2,258,450

448,927

1,830,556

743,378

2011

2,598,133

572,857

2,318,088

862,401

2012

3,487,883

667,357

3,168,206

949,010

2013

4,441,726

725,282

3,979,570

1,203,072

2014

3,633,454

744,047

3,379,549

935,411

2015

3,557,199

885,259

3,691,799

777,273

2016

4,720,075

856,291

4,239,335

848,617

2017

3,691,010

720,910

2,504,092

653,139

Data source: BATFE. "Miscellaneous firearms" category excluded.

Although there were nearly 2.5 times as many handguns produced in 2017 as in 2008, and 33% more long guns, 2017 saw a dramatic decline from 2016. There were 41% fewer rifles made and 23% fewer shotguns, which helps explain why the iconic Remington Arms was sent into bankruptcy a year ago.

So which company was the biggest? Well, it's telling to note which company didn't make the top-10 cut. Although perhaps better known than some other brands, Austrian manufacturer Glock was far down the 2017 list at No. 11. But lesser known brands (to those outside the shooting industry) such as Kimber and revolver maker Heritage Manufacturing placed higher.

Rifle and shotgun manufacturer Savage Arms, a division of Vista Outdoor (NYSE: VSTO), was the sixth-largest gunmaker overall and the third-biggest rifle manufacturer. In 2016, Savage was the eighth largest gunmaker. But Vista is looking to get rid of its firearms business and says it's close to selling Savage Arms. However, it will retain its ammunition business.

Long arms make a difference

In 2016, Smith & Wesson produced over 2.1 million firearms to narrowly defeat Ruger as the biggest U.S. gunmaker, a position the latter had held for several years running.

In 2017, although Smith & Wesson was still the largest handgun manufacturer, producing over 1.2 million pistols and revolvers, Ruger once again claimed the title of biggest gunmaker overall on the basis of producing two and a half times as many rifles as Smith & Wesson. Below are the top gunmakers in the U.S. in 2017.

Manufacturer

Pistols

Revolvers

Rifles

Shotguns

Total Firearms Volume*

Sturm, Ruger

781,623

172,104

661,171

0

1,631,554

Smith & Wesson

1,032,450

207,384

265,356

21

1,506,256

Remington Arms

59,581

0

453,513

269,391

816,421

Sig Sauer

536,636

0

35,920

0

572,694

Maverick Arms

0

0

80,275

302,830

499,100

Savage Arms^

0

0

364,565

15,861

380,426

Henry RAC

0

0

235,037

0

235,037

Heritage Manufacturing

0

226,065

0

0

226,065

Kimber Manufacturing

183,858

21,349

11,378

0

216,585

Wm. C. Anderson

1,448

0

2,295

0

215,125

Data source: BATFE. *Total firearms volume includes "miscellaneous firearms" category. ^Data from company.

Beyond the battle for the top spot, we see that Remington, despite its bankruptcy and a 41% drop in rifle production in 2017, still produced more long guns than any other manufacturer. Ruger, however, became the country's biggest rifle maker.

Still a troubled industry

It's clear that the industry is still in a deep funk. The FBI reported there were 8% fewer background checks conducted on potential firearms purchasers in 2017. But when the National Shooting Sports Foundation adjusts the data to exclude records for things like checking in on existing permit holders -- which gives a truer picture of firearms demand -- we see the number of background checks fell by over 11% that year. It was down another 6% in 2018 and is trailing 2018's numbers by a like percentage so far this year, so it may have finally hit bottom.


Vista CEO Christopher Metz has called the downturn "unprecedented" and noted that most industry declines typically last from 12 to 18 months, but the current one is now entering its third year.

 

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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.