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Sturm, Ruger & Company, Inc. Reports Second Quarter Diluted Earnings of $1.17 Per Share and Declares Quarterly Dividend of 47¢ Per Share

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SOUTHPORT, Conn., August 03, 2022--(BUSINESS WIRE)--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2022 the Company reported net sales of $140.7 million and diluted earnings of $1.17 per share, compared with net sales of $200.1 million and diluted earnings of $2.50 per share in the second quarter of 2021.

For the six months ended July 2, 2022, net sales were $307.2 million and diluted earnings were $2.87 per share. For the corresponding period in 2021, net sales were $384.4 million and diluted earnings were $4.66 per share.

The Company also announced today that its Board of Directors declared a dividend of 47¢ per share for the second quarter for stockholders of record as of August 17, 2022, payable on August 31, 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 second quarter of 2022, "Consumer demand for firearms has subsided from the unprecedented levels of the surge that began early in 2020 and remained for most of 2021, resulting in a 30% reduction in our sales from the second quarter of 2021, which was the highest quarter in sales and profitability in our history. Yet our broad and diverse product family helps us weather fluctuations in demand as we adjust production accordingly. While channel inventory of some of our product families, including certain polymer pistols and modern sporting rifles, have been largely replenished, inventories of other product families remain below desired levels."

Mr. Killoy reaffirmed the Company’s commitment to new product innovation, "We are excited to continue to expand our Marlin product line with the reintroduction of the Marlin Model 1895 Trapper. This lightweight, stainless steel lever-action rifle is chambered in .45-70 Govt. and features a cold hammer-forged threaded barrel. We continue to increase our production of Marlin rifles and look forward to introducing additional Ruger-made Marlin lever-action rifles."

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

  • The estimated unit sell-through of the Company’s products from the independent distributors to retailers decreased 31% in the first half of 2022 compared to the prior year period. For the same period, the National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) decreased 17%. 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 second quarter of 2021 had the highest quarterly distributor unit sell-through in the Company’s history, which led to the significant year-over-year decrease in distributor sell-through in the current quarter.

  • Sales of new products, including the PC Charger, the MAX-9 pistol, the LCP MAX pistol, and Marlin 1895 lever-action rifles, represented $33.8 million or 11% of firearm sales in the first half 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, the Ruger-5.7 pistol, and the 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 the first half of 2022.

  • Our profitability declined in the second quarter of 2022 from the second quarter of 2021 as our gross margin decreased from 39% to 31%. In addition to unfavorable deleveraging of fixed costs resulting from decreased production and sales, inflationary cost increases in materials, commodities, services, energy, fuel and transportation, partially offset by increased pricing, resulted in the lower margin.

  • During the second quarter of 2022, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 49,300 units and 28,200 units, respectively.

  • Cash provided by operations during the first half of 2022 was $32.4 million. At July 2, 2022, our cash and short-term investments totaled $208.5 million. Our current ratio is 6.1 to 1 and we have no debt.

  • In the first half of 2022, capital expenditures totaled $14.3 million. We expect our 2022 capital expenditures to total approximately $25 million, most of which relate to new product introductions.

  • In the first half of 2022, the Company returned $27.2 million to its shareholders through the payment of dividends.

  • At July 2, 2022, stockholders’ equity was $387.0 million, which equates to a book value of $21.90 per share, of which $11.80 per share was cash and short-term investments.

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

Tomorrow, August 4, 2022, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second 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 second 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 second 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)

July 2, 2022

December 31, 2021

Assets

Current Assets

Cash

$

43,539

$

21,044

Short-term investments

165,000

199,971

Trade receivables, net

56,243

57,036

Gross inventories

114,863

100,023

Less LIFO reserve

(53,532

)

(51,826

)

Less excess and obsolescence reserve

(4,186

)

(4,347

)

Net inventories

57,145

43,850

Prepaid expenses and other current assets

12,150

6,832

Total Current Assets

334,077

328,733

Property, plant and equipment

434,790

421,282

Less allowances for depreciation

(359,566

)

(347,651

)

Net property, plant and equipment

75,224

73,631

Deferred income taxes

291

536

Other assets

34,140

39,443

Total Assets

$

443,732

$

442,343

STURM, RUGER & COMPANY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)
(Dollars in thousands, except per share data)

July 2, 2022

December 31, 2021

Liabilities and Stockholders’ Equity

Current Liabilities

Trade accounts payable and accrued expenses

$

27,306

$

36,400

Contract liabilities with customers

-

-

Product liability

441

795

Employee compensation and benefits

20,643

33,154

Workers’ compensation

6,105

6,760

Total Current Liabilities

54,495

77,109

Product liability accrual

118

97

Lease liability

2,162

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,

17,668,670 outstanding

2021 – 24,306,486 issued,

17,596,588 outstanding

24,378

24,306

Additional paid-in capital

46,760

46,847

Retained earnings

461,409

438,098

Less: Treasury stock – at cost

2022 – 6,709,898 shares

2021 – 6,709,898 shares

(145,590

)

(145,590

)

Total Stockholders’ Equity

386,957

363,661

Total Liabilities and Stockholders’ Equity

$

443,732

$

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

Six Months Ended

July 2, 2022

July 3, 2021

July 2, 2022

July 3, 2021

Net firearms sales

$

139,911

$

199,447

$

305,844

$

383,049

Net castings sales

742

625

1,384

1,400

Total net sales

140,653

200,072

307,228

384,449

Cost of products sold

97,099

121,315

205,566

233,126

Gross profit

43,554

78,757

101,662

151,323

Operating expenses:

Selling

8,630

8,449

17,065

16,537

General and administrative

9,734

10,639

20,680

23,161

Total operating expenses

18,364

19,088

37,745

39,698

Operating income

25,190

59,669

63,917

111,625

Other income:

Interest income

190

12

221

20

Interest expense

(26

)

(25

)

(117

)

(50

)

Other income, net

750

610

1,602

1,061

Total other income, net

914

597

1,706

1,031

Income before income taxes

26,104

60,266

65,623

112,656

Income taxes

5,347

15,882

14,634

30,080

Net income and comprehensive income

$

20,757

$

44,384

$

50,989

$

82,576

Basic earnings per share

$

1.18

$

2.52

$

2.89

$

4.70

Diluted earnings per share

$

1.17

$

2.50

$

2.87

$

4.66

Weighted average number of common shares outstanding - Basic

17,652,148

17,590,305

17,631,060

17,574,798

Weighted average number of common shares outstanding - Diluted

17,799,707

17,766,868

17,762,765

17,735,910

Cash dividends per share

$

0.68

$

0.86

$

1.54

$

1.57

STURM, RUGER & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)

Six Months Ended

July 2, 2022

July 3, 2021

Operating Activities

Net income

$

50,989

$

82,576

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

Depreciation and amortization

13,464

14,751

Stock-based compensation

3,356

5,043

Gain on sale of assets

(56

)

(58

)

Deferred income taxes

245

1,854

Changes in operating assets and liabilities:

Trade receivables

793

(18,183

)

Inventories

(13,295

)

(2,910

)

Trade accounts payable and accrued expenses

(9,662

)

1,686

Contract liability with customers

-

(84

)

Employee compensation and benefits

(13,019

)

(9,429

)

Product liability

(333

)

(116

)

Prepaid expenses, other assets and other liabilities

(103

)

(2,050

)

Income taxes payable

-

3,119

Cash provided by operating activities

32,379

76,199

Investing Activities

Property, plant and equipment additions

(14,330

)

(11,464

)

Proceeds from sale of assets

16

73

Purchases of short-term investments

(199,992

)

(271,984

)

Proceeds from maturities of short-term investments

234,963

242,997

Cash provided by (used for) investing activities

20,657

(40,378

)

Financing Activities

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

(3,371

)

(4,801

)

Dividends paid

(27,170

)

(27,606

)

Cash used for financing activities

(30,541

)

(32,407

)

Increase in cash and cash equivalents

22,495

3,414

Cash and cash equivalents at beginning of period

21,044

20,147

Cash and cash equivalents at end of period

$

43,539

$

23,561

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

Six Months Ended

July 2, 2022

July 3, 2021

July 2, 2022

July 3, 2021

Net income

$

20,757

$

44,384

$

50,989

$

82,576

Income tax expense

5,347

15,882

14,634

30,080

Depreciation and amortization expense

6,709

7,250

13,464

14,751

Interest income

(190

)

(12

)

(221

)

(20

)

Interest expense

26

25

117

50

EBITDA

$

32,649

$

67,529

$

78,983

$

127,437

EBITDA margin

23.2

%

33.8

%

25.7

%

33.1

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005696/en/

Contacts

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