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Sturm, Ruger & Company, Inc. Reports Second Quarter Diluted Earnings of $1.05 Per Share, Declares Special Dividend of $5.00 Per Share and Declares Quarterly Dividend of 42¢ Per Share

July 29, 2020 GMT

SOUTHPORT, Conn.--(BUSINESS WIRE)--Jul 29, 2020--

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2020 the Company reported net sales of $130.3 million and diluted earnings of $1.05 per share, compared with net sales of $96.3 million and diluted earnings of 35¢ per share in the second quarter of 2019.

For the six months ended June 27, 2020, net sales were $253.9 million and diluted earnings were $1.91 per share. For the corresponding period in 2019, net sales were $210.4 million and diluted earnings were $1.09 per share.

The Company also announced today that its Board of Directors declared two dividends:

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  • a quarterly dividend of 42¢ per share based on the results of the second quarter, and
  • a special dividend of $5.00 per share.

Both dividends are for shareholders of record as of August 14, 2020, and are payable on August 28, 2020.

Chief Executive Officer Christopher J. Killoy commented on the $5.00 per share special dividend, “Given our strong operational and financial performance, including our consistently positive cashflow, and our current cash balance of $227 million, we are returning some of our cash to shareholders. Our remaining cash holdings will allow us to continue to invest in capital expenditures in support of our commitment to new product development and innovation, maintain our quarterly dividend, and pursue opportunities that would further generate shareholder value.”

Mr. Killoy commented on the financial results for the second quarter of 2020, “Consumer demand, which began to surge in the latter stages on the first quarter, continued to intensify in the second quarter. This increased demand appears to be driven, in part, by concerns about personal protection and home defense stemming from the continuing COVID-19 pandemic; protests, demonstrations, and civil unrest in many cities throughout the United States; and the call, by some, for the reduction in funding and authority of various law enforcement organizations. As a result of this oversized demand, inventories were significantly reduced at all levels in the channel during the second quarter.”

Mr. Killoy commented on the COVID-19 pandemic and its impact on the Company, “The COVID-19 pandemic continues to cast uncertainty throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the second quarter of 2020. Since its onset in March, we have remained proactive in maintaining the health and safety of our employees during this pandemic and mitigating its impact on our business. For example, we suspended hiring from March until June, when we were confident that we could resume onboarding in a safe and responsible manner for all involved. The future impact of COVID-19 remains unknown. We have been fortunate to have only limited restrictions on our operations thus far. Our financial strength, evidenced by our debt-free balance sheet, provides financial security and flexibility as we continue to manage through this crisis.”

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Mr. Killoy made the following observations related to the Company’s second quarter 2020 performance:

  • The estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 47% in the first half of 2020 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) increased 65%. These substantial increases are attributable to increased consumer demand for firearms in the first half of 2020.

  • Sales of new products, including the Wrangler, the Ruger-57, the LCP II in .22 LR, the PC Charger, and the AR-556 pistol, represented $48 million or 21% of firearm sales in the first half of 2020. New product sales include only major new products that were introduced in the past two years.

  • During the second quarter of 2020, the Company’s finished goods inventory decreased 20,800 units and distributor inventories of the Company’s products decreased 106,500 units. In the aggregate, total Company and distributor inventories decreased by 57% during the quarter.

  • Cash provided by operations during the first half of 2020 was $78.1 million. At June 27, 2020, our cash and short-term investments totaled $226.6 million. Our current ratio is 3.9 to 1 and we have no debt.

  • In the first half of 2020, capital expenditures totaled $5.9 million. We expect our 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.

  • In the first half of 2020, the Company returned $9.3 million to its shareholders through the payment of dividends.

  • At June 27, 2020, stockholders’ equity was $311.5 million, which equates to a book value of $17.80 per share, of which $12.95 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the second quarter of 2020. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

Tomorrow, July 30, 2020, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second quarter operating results. Interested parties can access the webcast atRuger.com/corporateor by dialing855-871-7398, participant code3253225.

The Quarterly Report on Form 10-Q for the second quarter of 2020 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 2020 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 700 variations of more than 40 product lines. For more than 70 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)

 

 

June 27, 2020

December 31, 2019

 

 

 

 

 

 

Assets

 

 

 

 

 

Current Assets

 

 

Cash

$

17,701

 

$

35,420

 

Short-term investments

 

208,882

 

 

129,488

 

Trade receivables, net

 

53,653

 

 

52,640

 

 

 

 

Gross inventories

 

62,580

 

 

79,011

 

Less LIFO reserve

 

(47,489

)

 

(47,137

)

Less excess and obsolescence reserve

 

(3,025

)

 

(3,573

)

Net inventories

 

12,066

 

 

28,301

 

 

 

 

Prepaid expenses and other current assets

 

2,637

 

 

3,467

 

Total Current Assets

 

294,939

 

 

249,316

 

 

 

 

Property, plant and equipment

 

376,648

 

 

372,482

 

Less allowances for depreciation

 

(311,103

)

 

(298,568

)

Net property, plant and equipment

 

65,545

 

 

73,914

 

 

 

 

Deferred income taxes

 

2,260

 

 

5,393

 

Other assets

 

27,112

 

 

20,338

 

Total Assets

$

389,856

 

$

348,961

 

 
 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data )

 

June 27, 2020

December 31, 2019

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

Trade accounts payable and accrued expenses

$

40,110

 

$

29,771

 

Contract liabilities with customers

 

3,646

 

 

9,623

 

Product liability

 

733

 

 

735

 

Employee compensation and benefits

 

20,405

 

 

14,273

 

Workers’ compensation

 

5,730

 

 

5,619

 

Income taxes payable

 

5,689

 

 

1,223

 

Total Current Liabilities

 

76,313

 

 

61,244

 

 

 

 

Product liability accrual

 

43

 

 

83

 

Lease liability

 

1,953

 

 

2,176

 

 

 

 

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

 

 

 

 

 

 

2020 – 24,205,749 issued,

 

 

 

 

 

 

17,495,851 outstanding

 

 

 

 

 

 

2019 – 24,160,424 issued,

 

 

 

 

 

 

17,450,526 outstanding

 

24,193

 

 

24,160

 

Additional paid-in capital

 

40,085

 

 

38,683

 

Retained earnings

 

392,859

 

 

368,205

 

Less: Treasury stock – at cost

 

 

 

 

 

 

2020 – 6,709,898 shares

 

 

 

 

 

 

2019 – 6,709,898 shares

 

(145,590

)

 

(145,590

)

Total Stockholders’ Equity

 

311,547

 

 

285,458

 

Total Liabilities and Stockholders’ Equity

$

389,856

 

$

348,961

 

 

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

 

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

 

 

 

 

 

Net firearms sales

$

129,413

 

$

94,971

 

$

252,178

 

$

207,903

 

Net castings sales

 

851

 

 

1,358

 

 

1,725

 

 

2,464

 

Total net sales

 

130,264

 

 

96,329

 

 

253,903

 

 

210,367

 

 

 

 

 

 

Cost of products sold

 

90,179

 

 

74,027

 

 

177,809

 

 

155,467

 

 

 

 

 

 

Gross profit

 

40,085

 

 

22,302

 

 

76,094

 

 

54,900

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling

 

7,286

 

 

7,265

 

 

14,923

 

 

15,396

 

General and administrative

 

8,773

 

 

7,572

 

 

16,982

 

 

15,586

 

Total operating expenses

 

16,059

 

 

14,837

 

 

31,905

 

 

30,982

 

 

 

 

 

 

Operating income

 

24,026

 

 

7,465

 

 

44,189

 

 

23,918

 

 

 

 

 

 

Other income:

 

 

 

 

Interest income

 

394

 

 

682

 

 

960

 

 

1,361

 

Interest expense

 

(27

)

 

(25

)

 

(52

)

 

(51

)

Other income, net

 

306

 

 

288

 

 

413

 

 

582

 

Total other income, net

 

673

 

 

945

 

 

1,321

 

 

1,892

 

 

 

 

 

 

Income before income taxes

 

24,699

 

 

8,410

 

 

45,510

 

 

25,810

 

 

 

 

 

 

Income taxes

 

6,105

 

 

2,177

 

 

11,578

 

 

6,544

 

 

 

 

 

 

Net income and comprehensive income

$

18,594

 

$

6,233

 

$

33,932

 

$

19,266

 

 

 

 

 

 

Basic earnings per share

$

1.06

 

$

0.36

 

$

1.94

 

$

1.10

 

 

 

 

 

 

Diluted earnings per share

$

1.05

 

$

0.35

 

$

1.91

 

$

1.09

 

 

 

 

 

 

Cash dividends per share

$

0.35

 

$

0.29

 

$

0.53

 

$

0.57

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

( Dollars in thousands)

 

Six Months Ended

 

June 27, 2020

June 29, 2019

 

 

 

Operating Activities

 

 

Net income

$

33,932

 

$

19,266

 

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

 

 

Depreciation and amortization

 

14,429

 

 

14,972

 

Stock-based compensation

 

2,732

 

 

3,174

 

(Gain) loss on sale of assets

 

(48

)

 

53

 

Deferred income taxes

 

3,133

 

 

1,125

 

Changes in operating assets and liabilities:

 

 

Trade receivables

 

(1,013

)

 

3,537

 

Inventories

 

16,235

 

 

(10,047

)

Trade accounts payable and accrued expenses

 

10,465

 

 

(10,804

)

Contract liability to customers

 

(5,977

)

 

(6,202

)

Employee compensation and benefits

 

6,123

 

 

(8,119

)

Product liability

 

(42

)

 

117

 

Prepaid expenses, other assets and other liabilities

 

(6,327

)

 

(10,157

)

Income taxes payable

 

4,466

 

 

(3,340

)

Cash provided by (used for) operating activities

 

78,108

 

 

(6,425

)

 

 

 

Investing Activities

 

 

Property, plant and equipment additions

 

(5,921

)

 

(3,890

)

Proceeds from sale of assets

 

54

 

 

14

 

Purchases of short-term investments

 

(233,466

)

 

(118,972

)

Proceeds from maturities of short-term investments

 

154,072

 

 

133,736

 

Cash (used for) provided by investing activities

 

(85,261

)

 

10,888

 

 

 

 

Financing Activities

 

 

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

(1,297

)

(779

)

Dividends paid

 

(9,269

)

 

(9,956

)

Cash used for financing activities

 

(10,566

)

 

(10,735

)

 

 

 

Decrease in cash and cash equivalents

 

(17,719

)

 

(6,272

)

 

 

 

Cash and cash equivalents at beginning of period

 

35,420

 

 

38,492

 

 

 

 

Cash and cash equivalents at end of period

$

17,701

 

$

32,220

 

 

Non-GAAP Financial Measure

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 one non-GAAP financial measure, EBITDA, which management believes provides useful information to investors. This non-GAAP financial measure may not be comparable to similarly titled financial measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measure should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA is 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 its EBITDA 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.

 

Non-GAAP Reconciliation – EBITDA

EBITDA

(Unaudited, dollars in thousands)

 

 

Three Months Ended

Six Months Ended

 

June 27, 2020

June 29, 2019

June 27, 2019

June 29, 2019

 

 

 

 

Net income

$

18,594

 

$

6,233

 

$

33,932

 

$

19,266

 

 

Income tax expense

 

6,105

 

 

2,177

 

 

11,578

 

 

6,544

 

Depreciation and amortization expense

 

7,215

 

7,486

 

14,429

 

14,972

Interest income

 

(394

)

 

(682

)

 

(960

)

 

(1,361

)

Interest expense

 

27

 

 

25

 

 

52

 

 

51

 

EBITDA

$

31,547

 

$

15,239

 

$

59,031

 

$

39,472

 

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200729005791/en/

CONTACT: Sturm, Ruger & Company, Inc.

One Lacey Place

Southport, CT 06890

www.ruger.com

203-259-7843

KEYWORD: CONNECTICUT UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: SPORTS GENERAL SPORTS OTHER RETAIL MANUFACTURING HUNTING OTHER CONSUMER OTHER SPORTS OTHER MANUFACTURING RETAIL CONSUMER OUTDOORS

SOURCE: Sturm, Ruger & Company, Inc.

Copyright Business Wire 2020.

PUB: 07/29/2020 05:05 PM/DISC: 07/29/2020 05:06 PM

http://www.businesswire.com/news/home/20200729005791/en