Sturm, Ruger & Company, Inc. (NYSE:RGR) announced today that for the third quarter of 2013 the Company reported net sales of $170.9 million and fully diluted earnings of $1.44 per share, compared with net sales of $118.2 million and fully diluted earnings of 88¢ per share in the third quarter of 2012.
For the nine months ended September 28, 2013, net sales were $506.4 million and fully diluted earnings were $4.25 per share. For the corresponding period in 2012, net sales were $350.1 million and fully diluted earnings were $2.58 per share.
The Company also announced today that its Board of Directors declared a dividend of 58¢ per share for the third quarter, for shareholders of record as of November 15, 2013, payable on November 29, 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 64% from the third quarter of 2012, driven by the 45% 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 $146.6 million or 32% of firearm sales in the first nine months of 2013. New product introductions in 2013 included the LC380 pistol, the SR45 pistol, and the Ruger American Rimfire rifle.
- Demand for our products outpaced the growth in overall industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for both the third quarter and nine months ended September 28, 2013 as illustrated below:
| Period ended September 28, 2013 | ||||||||
| Q3 | Nine months | |||||||
Increase in estimated Ruger Units Sold from Distributors to Retailers | 31% | 26% | (a) | |||||
| Increase in total adjusted NICS Background Checks (thousands) | - % | 22% | ||||||
| (a) | Insufficient distributor inventory at December 31, 2012 severely limited the estimated sell-through from independent distributors to retailers in the first half of 2013. |
- Cash generated from operations during the nine months ended September 28, 2013 was $84 million. At September 28, 2013, our cash totaled $54 million. Our current ratio is 1.8 to 1 and we have no debt.
- In the first nine months of 2013, capital expenditures totaled $31 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $40 million on capital expenditures during 2013.
- In the first nine months of 2013, the Company returned $30 million to its shareholders through the payment of dividends. An additional $11 million of dividends will be paid to shareholders on November 29, 2013.
- At September 28, 2013, stockholders’ equity was $152.6 million, which equates to a book value of $7.89 per share, of which $2.80 per share was cash and equivalents.
- On September 3, 2013, the Company announced that it finalized the purchase of a 220,000 square foot facility in Mayodan, North Carolina. This is the Company's first major expansion in over 25 years, and production at the new facility is expected to begin during the first quarter of 2014.
Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2013. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.
Tomorrow, November 6, 2013, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the third quarter operating results. Interested parties can access the webcast at www.ruger.com/corporateor www.earnings.com or by dialing 877-415-3183, participant code 45408758.
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) | |||||||||||
September 28, |
December 31, | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash | $ | 54,256 | $ | 30,978 | |||||||
| Trade receivables, net | 63,833 | 43,018 | |||||||||
| Gross inventories | 61,079 | 55,827 | |||||||||
| Less LIFO reserve | (39,145 | ) | (38,089 | ) | |||||||
| Less excess and obsolescence reserve | (1,966 | ) | (1,729 | ) | |||||||
| Net inventories | 19,968 | 16,009 | |||||||||
| Deferred income taxes | 6,818 | 5,284 | |||||||||
| Prepaid expenses and other current assets | 3,031 | 1,632 | |||||||||
| Total Current Assets | 147,906 | 96,921 | |||||||||
| Property, plant and equipment | 225,950 | 195,713 | |||||||||
| Less allowances for depreciation | (142,956 | ) | (129,720 | ) | |||||||
| Net property, plant and equipment | 82,994 | 65,993 | |||||||||
| Deferred income taxes | -- | 2,004 | |||||||||
| Other assets | 19,476 | 9,568 | |||||||||
| Total Assets | $ | 250,376 | $ | 174,486 | |||||||
STURM, RUGER & COMPANY, INC. | |||||||||||
CONDENSED BALANCE SHEETS (Continued) (Dollars in thousands, except share data) | |||||||||||
September 28, |
December 31, | ||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current Liabilities | |||||||||||
| Trade accounts payable and accrued expenses | $ | 39,555 | $ | 38,500 | |||||||
| Product liability | 1,286 | 720 | |||||||||
| Employee compensation and benefits | 31,659 | 15,182 | |||||||||
| Workers’ compensation | 4,254 | 4,600 | |||||||||
| Income taxes payable | 3,390 | 489 | |||||||||
| Total Current Liabilities | 80,144 | 59,491 | |||||||||
| Accrued pension liability | 17,223 | 19,626 | |||||||||
| Deferred income taxes | 137 | -- | |||||||||
| Product liability | 279 | 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 – 23,647,026 issued, | |||||||||||
| 19,347,592 outstanding | |||||||||||
| 2012 – 23,562,422 issued, | |||||||||||
| 19,262,988 outstanding | 23,647 | 23,563 | |||||||||
| Additional paid-in capital | 19,296 | 15,531 | |||||||||
| Retained earnings | 177,154 | 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 | 152,593 | 95,032 | |||||||||
| Total Liabilities and Stockholders’ Equity | $ | 250,376 | $ | 174,486 | |||||||
STURM, RUGER & COMPANY, INC. | ||||||||||||||||||||
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) (Dollars in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 28, |
September 29, |
September 28, |
September 29, | |||||||||||||||||
| Net firearms sales | $ | 167,234 | $ | 116,270 | $ | 497,461 | $ | 345,203 | ||||||||||||
| Net castings sales | 3,708 | 1,882 | 8,915 | 4,854 | ||||||||||||||||
| Total net sales | 170,942 | 118,152 | 506,376 | 350,057 | ||||||||||||||||
| Cost of products sold | 108,002 | 75,587 | 311,403 | 220,565 | ||||||||||||||||
| Gross profit | 62,940 | 42,565 | 194,973 | 129,492 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling | 9,662 | 7,891 | 37,250 | 27,998 | ||||||||||||||||
| General and administrative | 8,207 | 7,271 | 24,967 | 21,153 | ||||||||||||||||
| Other operating expenses | 287 | 166 | 49 | 377 | ||||||||||||||||
| Total operating expenses | 18,156 | 15,328 | 62,266 | 49,528 | ||||||||||||||||
| Operating income | 44,784 | 27,237 | 132,707 | 79,964 | ||||||||||||||||
| Other income: | ||||||||||||||||||||
| Interest expense, net | (40 | ) | (18 | ) | (95 | ) | (62 | ) | ||||||||||||
| Other income, net | 408 | 319 | 769 | 800 | ||||||||||||||||
| Total other income, net | 368 | 301 | 674 | 738 | ||||||||||||||||
| Income before income taxes | 45,152 | 27,538 | 133,381 | 80,702 | ||||||||||||||||
| Income taxes | 16,481 | 10,189 | 48,684 | 29,860 | ||||||||||||||||
| Net income and comprehensive income | $ | 28,671 | $ | 17,349 | $ | 84,697 | $ | 50,842 | ||||||||||||
| Basic earnings per share | $ | 1.48 | $ | 0.91 | $ | 4.38 | $ | 2.66 | ||||||||||||
| Fully diluted earnings per share | $ | 1.44 | $ | 0.88 | $ | 4.25 | $ | 2.58 | ||||||||||||
| Cash dividends per share | $ | 0.650 | $ | 0.377 | $ | 1.544 | $ | 0.913 | ||||||||||||
STURM, RUGER & COMPANY, INC. | ||||||||||
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands) | ||||||||||
| Nine Months Ended | ||||||||||
September 28, |
September 29, | |||||||||
| Operating Activities | ||||||||||
| Net income | $ | 84,697 | $ | 50,842 | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 14,177 | 10,151 | ||||||||
| Slow moving inventory valuation adjustment | 237 | 446 | ||||||||
| Stock-based compensation | 3,973 | 3,317 | ||||||||
| Gain on sale of assets | (99 | ) | (65 | ) | ||||||
| Deferred income taxes | 607 | (265 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Trade receivables | (20,815 | ) | (5,249 | ) | ||||||
| Inventories | (4,196 | ) | (3,599 | ) | ||||||
| Trade accounts payable and accrued expenses | 709 | 2,571 | ||||||||
| Employee compensation and benefits | 15,350 | 1,709 | ||||||||
| Product liability | 508 | (352 | ) | |||||||
| Prepaid expenses, other assets and other liabilities | (14,309 | ) | 1,656 | |||||||
| Income taxes payable | 2,901 | 631 | ||||||||
| Cash provided by operating activities | 83,740 | 61,793 | ||||||||
| Investing Activities | ||||||||||
| Property, plant and equipment additions | (30,600 | ) | (20,315 | ) | ||||||
| Proceeds from sale of assets | 120 | 65 | ||||||||
| Purchases of short-term investments | - | (59,966 | ) | |||||||
| Proceeds from maturities of short-term investments | - | 29,993 | ||||||||
| Cash used for investing activities | (30,480 | ) | (50,223 | ) | ||||||
| Financing Activities | ||||||||||
| Tax benefit from exercise of stock options and vesting of RSU’s | 2,290 | 1,037 | ||||||||
Remittance of taxes withheld from employees related to share-based compensation | (2,414 | ) | (1,045 | ) | ||||||
| Dividends paid | (29,858 | ) | (17,495 | ) | ||||||
| Cash used for financing activities | (29,982 | ) | (17,503 | ) | ||||||
| Increase (decrease) in cash and cash equivalents | 23,278 | (5,933 | ) | |||||||
| Cash and cash equivalents at beginning of period | 30,978 | 81,056 | ||||||||
| Cash and cash equivalents at end of period | $ | 54,256 | $ | 75,123 | ||||||
Contacts:
One Lacey Place
Southport, CT
06890
www.ruger.com
203-259-7843
