Sturm, Ruger & Company, Inc. (NYSE:RGR) announced today that for 2013 the Company reported net sales of $688.3 million and fully diluted earnings of $5.58 per share, compared with net sales of $491.8 million and fully diluted earnings of $3.60 per share in 2012.
For the fourth quarter of 2013, net sales were $181.9 million and fully diluted earnings were $1.33 per share. For the corresponding period in 2012, net sales were $141.8 million and fully diluted earnings were $1.00 per share.
The Company also announced today that its Board of Directors declared a dividend of 54¢ per share for the fourth quarter, for shareholders of record as of March 14, 2014, payable on March 28, 2014. 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 55% in 2013, driven by the 40% growth in sales and our ongoing focus on continuous improvement in our operations.
- Our EBITDA of $195.7 million increased 54% from our 2012 EBITDA of $127.1 million.
- New product introductions were a significant component of our sales growth as new product sales represented $195.8 million or 29% of firearm sales in 2013. New product introductions in 2013 included the LC380 pistol, the SR45 pistol, the Ruger American Rimfire rifle, the SR-762 rifle, and the Red Label II shotgun.
- Demand for our products outpaced the growth in industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for 2013 as illustrated below:
Increase in estimated Ruger Units Sold | 18% | ||||||||||
Increase in total adjusted NICS | 7% |
- Cash generated from operations during 2013 was $120 million. At December 31, 2013, our cash totaled $55 million. Our current ratio is 1.8 to 1 and we have no debt.
- In 2013, capital expenditures totaled $54.6 million, much of it related to machinery and equipment for new products, the purchase and building improvements of the Mayodan, North Carolina facility, and the expansion of production capacity for products in greater demand. We expect to invest approximately $35 million on capital expenditures during 2014 as we continue to prioritize new product development.
- In 2013, the Company returned $41.1 million to its shareholders through the payment of dividends.
- At December 31, 2013, stockholders’ equity was $179.1 million, which equates to a book value of $9.26 per share, of which $2.85 per share was cash and equivalents.
- During the fourth quarter of 2013, we began to manufacture a limited quantity of rifles at our 220,000 square foot facility in Mayodan, North Carolina that we acquired in September of 2013. Firearm production at the Mayodan facility is expected to increase during 2014.
Today, the Company filed its Annual Report on Form 10-K for 2013. The financial statements included in this Annual Report on Form 10-K are attached to this press release.
Tomorrow, February 26, 2014, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the 2013 operating results. Interested parties can access the webcast at www.ruger.com/corporateor by dialing 866-270-6057, participant code 15153767.
The Annual Report on Form 10-K 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 Annual Report on Form 10-K 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. | ||||||||
| BALANCE SHEETS | ||||||||
(Dollars in thousands) | ||||||||
| December 31, | 2013 | 2012 | ||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 55,064 | $ | 30,978 | ||||
| Trade receivables, net | 67,384 | 43,018 | ||||||
| Gross inventories | 64,199 | 55,827 | ||||||
| Less LIFO reserve | (38,516 | ) | (38,089 | ) | ||||
| Less excess and obsolescence reserve | (2,422 | ) | (1,729 | ) | ||||
| Net inventories | 23,261 | 16,009 | ||||||
| Deferred income taxes | 7,637 | 5,284 | ||||||
| Prepaid expenses and other current assets | 4,280 | 1,632 | ||||||
| Total Current Assets | 157,626 | 96,921 | ||||||
| Property, Plant, and Equipment | 250,127 | 195,713 | ||||||
| Less allowances for depreciation | (149,099 | ) | (129,720 | ) | ||||
| Net property, plant and equipment | 101,028 | 65,993 | ||||||
| Deferred income taxes | - | 2,004 | ||||||
| Other assets | 18,464 | 9,568 | ||||||
| Total Assets | $ | 277,118 | $ | 174,486 | ||||
| STURM, RUGER & COMPANY, INC. | ||||||||
| BALANCE SHEETS (Continued) | ||||||||
(Dollars in thousands, except share data) | ||||||||
| December 31, | 2013 | 2012 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Trade accounts payable and accrued expenses | $ | 46,991 | $ | 38,500 | ||||
| Product liability | 971 | 720 | ||||||
| Employee compensation and benefits | 34,626 | 15,182 | ||||||
| Workers’ compensation | 5,339 | 4,600 | ||||||
| Income taxes payable | 239 | 489 | ||||||
| Total Current Liabilities | 88,166 | 59,491 | ||||||
| Accrued pension liability | - | 19,626 | ||||||
| Product liability | 265 | 337 | ||||||
| Deferred income taxes | 9,601 | - | ||||||
| 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 – 23,647,350 issued, | ||||||||
| 19,347,916 outstanding | ||||||||
| 2012 – 23,562,422 issued, | ||||||||
| 19,262,988 outstanding | 23,647 | 23,563 | ||||||
| Additional paid-in capital | 20,614 | 15,531 | ||||||
| Retained earnings | 192,088 | 123,442 | ||||||
| Less: Treasury stock – at cost | ||||||||
| 2013 and 2012 – 4,299,434 shares | (37,884 | ) | (37,884 | ) | ||||
| Accumulated other comprehensive loss | (19,379 | ) | (29,620 | ) | ||||
| Total Stockholders’ Equity | 179,086 | 95,032 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 277,118 | $ | 174,486 | ||||
| STURM, RUGER & COMPANY, INC. | ||||||||||||
| STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||
| Year ended December 31, | 2013 | 2012 | 2011 | |||||||||
| Net firearms sales | $ | 678,552 | $ | 484,933 | $ | 324,200 | ||||||
| Net castings sales | 9,724 | 6,891 | 4,616 | |||||||||
| Total net sales | 688,276 | 491,824 | 328,816 | |||||||||
| Cost of products sold | 429,671 | 312,871 | 217,058 | |||||||||
| Gross profit | 258,605 | 178,953 | 111,758 | |||||||||
| Operating Expenses: | ||||||||||||
| Selling | 48,706 | 38,363 | 28,691 | |||||||||
| General and administrative | 35,394 | 29,231 | 20,970 | |||||||||
| Other operating (income) expenses, net | (401 | ) | 293 | (319 | ) | |||||||
| Total operating expenses | 83,699 | 67,887 | 49,342 | |||||||||
| Operating income | 174,906 | 111,066 | 62,416 | |||||||||
| Other income: | ||||||||||||
| Royalty income | 658 | 824 | 873 | |||||||||
| Interest income | 4 | 34 | 29 | |||||||||
| Interest expense | (135 | ) | (95 | ) | (110 | ) | ||||||
| Other (expense) income, net | (201 | ) | 280 | 308 | ||||||||
| Total other income, net | 326 | 1,043 | 1,100 | |||||||||
| Income before income taxes | 175,232 | 112,109 | 63,516 | |||||||||
| Income taxes | 63,960 | 41,480 | 23,501 | |||||||||
| Net income | 111,272 | 70,629 | 40,015 | |||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||
| Defined benefit pension plans | 10,240 | (2,077 | ) | (7,895 | ) | |||||||
| Comprehensive income | $ | 121,512 | $ | 68,552 | $ | 32,120 | ||||||
| Basic Earnings Per Share | $ | 5.76 | $ | 3.69 | $ | 2.12 | ||||||
| Fully Diluted Earnings Per Share | $ | 5.58 | $ | 3.60 | $ | 2.09 | ||||||
| Cash Dividends Per Share | $ | 2.12 | $ | 5.80 | $ | 0.43 | ||||||
| STURM, RUGER & COMPANY, INC. | ||||||||||||
| STATEMENTS OF CASH FLOWS | ||||||||||||
(Dollars in thousands) | ||||||||||||
| Year ended December 31, | 2013 | 2012 | 2011 | |||||||||
| Operating Activities | ||||||||||||
| Net income | $ | 111,272 | $ | 70,629 | $ | 40,015 | ||||||
|
Adjustments to reconcile net income to cash
provided by operating activities: | ||||||||||||
| Depreciation and amortization | 20,362 | 14,888 | 12,148 | |||||||||
| Stock-based compensation | 5,288 | 4,718 | 2,953 | |||||||||
| Excess and obsolescence inventory reserve | 693 | 761 | (234 | ) | ||||||||
| Loss (gain) on sale of assets | 1 | (944 | ) | (26 | ) | |||||||
| Deferred income taxes | 5,736 | (1,480 | ) | 8,205 | ||||||||
| Impairment of assets | 911 | 1,134 | - | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Trade receivables | (24,366 | ) | (793 | ) | (10,660 | ) | ||||||
| Inventories | (7,945 | ) | (6,553 | ) | (156 | ) | ||||||
| Trade accounts payable and accrued expenses | 9,231 | 9,908 | 11,807 | |||||||||
| Employee compensation and benefits | 17,897 | (4,345 | ) | 3,959 | ||||||||
| Product liability | 179 | (689 | ) | 724 | ||||||||
| Prepaid expenses, other assets and other liabilities | (19,340 | ) | (321 | ) | (10,961 | ) | ||||||
| Income taxes payable | (250 | ) | 272 | (365 | ) | |||||||
| Cash provided by operating activities | 119,669 | 87,185 | 57,409 | |||||||||
| Investing Activities | ||||||||||||
| Property, plant, and equipment additions | (54,616 | ) | (27,282 | ) | (22,135 | ) | ||||||
| Purchases of short-term investments | - | (59,966 | ) | (122,978 | ) | |||||||
Proceeds from sales or maturities of short-term | ||||||||||||
| investments | - | 59,966 | 175,471 | |||||||||
| Net proceeds from sale of assets | 233 | 1,003 | 319 | |||||||||
| Cash (used for) provided by investing activities | (54,383 | ) | (26,279 | ) | 30,677 | |||||||
| Financing Activities | ||||||||||||
| Dividends paid | (41,079 | ) | (111,523 | ) | (8,159 | ) | ||||||
| Tax benefit from exercise of stock options | 2,302 | 3,474 | 3,855 | |||||||||
| Repurchase of common stock | - | - | (1,999 | ) | ||||||||
| Payment of employee withholding tax related to | ||||||||||||
| share-based compensation | (2,423 | ) | (3,083 | ) | (5,859 | ) | ||||||
| Proceeds from exercise of stock options | - | 148 | - | |||||||||
| Cash used for financing activities | (41,200 | ) | (110,984 | ) | (12,162 | ) | ||||||
| Increase (decrease) in cash and cash equivalents | 24,086 | (50,078 | ) | 75,924 | ||||||||
| Cash and cash equivalents at beginning of year | 30,978 | 81,056 | 5,132 | |||||||||
| Cash and cash equivalents at end of year | $ | 55,064 | $ | 30,978 | $ | 81,056 | ||||||
Non-GAAP Financial Measure
In an effort to provide investors with additional information regarding its results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and one non-GAAP financial measure which management believes provides useful information to investors. This non-GAAP measure may not be comparable to similarly titled 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 this non-GAAP measure is useful to understanding its operating results and the ongoing performance of its underlying business. The Company uses both GAAP and non-GAAP financial measures to evaluate the Company’s financial performance.
Non-GAAP Reconciliation – EBITDA
EBITDA | ||||||||
(Unaudited, dollars in thousands) | ||||||||
| Year ended December 31, | 2013 | 2012 | ||||||
| Net income | $ | 111,272 | $ | 70,629 | ||||
| Income tax expense | 63,960 | 41,480 | ||||||
| Depreciation and amortization expense | 20,362 | 14,888 | ||||||
| Interest expense | 135 | 95 | ||||||
| Interest income | (4 | ) | (34 | ) | ||||
| EBITDA | $ | 195,725 | $ | 127,058 | ||||
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 believes that disclosure of EBITDA will be helpful to those reviewing its performance, 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.
Contacts:
One Lacey Place
Southport, CT
06890
www.ruger.com
203-259-7843
