MRO Magazine

Sturm, Ruger & Company, Inc. Reports Third Quarter Fully Diluted Earnings of 62¢ Per Share and Declares Dividend of 25¢ Per Share


November 4, 2015
By Business Wire News

SOUTHPORT, Conn.

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the third quarter of 2015 the Company reported net sales of $120.9 million and fully diluted earnings of 62¢ per share, compared with net sales of $98.3 million and fully diluted earnings of 34¢ per share in the third quarter of 2014.

For the nine months ended September 26, 2015, net sales were $398.7 million and fully diluted earnings were $2.33 per share. For the corresponding period in 2014, net sales were $421.9 million and fully diluted earnings were $2.69 per share.

The Company also announced today that its Board of Directors declared a dividend of 25¢ per share for the third quarter for stockholders of record as of November 16, 2015, payable on November 30, 2015. 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 2015 third quarter performance:

  • In the third quarter of 2015, net sales increased 23% and earnings increased 76% from the third quarter of 2014.
  • New products, including the AR-556 modern sporting rifle and the LC9s pistol, represented $81.1 million or 21% of firearm sales in the first nine months of 2015. New product sales include only major new products that were introduced in the past two years.
  • In the third quarter of 2015, the estimated sell-through of the Company’s products from the independent distributors to retailers increased 28% from the third quarter of 2014. The National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) increased 8% during the same period.
  • Inventory of the Company’s products at the independent distributors increased by 19,800 units during the third quarter of 2015 and the Company’s finished goods inventory increased by 45,200 units during the same period.
  • Cash generated from operations during the nine months ended September 26, 2015 was $94.9 million. At September 26, 2015, our cash totaled $60.3 million. Our current ratio is 2.4 to 1 and we have no debt.
  • In the first nine months of 2015, capital expenditures totaled $24.5 million, much of it related to tooling and equipment for new products. We expect our 2015 capital expenditures to total approximately $30 million.
  • In the first nine months of 2015, the Company returned $18.7 million to its shareholders through:
  • the payment of $15.9 million of dividends, and
  • the repurchase of 82,100 shares of our common stock in the open market at an average price of $34.57 per share, for a total of $2.8 million.
  • At September 26, 2015, stockholders’ equity was $214.1 million, which equates to a book value of $11.45 per share, of which $3.22 per share is cash.

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

Tomorrow, November 5, 2015, 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 by dialing 866-515-2913, participant code 73923720.

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 CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

         

September 26,

December 31,
   

2015

  2014
 
 
Assets
 
Current Assets
Cash $ 60,252 $ 8,901
Trade receivables, net 52,982 49,735
 
Gross inventories 85,529 89,017
Less LIFO reserve (42,308 ) (40,578 )
Less excess and obsolescence reserve     (2,460 )     (3,750 )
Net inventories     40,761       44,689  
 
Deferred income taxes 7,369 7,246
Prepaid expenses and other current assets     4,393       7,603  
Total Current Assets 165,757 118,174
 
Property, plant and equipment 304,582 288,236
Less allowances for depreciation     (195,716 )     (177,575 )
Net property, plant and equipment     108,866       110,661  
 
 
Other assets     18,498       25,547  
Total Assets   $ 293,121     $ 254,382  
 
       

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands, except share data)

             
September 26, December 31,
        2015   2014
 
 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Trade accounts payable and accrued expenses $ 37,159 $ 36,150
Product liability 645 641
Employee compensation and benefits 27,363 18,302
Workers’ compensation 5,080 5,133
Income taxes payable         257       156  
Total Current Liabilities 70,504 60,382
 
Product liability 99 204
Deferred income taxes 8,379 8,334
 
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
2015 – 23,763,877 issued,
18,701,530 outstanding
2014 – 23,717,321 issued,
18,737,074 outstanding 23,764 23,717
Additional paid-in capital 28,269 25,472
Retained earnings 226,833 198,159
Less: Treasury stock – at cost
2015 – 5,062,347 shares
2014 – 4,980,247 shares         (64,727 )     (61,886 )
Total Stockholders’ Equity         214,139       185,462  
Total Liabilities and Stockholders’ Equity       $ 293,121     $ 254,382  
 
   
STURM, RUGER & COMPANY, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

         
    Three Months Ended   Nine Months Ended
September 26,   September 27, September 26,   September 27,
2015   2014   2015   2014
 
Net firearms sales $ 119,281 $ 97,847 $ 394,084 $ 420,026
Net castings sales     1,590       480       4,614       1,843  
Total net sales 120,871 98,327 398,698 421,869
 
Cost of products sold 86,860 74,589 274,781 286,655
                 
Gross profit     34,011       23,738       123,917       135,214  
 
Operating expenses:
Selling 9,170 7,586 34,255 32,069
General and administrative     6,880       6,192       21,214       22,168  
Total operating expenses     16,050       13,778       55,469       54,237  
 
Operating income     17,961       9,960       68,448       80,977  
 
Other income:
Interest expense, net (36 ) (37 ) (113 ) (110 )
Other income, net     247       673       1,333       1,168  
Total other income, net     211       636       1,220       1,058  
 
Income before income taxes 18,172 10,596 69,668 82,035
 
Income taxes     6,209       3,815       24,642       28,648  
 
Net income and comprehensive income   $ 11,963     $ 6,781     $ 45,026     $ 53,387  
 
Basic earnings per share   $ 0.64     $ 0.35     $ 2.41     $ 2.75  
 
Fully diluted earnings per share   $ 0.62     $ 0.34     $ 2.33     $ 2.69  
 
Cash dividends per share   $ 0.36     $ 0.45     $ 0.85     $ 1.48  
 
 
STURM, RUGER & COMPANY, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

     
    Nine Months Ended
September 26,   September 27,
2015   2014
 
Operating Activities
Net income $ 45,026 $ 53,387
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 26,693 26,820
Slow moving inventory valuation adjustment (1,126 ) 2,615
Stock-based compensation 3,442 4,193
Gain on sale of assets (157 ) (8 )
Deferred income taxes (78 ) 511
Impairment of assets 32
Changes in operating assets and liabilities:
Trade receivables (3,247 ) 21,542
Inventories 5,054 (27,058 )
Trade accounts payable and accrued expenses 956 (22,414 )
Employee compensation and benefits 8,602 (17,586 )
Product liability (101 ) (360 )
Prepaid expenses, other assets and other liabilities 9,752 (10,819 )
Income taxes payable     101       131  
Cash provided by operating activities     94,949       30,954  
 
Investing Activities
Property, plant and equipment additions (24,488 ) (28,696 )
Proceeds from sale of assets     222       179  
Cash used for investing activities     (24,266 )     (28,517 )
 
Financing Activities
Tax benefit from exercise of stock options and vesting of RSU’s 305 1,621
Remittance of taxes withheld from employees related to

share-based compensation

(1,000

)

(2,363

)

Proceeds from exercise of stock options 97 23
Repurchase of common stock (2,841 )

 

Dividends paid     (15,893 )     (28,728 )
Cash used for financing activities     (19,332 )     (29,447 )
 
Increase (decrease) in cash and cash equivalents 51,351 (27,010 )
 
Cash and cash equivalents at beginning of period 8,901 55,064
         
Cash and cash equivalents at end of period   $ 60,252     $ 28,054  
 

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 EBITDA, a non-GAAP financial measure 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 this non-GAAP financial measure 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 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   Nine Months Ended

September 26,
2015

 

September 27,
2014

 

September 26,
2015

 

September 27,
2014

   
Net income $ 11,963 $ 6,781 $ 45,026 $ 53,387
 
Income tax expense 6,209 3,815 24,642 28,648
Depreciation and amortization expense

8,852

8,940

26,693

26,820

Interest expense, net         36     37     113     110
EBITDA       $ 27,060   $ 19,573   $ 96,474   $ 108,965
 

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