Sturm, Ruger & Company, Inc. Reports Third Quarter Fully Diluted Earnings Of $1.44 Per Share And Dividend Of 58¢ Per Share

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/corporate or 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 28,2013
     

December 31,2012
 
 
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 28,2013
     

December 31,2012
 
 
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 28,2013
   

September 29,2012
   

September 28,2013
   

September 29,2012
       
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 28,2013
   

September 29,2012
   
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  

Copyright Business Wire 2010

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