Big Gun Makers’ Sales, Earnings Continue to Slide

Ruger Stock Price

Courtesy Google

Sturm, Ruger and Vista Outdoor reported their first quarter 2019 earnings in the last couple of days and the two firearms industry giants and both reported lower earnings.

The introduction of new products is helping Ruger’s results, but inventories continue to rise. Here are some highlights from Ruger’s press release:

  • In the first quarter of 2019, net sales and earnings per share decreased 13% and 9%, respectively, from the first quarter of 2018 due to a decline in overall market demand, as evidenced by the 8% decrease in National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation).
  • Improved price realization in the first quarter of 2019 drove profitability during the quarter.
  • Sales of new products, including the Pistol Caliber Carbine, the EC9s pistol, the Security-9 pistol, and the Precision Rimfire Rifle, represented $20.9 million or 20% of firearm sales in the first quarter of 2019. New product sales include only major new products that were introduced in the past two years.
  • During the first quarter of 2019, the Company’s finished goods inventory increased by 52,000 units and distributor inventories of the Company’s products decreased by 25,000 units. In the aggregate, total Company and distributor inventories increased 27,000 units during the quarter.
  • Cash used by operations during the first quarter of 2019 was $10.3 million. At March 30, 2019, our cash and short-term investments totaled $135 million. Our current ratio is 4.1 to 1 and we have no debt.
  • In the first quarter of 2019, capital expenditures totaled $2.7 million. We expect our 2019 capital expenditures to total approximately $25 million, most of which relate to new product introductions.
  • In the first quarter of 2019, the Company returned $4.9 million to its shareholders through the payment of dividends.
  • At March 30, 2019, stockholders’ equity was $273.9 million, which equates to a book value of $15.69 per share, of which $7.73 per share is cash and short-term investments.

As for Vista (which is more diversified than Ruger) their press release noted “Sales and margin pressure in the Shooting Sports segment” as a drag on earnings. That includes reduced ammunition demand . . .

  • Sales were $515 million, down 10 percent from the prior-year quarter. The decline was caused by the sale of Eyewear in the second quarter, lower sales in hydration and hunting and shooting accessories in the Outdoor Products segment, and lower demand within firearms.
  • Gross profit was $99 million, down 9 percent from the prior-year quarter. Adjusted gross profit was $103 million, down 8 percent from the prior-year quarter. The decrease in gross profit is due to the sale of eyewear and lower sales.
  • Operating expenses were $136 million, compared to $125 million in the prior-year quarter. Adjusted operating expenses were $92 million, compared to $123 million in the prior-year quarter. The decrease in operating expenses was driven primarily by the sale of eyewear, cost savings initiatives and lower overall selling costs.
  • Interest expense was $11 million for the quarter, compared to $12 million in the prior-year quarter. The decrease was due to overall lower debt balance, partially offset by a higher average interest rate.
  • Tax rate was (3) percent, compared to 42 percent in the prior-year quarter. The adjusted tax rate was 170 percent, compared to 46 percent in the prior-year quarter.
  • Fully diluted earnings per share (EPS) was $(0.84), compared to $(0.28) in the prior-year quarter. Adjusted EPS was $0.01, compared to $(0.22) in the prior-year quarter.

American Outdoor, which is also somewhat diversified, thought not as widely as Vista, reported its most recent quarterly results a month ago. From their press release . . .

  • Quarterly net sales were $162.0 million compared with $157.4 million for the third quarter last year, an increase of 2.9%.
  • Gross margin for the quarter was 33.4% compared with 29.8% for the third quarter last year.
  • Based upon long-term sales forecasts for its Electro-Optics operating unit, the company has decided to restructure and combine that business with its Outdoor Products & Accessories operating unit in order to drive efficiencies and increase operating performance.  As a result of those forecasts, the company conducted an evaluation to assess the fair value of the Electro-Optics operating unit and, as a result, recorded a $10.4 million partial impairment of the goodwill in that operating unit during the third quarter.
  • Including that impairment, the company recorded a quarterly GAAP net loss of $5.7 million, or $(0.10) per diluted share, compared with $11.4 million, or $0.21 per diluted share, for the comparable quarter last year.  Prior year GAAP results included a one-time, tax reform benefit of $0.17.  Excluding the impairment, quarterly GAAP net income in the current third quarter would have been $4.7 million, or $0.09 per diluted share.
  • Quarterly Non-GAAP net income was $8.9 million, or $0.16 per diluted share, compared with $4.7 million, or $0.09 per diluted share, for the comparable quarter last year. GAAP to non-GAAP adjustments to net income exclude a number of acquisition-related costs, including amortization, one-time transaction costs, fair value inventory step-up expense, one-time tax reform benefits, and the goodwill impairment from the Electro-Optics division. For a detailed reconciliation, see the schedules that follow in this release.
  • Quarterly non-GAAP Adjusted EBITDAS improved to $24.4 million, or 15.0% of net sales, compared with $20.0 million, or 12.7% of net sales, for the comparable quarter last year.

comments

  1. avatar possum, destroyer of arachnids says:

    Wow

    1. avatar Art out West says:

      Ruger is going to sell tons of these new Wrangler .22lr SA revolvers.

      I had no intention of buying another SA .22 revolver (already having purchased a Heritage Rough Rider).

      Now, I want the Wrangler. I’d also like one of Henry’s new side loading lever guns (in .357).

      I think most gun guys have bought most of the guns they wanted. Everyone loaded up during the Obama administration.

      1. avatar TruthTellers says:

        “I think most gun guys have bought most of the guns they wanted. Everyone loaded up during the Obama administration.”

        This is exactly it. I’m not saying I’m not buying new guns, but in the past 8 months I’ve bought 4 guns, all revolvers. 2016 thru 2018, I was buying at least one gun a month and I’m pretty well set right now, I can only have and shoot so many. There’s very little left on my list and what Ruger is making doesn’t interest me anymore. Their revolver QC isn’t good, they dropped a lot of good pistols for cheap, junky ones, and their rifles outside the 10/22 and Americans are not better than competitors like Savage and S&W.

      2. avatar LazrBeam says:

        People can say what they want about Obummer but, one thing he accomplished was being a GREAT gun salesman.

  2. avatar Draven says:

    first quarter 2019, not 2020.

  3. avatar enuf says:

    My question for Ruger is why is it that the PC Carbine is $100 less from Kentucky Gun Company (free shipping) than from Cabelas/Bass Pro?

    So I’d like to use my Cabelas Club Card points which means I have to buy from Cabelas. But only if I first buy at $100 above the competition, which is a far smaller retailer than Cabelas/Bass Pro.

    Is Ruger charging big box Cabelas/Bass Pro that much more per gun than single-store KYGunCo?

    If you are, that approach is actually preventing a sale.

    Just so you know.

    1. avatar TheUnspoken says:

      Use your Cabela’s earnings for ammo or an accessory?

      I would think a large dealer can get better volume prices, I guess a lot of times the manufacturer’s price is set MAP but I am guessing it is overhead/profit driven. A lot of small companies sell online and volume, so not making much per gun, but selling a lot of them without a big footprint. I remember going into to gander and seeing prices almost to MSRP, when you could go online or smaller shop and save a ton…

      I haven’t ever bought a gun from a big box, for the record. Almost entirely online and shipped to an FFL, only a couple bought directly from a local shop.

    2. avatar Biatec says:

      Cabelas and Bass pro are always overpriced. There are exceptions sometimes but it usually seems to be that way.

      1. avatar Clay-in-UT says:

        I typically see Cabellas at $50 higher on all guns, but the more popular/newer the higher the mark up

    3. avatar Art out West says:

      Cabela’s is overpriced. It probably has nothing to do with Ruger.

      Things like this are one drawback to gift cards.

      1. avatar Dale Ross says:

        Cabela’s, if it still Cabela’s, is no place to buy a firearm. I was looking for a Sig Mohan Labe for about 8 mos. I found one at Cabela’s south of Denver. The gun was FULL DAMN PRICE. My local gun shop in Pueblo West, Colorado found one for me about 3 weeks later. Instant 20% discount.

        Another note on Cabela’s. Their clothing line is pure junk.

        1. avatar Red in CO says:

          Plus they appear to have massively scaled back their “politically incorrect” firearms. I was in a Cabela’s last month for the first time in several years and made a beeline for the gun counter. I was MASSIVELY disappointed; they had a handful of handguns and basically nothing else with a pistol grip. FUDD central, apparently. Sportsman’s Warehouse carries a far more diverse and interesting lineup of firearms

        2. avatar TruthTellers says:

          They’ve cut down a lot on their black powder guns too. They use to have a larger selection and great sales throughout the year, but since Bass Pro bought them, the sales are gone and the selection is was less.

          I don’t buy much from Cabela’s anymore and I get the feeling they’re going the way of Gander very soon.

      2. avatar enuf says:

        Their sale prices can be excellent. Example, a Ruger 10/22 for $149 last year with a sale and Club Card discount voucher that came in the mail.

        They honored .22 brick prices for orders placed and back ordered during the late unpleasantness. Took 13 months but I received the five bricks of Federal Automatch for $15 each that was going for a $100 a brick if you could find it.

        That is the point, takes a sale to get a deal there. Since the Bass Pro marriage the sales are poorer and so is the stock. I’m thinking of dropping their card after using up all those Club Points on something.

    4. avatar barnbwt says:

      LOL, Cabela’s/BP likely pay less for their stock than other smaller outfits, and there are likely even agreements in place that require the ‘little guys’ to buy their product back if it doesn’t sell fast enough. Despite those advantages, there are enough fat fudge-suckers waddling into those stores under the influence of insulin & convenience, that the big box retailers can command higher prices for an even greater, and more guaranteed, profit.

      1. avatar Gunner2000 says:

        Wow, Cabelas/BP has great prices on guns! Said no one ever.
        It boggles me that people don’t shop and are more than happy to overpay.

        1. avatar E is E says:

          It’s about the experience.

          If you want to walk around a nice store that cost money.

          It’s the massive amount of sq feet cost that they have.

          Every store like that has a daily break even cost of tens of thousands of dollars.

        2. avatar enuf says:

          Sale prices combined with Club Card points and promotional discounts made for some great buys. But that’s evaporated it seems, since the Bass Pro merger.

    5. avatar Enough is enuf says:

      Hey enuf,

      It’s TRUMPS fault!

      1. avatar enuf says:

        No, it isn’t.

        Do try to keep up.

      2. avatar Craig in IA says:

        “It’s TRUMPS fault!”

        Well, of course it is…

        Right now, there are millions fewer Americans who feel their guns are under attack via Trump than by obama and his minions. Simple.

    6. avatar Marty says:

      In my experience, Cabelas has always been more expensive than other stores in my area. They do okay on ammo, but only when it is on sale. Yea, they have a lot in stock when it comes to firearms, but I’ve always been able to find the same gun elsewhere in town for much less.

  4. avatar frank speak says:

    too much competition…they no longer have the market to themselves…..

  5. avatar User1 says:

    The industry is really hoping for a good 2020 election for them. Waiting until 2024 is going to be horrible for them. They can always call up the NRA and ask them to do something that will get people into the stores.

    It’s as if there would be a lot less guns in America if the government stopped trying to take them away. The gun culture will fade away without the statists.

    I know soon the prices are going to jump because the older generation is going to horde when they see someone that is more socialist than them. They are going to price the new gun owner out of buying guns and ammo that they don’t have. Instead of trying to arm more Americans they are going to seek to profiteer.

  6. avatar Shire-man says:

    Just need a few more $1,500+ polymer PCC’s on the shelves. That’ll get things moving.

  7. avatar Rooster17 says:

    This will change once the election time starts up again and the panic buying starts again 🙁

  8. avatar Gunner2000 says:

    •”Improved price realization in the first quarter of 2019″ is code for the across the board price increase Ruger made for 2019? As a LGS, things are looking bleak for the upcoming Spring & Summer. Hunting season can’t get here soon enough, maybe the 350 Legend will be our savior….

  9. avatar Derringer Dave says:

    Hmm, Ruger is my favorite gunmaker, but I haven’t bought any guns this year…
    …and Ruger’s profits went down.
    Coincidence? LOL, I think not!

    Maybe Ruger’s profits have gone down BECAUSE I haven’t bought any guns this year.
    This means if I start buying guns again, Ruger’s profits will go up!

  10. avatar Geoff says:

    Sales have slowed, but last year was still the second highest for NICS checks.
    YUP! Second highest. No problems.
    https://www.fbi.gov/file-repository/nics_firearm_checks_-_month_year.pdf/view
    2019 is current running just behind last year and could end up at third highest.

  11. avatar Texican says:

    I would imagine that it’s difficult to keep a steady profit increase year to year with the way guns and related gear are politicized. Or to forecast for the same. A long term investor could profit buying when Republicans are in control and sell when Demoncrats are in control. That’s both guns and gun company stocks. Anyone doing that?

  12. avatar Hoyden says:

    Oh for the days of Prez Obama and the threat of Prez Pantsuit.

    1. avatar KMc says:

      Nailed it.

  13. avatar Leighton Cavendish says:

    Maybe if they made stuff people wanted…and stuff that lasts…and works
    I got stung with the R51 fiasco…

  14. avatar former water walker says:

    Just bought Federal 223 for 5.79 @ 20rounds. No discount from my ” new” Club card-annoyed. Sorry my “new” never shot AR came from a pawn shop…I’m sure sales will pick up😄😊😏

  15. avatar WI Patriot says:

    “Big Gun Makers’ Sales, Earnings Continue to Slide”

    Boo effin’ hoo…I’m sure sale and earnings are still up from before obama…

    4/30/2019 RGR closes @$55.99/sh
    5/30/2008 RGR closes @$7.64/sh

    RGR is UP over %700 in the last 11yrs…

    https://www.msn.com/en-us/money/stockdetails/history/nys-rgr/fi-a21yu2

  16. avatar Tejas223 says:

    This is where antigun policies of Silicon Valley are impacting the 2A.
    We can’t freely advertise on the platforms that the newest generation uses, and we are censored.
    ANTITRUST!!!!

  17. avatar Widdler says:

    I just bought a GP100 a week ago, guess it didn’t help much. Ran my account pretty dry though.

  18. avatar Ed Schrade says:

    Work on your extravagant prices big companies !

  19. avatar SoCalJack says:

    How are other related parts of the gun industry doing; where’s gun owner’s money going lately? My last gun buy was a Glock 19 last Oct, but since then I have been buying a crap load of ammo. Also other accesories like mags, optic holsters, also saving up to take a shooting class.

  20. avatar Longhorn Bob says:

    Seems like Ruger and Smith&Wesson should make some donations to Swallwell’s campaign. He’ll boost sales for sure.

  21. avatar GlockMeAmadeus says:

    Please Biden save us!

  22. avatar jarret says:

    wait, remind me again what we should care? If you had stocks, you should have sold them when Trump was elected. If no you need to go back to remidial investing 101. Secondly this is good for the consumers, us, your readers. There will be no tears spilt for these companies losing money. They should have invested their enormous profits while they were robbing us during the Obama years. This is the second article in as many days like this. DONT WANT TO READ THIS CRAP. Gun and accessory articles.

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