Ruger First Quarter Earnings Jump 17.5% on a 37% Increase in Sales From Distributors

Ruger-57 5.7x28mm pistol

Ruger-57 (Jeremy S. for TTAG)

Sturm, Ruger & Company, Inc. (NYSE: RGR) announced today that for the first quarter of 2020 the Company reported net sales of $123.6 million and diluted earnings of 87¢ per share, compared with net sales of $114.0 million and diluted earnings of 74¢ per share in the first quarter of 2019.

The Company also announced today that its Board of Directors declared a dividend of 35¢ per share for the first quarter, for shareholders of record as of May 18, 2020, payable on June 1, 2020. This dividend varies every quarter because the Company pays a percentage of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Christopher J. Killoy commented on the financial results for the first quarter of 2020, “Strong consumer demand, exciting new products, and reduced reliance on promotions led to improved earnings and cash flows, which strengthened our already robust debt-free balance sheet as we ended the quarter with $188 million of cash and short-term investments. In addition, inventories were reduced at both Ruger and at our distributors as retail demand outstripped available inventories, particularly in the latter weeks of the quarter.”

Mr. Killoy commented on the COVID-19 pandemic and its impact on the Company, “The COVID-19 pandemic has created significant uncertainty and adversely impacted many industries throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the first quarter of 2020. Beginning in March, we took many proactive steps to maintain the health and safety of our employees and mitigate its impact on our business. These actions included:

  • Providing all hourly employees with an additional two weeks of paid time off,
  • Encouraging employees to work remotely, wherever possible, and implementing social distancing throughout each manufacturing facility, including in every manufacturing cell,
  • Communicating with and assisting employees with potential health issues,
  • Restricting visitor access to avoid introducing new people to the factory environment,
  • Implementing additional cleaning, sanitizing and other health and safety processes to maintain a clean and safe workplace, and
  • Manufacturing and donating personal protective equipment to hospitals, health care facilities, and police and fire departments in our local communities.

Google Ruger RGR stock price

Courtesy Google

Mr. Killoy continued, “The impact of COVID-19 has increased in the past month, but we have been fortunate and have been able to keep all of our facilities safe and open with only limited restrictions on production. We are well positioned to manage through this global crisis as we continue to monitor and adjust our mitigation efforts daily. Our financial strength, evidenced by our debt-free balance sheet and our cash and short-term investments, which now exceed $200 million, coupled with our $40 million revolving credit facility provide added financial security and flexibility.”

Mr. Killoy made the following observations related to the Company’s first quarter 2020 performance:

  • The estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 37% in the first quarter of 2020 compared to the prior year period. For the same period, the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 42%. These substantial increases are attributable to increased consumer demand for firearms in the first quarter of 2020, especially the latter stages.
  • Sales of new products, including the Wrangler, the Ruger-57, the LCP II in .22 LR, the PC Charger, and the AR-556 pistol, represented $23.0 million or 20% of firearm sales in the first quarter of 2020. New product sales include only major new products that were introduced in the past two years.
  • During the first quarter 2020, the Company’s finished goods inventory decreased 35,500 units and distributor inventories of the Company’s products decreased 77,900 units. In the aggregate, total Company and distributor inventories decreased by 34% during the quarter.
  • Cash provided by operations during the first quarter of 2020 was $31.1 million. At March 28, 2020, our cash and short-term investments totaled $187.6 million. Our current ratio is 4.2 to 1 and we have no debt.
  • In the first quarter of 2020, capital expenditures totaled $4.1 million. We expect our 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.
  • In the first quarter of 2020, the Company returned $3.0 million to its shareholders through the payment of dividends.
  • At March 28, 2020, stockholders’ equity was $297.8 million, which equates to a book value of $17.03 per share, of which $10.73 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2020. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. – View Release.

Tomorrow, May 7, 2020, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the first quarter operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 9986785.

On Wednesday, May 13, 2020, Sturm, Ruger will hold its Annual Meeting of Stockholders live via the Internet at 9:00 a.m. ET. Stockholders will be able to participate in this virtual meeting by following the directions and using the control number supplied with their proxy materials. Other interested parties may listen to the virtual meeting via the Internet at www.virtualshareholdermeeting.com/RGR2020.

The Quarterly Report on Form 10-Q for the first quarter of 2020 is available on the SEC website at SEC.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Quarterly Report on Form 10-Q for the first quarter of 2020 to ensure that they have adequate information to make informed investment judgments.

See Ruger’s full 1st quarter earnings report here.

Courtesy Ruger

comments

  1. avatar tsbhoa.p.jr says:

    my first gun was a ruger. boys first gun was a ruger. we have two.

    1. avatar Biatec says:

      Me too. Ruger makes a lot of great first guns.

    2. avatar I Haz A Question says:

      I have a sweet Ruger Mark I (first gen) I recently took out of the safe for its annual takedown and cleaning. Been in our family since originally purchased decades ago. Since it’s a Mark I, it’s very simple in operation and doesn’t have the extra mechanics/levers subsequent models were given. You just point and shoot.

  2. avatar Huntmaster says:

    It’s shame that Colt can’t Learn a few tricks from Ruger.

    1. avatar Green Mtn. Boy says:

      Some companies just want to market their name and not really market a successful product.

      1. avatar I Haz A Question says:

        Boy, ain’t that the truth. Typically happens upon third generation of leadership. First generation possesses the heart, drive, and creativity to get the company up and going (get the plane into the air, so to speak). Second generation usually has some connection and dedication to their predecessor, so they continue the momentum (keep the plane in the air). The third generation often enters the scene when the second retires, and well after the first is long gone, so they see the company more in the terms of profit rather than family, and try to squeeze as much money as they can while making decisions the first would never have considered. This is when the plane veers off course and starts to sputter. At that point, those who see the writing on the wall reach for the parachutes and leave the passengers (employees, stockholders) to fend for themselves.

      2. avatar Peter Gunn says:

        Sad but true.

        It’s a shame when a name becomes a company’s main product. It is embarrassing to watch formerly world-leading, cutting-edge American manufacturers become a shadow of their former selves. When profit is placed above product the whole operation begins a downhill slide. That slide can easily become a death spiral when you continue to allow outside “experts” to hold the reins- especially when those “experts” know very little, nor care, about the products being produced. They only believe in “producing” profits. But it is the very act of producing preeminent products that make manufacturers great- not marketing.

        There is a place for archaic products- I own many and love them for what they are. But maintaining a sad devotion to obsolete designs while eschewing even the slightest thought of keeping up with any of your competitors is disturbing. Having the capability of doing so much, and doing so little is, frankly, unforgivable.There’s a limited audience upon which Jedi mind tricks work, so the future is bleak for those convinced they can compete with archaic products by simply suggesting they embody the “idea” of some “glorious past”. Not only is it untenable, but, quite frankly- it shows considerable disdain for the intelligence of the consumer. Despicable, really.

        Colt is one company that comes to mind… Harley Davidson is another.

        1. avatar I Haz A Question says:

          Pony pipe clamps. And Jorgesen.

        2. avatar RidgeRunner says:

          The opposite of that is Browning.

    2. avatar Ron says:

      Colts revolver return is actually pretty great.

  3. avatar Dude says:

    The buying spree will inevitably slow down now that everyone that wanted one finally pulled the trigger. I can already imagine the headlines in 2021 if Trump is reelected: “Trump tanks the firearms industry”

    1. avatar jwm says:

      After Trump gets his second term and rbg goes to her reward we will see another surge. One or two calls by the supremems will spark a new rush, in a good way.

      1. avatar RedEagle says:

        Hoping for a conservative majority in the courts is ignorant when the house is against the stack..

        We need to win the house and senate to not loose our country!

        1. avatar Dude says:

          Our country is already loose. That’s why we can’t afford to lose. 😉

        2. avatar RedEagle says:

          Super loose, fucking grammer, did not drink coffee before. blastingshitoutoftheface.

          Fuck it, that’s why I have soldiers like you fix it.

  4. avatar Enuf says:

    There’s a young lady in the family I taught to shoot on rifles and handguns. She’s about to be 21 and wants her own handgun. We have yet to settle a caliber, but her preference is revolvers.

    I lean toward Ruger myself. At least 4″ barrel for target shooting fun. Could be anything from a 10 shot .22 to a .357. If the .357, but feed it cheapest .38 Special we can find and do more shooting! 🙂

    Whatever gun she settles on I’m tossing in a couple of pistolero classes some lady shooting champs run in a nearby town. Plus a concealed carry class for the legal mumbo jumbo, whether she decides to carry or not.

    Support MADE IN USA brands. Encourage a self defense outlook. Encourage the young to hear advice from experienced folks but to make up their own minds, not be ditto heads.

    Time will tell.

  5. avatar Ralph says:

    If I’m reading that chart correctly, it looks like the quarterly dividend per share was decreased from $0.28 to $0.18 year to year. Either (i) there’s a hell of a lot more shares, or (ii) that’s a typo, or (iii) someone done got screwed.

  6. avatar hawkeye says:

    On a hunch, I did a search at Morningstar.com. There are a few articles there by their Director of Sustainability Research (so-called “green” investments). He discusses how concerned investors can avoid unknowingly investing in gun manufacturers. I saw language such as

    “As stewards of your capital and as major shareholders in the three gunmakers, these asset managers have an obligation to engage with company management about their response to the Florida shootings, issues surrounding the safe and responsible use of their products, and their lobbying activities.”

    “Significant engagement with gunmakers at this point should be an obligation.”

    and “If you get your small-cap exposure through an actively managed fund, you have a better chance of not being invested in any of the three gunmakers.”

    Yet, they sing the praises of Big Tobacco because of the returns. Gave me pause.

  7. avatar Jeff O. says:

    Ruger has been killing it lately with their offerings.

    I do like the look of those Wranglers A LOT. The burnt
    bronze is sharp looking.

    I also like that PC Carbine pistol, though it’s ugly as heck! (Which endears me to it.)

    I’m also in the market for another 10/22 that I can tear apart, rebarrel & stock and make myself a race gun. So really, all technically need is the receiver, bolt, and a few internals, but getting the whole gun is still cheaper than most aftermarket receivers & parts.

    1. avatar RidgeRunner says:

      I want a Wrangler, too. It’s just a little far down the list, but at $200 seems well worth it. I’d get the Burnt Bronze, as well. Then, of course, I’d have to get some leather…

  8. avatar M1Lou says:

    In my early years of shooting as a kid, some of the first pistols I shot were Ruger revolvers. I own three Rugers personally and their 5.7 pistol is on my list to buy. I just have never been able to stomach the FN pistol’s price and their controls were meh. This is from an FN “fanboy” that owns a bunch of their products.

  9. avatar Mark Huett says:

    My first gun was a Ruget Single Six.

  10. avatar 5.7 is the future says:

    Proof is in the numbers. 5.7 is here to stay. 5.7 is exponentially growing in popularity and will eventually even unseat 9mm. 9mm will be tossed into the dustbin of history by the far superior 5.7.

    1. avatar Nate in CA says:

      Okay, now THAT was funny!

      1. avatar Neil says:

        ROTFL

        With what, three guns on the market that fire 5.7mm, with insanely expensive ammo, it threatens the better selling calibers?!?

        The only pistol Ruger makes that gets into the top 5 selling guns is the LCP in 380ACP. 5.7 needs to challenge 380 ACP first.

        So where is the LCP equivalent? Shield 380 EZ equivalent? Where is the gun from Bersa, Berretta, Glock, and Sig? We do not yet have a 5.7mm outselling the #5 380 ACP, shouldn’t we wait for that first before claiming world domination?

        And people complain about 380ACP ammo pricing as it isn’t one of the volume ammos. Improving, but not a top 10 selling caliber:

        https://www.luckygunner.com/labs/2013-ammo-stats/

        So until 5.7mm breaks say 3% of ammo sales, by revenue, it is a novelty caliber.

        The various Ruger 9mm guns will sell for a long time: EC9, LC9s, Security-9, PC Charger, American, American Compact, and a bunch of 1911s in 9mm vs. one in 5.7mm… One pistol from FN and one personal defense line (P90/PS90).

        1. avatar RidgeRunner says:

          Dude

  11. avatar Dyspeptic Gunsmith says:

    One of the ways that Ruger is able to deliver quality guns at affordable prices is investment casting.

    There are three ways to make larger gun parts, such as frames:

    1. You can machine it from bar stock (NB I didn’t use the term “billet”).
    2. You can forge a piece of metal into the shape you want, and then machine/finish it.
    3. You can cast it in a mold, which gets you the shape you want, and then machine/finish it.

    Ruger has the best expertise in the industry on doing #3. After becoming very good at casting parts for Ruger, Pine Tree Castings opened up for other customers, and today they will cast parts on contract. What’s more is that they will do it with a competence that very, very few other companies have. This is because Ruger has been casting parts for guns since before 1960. They’ve learned a thing or two. They also cast a number of alloys that are specifically useful in firearms.

    Now, for the inevitable “but, but, but forgings are better than castings!” crowd: Open up a reloading book. Turn to the chapters for .45 Colt. Notice that there is a section there just for certain Ruger revolvers, not to be used in any other handguns. Why is that? There’s nothing wrong with cast parts in guns. There’s something wrong with incompetent or third-world quality castings as gun parts, but Pine Tree and Ruger have been proving that cast parts can deliver strong guns at reasonable prices (and deliver profits for Ruger too) for decades.

    1. avatar RidgeRunner says:

      Makes sense. I do know my Ruger Super Redhawks in .44 are the stoutest-built handguns I own. The Alaskan is just a big ol’ hunk o metal. Just a beautiful brick, and a joy to shoot with the Hogue tamers.

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