EXHIBIT 99.1

 

 

 

 

 

 

 

FOR IMMEDIATE RELEASE

 

STURM, RUGER & COMPANY, INC. REPORTS THIRD QUARTER

FULLY DILUTED EARNINGS OF 62¢ PER SHARE

AND DECLARES DIVIDEND OF 25¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, November 4, 2015--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/corporate or 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, 2015				December 31, 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, 2015				December 31, 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, 2015				September 27, 2014				September 26, 2015				September 27, 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, 2015				September 27, 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