EXHIBIT 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

STURM, RUGER & COMPANY, INC. REPORTS SECOND QUARTER

DILUTED EARNINGS OF $1.05 PER SHARE,

DECLARES SPECIAL DIVIDEND OF $5.00 PER SHARE AND

DECLARES QUARTERLY DIVIDEND OF 42¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, July 29, 2020--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2020 the Company reported net sales of $130.3 million and diluted earnings of $1.05 per share, compared with net sales of $96.3 million and diluted earnings of 35¢ per share in the second quarter of 2019.

For the six months ended June 27, 2020, net sales were $253.9 million and diluted earnings were $1.91 per share. For the corresponding period in 2019, net sales were $210.4 million and diluted earnings were $1.09 per share.

The Company also announced today that its Board of Directors declared two dividends:

·

a quarterly dividend of 42¢ per share based on the results of the second quarter, and

·

a special dividend of $5.00 per share.

Both dividends are for shareholders of record as of August 14, 2020, and are payable on August 28, 2020.

Chief Executive Officer Christopher J. Killoy commented on the $5.00 per share special dividend, “Given our strong operational and financial performance, including our consistently positive cashflow, and our current cash balance of $227 million, we are returning some of our cash to shareholders. Our remaining cash holdings will allow us to continue to invest in capital expenditures in support of our commitment to new product development and innovation, maintain our quarterly dividend, and pursue opportunities that would further generate shareholder value.”

Mr. Killoy commented on the financial results for the second quarter of 2020, “Consumer demand, which began to surge in the latter stages on the first quarter, continued to intensify in the second quarter. This increased demand appears to be driven, in part, by concerns about personal protection and home defense stemming from the continuing COVID-19 pandemic; protests, demonstrations, and civil unrest in many cities throughout the United States; and the call, by some, for the reduction in funding and authority of various law enforcement organizations. As a result of this oversized demand, inventories were significantly reduced at all levels in the channel during the second quarter.”

Mr. Killoy commented on the COVID-19 pandemic and its impact on the Company, “The COVID-19 pandemic continues to cast uncertainty throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the second quarter of 2020. Since its onset in March, we have remained proactive in maintaining the health and safety of our employees during this pandemic and mitigating its impact on our business. For example, we suspended hiring from March until June, when we were confident that we could resume onboarding in a safe and responsible manner for all involved. The future impact of COVID-19 remains unknown. We have been fortunate to have only limited restrictions on our operations thus far. Our financial strength, evidenced by our debt-free balance sheet, provides financial security and flexibility as we continue to manage through this crisis.”

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

·

The estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 47% in the first half 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 65%. These substantial increases are attributable to increased consumer demand for firearms in the first half of 2020.

 

·

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 $48 million or 21% of firearm sales in the first half of 2020. New product sales include only major new products that were introduced in the past two years.

 

·

During the second quarter of 2020, the Company’s finished goods inventory decreased 20,800 units and distributor inventories of the Company’s products decreased 106,500 units. In the aggregate, total Company and distributor inventories decreased by 57% during the quarter.

 

·

Cash provided by operations during the first half of 2020 was $78.1 million. At June 27, 2020, our cash and short-term investments totaled $226.6 million. Our current ratio is 3.9 to 1 and we have no debt.

 

·

In the first half of 2020, capital expenditures totaled $5.9 million. We expect our 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.

 

·

In the first half of 2020, the Company returned $9.3 million to its shareholders through the payment of dividends.

 

·

At June 27, 2020, stockholders’ equity was $311.5 million, which equates to a book value of $17.80 per share, of which $12.95 per share was cash and short-term investments.

 

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

Tomorrow, July 30, 2020, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second quarter operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 3253225.

The Quarterly Report on Form 10-Q for the second 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 second quarter of 2020 to ensure that they have adequate information to make informed investment judgments.

 

About Sturm, Ruger & Co., Inc.

Sturm, Ruger & Co., Inc. is one of the nation's leading manufacturers of rugged, reliable firearms for the commercial sporting market. With products made in America, Ruger offers consumers almost 700 variations of more than 40 product lines. For more than 70 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens^®,” echoes our commitment to 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 (UNAUDITED)

(Dollars in thousands)

 

		June 27, 2020				December 31, 2019
Assets
Current Assets
Cash		$	17,701			$	35,420
Short-term investments			208,882				129,488
Trade receivables, net			53,653				52,640
Gross inventories			62,580				79,011
Less LIFO reserve			(47,489	)			(47,137	)
Less excess and obsolescence reserve			(3,025	)			(3,573	)
Net inventories			12,066				28,301
Prepaid expenses and other current assets			2,637				3,467
Total Current Assets			294,939				249,316
Property, plant and equipment			376,648				372,482
Less allowances for depreciation			(311,103	)			(298,568	)
Net property, plant and equipment			65,545				73,914
Deferred income taxes			2,260				5,393
Other assets			27,112				20,338
Total Assets		$	389,856			$	348,961

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data)

 

		June 27, 2020				December 31, 2019
Liabilities and Stockholders’ Equity
Current Liabilities
Trade accounts payable and accrued expenses		$	40,110			$	29,771
Contract liabilities with customers			3,646				9,623
Product liability			733				735
Employee compensation and benefits			20,405				14,273
Workers’ compensation			5,730				5,619
Income taxes payable			5,689				1,223
Total Current Liabilities			76,313				61,244
Product liability accrual			43				83
Lease liability			1,953				2,176
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            2020 – 24,205,749 issued,                        17,495,851 outstanding           2019 – 24,160,424 issued,                        17,450,526 outstanding			24,193				24,160
Additional paid-in capital			40,085				38,683
Retained earnings			392,859				368,205
Less: Treasury stock – at cost           2020 – 6,709,898 shares           2019 – 6,709,898 shares			(145,590	)			(145,590	)
Total Stockholders’ Equity			311,547				285,458
Total Liabilities and Stockholders’ Equity		$	389,856			$	348,961

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

 

		Three Months Ended								Six Months Ended
		June 27, 2020				June 29, 2019				June 27, 2020				June 29, 2019
Net firearms sales		$	129,413			$	94,971			$	252,178			$	207,903
Net castings sales			851				1,358				1,725				2,464
Total net sales			130,264				96,329				253,903				210,367
Cost of products sold			90,179				74,027				177,809				155,467
Gross profit			40,085				22,302				76,094				54,900
Operating expenses:
Selling			7,286				7,265				14,923				15,396
General and administrative			8,773				7,572				16,982				15,586
Total operating expenses			16,059				14,837				31,905				30,982
Operating income			24,026				7,465				44,189				23,918
Other income:
Interest income			394				682				960				1,361
Interest expense			(27	)			(25	)			(52	)			(51	)
Other income, net			306				288				413				582
Total other income, net			673				945				1,321				1,892
Income before income taxes			24,699				8,410				45,510				25,810
Income taxes			6,105				2,177				11,578				6,544
Net income and comprehensive income		$	18,594			$	6,233			$	33,932			$	19,266
Basic earnings per share		$	1.06			$	0.36			$	1.94			$	1.10
Diluted earnings per share		$	1.05			$	0.35			$	1.91			$	1.09
Cash dividends per share		$	0.35			$	0.29			$	0.53			$	0.57

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

		Six Months Ended
		June 27, 2020				June 29, 2019
Operating Activities
Net income		$	33,932			$	19,266
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			14,429				14,972
Stock-based compensation			2,732				3,174
(Gain) loss on sale of assets			(48	)			53
Deferred income taxes			3,133				1,125
Changes in operating assets and liabilities:
Trade receivables			(1,013	)			3,537
Inventories			16,235				(10,047	)
Trade accounts payable and accrued expenses			10,465				(10,804	)
Contract liability to customers			(5,977	)			(6,202	)
Employee compensation and benefits			6,123				(8,119	)
Product liability			(42	)			117
Prepaid expenses, other assets and other liabilities			(6,327	)			(10,157	)
Income taxes payable			4,466				(3,340	)
Cash provided by (used for) operating activities			78,108				(6,425	)
Investing Activities
Property, plant and equipment additions			(5,921	)			(3,890	)
Proceeds from sale of assets			54				14
Purchases of short-term investments			(233,466	)			(118,972	)
Proceeds from maturities of short-term investments			154,072				133,736
Cash (used for) provided by investing activities			(85,261	)			10,888
Financing Activities
Remittance of taxes withheld from employees related to      share-based compensation			(1,297	)			(779	)
Dividends paid			(9,269	)			(9,956	)
Cash used for financing activities			(10,566	)			(10,735	)
Decrease in cash and cash equivalents			(17,719	)			(6,272	)
Cash and cash equivalents at beginning of period			35,420				38,492
Cash and cash equivalents at end of period		$	17,701			$	32,220

 

 

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 one non-GAAP financial measure, EBITDA, 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 EBITDA 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 believes that this reporting provides better transparency and comparability to its operating results. 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								Six Months Ended
		June 27, 2020				June 29, 2019				June 27, 2019				June 29, 2019
Net income		$	18,594			$	6,233			$	33,932			$	19,266
Income tax expense			6,105				2,177				11,578				6,544
Depreciation and amortization expense			7,215				7,486				14,429				14,972
Interest income			(394	)			(682	)			(960	)			(1,361	)
Interest expense			27				25				52				51
EBITDA		$	31,547			$	15,239			$	59,031			$	39,472