For the third quarter ended Sept. 27, 2008, Sturm, Ruger & Co. reported net sales of $41.8 million and earnings per share of 2 cents, a 24% increase compared with sales of $31.9 million and a loss per share of 3 cents in the third quarter of 2007.
Sales for the firearm manufacturer grew 31% from the third quarter of 2007 and 8% from the second quarter of 2008, primarily on the strength of new product shipments, said management.
At the end of the quarter, cash, cash equivalents and short-term investments totaled $22.6 million. The company's pre-LIFO working capital of $91.6 million, less the LIFO reserve of $47.5 million, resulted in working capital of $44.1 million and a current ratio of 2.8 to 1.
In late-October, the company drew down $1 million from it's $25 million credit facility to ensure access to it, and moved approximately $16 million from money market funds investing in Treasury Bills to direct investments in Treasury Bills.
The company completed its share repurchase announced in April 2008. Under a 10b5-1 program that expired on Oct. 17, the company repurchased a total of 1.5 million shares of its common stock for $9.9 million in the open market, representing 7.2% of the outstanding shares, at an average price per share of $6.59.
At the completion of this program and before drawing on the credit line, cash and equivalents were approximately $20 million and there were 19.1 million shares outstanding.
Prior to the period's end The company received a small number of reports from the field that its LCP pistols can discharge if dropped onto a hard surface. Although no injuries were reported, the company recalled all LCP pistols in October 2008 to offer free safety upgrades. The estimated cost of this retrofit program of approximately $2.3 million was recorded in the third quarter of 2008 and had the impact of reducing earnings per share by 7 cents in the quarter. This safety upgrade program is expected to be in effect for several years.
