Sturm, Ruger & Company, Inc. reported sales declined 11..2 percent in the fourth quarter to close the year with a sales decline of 18.5 percent.

Sales were $149.2 million in the quarter, down from $168.0 million a year ago. Sales for the year reached $595.8 million against $730.7 million a year ago.

For the fourth quarter of 2022, diluted earnings were $1.06 per share, down 50.5 percent from $2.14 a year ago. For the year, earnings declined 43.5 percent to $4.96 per share from $8.78 a year ago.

The company also announced today that its Board of Directors declared a dividend of 42¢ per share for the fourth quarter for stockholders of record as of March 10, 2023, payable on March 24, 2023. 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 percent of net income. 

CEO Christopher J. Killoy commented on the financial results for the year, “Consumer demand in 2022 was below the level of demand in 2021, dampened in part by inflationary pressures, which often constrain discretionary spending. This led to an 18 percent reduction in our sales from the prior year. Nevertheless, we are encouraged by our increased quarterly sales and production in the fourth quarter. Our disciplined approach and long-term focus yielded strong cash flow, investment in our new product development, and a robust, debt-free balance sheet.”

Killoy reiterated the company’s commitment to product development, “We continue to enhance our catalog of products with exciting and innovative new firearms that were met with strong demand in the marketplace. Our major new product launches in 2022 included:

  • Marlin Model 1895 Guide Gun, chambered in 45-70 Govt, which was its first reintroduction in the Marlin Guide Gun family of lever-action rifles;
  • Marlin Model 1895 Trapper stainless steel lever-action rifle, chambered in .45-70 Govt.;
  • LC Carbine, chambered in 5.7x28mm, a companion to the Ruger-5.7 pistol;
  • Security-380 Lite Rack Pistol, a full-featured pistol chambered in light-recoiling .380 Auto; and
  • Small-Frame Autoloading Rifle, or SFAR, chambered in 7.62 NATO/.308 Win., which combines the ballistic advantages of .308 Win. with the size and weight of a traditional modern sporting rifle.

Killoy concluded by reaffirming the company’s capital philosophy, “Our focus on financial discipline and the cultivation of long-term shareholder value is unwavering. We continue to evaluate opportunities but will pursue them only if they provide long-term value to our shareholders. When we believe our cash position significantly exceeds our foreseeable funding requirements for operations, including capital investment, quarterly dividends, and working capital needs, we will return cash to our shareholders, as we did most recently in January with a $5.00 per share special dividend.”

Killoy made the following observations related to the company’s 2022 performance:

The estimated unit sell-through of the company’s products from the independent distributors to retailers decreased 25 percent in 2022 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased by 11 percent. These decreases are attributable to decreased consumer demand for firearms from the unprecedented levels of the surge that began in 2020 and remained for most of 2021. The greater reduction in the sellthrough of the company’s products relative to adjusted NICS background checks may be attributable to the following:

  • More aggressive promotions, discounts, rebates, and the extension of payment terms offered by its competitors;
  • An increase in sales of used firearms at retail, which is included in the adjusted NICS checks but is not distinguished from new gun sales; and
  • Decreased retailer inventories as the anticipation of further discounting could be encouraging cautious buying behavior by retailers.

Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin 1895 lever-action rifles, LC Carbine, PC Charger, and Small-Frame Autoloading Rifle represented $78.4 million or 14 percent of firearm sales in 2022. New product sales include only major new products that were introduced in the past two years.

Ruger’s profitability declined in 2022 from 2021 as its gross margin decreased from 38 percent to 30 percent. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales, as well as inflationary cost increases in materials, commodities, services, energy, fuel and transportation, which were partially offset by increased pricing.

In 2022, the company’s finished goods inventory and distributor inventories of the company’s products increased by 92,200 units and 134,200 units, respectively, returning to a reasonable level that will allow for the rapid fulfillment of retailer demand.

Cash provided by operations during 2022 was $77.2 million. At December 31, 2022, its cash and short-term investments totaled $224.3 million. Ruger’s current ratio is 2.2 to 1 and the company has no debt.

In 2022, capital expenditures totaled $27.7 million related to new product introductions, upgrades to its manufacturing equipment and facilities, and the purchase of a previously leased 225,000-square-foot facility in Mayodan, NC for $8.3 million for use in the company’s manufacturing and warehousing operations.

In 2022, the company returned $42.9 million to its shareholders, primarily through the payment of dividends. An additional $88.3 million was returned to its shareholders on January 5, 2023, through the payment of a $5.00 per share special dividend to shareholders.

At December 31, 2022, stockholders’ equity was $316.7 million, which equates to a book value of 17.93 per share, of which $12.70 per share was cash and short-term investments.