Sturm, Ruger & Company, Inc.’s sales declined 13.3 percent in the third quarter, to $120.9 million from $139.4 million a year ago. Earnings fell 40.4 percent to $7.43 million, or 42 cents a share, from $18.4 million, or $2.13, a year ago.
For the nine months ended September 30, net sales were down 7.5 percent to $413.2 million from $446.6 million a year ago. Profits fell 45.3 percent to $38.0 million, or $2.13 a share, from $69.4 million, or $3.90, the prior year.
Ruger also announced that its Board of Directors declared a dividend of 17¢ per share for the third quarter for stockholders of record as of November 15, 2023, payable on November 29, 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 third quarter of 2023, “Our third quarter sales and profitability decreased from last year, as overall firearms demand declined, creating a challenging, promotion-rich marketplace. We remained focused on the long-term, offering only modest promotions and adjusting the production rates on various product lines to better match demand, which reduced our overall production. While our decreased production hindered current period profitability, it resulted in only a nominal increase in our inventories and essentially flat distributor inventories during this seasonally slow quarter. Our debt-free balance sheet and diverse product offerings have us well positioned to capitalize when the firearms market rebounds.”
Killoy continued, “Our strategy remains unchanged as we stay focused on long-term shareholder value. To that end, new product development continues to be our priority. Earlier this week, we introduced the Ruger-made Marlin Dark Series lever-action rifles that will appeal to a broad variety of firearms enthusiasts interested in a more modern look and features to enhance the rifles’ classic design. In addition to our traditional new product introductions in 2023, including the Marlin 336 and 1894 Classic lever-action rifles and the Super Wrangler revolver, we continue to offer a variety of limited-run distributor-exclusive models across many of our product lines. We are also capitalizing on the opportunity to offer new Ruger pistols in California for the first time in 10 years, brought about by some recent changes in the pistol requirements. To date, four Ruger pistols were added to the California roster of certified handguns, including a Mark IV pistol, SR22 pistol, LCP pistol, and MAX-9 pistol. We look forward to introducing exciting new firearms in both the Ruger and Marlin brands and offering additional pistols to the California market in the coming months.”
Killoy concluded with an update from last week’s National Association of Sporting Goods Wholesalers Annual Exposition, “We were thrilled to be recognized by our wholesale customers with three industry awards at this year’s NASGW Show in Columbus, Ohio. We were named “Firearms Manufacturer of the Year”, and awarded “Best New Rifle” and “Best New Overall Product” for the Marlin Model 336. This was a great testament to our 1,800 loyal and hard-working associates.”
Killoy made the following observations related to the company’s third-quarter 2023 performance:
- The estimated unit sell-through of the company’s products from independent distributors to retailers decreased 8 percent in the first nine months of 2023 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 7 percent.
- Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin lever-action rifles, LC Carbine, Small-Frame Autoloading Rifle, Super Wrangler revolver, and the Security-380 pistol, represented $90.5 million or 22.7 percent of firearm sales in the first nine months of 2023. New product sales include only major new products that were introduced in the past two years.
- Profitability declined in the third quarter of 2023 from the third quarter of 2022 as gross margin decreased from 28 percent to 20 percent. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production, increased sales promotional activity, cost increases in materials, commodities, services, wages, energy, fuel and transportation, and a product mix shift toward products with relatively lower margins.
- During the third quarter of 2023, the company’s finished goods inventory and distributor inventories of the company’s products increased by 16,100 units and 1,000 units, respectively.
- Cash provided by operations during the nine months of 2023 was $17.3 million. At September 30, 2023, cash and short-term investments totaled $120 million. Ruger’s current ratio is 4.5 to 1 and the company has no debt.
- In the first nine months of 2023, capital expenditures totaled $11.6 million related to new product introductions and upgrades to its manufacturing equipment and facilities. 2023 capital expenditures are expected to approximate $20 million.
- In the first nine months of 2023, the company returned $107.8 million to its shareholders through the payment of its quarterly dividends and a $5.00 per share special dividend paid in January.
- At September 30, 2023, stockholders’ equity was $335.5 million, which equates to a book value of $18.92 per share, of which $6.77 per share was cash and short-term investments
Photo courtesy Sturm, Ruger