Sturm, Ruger & Company, Inc. reported that for the second quarter of 2014 the company reported net sales of $153.7 million and fully diluted earnings of $1.12 per share, compared with net sales of $179.5 million and fully diluted earnings of $1.63 per share in the second quarter of 2013.
For the six months ended June 28, 2014, net sales were $323.5 million and fully diluted earnings were $2.34 per share. For the corresponding period in 2013, net sales were $335.4 million and fully diluted earnings were $2.83 per share.
The company also announced today that its Board of Directors declared a dividend of 45¢ per share for the second quarter, for shareholders of record as of August 15, 2014, payable on August 29, 2014. 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 percent of net income.
In addition, the company announced that its Board of Directors expanded its authorization to repurchase shares of its common stock from $25 million to $100 million.
Chief Executive Officer Michael O. Fifer made the following observations related to the company’s 2014 second quarter performance:
- Our sales decreased 14 percent from the second quarter of 2013 due to a reduction in demand for firearms and accessories.
- Our earnings decreased 31 percent and our EBITDA decreased 25 percent, from the second quarter of 2013. The main drivers of the reduced operating margins were the reduced sales volume, a product mix shift away from unusually strong sales of higher-margin firearms accessories last year, and increased depreciation expense.
- New products represented $57.1 million or 18 percent of firearm sales in the first half of 2014.
- The decrease in the estimated sell-through of Ruger products from distributors to retailers and the decrease in industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for the second quarter and six months ended June 28, 2014 follow:
The estimated sell-through of our products from distributors to retailers in the second quarter was adversely impacted by the following:
- the reduction in overall industry demand,
- the aggressive discounting of many of our competitors, and
- the absence of recent significant new product introductions from the company.
Nonetheless, the estimated sell-through of our products from the independent distributors to retailers for the six months ended June 28, 2014 was the second highest in the company’s history, exceeding the estimated sell-through from the first half of 2012 by 83,100 units or 10 percent.
Cash generated from operations during the six months ended June 28, 2014 was $35.6 million. At June 28, 2014, our cash totaled $47.4 million. Our current ratio is 2.3 to 1 and we have no debt.
In the first half of 2014, capital expenditures totaled $22.8 million, much of it related to tooling fixtures and equipment for new product introductions and to upgrade and modernize manufacturing equipment. We expect to invest
approximately $40 million on capital expenditures during 2014 as we continue to prioritize new product development.
In the first half of 2014, the company returned $20.0 million to its shareholders through the payment of dividends.
At June 28, 2014, stockholders’ equity was $207.1 million, which equates to a book value of $10.67 per share, of which $2.44 per share was cash.