Sturm, Ruger & Co. reported a 0.8 percent year-over-year decline in sales in the fourth quarter, marking the first quarterly decline since Q419. The decline, in part, reflects challenging comparisons against the year-ago period. Ruger’s CEO, Chris Killoy, said demand for firearms remains solid.
“We have good visibility on what our distributors are shipping to retailers, and that’s the barometer we use for our planning purposes, watching what they’re shipping to retailers,” said Killoy. “That still looks good. It’s not where it was, say, a year ago at this time, but it’s very solid, and it’s across the board. We see good strength from our distributor sell-through.”
In the quarter ended December 31, sales declined to $168.0 million from $169.3 million a year ago. Fourth-quarter earnings improved 20.2 percent to $2.14 per share from $1.78 a year ago.
For the full year, sales rose 28.4 percent to $730.7 million from $568.9 million in 2020. Net earnings shot up 72.4 percent to $155.9 million, or $8.78 per share, from $90.4 million, or $5.09, a year ago.
On the call, Killoy spent most of the time discussing 2021 accomplishments that came on top of a 38.6 percent sales gain in 2020 over 2019.
“2021 was a great year for Ruger,” said Killoy. “We entered the year with virtually no finished goods inventory, so all of the firearms sold in 2021 had to be manufactured in 2021.”
He noted that the 28 percent increase in sales was only possible due to a 30 percent increase in production at its U.S. factories and 30 percent improvement came even though its workforce grew less than 10 percent.
“These manufacturing efficiencies gains drove a 109 percent return on net operating assets for the year, which is a remarkable feat,” said Killoy. “Our dedicated workforce accomplished this despite the highly publicized challenges of tight labor markets, transportation and supply chain issues and COVID-19 obstacles that we experienced throughout the year.”
Following a 44 percent increase in 2020, the sell-through of products from distributors to retailers increased again in 2021, this time by 4 percent, despite the 12 percent reduction in the National Instant Criminal Background Check System (NICS) background checks, as adjusted by the National Shooting Sports Foundation.
“The increase in the sell-through of our products compared favorably to the decrease in adjusted NICS background checks in 2021 and maybe attributable to strong consumer demand for our products, increased availability of our products at the distributors and retail as a result of our increased production, and the introduction of popular new products,” said Killoy.
NSSF-adjusted NICS firearms background checks started turning negative in the spring of 2021 after a run-up in the prior year attributed to civil unrest and the election. Total NSSF-adjusted NICS figures for 2021 declined 21.2 percent to 18.5 million, still the second-highest year on record. January 2021 NICS plunged 40.9 percent.
New product sales in 2021 for Ruger represented $155 million, or 22 percent of firearm sales, up from $111 million, or 22 percent of firearm sales, in 2020. Top-selling new products were the Ruger-57 pistol, the MAX-9 pistol and the LCP MAX pistol.
Ruger ended the year with the December launch of Marlin’s Model 1895 45/70 rifle, shown lead photo, the first Ruger-made, Marlin lever-action rifle.
At year-end, Ruger’s finished goods inventory remained significantly below pre-COVID-19 levels. Distributor inventories of Ruger’s products increased 125,000 units in 2021 but remain below the level needed to support rapid fulfillment of retailer demand for most products.
“We have an expansive product line, which ranges from our versatile pistols to bolt-action hunting rifles to our classic revolvers to Marlin lever-action rifles,” said Killoy. “This provides some stability in the volatile firearms market as we can reallocate our labor and machinery to prioritize the manufacture of products that are in strong demand while we replenish our inventories and models that appear to be an adequate supply in the distribution channel. Our ability to reallocate resources and our willingness to maintain appropriate levels of inventory strengthen us as demand ebbs and flows within the various diverse sectors of the industry.”
Looking ahead, Killoy remains upbeat about 2022. He said, “We will remain disciplined and committed to our strategy of pursuing manufacturing excellence and vigorously developing innovative and exciting new products. We look forward to launching some of these new products under both the Ruger and Marlin brands in 2022.”
Photo courtesy Sturm, Ruger
