Sturm, Ruger & Company, Inc. reported third quarter net sales slipped 17.9% to $58.4 million and earnings per share were 32 cents per diluted share for the third quarter ended Oct. 2, 2010. Year-ago sales were $71.2 million with earnings per share of 37 cents per diluted share.
Chief Executive Officer Michael O. Fifer made the following comments related to the company’s results:
The company launched the new SR-40 striker-fired pistol late in the third quarter of 2010. New product introductions, including the new SR-40 pistol, remain a strong driver of demand and represented $50.0 million or 27% of sales in the first nine months of 2010.
Estimated unit sell-through of the company’s products from distributors to retailers in the third quarter of 2010 decreased by approximately 7% from both the third quarter of 2009 and the second quarter of 2010. NICS checks increased 6% from the third quarter of 2009 and 2% from the second quarter of 2010, indicating that the company’s share of total firearms retail transactions (new and used firearms) may have declined during the quarter.
The incoming order rate in the third quarter of 2010 increased significantly from the second quarter of 2010 and the third quarter of 2009.
Cash generated from operations during the first nine months of 2010 was $23.5 million. At the end of the third quarter of 2010, our cash and equivalents and short-term investments totaled $53.0 million. Our current ratio is 3.7 to 1 and we have no debt.
During the first nine months of 2010, capital expenditures totaled $16.4 million, much of it related to tooling and equipment for new products. We expect to invest approximately $20 million for capital expenditures during 2010.
During the third quarter of 2010, the company repurchased 412,000 shares of its common stock for $5.7 million in the open market. The average price per share repurchased was $13.83. These repurchased shares represented 2.1% of the outstanding shares as of the beginning of the third quarter of 2010 and were funded with cash on hand. As of the end of the third quarter of 2010, $4.3 million remains available for future stock repurchases.
At the end of the third quarter of 2010, stockholders’ equity was $109 million, which equates to a book value of $5.77 per share, of which $2.82 per share was cash and equivalents and short-term investments.
For the nine months ended Oct. 2, 2010, net sales were $191.1 million and earnings were $1.18 per share. For the corresponding period in 2009, net sales were $207.1 million and earnings were $1.13 per share.
Three Months Ended | Nine Months Ended | |||||||||||||||
| October 2, 2010 | October 3, 2009 | October 2, 2010 | October 3, 2009 | |||||||||||||
| Net firearms sales | $ | $57,505 | $ | $70,011 | $ | $188,396 | $ | $203,611 | ||||||||
| Net castings sales | $896 | $1,175 | $2,671 | $3,495 | ||||||||||||
| Total net sales | $58,401 | $71,186 | $191,067 | $207,106 | ||||||||||||
| Cost of products sold | $39,818 | $49,404 | $127,613 | $140,766 | ||||||||||||
| Gross profit | $18,583 | $21,782 | $63,454 | $66,340 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling | $5,194 | $5,145 | $16,211 | $15,909 | ||||||||||||
| General and administrative | $4,080 | $5,031 | $11,999 | $14,740 | ||||||||||||
| Other operating expenses, net | – | $275 | $398 | $950 | ||||||||||||
| Total operating expenses | $9,274 | $10,451 | $28,608 | $31,599 | ||||||||||||
| Operating income | $9,309 | $11,331 | $34,846 | $34,741 | ||||||||||||
| Other income: | ||||||||||||||||
| Interest (expense) income, net | (18 | ) | $8 | ($75 | ) | ($12 | ) | |||||||||
| Other income, net | $148 | $125 | $449 | $101 | ||||||||||||
| Total other income, net | $130 | $133 | $374 | $89 | ||||||||||||
| Income before income taxes | $9,439 | $11,464 | $35,220 | $34,830 | ||||||||||||
| Income taxes | $3,398 | $4,356 | $12,679 | $13,235 | ||||||||||||
| Net income | $ | 6,041 | $ | 7,108 | $ | 22,541 | $ | 21,595 | ||||||||
| Basic earnings per share | $ | 0.32 | $ | 0.37 | $ | 1.18 | $ | 1.13 | ||||||||
| Fully diluted earnings per share | $ | 0.31 | $ | 0.37 | $ | 1.17 | $ | 1.12 | ||||||||
| Cash dividends per share | $ | 0.10 | $ | 0.12 | $ | 0.25 | $ | 0.21 | ||||||||
