Sturm, Ruger & Co. Inc. reported first-quarter earnings of $14.3 million, or 81 cents per share, on revenue of $131.2 million, which topped analysts’ expectations by 1 cent per share and $3.7 million, respectively.

Income was down 35.8 percent and revenue was down 21.6 percent from the same quarter a year ago.

Here are first-quarter highlights, according to CEO Christopher Killoy:

  • In the first quarter of 2018, net sales decreased 22 percent and earnings per share decreased 33 percent from the first quarter of 2017. The decrease in earnings is attributable to the sales decline and the unfavorable de-leveraging of fixed manufacturing costs due to the decline in production volumes.
  • Effective January 1, 2018, the company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which modified the timing of revenue recognition related to certain sales promotion activities involving the shipment of no charge firearms. Consequently, net sales in the first quarter of 2018 were reduced by $2.4 million. In addition, certain promotional expenses that had been classified as selling expenses in prior years were included in cost of products sold in 2018. As a result, the first quarter gross margin was reduced by approximately 3 percent and earnings per share was reduced by approximately 4 cents.
  • The reduced effective tax rate in 2018, resulting from the Tax Cuts and Job Act of 2017, increased the quarterly diluted earnings per share by 11 cents.
  • The repurchase of 1.3 million shares of common stock in 2017 increased the quarterly diluted earnings per share by 6 cents.
  • Sales of new products, including the Pistol Caliber Carbine, the Mark IV pistol, the LCP II pistol, the EC9s pistol, the Security-9 pistol, and the Precision Rimfire Rifle, represented $37.2 million or 29 percent of firearm sales in the first quarter of 2018. New product sales include only major new products that were introduced in the past two years.
  • The estimated unit sell-through of the company’s products from the independent distributors to retailers decreased 5 percent in the first quarter of 2018 from the comparable prior year period. For the same periods, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) increased 1 percent. The decrease in estimated sell-through of the company’s products from the independent distributors to retailers is attributable to decreased overall consumer demand in the early stages of the first quarter of 2018, partially offset by increased demand in the latter part of the quarter.
  • Favorable distributor sell-through trends in the latter half of the quarter resulted in significant reductions of inventories at the company and at the independent distributors. During the first quarter of 2018, the company’s finished goods inventory decreased by 51,900 units and distributor inventories of the company’s products decreased by 69,000 units.
  • Cash generated from operations during the first quarter of 2018 was $45 million. At March 31, 2018, our cash totaled $103 million. Our current ratio is 3.0 to 1 and we have no debt.
  • In the first quarter of 2018, capital expenditures totaled $1 million. We expect our 2018 capital expenditures to total approximately $15 million.
  • In the first quarter of 2018, the company returned $4 million to shareholders through the payment of dividends.
  • At March 31, 2018, stockholders’ equity was $238 million, which equates to a book value of $13.67 per share, of which $5.89 per share is cash.