Sturm, Ruger & Company, Inc. achieved net sales of $136.8 million in the first quarter of 2024, an 8.5 percent decline year-over-year from net sales of $149.5 million in the Q1 20203 period.

Net fireman sales were the vast majority of sales for the period, but declining 8.7 percent to $136.0 million for the quarter. Net Castings sales, which comprises the balance of the revenue, were up 45.0 percent for the period.

Sales of new products, including the Security-380 pistol, Super Wrangler revolver, Marlin lever-action rifles, LC Carbine, Small-Frame Autoloading Rifle, and American Centerfire Rifle Generation II represented $41.8 million, or 32.0 percent of firearm sales, in the first quarter ended March 30. 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 increased 1 percent in the first quarter of 2024 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 4 percent.

Gross margin was down 430 basis points to 21.5 percent in the quarter, compared to 25.8 percent in the prior-year Q1 period.

The decreased gross margins for the period was attributable to the decrease in sales, a product mix shift toward products with relatively lower margins that remain in relatively stronger demand, unfavorable deleveraging of fixed costs resulting from decreased production, and inflationary cost increases in materials, commodities, services, wages, energy, fuel and transportation, , partially offset by increased pricing.

A 5.2 percent increase in selling expenses for the quarter was primarily attributable to increases in shipping costs and increased advertising and promotional activity.

Reduction in Force
The flattish decrease in general, and administrative expenses for the first quarter was primarily attributable to decreased professional service costs and decreased incentive compensation, offset by accrued severance expense of $1.5 million related to a reduction in force that involved about 80 employees.

The accrued severances are expected to be settled in cash and consist of one-time termination charges arising from severance obligations and other customary employee benefit payments in connection with a reduction in force.

The reduction in force is expected to result in approximately $9 million of annualized cash savings. This action is part of the company’s initiatives to reallocate its resources and cost structure into prioritized areas that will drive long-term growth and improve margins. As the company focuses on these goals, it said it will continue to pursue opportunities to consolidate functions and reduce or eliminate investment in areas of lower focus.

“We recently executed a variety of strategic moves aimed at ensuring our long-term success and continued leadership in an ever-evolving firearms market,” offered company CEO Chris Killoy. “This involved reorganizing specific aspects of our business to achieve greater efficiency and productivity. Consequently, we undertook a reduction in force that impacted about 80 of our employees, approximately half of which were reassigned to manufacturing positions. This reduction in force resulted in a severance expense of $1.5 million in the first quarter and will result in annualized savings of approximately $9 million. As we focus on these goals, we will continue to pursue opportunities to consolidate functions and reduce or eliminate investment where possible.”

EBITDA was $13.5 million for the first quarter, a decrease of 43.2 percent from $23.8 million in the comparable prior-year period.

Net income was halved in the quarter to $7.1 million, or 40 cents per diluted share, in the first quarter, compared to $14.4 million, or 81 cents per diluted share in the year-ago Q1 period.

The company also announced that its Board of Directors declared a dividend of 16 cents per share for the first quarter for stockholders of record as of May 20, 2024, payable on June 7, 2024. 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.