Sturm, Ruger & Company, Inc. reported net sales surged 35.3 percent to $130.3 million in the second quarter ended June 27, compared with net sales of $96.3 million in the prior-year quarter. The company posted diluted earnings per share of $1.05 in Q2, triple the diluted EPS of 35 cents per share in the second quarter of 2019.
For the six months ended June 27, net sales were $253.9 million and diluted earnings were $1.91 per share, compared to net sales of $210.4 million and $1.09 earnings per diluted share in the comparable period last year.
The company also announced that its Board of Directors declared two dividends:
- a quarterly dividend of 42¢ per share based on the results of the second quarter; and
- a special dividend of $5.00 per share.
Both dividends are for shareholders of record as of August 14, 2020, and are payable on August 28,
CEO Christopher J. Killoy commented on the $5.00 per share special dividend, “Given our strong operational and financial performance, including our consistently positive cash flow, and our current cash balance of $227 million, we are returning some of our cash to shareholders. Our remaining cash holdings will allow us to continue to invest in capital expenditures in support of our commitment to new product development and innovation, maintain our quarterly dividend, and pursue opportunities that would further generate shareholder value.”
Killoy commented on the financial results for the second quarter of 2020, “Consumer demand, which began to surge in the latter stages on the first quarter, continued to intensify in the second quarter. This increased demand appears to be driven, in part, by concerns about personal protection and home defense stemming from the continuing COVID-19 pandemic; protests, demonstrations, and civil unrest in many cities throughout the United States; and the call, by some, for the reduction in funding and authority of various law enforcement organizations. As a result of this oversized demand, inventories were significantly reduced at all levels in the channel during the second quarter.”
Killoy commented on the COVID-19 pandemic and its impact on the company, “The COVID-19 pandemic continues to cast uncertainty throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the second quarter of 2020. Since its onset in March, we have remained proactive in maintaining the health and safety of our employees during this pandemic and mitigating its impact on our business. For example, we suspended hiring from March until June, when we were confident that we could resume onboarding in a safe and responsible manner for all involved. The future impact of COVID-19 remains unknown. We have been fortunate to have only limited restrictions on our operations thus far. Our financial strength, evidenced by our debt-free balance sheet, provides financial security and flexibility as we continue to manage through this crisis.”
Killoy made the following observations related to the company’s second-quarter 2020 performance:
- The estimated unit sell-through of the company’s products from the independent distributors to retailers increased 47 percent in the first half of 2020 compared to the prior-year period. For the same period, the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 65 percent. These substantial increases are attributable to increased consumer demand for firearms in the first half of 2020.
- Sales of new products, including the Wrangler, the Ruger-57, the LCP II in .22 LR, the PC Charger, and the AR-556 pistol, represented $48 million or 21 percent of firearm sales in the first half of 2020. New product sales include only major new products that were introduced in the past two years.
- During the second quarter of 2020, the company’s finished goods inventory decreased by 20,800 units and distributor inventories of the company’s products decreased 106,500 units. In the aggregate, total company and distributor inventories decreased by 57 percent during the quarter.
- Cash provided by operations during the first half of 2020 was $78.1 million. At June 27, 2020, our cash and short-term investments totaled $226.6 million. Our current ratio is 3.9 to 1 and we have no debt.
- In the first half of 2020, capital expenditures totaled $5.9 million. We expect our 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.
- In the first half of 2020, the company returned $9.3 million to its shareholders through the payment of dividends.
- At June 27, 2020, stockholders’ equity was $311.5 million, which equates to a book value of $17.80 per share, of which $12.95 per share was cash and short-term investments.
Photo courtesy Sturm, Ruger