Sturm, Ruger & Company, Inc. reported earnings increased 62 percent in the third quarter,  driven by the 47 percent growth in sales and an ongoing focus on continuous improvement in our operations. Net sales reached $118.2 million and fully diluted earnings of 88 cents per share, compared with net sales of $80.5 million and fully diluted earnings of 56 cents per share in the third quarter of 2011.



For the nine months ended Sept. 29, 2012, net sales were $350.1 million and fully diluted earnings were $2.58 per share. For the corresponding period in 2011, net sales were $235.6 million and fully diluted earnings were $1.55 per share.

 


New product introductions were a significant component of sales growth as new product sales represented $130.3 million, or 38 percent, of sales in the first nine months of 2012. New product introductions in the first nine months of 2012 included: Ruger American Rifle, SR22 pistol, 10/22 Takedown rifle, 22/45 Lite pistol and Single-Nine revolver.

 
Demand outpaced the growth in overall industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for both the third quarter and nine months ended Sept. 29, 2012 as illustrated below:





















































































Period ended September 29, 2012
Q3 Nine months

Increase in estimated Ruger Units Sold
from Distributors to Retailers

62%

60%

Increase in total adjusted NICS
Background Checks

22%

21%


Cash generated from operations during the nine months ended Sept. 29, 2012 was $61.8 million. At Sept. 29, 2012, our cash, cash equivalents, and short-term investments totaled $105.1 million, an increase of $24 million from December 2011. Current ratio is 3.2 to 1 and we have no debt.


In the first nine months of 2012, capital expenditures totaled $20.3 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $25 million for capital expenditures during 2012.


In the first nine months of 2012, the company returned $17.5 million to its shareholders through the payment of dividends. An additional $7.3 million in dividends will be paid to shareholders on Nov. 26, 2012.
At Sept. 29, 2012, stockholders’ equity was $174 million, which equates to a book value of $9.08 per share, of which $5.49 per share was cash and equivalents.
 






































































































































































































































































































































































Condensed Statements of Income and Comprehensive Income (Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended

September 29,
2012

October 1,
2011



September 29,
2012

October 1,
2011


Net firearms sales $116,270 $79,214 $345,203 $232,126
Net castings sales 1,882 1,298 4,854 3,449
Total net sales 118,152 80,512 350,057 235,575
Cost of products sold 75,587 51,385 220,565 153,989
Gross profit 42,565 29,127 129,492 81,586
Operating expenses:
Selling 7,891 6,581 27,998 19,961
General and administrative 7,437 5,659 21,543 15,218
Total operating expenses 15,328 12,240 49,541 35,179
Operating income 27,237 16,887 79,951 46,407
Other income:
Interest expense, net (18) (21) (62) (54)
Other income, net 319 177 813 466
Total other income, net 301 156 751 412
Income before income taxes 27,538 17,043 80,702 46,819
Income taxes 10,189 6,306 29,860 17,323
Net income and comprehensive income $17,349 $10,737 $50,842 $ 29,496
Basic earnings per share $0.91 $0.57 $2.66 $1.56
Fully diluted earnings per share $0.88 $0.56 $2.58 $1.55
Cash dividends per share $0.377 $0.142 $0.913 $0.289