Sturm, Ruger & Company Inc. reported net earnings rose 18.5 percent in the first quarter on an 8.4 percent revenue gain.

The company reported net sales of $123.6 million and earnings of $15.4 million, or 87 cents per share, compared with net sales of $114.0 million and earnings of $13 million, or 74 cents per share, in the first quarter of 2019.

The company also announced that its Board of Directors declared a dividend of 35¢ per share for the first quarter, for shareholders of record as of May 18, 2020, payable on June 1, 2020. 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.

Chief Executive Officer Christopher J. Killoy commented on the financial results for the first quarter of 2020, “Strong consumer demand, exciting new products, and reduced reliance on promotions led to improved earnings and cash flows, which strengthened our already robust debt-free balance sheet as we ended the quarter with $188 million of cash and short-term investments. In addition, inventories were reduced at both Ruger and at our distributors as retail demand outstripped available inventories, particularly in the latter weeks of the quarter.”

Killoy commented on the COVID-19 pandemic and its impact on the company, “The COVID19 pandemic has created significant uncertainty and adversely impacted many industries throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the first quarter of 2020. Beginning in March, we took many proactive steps to maintain the health and safety of our employees and mitigate its impact on our business. These actions included:

  • Providing all hourly employees with an additional two weeks of paid time off;
  • Encouraging employees to work remotely, wherever possible, and implementing social distancing throughout each manufacturing facility, including in every manufacturing cell;
  • Communicating with and assisting employees with potential health issues;
  • Restricting visitor access to avoid introducing new people to the factory environment;
  • Implementing additional cleaning, sanitizing and other health and safety processes to maintain a clean and safe workplace; and
  • Manufacturing and donating personal protective equipment to hospitals, health care facilities, and police and fire departments in our local communities.”

Killoy continued, “The impact of COVID-19 has increased in the past month, but we have been fortunate and have been able to keep all of our facilities safe and open with only limited restrictions on production. We are well-positioned to manage through this global crisis as we continue to monitor and adjust our mitigation efforts daily. Our financial strength, evidenced by our debt-free balance sheet and our cash and short-term investments, which now exceed $200 million, coupled with our $40 million revolving credit facility provide added financial security and flexibility.”

Killoy made the following observations related to the company’s first-quarter 2020 performance:

  • The estimated unit sell-through of the company’s products from the independent distributors to retailers increased 37 percent in the first quarter 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 42 percent. These substantial increases are attributable to increased consumer demand for firearms in the first quarter of 2020, especially the latter stages.
  • 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 $23.0 million or 20 percent of firearm sales in the first quarter of 2020.
    New product sales include only major new products that were introduced in the past two years.
  • During the first quarter 2020, the company’s finished goods inventory decreased 35,500 units and distributor inventories of the company’s products decreased 77,900 units. In the aggregate, total company and distributor inventories decreased by 34 percent during the quarter.
  • Cash provided by operations during the first quarter of 2020 was $31.1 million. At March 28, 2020, cash and short-term investments totaled $187.6 million. The company’s current ratio is 4.2 to 1 and the company has no debt.
  • In the first quarter of 2020, capital expenditures totaled $4.1 million. The company expects 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.
  • In the first quarter of 2020, the company returned $3.0 million to its shareholders through the payment of dividends.
  • At March 28, 2020, stockholders’ equity was $297.8 million, which equates to a book value of $17.03 per share, of which $10.73 per share was cash and short-term investments.

Photo courtesy Sturm Ruger