Sturm, Ruger & Company, Inc. reported earnings declined 20.8 percent in the first quarter as sales were down 9.7 percent. The decline was attributed to decreased consumer demand for firearms from the “unprecedented levels of the surge that began in 2020 and remained for most of 2021.”

In the quarter ended March 31, earnings slid to $30.2 million, or $1.70 per share, from $38.2 million, or $2.16, a year ago. Revenues slid to $166.6 million from $184.4 million.

The company also announced that its Board of Directors declared a dividend of 68 cents per share for the first quarter for stockholders of record as of May 16, 2022, payable on May 31, 2022. 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 first quarter of 2022, “During the quarter, consumer demand for firearms subsided from the unprecedented levels of the surge that began early in 2020, resulting in the 10 percent reduction in our sales. Consequently, we shifted our production mix to allow for a healthy replenishment of Ruger firearms in our warehouses and in the distribution channel, as inventories of many of our product families were depleted in 2020. We prioritize production of our product 2 families in strong demand, often right down to the individual model, in an effort to optimize the inventory mix at each level of the distribution chain. Our operations and logistics folks have done a great job navigating the challenges brought about by tight labor markets, transportation issues, and supply chain delays, which allowed for greater flexibility in our production mix and mitigated the impact of these challenges.”

Killoy reaffirmed the company’s commitment to new product innovation, “Our new product development teams continue to design and create the firearms of the future, many of which are recognized by the industry. Most recently, the Ruger Custom Shop 10/22 Left-Handed Competition Rifle was awarded the prestigious Golden Bullseye Award as the American Rifleman Rifle of the Year. We are excited to see the ongoing progress of our Marlin product line. We continue to increase production volumes and look forward to re-introducing additional Ruger-made Marlin lever-action rifles throughout this year. We are just scratching the surface of the value that Marlin products and the Marlin brand will bring to Ruger. We know that Ruger and Marlin fans alike are eagerly awaiting additional offerings and we look forward to more new product launches in 2022.”

Killoy made the following observations related to the company’s first-quarter 2022 performance:

  • The estimated unit sell-through of the company’s products from the independent distributors to retailers decreased 21 percent in the first quarter of 2022 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) decreased by 23 percent. These decreases are attributable to decreased consumer demand for firearms from the unprecedented levels of the surge that began in 2020 and remained for most of 2021.
  • Sales of new products, including the PC Charger, the MAX-9 pistol, the LCP MAX pistol and the Marlin 1895 lever-action rifle, represented $21.4 million or 13 percent of firearm sales in the first quarter of 2022. New product sales include only major new products that were introduced in the past two years. Several popular firearms that were considered new products in 2021, including the Wrangler revolver, the Ruger-5.7 pistol and the LCP II in .22 LR pistol, have now been in production for over two years and are no longer included in new product sales for the first quarter of 2022.
  • Ruger’s profitability declined in the first quarter of 2022 from the first quarter of 2021 as its gross margin decreased from 39.4 percent to 34.9 percent and its operating profit margin decreased from 28.2 percent to 23.2 percent. In addition to unfavorable deleveraging of fixed costs resulting from decreased production and sales, inflationary cost increases in materials, commodities, services, energy, fuel, and transportation, are partially offset by increased pricing, resulting in the lower margins. 
  • During the first quarter of 2022, the company’s finished goods inventory and distributor inventories of the company’s products increased by 29,800 units and 80,400 units, respectively.
  • Cash provided by operations during the first quarter of 2022 was $18.8 million. At April 2, 2022, Ruger’s cash and short-term investments totaled $211.6 million. Ruger’s current ratio is 5.1 to 1 and has no debt.
  • In the first quarter of 2022, capital expenditures totaled $10.9 million. Ruger expects its 2022 capital expenditures to total approximately $25 million, most of which relate to new product introductions.
  • In the first quarter of 2022, the company returned $15.2 million to its shareholders through the payment of dividends.
  • At April 2, 2022, stockholders’ equity was $378.0 million, which equates to a book value of $21.43 per share, of which $12.00 per share was cash and short-term investments.

Photo courtesy Sturm, Ruger