Sturm, Ruger & Company, Inc. reported sales surged 87.1% in the second quarter to $72.4 million from $38.7 million a year ago. Earnings jumped to $8.7 million, or 46 cents a share, from $1.1 million, or 5 cents, a year ago.
Firearms unit production grew 63% from the second quarter of 2008 and 18% from the first quarter of 2009. The company also had a successful launch of a new product platform, the SR-556, our new modern sporting rifle.
For the six months ended July 4, sales climbed to $135.9 million from $81.2 million a year earlier. Earnings lifted to $14.5 million, or 76 cents a share, from $2.5 million, or 12 cents, a year ago.
The company estimated that its year-to-date sales growth of $54.7 million can be attributed to the following:
Approximately 50% to new products (LCP, LCR, SR-9, and SR-556),
Approximately 25% to industry-wide surge in demand that began in the fourth quarter of 2008, and
Approximately 25% to increased market share.
The company also announced today that its Board of Directors declared a dividend of 12.3¢ per share for the second quarter, for shareholders of record as of August 14, 2009, payable on August 28, 2009. The amount of the dividend was based on a percentage of Operating Profit after adjustment for certain items, the same approach used by the company last quarter when it declared its first dividend in over three years. Under this approach, the amount of the quarterly dividend fluctuates directly with certain operating results of the company.
Cash generated from operations during the second quarter of 2009 was $13.1 million. At the end of the second quarter of 2009, our cash, cash equivalents and short-term investments totaled $43.6 million. Our pre-LIFO working capital of $100.0 million, less the LIFO reserve of $43.2 million, resulted in working capital of $56.8 million and a current ratio of 3.0 to 1. The company has no debt.
During the first half of 2009, capital expenditures totaled $6.8 million. We expect to invest approximately $12 million for capital expenditures during 2009.
The company's backlog dropped to 412,300 units as orders received in the second quarter decreased by 59% from the first quarter of 2009. This decline in orders received reflects the following:
A reduction in the industry-wide surge in demand that began in the fourth quarter of 2008,
The large backlog at the end of the first quarter that discouraged further orders,
Prolonged ammunition shortage at retail that hindered retail firearms sales,
Stronger inventories throughout the distribution channel, and
Normal product seasonality.
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| July 4, 2009 | June 28, 2008 | July 4, 2009 | June 28, 2008 | |||||||||||||||||
| Net firearms sales | $ | 71,372 | $ | 36,839 | $ | 133,600 | $ | 76,869 | ||||||||||||
| Net castings sales | 1,018 | 1,825 | 2,320 | 4,301 | ||||||||||||||||
| Total net sales | 72,390 | 38,664 | 135,920 | 81,170 | ||||||||||||||||
| Cost of products sold | 47,358 | 30,169 | 91,362 | 62,020 | ||||||||||||||||
| Gross profit | 25,032 | 8,495 | 44,558 | 19,150 | ||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Selling | 5,319 | 4,098 | 10,764 | 8,486 | ||||||||||||||||
| General and administrative | 5,738 | 2,968 | 10,384 | 6,909 | ||||||||||||||||
| Other operating expenses (income), net | – | (54 | ) | – | (54 | ) | ||||||||||||||
| Total operating expenses | 11,057 | 7,012 | 21,148 | 15,341 | ||||||||||||||||
| Operating income | 13,975 | 1,483 | 23,410 | 3,809 | ||||||||||||||||
| Other income: | ||||||||||||||||||||
| Interest income | 39 | 118 | 57 | 280 | ||||||||||||||||
| Other income (expense), net | (14 | ) | 144 | (101 | ) | (1 | ) | |||||||||||||
| Total other income (expense), net | 25 | 262 | (44 | ) | 279 | |||||||||||||||
