Sturm, Ruger & Company, Inc. reported earnings rose nearly four-fold in the fourth quarter on a 61.1 percent revenue gain.
In the quarter, earnings rose to $31.7 million, or $1.78 per share, from $8.2 million, or 46 cents, a year ago. Sales reached $169.3 million against $105.1 million a year ago.
For the year, sales rose 39.3 percent to $565.9 million from $406.3 million in 2019. Net income grew 180 percent to $90.4 million, or $5.09, from $32.3 million a year ago.
The company also announced today that its Board of Directors declared a dividend of 71¢ per share for the fourth quarter for stockholders of record as of March 12, 2021, payable on March 26, 2021. 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 reflected on the strong financial results for the year, “Our tremendous sales growth and profitability in 2020 was driven by the historic surge in consumer demand that began late in the first quarter and continued throughout the year. But that is only part of the story. Our ability to capitalize on this opportunity was only possible through the efforts of our remarkable workforce of 1,800 dedicated employees. I would be remiss if I did not mention the extraordinary work of our COVID-19 Task Force and our leadership teams at all of our facilities. They have risen to the daily challenges posed by the pandemic and have worked tirelessly, keeping our folks healthy and our facilities sanitized. I could not be prouder of everyone’s performance. It truly was a team effort.”
Killoy commented on 2021, “I am excited as we head into 2021. Our workforce has been strengthened by 250 folks since the middle of 2020, which drove a 30 percent increase in production during the latter half of the year. We look forward to launching new products that are sure to create excitement among shooters and we are hard at work getting the Marlin manufacturing cells established and look forward to broadening our catalog of rugged, reliable, and exciting products with the addition of Marlin lever-action rifles in late 2021. And as a result of the unprecedented demand in 2020, inventories remain depleted throughout the channel, so inventory replenishment provides further opportunity.”
Killoy made the following observations related to the company’s 2020 performance:
- In 2020, sales increased 39 percent from 2019 and the estimated unit sell-through of the company’s products from the independent distributors to retailers increased 44 percent from 2019. For the same period, the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 60 percent. These substantial increases are attributable to increased consumer demand for firearms in 2020 and have likely been constrained due to limited available inventory in the distribution channel.
- Sales of new products, including the Wrangler revolver, the Ruger-57 pistol, the LCP II in .22 LR pistol, the PC Charger, and the AR-556 pistol, represented $111 million or 22 percent of firearm sales in 2020. New product sales include only major new products that were introduced in the past two years.
- In 2020, the company’s finished goods inventory decreased by 58,600 units and distributor inventories of the company’s products decreased by 231,200 units. In the aggregate, total company and distributor inventories decreased 86 percent in 2020.
- Cash provided by operations during 2020 was $143.8 million. At December 31, 2020, our cash and short-term investments totaled $141.2 million. Our current ratio is 2.9 to 1, and we have no debt.
- In 2020, capital expenditures totaled $24.2 million. In addition, the company acquired substantially all of the Marlin Firearms assets for $28.3 million in November 2020. We expect our 2021 capital expenditures to total approximately $20 million, most of which relate to new product introductions. Our ability to shift manufacturing equipment between cells, and between facilities, improve overall utilization and allows for reduced capital investment.
- In 2020, the company returned $113.9 million to its shareholders through the payment of dividends, reflecting the customary quarterly dividends and a special dividend of $5.00 per share that was paid in August.
- At December 31, 2020, stockholders’ equity was $264.7 million, which equates to a book value of $15.13 per share, of which $8.07 per share was cash and short-term investments.
Photo courtesy Sturm, Ruger & Company