Sturm, Ruger & Company, Inc. announced that for the second quarter of 2022, the company reported net sales of $140.7 million against $200.1 million a year ago, representing a decline of 29.7 percent.
Earnings reached $1.17 per share, compared with $2.50 per share in the second quarter of 2021.
For the six months ended July 2, 2022, net sales were $307.2 million and diluted earnings were $2.87 per share. For the corresponding period in 2021, net sales were $384.4 million and diluted earnings were $4.66 per share.
The company also announced that its Board of Directors declared a dividend of $0.47 per share for the second quarter for stockholders of record as of August 17, 2022, payable on August 31, 2022. This dividend varies quarterly because the company pays a percentage of earnings rather than a fixed amount per share. This dividend is approximately 40 percent of net income.
CEO Christopher J. Killoy commented on the second quarter of 2022, “Consumer demand for firearms has subsided from the unprecedented levels of the surge that began early in 2020, and two remained for most of 2021, resulting in a 30 percent reduction in our sales from the second quarter of 2021, which was the highest quarter in sales and profitability in our history. Yet our broad and diverse product family helps us weather fluctuations in demand as we adjust production accordingly. While channel inventory of some of our product families, including certain polymer pistols and modern sporting rifles, have been largely replenished, inventories of other product families remain below desired levels.”
Killoy reaffirmed the company’s commitment to new product innovation, “We are excited to continue to expand our Marlin product line with the reintroduction of the Marlin Model 1895 Trapper. This lightweight, stainless steel lever-action rifle is chambered in .45-70 Govt. and features a cold hammer-forged threaded barrel. We continue to increase our production of Marlin rifles and look forward to introducing additional Ruger-made Marlin lever-action rifles.”
Killoy made the following observations related to the company’s second-quarter 2022 performance:
- The estimated unit sell-through of the company’s products from the independent distributors to retailers decreased 31 percent in the first half 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 17 percent. These decreases are attributable to reduced consumer demand for firearms from the unprecedented levels that began in 2020 and remained for most of 2021;
- The second quarter of 2021 had the highest quarterly distributor unit sell-through in the company’s history, which led to a significant year-over-year decrease in distributor sell-through in the current quarter;
- Sales of new products, including the PC Charger, the Max-9 pistol, the LCP Max pistol, and Marlin 1895 lever-action rifles, represented $33.8 million, or 11 percent of firearm sales in the first half of 2022;
- New product sales include only major new products 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, were in production for over two years and are no longer included in new product sales for the first half of 2022;
- Profitability declined in the second quarter of 2022 from the second quarter of 2021 as the gross margin decreased from 39 percent to 31 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, partially offset by increased pricing, resulted in a lower margin;
- During the second quarter of 2022, the company’s finished goods inventory and distributor inventories of the company’s products increased 49,300 units and 28,200 units, respectively;
- Cash provided by operations during the first half of 2022 was $32.4 million. At July 2, 2022, cash and short-term investments totaled $208.5 million. The current ratio is 6.1 to 1, and Ruger has no debt;
- In the first half of 2022, capital expenditures totaled $14.3 million. Ruger expects its 2022 capital expenditures to total approximately $25 million, most of which relate to new product introductions.
- In the first half of 2022, the company returned $27.2 million to its shareholders through the payment of dividends; and
- At July 2, 2022, stockholders’ equity was $387.0 million, which equates to a book value of $21.90 per share, of which $11.80 per share was cash and short-term investments.
Photo courtesy Field & Stream, Sturm, Ruger’s Marlin 1895 lever-action rifle