Sturm, Ruger & Company Inc. reported a slight decline in earnings in the first quarter as sales slid 3.3 percent to $167.4 million.
The firearms giant said the estimated unit sell-through of the company’s products from the independent distributors to retailers decreased 7 percent in the first quarter of 2017. For the same period, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) decreased 11 percent.
The company said the overall decrease in estimated sell-through of the company’s products from the independent distributors to retailers is attributable to decreased overall consumer demand due to “stronger-than-normal demand during most of 2016, likely bolstered by the political campaigns for the November 2016 elections.”
The company also believes it encountered lower overall retailer demand as some retailers committed inventory dollars to certain product categories such as modern sporting rifles in the third and fourth quarters of 2016 in advance of the November elections.
Sturm, Ruger said sales of new products, including the Mark IV pistols, the LCP II pistol, and the Precision Rifle, represented $41.5 million or 25 percent of firearm sales in the first quarter of 2017. New product sales include only major new products that were introduced in the past two years.
EBITDA in the quarter was $43.6 million, or 26 percent of sales, in the first quarter of 2017, a decrease of 2.7 percent from $44.8 million, or the same 26 percent of sales, in the comparable prior-year period.
Gross margins eroded to 33.5 percent from 34.4 percent in the same period a year ago. Operating expenses were reduced to 13.2 percent of sales from 13.3 percent. Net income reduced slightly to $22.2 million, or $1.21, from $23.3 million, or $1.21, in the same period a year ago.
As previously announced, the company said its president and COO, Christopher J. Killoy, succeeded Michael O. Fifer as CEO on May 9.
Michael Jacobi, chairman, said, “Mike’s leadership over the past 10 and a half years as CEO has been exemplary. His focus on new product development and operational excellence drove unprecedented financial success at Ruger, which benefitted our shareholders through the payment of $265 million of dividends, share repurchases of $132 million, and an increase in Ruger’s market capitalization of approximately $1 billion. We look forward to Mike’s continued service to Ruger on the board of directors.”
Photo courtesy Sturm, Ruger & Co.