EX-99.1 2 ex99-1.htm EX-99.1

EXHIBIT 99.1

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FOR IMMEDIATE RELEASE

 

STURM, RUGER & COMPANY, INC. REPORTS 2022

DILUTED EARNINGS OF $4.96 PER SHARE AND

DECLARES DIVIDEND OF 42¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, February 22, 2023--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2022 the Company reported net sales of $595.8 million and diluted earnings of $4.96 per share, compared with net sales of $730.7 million and diluted earnings of $8.78 per share in 2021.

For the fourth quarter of 2022, net sales were $149.2 million and diluted earnings were $1.06 per share. For the corresponding period in 2021, net sales were $168.0 million and diluted earnings were $2.14 per share.

The Company also announced today that its Board of Directors declared a dividend of 42¢ per share for the fourth quarter for stockholders of record as of March 10, 2023, payable on March 24, 2023. 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% of net income.

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Chief Executive Officer Christopher J. Killoy commented on the financial results for the year, “Consumer demand in 2022 was below the level of demand in 2021, dampened in part by inflationary pressures, which often constrain discretionary spending. This led to a 18% reduction in our sales from the prior year. Nevertheless, we are encouraged by our increased quarterly sales and production in the fourth quarter. Our disciplined approach and long-term focus yielded strong cash flow, investment in our new product development, and a robust, debt-free balance sheet.”

Mr. Killoy reiterated the Company’s commitment to new product development, “We continue to enhance our catalog of products with exciting and innovative new firearms that were met with strong demand in the marketplace. Our major new product launches in 2022 included:

·Marlin Model 1895 Guide Gun, chambered in 45-70 Govt, which was our first reintroduction in the Marlin Guide Gun family of lever-action rifles,

 

·Marlin Model 1895 Trapper stainless steel lever-action rifle, chambered in .45-70 Govt.,

 

·LC Carbine, chambered in 5.7x28mm, a companion to the Ruger-5.7 pistol,

 

·Security-380 Lite Rack Pistol, a full-featured pistol chambered in light-recoiling .380 Auto, and

 

·Small-Frame Autoloading Rifle, or SFAR, chambered in 7.62 NATO / .308 Win., which combines the ballistic advantages of .308 Win. with the size and weight of a traditional modern sporting rifle.

 

Mr. Killoy concluded by reaffirming the Company’s capital philosophy, “Our focus on financial discipline and the cultivation of long-term shareholder value is unwavering. We continue to evaluate opportunities, but will pursue them only if they provide long-term value to our shareholders. When we believe our cash position significantly exceeds our foreseeable funding requirements for operations, including capital investment, quarterly dividends, and working capital needs, we will return cash to our shareholders, as we did most recently in January with a $5.00 per share special dividend.”

Mr. Killoy made the following observations related to the Company’s 2022 performance:

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·The estimated unit sell-through of the Company’s products from the independent distributors to retailers decreased 25% in 2022 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 11%. 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.The greater reduction in the sell-through of the Company’s products relative to adjusted NICS background checks may be attributable to the following:
·More aggressive promotions, discounts, rebates, and the extension of payment terms offered by our competitors,
·An apparent increase in sales of used firearms at retail, which are included in the adjusted NICS checks, but are not distinguished from new gun sales, and
·Decreased retailer inventories as the anticipation of further discounting may be encouraging cautious buying behavior by retailers.
·Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin 1895 lever-action rifles, LC Carbine, PC Charger, and Small-Frame Autoloading Rifle represented $78.4 million or 14% of firearm sales in 2022. New product sales include only major new products that were introduced in the past two years.

 

·Our profitability declined in 2022 from 2021 as our gross margin decreased from 38% to 30%. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales, as well as inflationary cost increases in materials, commodities, services, energy, fuel and transportation, which were partially offset by increased pricing.

 

·In 2022, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 92,200 units and 134,200 units, respectively, returning to a reasonable level that will allow for the rapid fulfillment of retailer demand.

 

·Cash provided by operations during 2022 was $77.2 million. At December 31, 2022, our cash and short-term investments totaled $224.3 million. Our current ratio is 2.2 to 1 and we have no debt.

 

·In 2022, capital expenditures totaled $27.7 million related to new product introductions, upgrades to our manufacturing equipment and facilities, and the purchase of a previously leased 225,000 square foot facility in Mayodan, North Carolina for $8.3 million for use in the Company’s manufacturing and warehousing operations.

 

·In 2022, the Company returned $42.9 million to its shareholders, primarily through the payment of dividends. An additional $88.3 million was returned to its shareholders on January 5, 2023 through the payment of a $5.00 per share special dividend to shareholders.

 

·At December 31, 2022, stockholders’ equity was $316.7 million, which equates to a book value of $17.93 per share, of which $12.70 per share was cash and short-term investments.

 

Today, the Company filed its Annual Report on Form 10-K for 2022. The financial statements included in this Annual Report on Form 10-K are attached to this press release.

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On Thursday, February 23, 2023, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the fourth quarter and year-end 2022 operating results. Interested parties can listen to the webcast via this link or by visiting Ruger.com/corporate. Those who wish to ask questions during the webcast will need to pre-register prior to the meeting.

The Annual Report on Form 10-K for 2022 is available on the SEC website at SEC.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Annual Report on Form 10-K to ensure that they have adequate information to make informed investment judgments.

 

About Sturm, Ruger & Co., Inc.

Sturm, Ruger & Co., Inc. is one of the nation's leading manufacturers of rugged, reliable firearms for the commercial sporting market. With products made in America, Ruger offers consumers almost 800 variations of more than 40 product lines, across both the Ruger and Marlin brands. For almost 75 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens®,” echoes our commitment to these principles as we work hard to deliver quality and innovative firearms.

 

The Company may, from time to time, make forward-looking statements and projections concerning future expectations. Such statements are based on current expectations and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company, the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

 

December 31,  2022   2021 
         

Assets

          
           
Current Assets           
           
Cash and cash equivalents  $65,173   $21,044 
Short-term investments   159,132    199,971 
Trade receivables, net   65,449    57,036 
           
Gross inventories   129,294    100,023 
     Less LIFO reserve   (59,489)   (51,826)
     Less excess and obsolescence reserve   (4,812)   (4,347)
     Net inventories   64,993    43,850 
           
Prepaid expenses and other current assets   7,091    6,832 
Total Current Assets   361,838    328,733 
           
Property, Plant, and Equipment   447,126    421,282 
     Less allowances for depreciation   (370,273)   (347,651)
     Net property, plant and equipment   76,853    73,631 
           
Deferred income taxes   6,109    536 
Other assets   39,963    39,443 
Total Assets  $484,763   $442,343 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

 

December 31,  2022   2021 
         

Liabilities and Stockholders’ Equity

          
           
Current Liabilities          
           
Trade accounts payable and accrued expenses  $35,658   $36,400 
Dividends Payable   88,343     
Contract liabilities with customers   1,031     
Product liability   235    795 
Employee compensation and benefits   30,160    33,154 
Workers’ compensation   6,469    6,760 
Income taxes payable   1,171     
Total Current Liabilities   163,067    77,109 
           
Lease liability   3,039    1,476 
Employee compensation   1,846     
Product liability accrual   73    97 
           
Contingent liabilities        
           
Stockholders’ Equity          
Common stock, non-voting, par value $1:
Authorized shares – 50,000; none issued
          
Common stock, par value $1:
Authorized shares – 40,000,000
2022 – 24,378,568 issued,
             17,664,230 outstanding
2021 – 24,306,486 issued,
             17,596,588 outstanding
   24,378    24,306 
Additional paid-in capital   45,075    46,847 
Retained earnings   393,097    438,098 
Less: Treasury stock – at cost
2022 – 6,714,338 shares
2021 – 6,709,898 shares
   (145,812)   (145,590)
Total Stockholders’ Equity   316,738    363,661 
Total Liabilities and Stockholders’ Equity  $484,763   $442,343 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

 

Year ended December 31,  2022   2021   2020 
             
Net firearms sales  $593,289   $728,141   $565,863 
Net castings sales   2,553    2,595    3,005 
Total net sales   595,842    730,736    568,868 
                
Cost of products sold   415,757    451,179    377,427 
                
Gross profit   180,085    279,557    191,441 
                
Operating Expenses (Incomes):               
Selling   36,114    33,259    33,332 
General and administrative   40,551    43,289    39,013 
Other operating expense (income), net   (36)   (127)   (52)
Total operating expenses   76,629    76,421    72,293 
                
Operating income   103,456    203,136    119,148 
                
Other income:               
Royalty income   837    1,975    814 
Interest income   2,552    49    1,126 
Interest expense   (256)   (164)   (191)
Other income, net   1,690    1,598    84 
Total other income, net   4,823    3,458    1,833 
                
Income before income taxes   108,279    206,594    120,981 
                
Income taxes   19,947    50,695    30,583 
                
Net income and comprehensive income  $88,332   $155,899   $90,398 
                
                
Basic Earnings Per Share  $5.00   $8.87   $5.17 
                
Diluted Earnings Per Share  $4.96   $8.78   $5.09 
                
Weighted average number of common shares outstanding – Basic   17,648,850    17,585,604    17,486,054 
                
Weighted average number of common shares outstanding – Diluted   17,793,348    17,757,834    17,769,856 
                
Cash Dividends Per Share  $2.42   $3.36   $6.51 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Cash Flows

(In thousands)

 
Year ended December 31,  2022   2021   2020 
             
Operating Activities               
Net income  $88,332   $155,899   $90,398 
Adjustments to reconcile net income to cash provided by operating activities, net of effects of acquisition:               
Depreciation and amortization   25,789    26,152    27,576 
Stock-based compensation   1,671    8,280    6,128 
Excess and obsolescence inventory reserve   501    953     
Gain on sale of assets   (36)   (127)   (52)
Deferred income taxes   (5,573)   994    3,863 
Changes in operating assets and liabilities:               
Trade receivables   (8,413)   840    (5,236)
Inventories   (21,644)   (15,726)   10,624 
Trade accounts payable and accrued expenses   (640)   (392)   7,954 
Contract liability with customers   1,031    (84)   (9,539)
Employee compensation and benefits   (3,420)   (5,433)   20,910 
Product liability   (584)   (234)   308 
Prepaid expenses, other assets and other liabilities   (954)   1,217    (7,905)
Income taxes receivable/payable   1,171        (1,223)
Cash provided by operating activities   77,231    172,339    143,806 
                
Investing Activities               
Property, plant, and equipment additions   (27,730)   (28,776)   (24,229)
Purchase of Marlin assets           (28,316)
Purchases of short-term investments   (365,480)   (681,940)   (369,439)
Proceeds from maturity of short-term investments   406,319    602,976    377,920 
Net proceeds from sale of assets   100    203    178 
Cash provided by (used for) investing activities   13,209    (107,537)   (43,886)
                
Financing Activities               
Dividends paid   (42,718)   (59,104)   (113,896)
Repurchase of common stock   (222)        
Payment of employee withholding tax related to share-based compensation   (3,371)   (4,801)   (1,297)
Cash used for financing activities   (46,311)   (63,905)   (115,193)
                
Increase (decrease) in cash and cash equivalents   44,129    897    (15,273)
Cash and cash equivalents at beginning of year   21,044    20,147    35,420 
Cash and cash equivalents at end of year  $65,173   $21,044   $20,147 

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Non-GAAP Financial Measure

In an effort to provide investors with additional information regarding its results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and two non-GAAP financial measures, EBITDA and EBITDA margin, which management believes provides useful information to investors. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA and EBITDA margin are useful to understanding its operating results and the ongoing performance of its underlying business, as EBITDA provides information on the Company’s ability to meet its capital expenditure and working capital requirements, and is also an indicator of profitability. The Company believes that this reporting provides better transparency and comparability to its operating results. The Company uses both GAAP and non-GAAP financial measures to evaluate its financial performance.

Non-GAAP Reconciliation – EBITDA

EBITDA

(Unaudited, dollars in thousands)

 

Year ended December 31,  2022   2021 
         
Net income  $88,332   $155,899 
           
Income tax expense   19,947    50,695 
Depreciation and amortization expense   25,789    26,152 
Interest expense   256    164 
Interest income   (2,552)   (49)
EBITDA  $131,772   $232,861 
EBITDA margin   22.1%    31.9% 

 

EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. The Company calculates this by adding the amount of interest expense, income tax expense and depreciation and amortization expenses that have been deducted from net income back into net income, and subtracting the amount of interest income that was included in net income from net income to arrive at EBITDA. The Company’s EBITDA calculation also excludes any one-time non-cash, non-operating expense.

 

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