Sturm, Ruger & Company, Inc. Reports Second Quarter Diluted Earnings of $1.22 Per Share and Declares Dividend of 49¢ Per Share

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2016 the Company reported net sales of $167.9 million and diluted earnings of $1.22 per share, compared with net sales of $140.9 million and diluted earnings of 91¢ per share in the second quarter of 2015.

For the six months ended July 2, 2016, net sales were $341.1 million and fully diluted earnings were $2.44 per share. For the corresponding period in 2015, net sales were $277.8 million and fully diluted earnings were $1.71 per share.

The Company also announced today that its Board of Directors declared a dividend of 49¢ per share for the second quarter for stockholders of record as of August 12, 2016, payable on August 26, 2016. 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.

Chief Executive Officer Michael O. Fifer made the following observations related to the Company’s 2016 second quarter performance:

In the second quarter of 2016, net sales increased 19% and earnings per share increased 34% from the second quarter of 2015.
EBITDA was $45 million, or 27% of sales, in the second quarter of 2016, an increase of 25% from $36 million, or 26% of sales, in the comparable prior year period.
New products, including the American Pistol, the Precision Rifle, the AR-556 modern sporting rifle, and the LC9s pistol, represented $53 million or 33% of firearm sales in the second quarter of 2016. New product sales include only major new products that were introduced in the past two years.
The estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 20% in the second quarter of 2016 from the comparable prior year period. For the same period, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) increased 15%.
The increase in estimated sell-through of the Company’s products from the independent distributors to retailers is attributable to:

the increase in overall industry demand,
strong demand for certain new products, and
increased production of several products in strong demand.

During the second quarter of 2016, the Company’s finished goods inventory increased by 25,700 units and distributor inventories of the Company’s products increased by 50,300 units.
Cash generated from operations during the first half of 2016 was $66 million. At July 2, 2016, our cash totaled $103 million. Our current ratio is 2.8 to 1 and we have no debt.
In the first half of 2016, capital expenditures totaled $11 million, much of it related to tooling and equipment for new products. We expect our 2016 capital expenditures to total approximately $30 million.
In the first half of 2016, the Company returned $16 million to its shareholders through the payment of dividends.
At July 2, 2016, stockholders’ equity was $255 million, which equates to a book value of $13.27 per share, of which $5.37 per share is cash.

Today, the Company filed its Quarterly Report on Form 10-Q. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

Tomorrow, August 3, 2016, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second quarter operating results. Interested parties can access the webcast at www.ruger.com/corporate or by dialing 720-634-2919, participant code 50151643.

The Quarterly Report on Form 10-Q is available on the SEC website at www.sec.gov and the Ruger website at www.ruger.com/corporate. Investors are urged to read the complete Quarterly Report on Form 10-Q to ensure that they have adequate information to make informed investment judgments.

About Sturm, Ruger

Sturm, Ruger & Co., Inc. is one of the nation’s leading manufacturers of rugged, reliable firearms for the commercial sporting market. As a full-line manufacturer of American-made firearms, Ruger offers consumers over 400 variations of more than 30 product lines. For more than 60 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens,” echoes the importance of 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.

STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

July 2, 2016 December 31, 2015 Assets Current Assets Cash $ 103,069 $ 69,225 Trade receivables, net 64,978 71,721 Gross inventories 84,613 81,278 Less LIFO reserve (43,260 ) (42,061 ) Less excess and obsolescence reserve (2,570 ) (2,118 ) Net inventories 38,783 37,099 Deferred income taxes 10,474 8,219 Prepaid expenses and other current assets 2,508 3,008 Total Current Assets 219,812 189,272 Property, plant and equipment 309,470 308,597 Less allowances for depreciation (210,631 ) (204,777 ) Net property, plant and equipment 98,839 103,820 Other assets 25,056 22,791 Total Assets $ 343,707 $ 315,883 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands, except per share data)

July 2, 2016 December 31, 2015 Liabilities and Stockholders’ Equity Current Liabilities Trade accounts payable and accrued expenses $ 50,364 $ 42,991 Product liability 941 642 Employee compensation and benefits 22,975 28,298 Workers’ compensation 4,604 5,100 Income taxes payable 185 4,962 Total Current Liabilities 79,069 81,993 Product liability 92 102 Deferred income taxes 9,718 6,050 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 2016 – 24,034,201 issued, 18,971,854 outstanding 2015 – 23,775,766 issued, 18,713,419 outstanding 24,034 23,776 Additional paid-in capital 25,530 29,591 Retained earnings 269,991 239,098 Less: Treasury stock – at cost 2016 – 5,062,347 shares 2015 – 5,062,347 shares (64,727 ) (64,727 ) Total Stockholders’ Equity 254,828 227,738 Total Liabilities and Stockholders’ Equity $ 343,707 $ 315,883 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

Three Months Ended Six Months Ended

July 2,2016

June 27,2015

July 2,2016

June 27,2015

Net firearms sales $ 166,311 $ 139,224 $ 337,831 $ 274,804 Net castings sales 1,633 1,648 3,222 3,023 Total net sales 167,944 140,872 341,053 277,827 Cost of products sold 111,250 92,364 225,246 187,921 Gross profit 56,694 48,508 115,807 89,906 Operating expenses: Selling 12,808 14,858 27,882 25,085 General and administrative 7,402 6,957 15,241 14,334 Total operating expenses 20,210 21,815 43,123 39,419 Operating income 36,484 26,693 72,684 50,487 Other income: Interest expense, net (35 ) (37 ) (70 ) (77 ) Other income, net 293 617 499 1,086 Total other income, net 258 580 429 1,009 Income before income taxes 36,742 27,273 73,113 51,496 Income taxes 13,227 9,713 26,321 18,433 Net income and comprehensive income $ 23,515 $ 17,560 $ 46,792 $ 33,063 Basic earnings per share $ 1.24 $ 0.94 $ 2.47 $ 1.77 Diluted earnings per share $ 1.22 $ 0.91 $ 2.44 $ 1.71 Cash dividends per share $ 0.48 $ 0.32 $ 0.83 $ 0.49 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

Six Months Ended July 2, 2016 June 27, 2015 Operating Activities Net income $ 46,792 $ 33,063

Adjustments to reconcile net income to cash provided byoperating activities:

Depreciation and amortization 16,690 17,841 Slow moving inventory valuation adjustment 452 (1,011 ) Stock-based compensation 1,373 2,298 Loss (gain) on sale of assets 1 (157 ) Deferred income taxes 1,413 (1,176 ) Impairment of assets (10 ) 12 Changes in operating assets and liabilities: Trade receivables 6,743 (4,378 ) Inventories (2,136 ) 11,511 Trade accounts payable and accrued expenses 6,877 5,925 Employee compensation and benefits (5,482 ) 6,881 Product liability 289 (401 ) Prepaid expenses, other assets and other liabilities (2,134 ) 8,785 Income taxes payable (4,777 ) 1,671 Cash provided by operating activities 66,091 80,864 Investing Activities Property, plant and equipment additions (11,334 ) (16,259 ) Proceeds from sale of assets 3 218 Cash used for investing activities (11,331 ) (16,041 ) Financing Activities

Tax benefit from exercise of stock options and vesting of RSU’s

8,825 305

Remittance of taxes withheld from employees related toshare-based compensation

(14,001

)

(1,000

)

Proceeds from exercise of stock options - 97 Repurchase of common stock - (2,841 ) Dividends paid (15,740 ) (9,161 ) Cash used for financing activities (20,916 ) (12,600 ) Increase in cash and cash equivalents 33,844 52,223 Cash and cash equivalents at beginning of period 69,225 8,901 Cash and cash equivalents at end of period $ 103,069 $ 61,124

Non-GAAP Financial Measure

In an effort to provide investors with additional information regarding its financial results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and one non-GAAP financial measure, EBITDA, which management believes provides useful information to investors. This non-GAAP financial measure may not be comparable to similarly titled financial measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measure should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA is 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 the Company’s financial performance.

EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. The Company calculates its EBITDA 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.

Non-GAAP Reconciliation – EBITDA

EBITDA

(Unaudited, dollars in thousands)

Three Months Ended Six Months Ended

July 2,2016

June 27,2015

July 2,2016

June 27,2015

Net income $ 23,515 $ 17,560 $ 46,792 $ 33,063 Income tax expense 13,227 9,713 26,321 18,433

Depreciation and amortizationexpense

8,346

8,884