Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that
for the third quarter of 2016 the Company reported net sales of
$161.4 million and diluted earnings of $1.03 per share, compared
with net sales of $120.9 million and diluted earnings of 62¢ per
share in the third quarter of 2015.
For the nine months ended October 1, 2016, net sales were $502.5
million and diluted earnings were $3.48 per share. For the
corresponding period in 2015, net sales were $398.7 million and
diluted earnings were $2.33 per share.
The Company also announced today that its Board of Directors
declared a dividend of 41¢ per share for the third quarter for
stockholders of record as of November 18, 2016, payable on November
25, 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 third quarter
performance:
- In the third quarter of 2016, net sales
increased 34% and earnings per share increased 66% from the third
quarter of 2015.
- EBITDA was $39 million, or 24% of
sales, in the third quarter of 2016, an increase of 44% from $27
million, or 22% of sales, in the comparable prior year period.
- The following new products were
launched in September:
- the Mark IV pistols, similar to the
classic Mark III designs, but with a greatly simplified one-button
takedown,
- the LCP II pistol, a major re-design of
the popular LCP pistol that was introduced in 2008, and
- the American Compact pistols, an
expansion of the American pistol family that was launched in
2015.
- New product sales, which include those
launched in the third quarter as well as the Ruger Precision Rifle,
the AR-556 modern sporting rifle, and the LC9s pistol, were $58
million or 36% of firearm sales in the third quarter of 2016. New
product sales include only major new products that were introduced
in the past two years. The new product sales percentage is expected
to decrease next quarter as sales of the AR-556 and the LC9s will
no longer be included among the new products.
- The estimated unit sell-through of the
Company’s products from the independent distributors to retailers
increased 21% in the third 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 16%.
- The increase in estimated sell-through
of the Company’s products from the independent distributors to
retailers is attributable to:
- stronger-than-normal industry demand
during the summer, likely bolstered by the political campaigns for
the November elections,
- strong demand for certain new
products,
- greater availability of rimfire
ammunition which spurred demand for our 10/22 rifle and other
rimfire firearms, and
- increased production of several
products in strong demand.
- Cash generated from operations during
the first nine months of 2016 was $85 million. At October 1, 2016,
our cash totaled $101 million. Our current ratio is 2.7 to 1 and we
have no debt.
- In the first nine months of 2016,
capital expenditures totaled $23 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 nine months of 2016, the
Company returned $25 million to its shareholders through the
payment of dividends.
- At October 1, 2016, stockholders’
equity was $266 million, which equates to a book value of $14.02
per share, of which $5.34 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, November 2, 2016, Sturm, Ruger will host a webcast at
9:00 a.m. ET to discuss the third quarter operating results.
Interested parties can access the webcast at
www.ruger.com/corporate or by dialing 855-871-7398, participant code 1173648.
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)
October 1, 2016 December 31, 2015
Assets Current Assets Cash $ 101,363 $
69,225 Trade receivables, net 70,323 71,721 Gross
inventories 89,858 81,278 Less LIFO reserve (43,836 ) (42,061 )
Less excess and obsolescence reserve (2,448 )
(2,118 ) Net inventories 43,574
37,099 Deferred income taxes 9,085 8,219
Prepaid expenses and other current assets 6,773
3,008 Total Current Assets 231,118
189,272 Property, plant and equipment 320,465 308,597 Less
allowances for depreciation (218,401 )
(204,777 ) Net property, plant and equipment 102,064
103,820 Other assets
27,670 22,791 Total Assets
$ 360,852 $ 315,883
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
(Dollars in thousands, except per share
data)
October 1, 2016 December 31, 2015
Liabilities and Stockholders’
Equity
Current Liabilities Trade accounts payable and accrued
expenses $ 53,432 $ 42,991 Product liability 1,455 642 Employee
compensation and benefits 25,897 28,298 Workers’ compensation 4,421
5,100 Income taxes payable --
4,962 Total Current Liabilities 85,205 81,993 Product
liability 95 102 Deferred income taxes 9,436 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 26,371 29,591 Retained earnings 280,438 239,098
Less: Treasury stock – at cost 2016 – 5,062,347 shares 2015 –
5,062,347 shares (64,727 ) (64,727 )
Total Stockholders’ Equity 266,116
227,738 Total Liabilities and Stockholders’ Equity
$ 360,852 $ 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 Nine Months Ended
October 1,2016
September 26,2015
October 1,2016
September 26,2015
Net firearms sales $ 160,058 $ 119,281 $
497,889 $ 394,084 Net castings sales 1,369
1,590 4,591
4,614 Total net sales 161,427 120,871 502,480 398,698
Cost of products sold 111,176 86,860 336,422 274,781
Gross profit
50,251 34,011
166,058 123,917 Operating
expenses: Selling 13,378 9,170 41,261 34,255 General and
administrative 6,805 6,880
22,045 21,214
Total operating expenses 20,183
16,050 63,306 55,469
Operating income 30,068
17,961 102,752
68,448 Other income: Interest expense, net (32 ) (36
) (102 ) (113 ) Other income, net 418
247 917 1,333
Total other income, net 386
211 815 1,220
Income before income taxes 30,454 18,172 103,567
69,668 Income taxes 10,604
6,209 36,925
24,642 Net income and comprehensive income $
19,850 $ 11,963 $ 66,642
$ 45,026 Basic earnings per share $ 1.05
$ 0.64 $ 3.51 $ 2.41
Diluted earnings per share $ 1.03
$ 0.62 $ 3.48 $ 2.33
Cash dividends per share $ 0.49 $ 0.36
$ 1.32 $ 0.85
STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Nine Months Ended
October 1,2016
September 26,2015
Operating Activities Net income $ 66,642 $ 45,026
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation and amortization 25,257 26,693 Slow moving
inventory valuation adjustment 630 (1,126 ) Stock-based
compensation 2,213 3,442 Loss (gain) on sale of assets 50 (157 )
Deferred income taxes 2,520 (78 ) Impairment of assets 6 32 Changes
in operating assets and liabilities: Trade receivables 1,398 (3,247
) Inventories (7,105 ) 5,054 Trade accounts payable and accrued
expenses 9,762 956 Employee compensation and benefits (2,667 )
8,602 Product liability 806 (101 ) Prepaid expenses, other assets
and other liabilities (5,340 ) 5,652 Income taxes payable and
prepaid income taxes (8,781 ) 4,201
Cash provided by operating activities 85,391
94,949 Investing Activities
Property, plant and equipment additions (23,049 ) (24,488 )
Proceeds from sale of assets 7
222 Cash used for investing activities (23,042
) (24,266 ) Financing Activities Tax benefit
from exercise of stock options and vesting of RSU’s 8,826 305
Remittance of taxes withheld from employees related to share-based
compensation (14,001 ) (1,000 ) Proceeds from exercise of stock
options - 97 Repurchase of common stock - (2,841 ) Dividends paid
(25,036 ) (15,893 ) Cash used for
financing activities (30,211 ) (19,332
) Increase in cash and cash equivalents 32,138 51,351
Cash and cash equivalents at beginning of period 69,225 8,901
Cash and cash equivalents at end
of period $ 101,363 $ 60,252
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 Nine Months Ended
October 1,2016
September 26,2015
October 1,2016
September 26,2015
Net income $ 19,850 $ 11,963 $ 66,642 $ 45,026
Income tax expense 10,604 6,209 36,925 24,642 Depreciation
and amortization expense 8,567 8,852 25,257 26,693 Interest
expense, net 32 36 102
113 EBITDA $ 39,053 $ 27,060 $
128,926 $ 96,474
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Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT
06890www.ruger.com203-259-7843
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