Sturm, Ruger & Company, Inc. (NYSE:RGR) announced today that
for the third quarter of 2017 the Company reported net sales of
$104.8 million and diluted earnings of 53¢ per share, compared with
net sales of $161.4 million and diluted earnings of $1.03 per share
in the third quarter of 2016.
For the nine months ended September 30, 2017, net sales were
$404.0 million and diluted earnings were $2.32 per share. For the
corresponding period in 2016, net sales were $502.5 million and
diluted earnings were $3.48 per share.
The Company also announced today that its Board of Directors
declared a dividend of 21¢ per share for the third quarter for
stockholders of record as of November 15, 2017, payable on November
30, 2017. 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 Christopher J. Killoy made the following
observations related to the Company’s 2017 third quarter
performance:
- In the third quarter of 2017, net sales
decreased 35% and earnings per share decreased 50% from the third
quarter of 2016. The decrease in earnings is attributable to the
sales decline and the unfavorable de-leveraging of fixed
manufacturing costs due to the decline in production volumes.
- Sales of new products, including the
Mark IV pistols, the LCP II pistol, and the Precision Rifle,
represented $118.8 million or 30% of firearm sales in the first
nine months of 2017. 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
decreased 25% and 16% in three and nine months ended September 30,
2017 from the comparable prior year periods. For the same periods,
the National Instant Criminal Background Check System background
checks (as adjusted by the National Shooting Sports Foundation)
decreased 16% and 10%. The decrease in estimated sell-through of
the Company’s products from the independent distributors to
retailers is attributable to:
- Decreased overall consumer demand in
2017 due to stronger-than-normal demand during most of 2016, likely
bolstered by the political campaigns for the November 2016
elections,
- Reduced purchasing by retailers in an
effort to lower their inventories and generate cash,
- Aggressive price discounting and
lucrative consumer rebates offered by many of our competitors,
and
- Increased industry manufacturing
capacity, which exacerbates the above factors.
- Cash generated from operations during
the first nine months of 2017 was $59 million. At September 30,
2017, our cash totaled $45 million. Our current ratio is 2.8 to 1
and we have no debt.
- In the first nine months of 2017,
capital expenditures totaled $13 million. We expect our 2017
capital expenditures to total approximately $30 million.
- In the first nine months of 2017, the
Company returned $85 million to its shareholders through:
- the payment of $20 million of
dividends, and
- the repurchase of 1.3 million shares of
common stock in the open market at an average price of $49.10 per
share, for a total of $65 million.
- At September 30, 2017, stockholders’
equity was $223 million, which equates to a book value of $12.77
per share, of which $2.60 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 1, 2017, 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 Ruger.com/corporate or
by dialing 855-871-7398, participant
code 99533519.
The Quarterly Report on Form 10-Q is available on the SEC
website at www.sec.gov and the Ruger website at
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 & Co.,
Inc.
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)
September 30, 2017 December 31, 2016
Assets Current Assets Cash $ 45,359 $
87,126 Trade receivables, net 53,154 69,442 Gross
inventories 99,919 99,417 Less LIFO reserve (44,716 ) (42,542 )
Less excess and obsolescence reserve (3,034 )
(2,340 ) Net inventories 52,169
54,535 Prepaid expenses and other current
assets 2,602 3,660 Total
Current Assets 153,284 214,763 Property, plant and equipment
344,626 331,639 Less allowances for depreciation
(252,984 ) (227,398 ) Net property, plant and
equipment 91,642 104,241
Deferred income taxes - 334 Other assets
32,602 27,541 Total Assets $
277,528 $ 346,879
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
(Dollars in thousands, except per share
data)
September 30, 2017
December 31, 2016
Liabilities and
Stockholders’ Equity Current Liabilities Trade accounts
payable and accrued expenses $ 30,841 $ 48,493 Product liability
1,170 1,733 Employee compensation and benefits 14,693 25,467
Workers’ compensation 5,047 5,200 Income taxes payable
2,578 - Total Current
Liabilities 54,329 80,893 Product liability 100 86 Deferred
income taxes 591 - 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 2017 – 24,091,834 issued,
17,426,436 outstanding 2016 – 24,034,201 issued, 18,688,511
outstanding 24,092 24,034 Additional paid-in capital 27,318 27,211
Retained earnings 314,693 293,400 Less: Treasury stock – at cost
2017 – 6,665,398 shares 2016 – 5,345,690 shares
(143,595 ) (78,745 ) Total Stockholders’ Equity
222,508 265,900 Total
Liabilities and Stockholders’ Equity $ 277,528
$ 346,879
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
September 30,2017
October 1,2016
September 30,2017
October 1,2016
Net firearms sales $ 103,658 $ 160,058 $ 400,533 $
497,889 Net castings sales 1,159
1,369 3,493 4,591
Total net sales 104,817 161,427 404,026 502,480 Cost of
products sold 74,603 111,176 283,113 336,422
Gross profit
30,214 50,251
120,913 166,058 Operating
expenses: Selling 10,606 13,378 36,650 41,261 General and
administrative 6,291 6,805
21,779 22,045
Total operating expenses 16,897
20,183 58,429 63,306
Operating income 13,317
30,068 62,484
102,752 Other income: Interest expense, net (30 ) (32
) (96 ) (102 ) Other income, net 154
418 935 917
Total other income, net 124 386
839 815
Income before income taxes 13,441 30,454 63,323 103,567
Income taxes 4,071 10,604
21,530 36,925 Net
income and comprehensive income $ 9,370 $
19,850 $ 41,793 $ 66,642
Basic earnings per share $ 0.53 $ 1.05
$ 2.34 $ 3.51 Diluted earnings
per share $ 0.53 $ 1.03 $ 2.32
$ 3.48 Cash dividends per share
$ 0.23 $ 0.49 $ 1.15 $
1.32
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Dollars in thousands)
Nine Months Ended
September 30,2017
October 1,2016
Operating Activities Net income $ 41,793 $ 66,642
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation and amortization 26,026 25,263 Slow moving
inventory valuation adjustment 694 630 Stock-based compensation
2,647 2,213 Loss on sale of assets 31 50 Deferred income taxes 925
2,520 Changes in operating assets and liabilities: Trade
receivables 16,288 1,398 Inventories 1,672 (7,105 ) Trade accounts
payable and accrued expenses (17,805 ) 9,762 Employee compensation
and benefits (11,028 ) (2,667 ) Product liability (549 ) 806
Prepaid expenses, other assets and other liabilities (4,259 )
(5,340 ) Income taxes payable and prepaid income taxes
2,578 (8,781 ) Cash provided by
operating activities 59,013
85,391 Investing Activities Property, plant and
equipment additions (13,205 ) (23,049 ) Proceeds from sale of
assets 3 7 Cash used for
investing activities (13,202 ) (23,042
) Financing Activities Tax benefit from exercise of stock
options and vesting of RSU’s - 8,826 Remittance of taxes withheld
from employees related to share-based compensation (2,482 ) (14,001
) Repurchase of common stock (64,850 ) - Dividends paid
(20,246 ) (25,036 ) Cash used for financing
activities (87,578 ) (30,211 )
(Decrease) Increase in cash and cash equivalents (41,767 ) 32,138
Cash and cash equivalents at beginning of period 87,126
69,225 Cash and cash equivalents
at end of period $ 45,359 $ 101,363
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
September 30,2017
October 1,2016
September 30,2017
October 1,2016
Net income $ 9,370 $ 19,850 $ 41,793 $ 66,642
Income tax expense 4,071 10,604 21,530 36,925 Depreciation
and amortization expense
7,373
8,567
26,026
25,263
Interest expense, net 30 32
96 102 EBITDA $ 20,844 $ 39,053
$ 89,445 $ 128,932
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Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT
06890www.ruger.com203-259-7843
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