Business Wire | Nov 3, 2021 05:05PM EDT

Sturm, Ruger & Company, Inc. Reports Third Quarter Diluted Earnings of $1.98 Per Share and Declares Quarterly Dividend of 79 Per Share

Nov. 03, 2021

SOUTHPORT, Conn.--(BUSINESS WIRE)--Nov. 03, 2021--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the third quarter of 2021 the Company reported net sales of $178.2 million and diluted earnings of $1.98 per share, compared with net sales of $145.7 million and diluted earnings of $1.39 per share in the third quarter of 2020.

For the nine months ended October 2, 2021, net sales were $562.7 million and diluted earnings were $6.64 per share. For the corresponding period in 2020, net sales were $399.6 million and diluted earnings were $3.31 per share.

The Company also announced today that its Board of Directors declared a dividend of 79 per share for the third quarter for stockholders of record as of November 15, 2021, payable on November 30, 2021. 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 commented on the financial results for the third quarter of 2021, "Despite taking a one week shutdown in July, we were able to increase production by 22% from last year. This was our first shutdown in two years, which gave our workforce a very well-deserved break, allowed us to perform some maintenance and reconfigure some of our manufacturing operations, which has us better prepared as we head into the fourth quarter and 2022."

Mr. Killoy continued, "Despite a moderation of overall demand as reflected in the last two quarters of adjusted NICS, we shipped all of the firearms that we built this quarter without the need to aggressively promote or discount our products. Our finished goods inventories remain near historic lows and we have just begun to replenish the distributor and retail inventories that were largely depleted over the past eighteen months, putting us in a great position as we head into the fourth quarter, which has traditionally been a period of strong demand. In addition to our established firearms, we are working hard on some exciting new product initiatives, including the return of Marlin lever action rifles, which we plan to begin shipping later in the fourth quarter."

Mr. Killoy made the following observations related to the Company's third quarter 2021 performance:

* The estimated unit sell-through of the Company's products from the independent distributors to retailers increased 9% in the first nine months of 2021 compared to the prior year period. For the same period, the National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) decreased 11%. The increase in the sell-through of the Company's products compared favorably to the decrease in adjusted NICS background checks and may be attributable to the following: Strong consumer demand for the Company's products, Increased production in 2021, and Introduction of new products that have been met with strong demand.

* Sales of new products, including the Ruger-57, the LCP II in .22 LR, the PC Charger, the MAX-9 pistol, and the LCP MAX represented $116.2 million or 22% of firearm sales in the first nine months of 2021. New product sales include only major new products that were introduced in the past two years.

* During the third quarter of 2021, the Company's finished goods inventory remained substantially unchanged and distributor inventories of the Company's products increased 67,300 units. Inventories of most product families remain significantly below pre-COVID-19 pandemic levels.

* Cash provided by operations during the first nine months of 2021 was $117.0 million. At October 2, 2021, our cash and short-term investments totaled $192.7 million. Our current ratio is 3.8 to 1 and we have no debt.

* In the first nine months of 2021, capital expenditures totaled $15.6 million. We expect our 2021 capital expenditures to total approximately $20 million, most of which relate to new product introductions.

* In the first nine months of 2021, the Company returned $45.2 million to its shareholders through the payment of dividends.

* At October 2, 2021, stockholders' equity was $338.1 million, which equates to a book value of $19.21 per share, of which $10.95 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2021. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release, with one additional explanatory footnote with respect to the Condensed Consolidated Statements of Income and Comprehensive Income.

Tomorrow, November 4, 2021, 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/corporateor by dialing 855-871-7398, participant code 5189611.

The Quarterly Report on Form 10-Q for the third quarter of 2021 is available on the SEC website at SEC.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Quarterly Report on Form 10-Q for the third quarter of 2021 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. For more than 70 years, Ruger has been a model of corporate and community responsibility. Our motto, "Arms Makers for Responsible Citizens(r)," 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.

STURM, RUGER & COMPANY, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

October 2, 2021 December 31, 2020





Assets



Current Assets

Cash $ 27,677 $ 20,147

Short-term investments 164,996 121,007

Trade receivables, net 71,861 57,876



Gross inventories 92,475 80,487

Less LIFO reserve (49,473 ) (48,016 )

Less excess and obsolescence reserve (3,887 ) (3,394 )

Net inventories 39,115 29,077



Prepaid expenses and other current assets 5,210 6,266

Total Current Assets 308,859 234,373



Property, plant and equipment 408,733 393,843

Less allowances for depreciation (344,192 ) (323,110 )

Net property, plant and equipment 64,541 70,733



Deferred income taxes 11 1,530

Other assets 46,650 41,622

Total Assets $ 420,061 $ 348,258

STURM, RUGER & COMPANY, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data)

October 2, 2021 December 31, 2020





Liabilities and Stockholders' Equity

Current Liabilities

Trade accounts payable and accrued expenses $ 38,414 $ 37,078

Contract liabilities with customers - 84

Product liability 870 1,052

Employee compensation and benefits 31,782 37,275

Workers' compensation 6,777 6,272

Income taxes payable 2,544 -

Total Current Liabilities 80,387 81,761



Product liability accrual 95 74

Lease liability 1,509 1,724

Deferred income taxes - -



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

2021 - 24,306,486 issued,

17,596,588 outstanding

2020 - 24,205,749 issued,

17,495,851 outstanding 24,306 24,206

Additional paid-in capital 45,239 43,468

Retained earnings 414,115 342,615

Less: Treasury stock - at cost2021 - 6,709,898 shares 2020 - 6,709,898 shares (145,590 ) (145,590 )

Total Stockholders' Equity 338,070 264,699

Total Liabilities and Stockholders' Equity $ 420,061 $ 348,258

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 2, September 26, October 2, September 26, 2021 2020 2021 2020



Net firearms sales $ 177,529 $ 145,157 $ 560,578 $ 397,335

Net castings sales 717 548 2,116 2,273

Total net sales 178,246 145,705 562,694 399,608



Cost of products 113,444 94,553 346,569 272,362 sold



Gross profit 64,802 51,152 216,125 127,246



Operating expenses:

Selling 7,753 8,432 24,290 23,355

General and 10,323 9,862 33,484 26,844 administrative

Total operating 18,076 18,294 57,774 50,199 expenses



Operating income 46,726 32,858 158,351 77,047



Other income:

Interest income 11 112 31 1,072

Interest expense (114 ) (114 ) (164 ) (166 )

Other income, net 1,401 38 2,462 451

Total other income, 1,298 36 2,329 1,357 net



Income before 48,024 32,894 160,680 78,404 income taxes



Income taxes 12,822 8,141 42,902 19,719



Net income and comprehensive $ 35,202 $ 24,753 $ 117,778 $ 58,685 income



Basic earnings per $ 2.00 $ 1.42 $ 6.70 $ 3.36 share



Diluted earnings $ 1.98 $ 1.39 $ 6.64 $ 3.31 per share

Weighted averagenumber of

common shares 17,596,588 17,489,642 17,582,009 17,475,819 outstanding - Basic

Weighted averagenumber of

common shares 17,778,177 17,763,277 17,749,897 17,735,474 outstanding -Diluted



Cash dividends per $ 1.00 $ 5.42 $ 2.57 $ 5.95 share (a)

(a) Cash dividends per share for the three and nine months ended September 26, 2020 include the $5.00 per share special dividend paid in August of 2020.

STURM, RUGER & COMPANY, INC.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

(Dollars in thousands)

Nine Months Ended

October 2, September 26, 2021 2020



Operating Activities

Net income $ 117,778 $ 58,685

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 22,001 21,644

Stock-based compensation 6,672 4,430

Gain on sale of assets (111 ) (72 )

Deferred income taxes 1,519 3,127

Changes in operating assets and liabilities:

Trade receivables (13,985 ) (5,580 )

Inventories (10,038 ) 14,722

Trade accounts payable and accrued expenses 1,720 (1,614 )

Contract liability to customers (84 ) (8,420 )

Employee compensation and benefits (6,569 ) 15,299

Product liability (161 ) 196

Prepaid expenses, other assets and other liabilities (4,282 ) (19,215 )

Income taxes payable 2,544 (1,223 )

Cash provided by operating activities 117,004 81,979



Investing Activities

Property, plant and equipment additions (15,617 ) (8,044 )

Proceeds from sale of assets 135 178

Purchases of short-term investments (376,979 ) (268,451 )

Proceeds from maturities of short-term investments 332,990 293,962

Cash (used for) provided by investing activities (59,471 ) 17,645



Financing Activities

Remittance of taxes withheld from employees related to (4,801 ) (1,297 )share-based compensation

Dividends paid (45,202 ) (104,097 )

Cash used for financing activities (50,003 ) (105,394 )



Increase (decrease) in cash and cash equivalents 7,530 (5,770 )



Cash and cash equivalents at beginning of period 20,147 35,420



Cash and cash equivalents at end of period $ 27,677 $ 29,650

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 2, September 26, October 2, September 26, 2021 2020 2021 2020



Net income $ 35,202 $ 24,753 $ 117,778 $ 58,685



Income tax expense 12,822 8,141 42,902 19,719

Depreciation and amortization 7,250 7,215 22,001 21,644 expense

Interest income (11 ) (112 ) (31 ) (1,072 )

Interest expense 114 114 164 166

EBITDA $ 55,377 $ 40,111 $ 182,814 $ 99,142

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CONTACT: Sturm, Ruger & Company, Inc. One Lacey Place Southport, CT 06890 www.ruger.com 203-259-7843