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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports First Quarter Earnings of 44¢ Per Share

Tuesday, April 27, 2010

Sturm, Ruger & Company, Inc. Reports First Quarter Earnings of 44¢ Per Share17:05 EDT Tuesday, April 27, 2010 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE: RGR), announced today that for the first quarter of 2010, the Company reported net sales of $68.3 million and earnings per share of 44¢, compared with sales of $63.5 million and earnings per share of 30¢ in the first quarter of 2009. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's first quarter of 2010: Our year-over-year performance was highlighted by a 47% increase in earnings and an 8% increase in net sales. Demand for our products remained strong in the first quarter of 2010. Estimated sell-through of our products from distributors to retailers in the first quarter of 2010 increased by approximately 8% from the first quarter of 2009 and approximately 21% from the fourth quarter of 2009. This sales growth, despite declines of 4% and 5% in National Instant Criminal Background Check System (NICS) background checks over the same periods, suggests we gained market share. Our firearms unit production increased 3% from the fourth quarter of 2009, and 15% from the first quarter of 2009. Our backlog grew to 239,900 units and $72 million at the end of the first quarter of 2010, from 181,000 units and $60 million at the end of 2009. In January, we launched the SR9c, a compact version of the full-size SR9 striker-fired, semi-automatic pistol. The SR9c has been very popular since its introduction, and it has also generated renewed interest in the full-size SR9 pistol. New product introductions, including the new SR9c pistol, remain a strong driver of demand, and products introduced since January 2008 represented $27 million or 39% percent of sales in the first quarter of 2010. Cash generated from operations during the first quarter of 2010 was $10 million. At the end of the first quarter of 2010, our cash and equivalents totaled $59 million. Our current ratio is 3.1 to 1 and we have no debt. During the first quarter of 2010, capital expenditures totaled $5.7 million, much of it related to tooling and equipment for new products. We expect to invest approximately $12 to $18 million for capital expenditures during 2010. At the end of the first quarter of 2010, stockholders' equity was $103 million, which equates to a book value of $5.39 per share, of which $3.08 per share was cash and equivalents. Chief Executive Officer Michael O. Fifer issued a letter to Ruger shareholders today, and the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2010. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. Both the Quarterly Report on Form 10-Q and the letter to Ruger shareholders on Form 8-K are 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 Form 10-Q and the letter to shareholders to ensure that they have adequate information to make informed investment judgments. About Sturm, Ruger Sturm, Ruger was founded in 1949 and is one of the nation's leading manufacturers of high-quality firearms for the commercial sporting market. Sturm, Ruger is headquartered in Southport, CT, with manufacturing facilities located in Newport, NH and Prescott, AZ. 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 including lawsuits filed by mayors, attorneys general and other governmental entities and membership organizations, 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 Balance Sheets (Unaudited)(Dollars in thousands, except share data)       April 3, 2010   December 31, 2009 Assets   Current Assets Cash and cash equivalents $ 5,642 $ 5,008 Short-term investments 53,235 50,741 Trade receivables, net 27,615 25,049   Gross inventories 47,526 51,048 Less LIFO reserve (38,435) (38,663) Less excess and obsolescence reserve   (1,930)   (2,727) Net inventories   7,161   9,658   Deferred income taxes 5,349 5,893 Prepaid expenses and other current assets   1,542   2,062 Total current assets 100,544 98,411   Property, plant and equipment 139,399 134,057 Less allowances for depreciation   (103,106)   (101,324) Net property, plant and equipment   36,293   32,733 Deferred income taxes 6,878 6,190 Other assets   4,609   4,345 Total Assets   $148,324   $141,679 STURM, RUGER & COMPANY, INC.         April 3, 2010   December 31, 2009     Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 11,824 $ 12,011 Product liability 961 1,147 Employee compensation and benefits 8,283 12,890 Workers' compensation 5,400 5,443 Income taxes payable   5,733   1,543 Total current liabilities 32,201 33,034   Accrued pension liability 12,180 12,194 Product liability accrual 859 935 Contingent liabilities – Note 9 -- --   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 2010 – 22,866,369 issued, 19,112,548 outstanding 2009 – 22,826,601 issued, 19,072,780 outstanding 22,866 22,827 Additional paid-in capital 8,390 8,031 Retained earnings 122,357 115,187 Less: Treasury stock – at cost 2010 and 2009 – 3,753,821 shares (30,167) (30,167) Accumulated other comprehensive loss   (20,362)   (20,362) Total Stockholders' Equity   103,084   95,516 Total Liabilities and Stockholders' Equity   $148,324   $141,679 STURM, RUGER & COMPANY, INC.   Condensed Statements of Income (Unaudited)(Dollars in thousands, except per share data) Three Months Ended April 3, 2010   April 4, 2009     Net firearms sales $67,269 $62,227 Net castings sales   1,007   1,302 Total net sales 68,276 63,529   Cost of products sold   45,145   44,003 Gross margin   23,131   19,526   Expenses: Selling 5,899 5,445 General and administrative 3,932 4,147 Other operating expenses, net   400   500 Total operating expenses   10,231   10,092   Operating income   12,900   9,434   Other income: Interest (expense) income, net (33) (18) Other income (expense), net   127   (50) Total other income, net   94   (68)   Income before income taxes 12,994 9,366   Income taxes   4,678   3,559   Net income   $8,316   $ 5,807     Earnings per share Basic $0.44$0.30 Diluted $0.43$0.30   Average shares outstanding Basic 19,08719,045 Diluted 19,34019,175   Cash dividends per share $0.06-   STURM, RUGER & COMPANY, INC.   Condensed Statements of Cash Flows (Unaudited)(Dollars in thousands) Three Months Ended April 3, 2010   April 4, 2009   Operating Activities Net income $ 8,316 $ 5,807 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 2,135 1,662 Slow moving inventory valuation adjustment (761) - Stock-based compensation 628 920 Gain on sale of assets (3) - Deferred income taxes (408) 614 Changes in operating assets and liabilities: Trade receivables (2,566) 198 Inventories 3,258 3,627 Trade accounts payable and accrued expenses (4,836) 167 Product liability (262) (415) Prepaid expenses, other assets and other liabilities 242 (1,240) Income taxes payable   4,189   (971) Cash provided by operating activities   9,932   10,369   Investing Activities Property, plant and equipment additions (5,696) (3,701) Proceeds from sale of assets 5 - Purchases of short-term investments (34,992) (25,979) Proceeds from maturities of short-term investments   32,498   14,559 Cash used for investing activities   (8,185)   (15,121)   Financing Activities Tax benefit from exercise of stock options 33 - Repayment of line of credit balance - (1,000) Repurchase of common stock - (14) Dividends paid   (1,146)   - Cash used for financing activities   (1,113)   (1,014)   Increase (decrease) in cash and cash equivalents 634 (5,766)   Cash and cash equivalents at beginning of period 5,008 9,688           Cash and cash equivalents at end of period   $ 5,642   $ 3,922