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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports Second Quarter Earnings of 43¢ Per Share and Declares Dividend of 10¢ Per Share

Wednesday, July 28, 2010

Sturm, Ruger & Company, Inc. Reports Second Quarter Earnings of 43¢ Per Share and Declares Dividend of 10¢ Per Share17:00 EDT Wednesday, July 28, 2010 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE:RGR), announced today that for the second quarter of 2010, the Company reported net sales of $64.4 million and earnings per share of 43¢, compared with sales of $72.4 million and earnings per share of 46¢ in the second quarter of 2009. For the six months ended July 3, 2010, net sales were $132.7 million and earnings were 86¢ per share. For the corresponding period in 2009, net sales were $135.9 million and earnings were 76¢ per share. The Company also announced today that its Board of Directors declared a dividend of 10.0¢ per share for the second quarter, for shareholders of record as of August 13, 2010, payable on August 27, 2010. The amount of the dividend was based on a percentage of Operating Profit after adjustment for certain items, the same approach used by the Company since 2009. Under this approach, the amount of the quarterly dividend fluctuates directly with certain operating results of the Company. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's results of 2010: New product introductions remain a strong driver of demand and represented $42 million, or 32% of sales, in the first six months of 2010. The estimated sell-through of the Company's products from distributors to retailers in the first half of 2010 increased 1% from the first half of 2009, despite a reduction in National Instant Criminal Background Check System (NICS) background checks of 2% during this period. Cash generated from operations during the first half of 2010 was $17.8 million. At the end of the second quarter of 2010, our cash and equivalents totaled $58.7 million. Our current ratio is 4.0 to 1 and we have no debt. During the first half of 2010, capital expenditures totaled $12.6 million, much of it related to tooling and equipment for new products. We expect to invest approximately $18 to $20 million for capital expenditures during 2010. At the end of the second quarter of 2010, stockholders' equity was $109 million, which equates to a book value of $5.68 per share, of which $3.05 per share was cash and equivalents. For the third consecutive year, a Ruger handgun has been named the Shooting Industry Academy of Excellence "Handgun of the Year". The Ruger SR9c is the compact version of the SR9 striker-fired pistol, one of the slimmest and most ergonomic 9mm pistols on the market today. The Company filed its Quarterly Report on Form 10-Q for the second quarter of 2010. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. 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 Form 10-Q 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)           July 3, 2010   December 31, 2009     Assets   Current Assets Cash and cash equivalents $ 5,707 $ 5,008 Short-term investments 52,982 50,741 Trade receivables, net 22,383 25,049   Gross inventories 49,438 51,048 Less LIFO reserve (38,150 ) (38,663 ) Less excess and obsolescence reserve   (2,377 )   (2,727 ) Net inventories   8,911     9,658     Deferred income taxes 4,536 5,893 Prepaid expenses and other current assets   1,395     2,062   Total current assets 95,914 98,411   Property, plant and equipment 145,377 134,057 Less allowances for depreciation   (104,491 )   (101,324 ) Net property, plant and equipment   40,886     32,733     Deferred income taxes 5,627 6,190 Other assets   3,702     4,345   Total Assets   $146,129     $141,679       STURM, RUGER & COMPANY, INC.       July 3, 2010   December 31, 2009     Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 9,018 $ 12,011 Product liability 424 1,147 Employee compensation and benefits 8,556 12,890 Workers' compensation 5,489 5,443 Income taxes payable   384     1,543   Total current liabilities 23,871 33,034   Accrued pension liability 12,180 12,194 Product liability accrual 762 935 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 – 22,988,318 issued, 19,234,497 outstanding 2009 – 22,826,601 issued, 19,072,780 outstanding 22,988 22,827 Additional paid-in capital 8,109 8,031 Retained earnings 128,748 115,187 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   109,316     95,516   Total Liabilities and Stockholders' Equity   $146,129     $141,679     STURM, RUGER & COMPANY, INC.   Condensed Statements of Income (Unaudited) (Dollars in thousands, except per share data)     Three Months Ended   Six Months Ended July 3, 2010   July 4, 2009   July 3, 2010   July 4, 2009         Net firearms sales $63,621 $71,372 $130,891 $133,600 Net castings sales   768     1,018     1,775     2,320   Total net sales 64,389 72,390 132,666 135,920   Cost of products sold   42,649     47,358     87,794     91,362   Gross profit   21,740     25,032     44,872     44,558     Expenses: Selling 5,118 5,319 11,017 10,764 General and administrative 3,984 5,563 7,919 9,709 Other operating expenses, net   -     175     398     675   Total operating expenses   9,102     11,057     19,334     21,148     Operating income   12,638     13,975     25,538     23,410     Other income: Interest (expense) income, net (24 ) 39 (57 ) (40 ) Other income (expense), net   174     (14 )   301     (4 ) Total other income (expense), net   150     25     244     (44 )   Income before income taxes 12,788 14,000 25,782 23,366   Income taxes   4,604     5,320     9,281     8,879     Net income   $ 8,184     $ 8,680     $16,501     $14,487       Earnings per share Basic $0.43   $0.46   $0.86   $0.76   Diluted $0.42   $0.45   $0.85   $0.76     Average shares outstanding Basic 19,196   19,059   19,141   19,052   Diluted 19,504   19,272   19,333   19,110     Cash dividends per share $0.093   $0.086   $0.153   $0.086     STURM, RUGER & COMPANY, INC.   Condensed Statements of Cash Flows (Unaudited) (Dollars in thousands)   Six Months Ended July 3, 2010   July 4, 2009   Operating Activities Net income $ 16,501 $ 14,487 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 4,419 3,325 Slow moving inventory valuation adjustment (314 ) (302 ) Stock-based compensation 908 2,950 Loss on sale of assets 10 - Deferred income taxes 553 (380 ) Changes in operating assets and liabilities: Trade receivables 2,666 (1,725 ) Inventories 1,061 6,176 Trade accounts payable and accrued expenses (2,946 ) (797 ) Employee compensation (4,334 ) 2,269 Product liability (896 ) (68 ) Prepaid expenses, other assets and other liabilities 1,296 (769 ) Income taxes payable   (1,160 )   (1,715 ) Cash provided by operating activities   17,764     23,451     Investing Activities Property, plant and equipment additions (12,598 ) (6,829 ) Proceeds from sale of assets 16 - Purchases of short-term investments (76,977 ) (48,708 ) Proceeds from maturities of short-term investments   74,736     27,564   Cash used for investing activities   (14,823 )   (27,973 )   Financing Activities Tax benefit from exercise of stock options 698 1,378 Repayment of line of credit balance - (1,000 ) Repurchase of common stock - (14 ) Dividends paid   (2,940 )   (1,640 ) Cash used for financing activities   (2,242 )   (1,276 )   Increase (decrease) in cash and cash equivalents 699 (5,798 )   Cash and cash equivalents at beginning of period 5,008 9,688           Cash and cash equivalents at end of period   $ 5,707     $ 3,890