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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports Third Quarter 2011 Earnings of 57¢ Per Share and Declares Dividend of 14.1¢ Per Share

Wednesday, November 02, 2011

Sturm, Ruger & Company, Inc. Reports Third Quarter 2011 Earnings of 57¢ Per Share and Declares Dividend of 14.1¢ Per Share17:05 EDT Wednesday, November 02, 2011 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE-RGR), announced today that for the third quarter 2011, the Company reported net sales of $80.5 million and earnings of 57¢ per share, compared with net sales of $58.4 million and earnings of 32¢ per share in 2010. For the nine months ended October 1, 2011, net sales were $235.6 million and earnings were $1.56 per share. For the corresponding period in 2010, net sales were $191.1 million and earnings were $1.18 per share. The Company also announced today that its Board of Directors voted to declare a quarterly dividend of 14.1¢ per share on the Company's issued and outstanding shares of common stock. This cash dividend will be paid on November 28, 2011 to stockholders of record as of November 14, 2011. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's results:     •   Our earnings increase of 78% was driven by the 38% increase in sales and our ongoing focus on continuous improvement in our operations.   • Demand for our products outpaced the growth in overall industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for both the third quarter and nine months ended October 1, 2011 as illustrated below:                 Period ended October 1, 2011 Q3 Nine months Increase in estimated Ruger Units Sold from Distributors to Retailers 23% 19%   Increase in total adjusted NICS Background Checks (thousands) 12% 13%     •   We believe the growth in estimated unit sell-through from distributors to retailers was greater than the growth in Adjusted NICS background checks in both periods due largely to the popularity of the new products introduced in 2011, including the following:                 •   LC9 pistol, • SR1911 pistol, • Single-Ten revolver, • SR40c pistol, and • SP-101 double-action revolver chambered in 22LR.       New products represented $26.2 million or 33% of sales in the third quarter of 2011, and $75.0 million or 32% of sales in the nine months ended October 1, 2011.   • Cash provided by operating activities was $43.0 million for the nine months ended October 1, 2011.   • During the first nine months of 2011, capital expenditures totaled $12.2 million, much of it related to tooling and equipment for new products. We expect to invest approximately $15 million to $18 million for capital expenditures during 2011.   • At October 1, 2011, our cash and equivalents and short-term investments totaled $79.3 million, an increase of $21.7 million since the beginning of the year. Our current ratio is 3.3 to 1 and we have no debt.   • At October 1, 2011, stockholders' equity was $136.9 million, which equates to a book value of $7.19 per share, of which $4.17 per share was cash and equivalents and short-term investments.   • During the first nine months of 2011, we returned $7.5 million to our shareholders through:                   1.   The payment of $5.5 million of dividends, and   2. The repurchase of 133,400 shares of our common stock in the open market at an average price of $14.94 per share, for a total of $2.0 million.     •   As of the end of the third quarter of 2011, $8.0 million remained available for future stock repurchases.   • In May, the Company announced the Ruger Million Gun Challenge to benefit the National Rifle Association. To the best of our knowledge, no firearm manufacturer has ever built and shipped one million units in one year, and Ruger is attempting to be the first company ever to do so. Supporting this goal, Ruger will donate $1 to the NRA for every Ruger firearm sold from April 2011 through March 2012, with the goal of selling one million Ruger firearms and donating $1 million to the NRA. Ruger made its first Million Gun Challenge donation of $279,600 in July, and will donate an additional $276,500 in the fourth quarter. Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2011. 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, 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)   October 1,   December 31,   2011   2010     Assets   Current Assets Cash and cash equivalents $ 53,344 $ 5,132 Short-term investments 25,998 52,493 Trade receivables, net 33,421 31,565   Gross inventories 46,137 48,820 Less LIFO reserve (37,101 ) (37,448 ) Less excess and obsolescence reserve   (1,281 )     (1,545 ) Net inventories   7,755       9,827     Deferred income taxes 4,871 4,780 Prepaid expenses and other current assets   1,355       1,427   Total Current Assets 126,744 105,224   Property, plant and equipment 160,568 150,379 Less allowances for depreciation   (114,267 )     (107,458 ) Net property, plant and equipment   46,301       42,921   Deferred income taxes 3,976 5,443 Other assets   8,654       4,173   Total Assets $ 185,675     $ 157,761     STURM, RUGER & COMPANY, INC.   Condensed Balance Sheets (Unaudited) (Continued) (Dollars in thousands, except share data)       October 1,   December 31,       2011   2010     Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 19,790 $ 16,492 Product liability 1,062 449 Employee compensation and benefits 11,930 10,923 Workers' compensation 4,466 4,893 Income taxes payable     1,729   582 Total Current Liabilities 38,977 33,339   Accrued pension liability 9,366 9,369 Product liability accrual 414 573   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 2011 – 23,337,489 issued, 19,038,055 outstanding 2010 – 23,003,285 issued, 18,837,251 outstanding 23,337 23,003 Additional paid-in capital 9,966 9,885 Retained earnings 161,147 137,125 Less: Treasury stock – at cost 2011 – 4,299,434 shares 2010 – 4,166,034 shares (37,884) (35,885) Accumulated other comprehensive loss     (19,648)   (19,648) Total Stockholders' Equity     136,918   114,480 Total Liabilities and Stockholders' Equity     $185,675   $157,761   STURM, RUGER & COMPANY, INC.   Condensed Statements of Income (Unaudited)(Dollars in thousands, except per share data)         Three Months Ended   Nine Months Ended     October 1,   October 2,   October 1,   October 2,   2011       2010       2011       2010       Net firearms sales $ 79,214 $ 57,505 $ 232,126 $ 188,396 Net castings sales       1,298       896       3,449       2,671   Total net sales 80,512 58,401 235,575 191,067   Cost of products sold 51,385 39,818 153,989 127,613                     Gross profit       29,127       18,583       81,586       63,454     Operating expenses: Selling 6,581 5,194 19,961 16,211 General and administrative 5,659 4,080 15,218 11,999 Other operating expenses, net       -       -       -       398   Total operating expenses       12,240       9,274       35,179       28,608     Operating income       16,887       9,309       46,407       34,846     Other income: Interest expense, net (21 ) (18 ) (54 ) (75 ) Other income, net       177       148       466       449   Total other income, net       156       130       412       374     Income before income taxes 17,043 9,439 46,819 35,220   Income taxes       6,306       3,398       17,323       12,679     Net income     $ 10,737     $ 6,041     $ 29,496     $ 22,541     Basic earnings per share     $ 0.57     $ 0.32     $ 1.56     $ 1.18     Fully diluted earnings per share     $ 0.56     $ 0.31     $ 1.55     $ 1.17     Cash dividends per share     $ 0.142     $ 0.100     $ 0.289     $ 0.253     STURM, RUGER & COMPANY, INC.   Condensed Statements of Cash Flows (Unaudited)(Dollars in thousands)         Nine Months Ended     October 1,   October 2, 2011   2010   Operating Activities Net income $ 29,496 $ 22,541 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 8,792 6,863 Slow moving inventory valuation adjustment (35 ) (692 ) Stock-based compensation 2,110 1,711 Loss (Gain) on sale of assets (82 ) 5 Deferred income taxes 1,376 649 Changes in operating assets and liabilities: Trade receivables (1,856 ) (885 ) Inventories 2,107 (165 ) Trade accounts payable and accrued expenses 2,870 (1,477 ) Employee compensation and benefits 1,007 (3,905 ) Product liability 454 (995 ) Prepaid expenses, other assets and other liabilities (4,419 ) 933 Income taxes payable       1,147       (1,085 ) Cash provided by operating activities       42,967       23,498     Investing Activities Property, plant and equipment additions (12,209 ) (16,416 ) Proceeds from sale of assets 127 21 Purchases of short-term investments (122,978 ) (112,473 ) Proceeds from maturities of short-term investments       149,473       115,722   Cash provided by (used for) investing activities       14,413       (13,146 )   Financing Activities Tax benefit from exercise of stock options 3,087 698 Repurchase of common stock (1,999 ) (5,717 ) Payment of employee withholding tax related to share-based compensation (4,782 ) - Dividends paid       (5,474 )     (4,849 ) Cash used for financing activities       (9,168 )     (9,868 )   Increase in cash and cash equivalents 48,212 484   Cash and cash equivalents at beginning of period 5,132 5,008             Cash and cash equivalents at end of period     $ 53,344     $ 5,492   Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT 06890www.ruger.com203-259-7843