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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports First Quarter 2012 Fully Diluted Earnings of 79¢ Per Share

Tuesday, May 01, 2012

Sturm, Ruger & Company, Inc. Reports First Quarter 2012 Fully Diluted Earnings of 79¢ Per Share17:05 EDT Tuesday, May 01, 2012 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE-RGR), announced today that for the first quarter 2012, the Company reported net sales of $112.3 million and fully diluted earnings of 79¢ per share, compared with sales of $75.4 million and fully diluted earnings of 42¢ per share in the first quarter of 2011. The Company also announced today that its Board of Directors declared a dividend of 32.4¢ per share for the first quarter, for shareholders of record as of May 14, 2012, payable on May 29, 2012. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. Effective with the dividend paid in March 2012, the Company increased the percent of quarterly earnings paid out as dividends by 67%. This dividend is approximately 40% of our net income. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's results: Our earnings nearly doubled from the first quarter of 2011, driven by the 49% growth in sales and our ongoing focus on continuous improvement in our operations. New product introductions were a significant component of our sales growth as new product sales represented $40.8 million or 37% of sales in the first quarter of 2012. New product introductions in the first quarter of 2012 included: Ruger American Rifle SR22 pistol 10/22 Take Down rifle The estimated sell-through of our products from independent distributors to retailers in 2012 increased 62% from the first quarter of 2011. During this period, National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 23%. On March 21, 2012, the Company announced that it temporarily suspended the acceptance of new orders. In the first quarter of 2012, orders for 1.2 million units were received by the Company, which exceeded the total units shipped during 2011. The Company anticipates resuming the acceptance of orders at the end of May 2012. Cash generated from operations during the first quarter of 2012 was $21.8 million. At March 31, 2012, our cash, cash equivalents, and short-term investments totaled $95.8 million, an increase of $14.7 million from December 2011. Our current ratio is 3.1 to 1 and we have no debt. In the first quarter of 2012, capital expenditures totaled $3.0 million. We expect to invest approximately $20 million for capital expenditures during 2012. At March 31, 2012, stockholders' equity was $149.8 million, which equates to a book value of $7.82 per share, of which $5.01 per share was cash and equivalents. On March 31, 2012, the Company completed the fourth and final quarter of its “1.2 Million Gun Challenge to Benefit the NRA.” During this year-long challenge, Ruger donated a total of $1,253,700 to the NRA. We believe that Ruger is the first firearms manufacturer to build and ship more than one million firearms in one year. Today, the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2012. 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)     March 31, 2012   December 31, 2011     Assets   Current Assets Cash and cash equivalents $ 75,835 $ 81,056 Short-term investments 19,994 - Trade receivables, net 49,026 42,225   Gross inventories 46,264 49,004 Less LIFO reserve (37,405 ) (37,476 ) Less excess and obsolescence reserve   (1,238 )     (1,311 ) Net inventories   7,621       10,217     Deferred income taxes 6,861 5,776 Prepaid expenses and other current assets   1,025       6,968   Total Current Assets 160,362 146,242   Property, plant and equipment 171,869 169,142 Less allowances for depreciation   (119,252 )     (116,195 ) Net property, plant and equipment   52,617       52,947   Deferred income taxes 312 32 Other assets   8,102       7,289   Total Assets $ 221,393     $ 206,510     STURM, RUGER & COMPANY, INC.   Condensed Balance Sheets (Unaudited) (Continued)(Dollars in thousands, except share data)     March 31, 2012   December 31, 2011     Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 31,075 $ 28,592 Product liability 1,283 1,305 Employee compensation and benefits 10,644 14,882 Workers' compensation 4,728 4,600 Income taxes payable   4,405       217   Total Current Liabilities 52,135 49,596   Accrued pension liability 19,082 19,082 Product liability accrual 398 441   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 2012 – 23,445,371 issued, 19,145,937 outstanding 2011 – 23,382,566 issued, 19,083,132 outstanding 23,445 23,383 Additional paid-in capital 11,358 10,454 Retained earnings 180,402 168,981 Less: Treasury stock – at cost 2012 – 4,299,434 shares 2011 – 4,299,434 shares (37,884 ) (37,884 ) Accumulated other comprehensive loss   (27,543 )     (27,543 ) Total Stockholders' Equity   149,778       137,391   Total Liabilities and Stockholders' Equity $ 221,393     $ 206,510     STURM, RUGER & COMPANY, INC.   Condensed Statements of Income and Comprehensive Income (Unaudited)(Dollars in thousands, except per share data)     Three Months Ended March 31, 2012   April 2, 2011     Net firearms sales $ 110,787 $ 74,441 Net castings sales   1,550       1,000 Total net sales 112,337 75,441   Cost of products sold 70,544 51,446         Gross profit   41,793       23,995   Operating expenses: Selling 10,999 6,912 General and administrative   6,378       4,625 Total operating expenses   17,377       11,537   Operating income   24,416       12,458   Other income: Interest (expense) income, net (23 ) 50 Other income, net   178       106 Total other income, net   155       156   Income before income taxes 24,571 12,614   Income taxes   9,091       4,667   Net income and comprehensive income $ 15,480     $ 7,947   Basic earnings per share $ 0.81     $ 0.42   Fully diluted earnings per share $ 0.79     $ 0.42   Cash dividends per share $ 0.212     $ 0.050   STURM, RUGER & COMPANY, INC.   Condensed Statements of Cash Flows (Unaudited)(Dollars in thousands)     Three Months Ended March 31, 2012   April 2, 2011   Operating Activities Net income $ 15,480 $ 7,947 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 3,388 2,930 Slow moving inventory valuation adjustment (53 ) (125 ) Stock-based compensation 928 459 Gain on sale of assets - (7 ) Deferred income taxes (1,365 ) (1,556 ) Changes in operating assets and liabilities: Trade receivables (6,801 ) 1,135 Inventories 2,649 6,404 Trade accounts payable and accrued expenses 2,611 3,319 Employee compensation and benefits (4,238 ) (2,384 ) Product liability (65 ) 172 Prepaid expenses, other assets and other liabilities 5,119 (472 ) Income taxes payable   4,188       2,914   Cash provided by operating activities   21,841       20,736     Investing Activities Property, plant and equipment additions (3,047 ) (4,306 ) Proceeds from sale of assets - 7 Purchases of short-term investments (19,994 ) (61,483 ) Proceeds from maturities of short-term investments   -       46,994   Cash used for investing activities   (23,041 )     (18,788 )   Financing Activities Tax benefit from exercise of stock options 922 1,247 Repurchase of common stock - (1,999 ) Payment of employee withholding tax related to share-based compensation (884 ) - Dividends paid   (4,059 )     (938 ) Cash used for financing activities   (4,021 )     (1,690 )   (Decrease) Increase in cash and cash equivalents (5,221 ) 258   Cash and cash equivalents at beginning of period 81,056 5,132         Cash and cash equivalents at end of period $ 75,835     $ 5,390   Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT 06890www.ruger.com203-259-7843