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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports First Quarter Fully Diluted Earnings of $1.20 Per Share and Dividend of 49¢ Per Share

Monday, April 29, 2013

Sturm, Ruger & Company, Inc. Reports First Quarter Fully Diluted Earnings of $1.20 Per Share and Dividend of 49¢ Per Share

17:05 EDT Monday, April 29, 2013

SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the first quarter of 2013 the Company reported net sales of $155.9 million and fully diluted earnings of $1.20 per share, compared with net sales of $112.3 million and fully diluted earnings of 79¢ per share in the first quarter of 2012.

The Company also announced today that its Board of Directors declared a dividend of 49¢ per share for the first quarter, for shareholders of record as of May 10, 2013, payable on May 24, 2013. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Michael O. Fifer made the following observations related to the Company's results:

  • Our earnings increased 53% from the first quarter of 2012, driven by the 39% 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 $53.3 million or 35% of firearm sales in the first quarter of 2013. New product introductions in the first quarter of 2013 included the LC380 pistol and the SR45 pistol.
  • The estimated sell-through of our products from independent distributors to retailers in the first quarter of 2013 increased 12% from the first quarter of 2012. This estimated unit sell-through was effectively limited to first quarter production because distributor inventory totaled only 59,200 units at December 31, 2012. For reference, at December 31, 2011, the distributor inventory totaled 135,600 units, allowing Q1 2012 sell-through to exceed Q1 2012 production by 22%. During the first quarter of 2013, National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 46%.
  • Cash generated from operations during the first quarter of 2013 was $30.4 million. At March 30, 2013, our cash and cash equivalents totaled $45.6 million. Our current ratio is 1.6 to 1 and we have no debt.
  • In the first quarter of 2013, capital expenditures totaled $7.7 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $30 million for capital expenditures during 2013.
  • In the first quarter of 2013, the Company returned $7.8 million to its shareholders through the payment of dividends.
  • At March 30, 2013, stockholders' equity was $111.6 million, which equates to a book value of $5.78 per share, of which $2.36 per share was cash and equivalents.

Today, the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2013. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

Tomorrow, April 30, 2013, Sturm, Ruger will host a webcast at 12:00 p.m. EDT of its Annual Meeting of Stockholders. Interested parties can access the webcast at www.ruger.com/corporateor www.earnings.com or by dialing 800-295-4740, participant code 60546881.

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 Quarterly Report on 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

(Dollars in thousands)

 
   

March 30,
2013

 

December 31,
2012

 
Assets
 
Current Assets
Cash $ 45,611 $ 30,978
Trade receivables, net 59,482 43,018
 
Gross inventories 54,275 55,827
Less LIFO reserve (38,221 ) (38,089 )
Less excess and obsolescence reserve     (1,964 )     (1,729 )
Net inventories     14,090       16,009  
 
Deferred income taxes 7,521 5,284
Prepaid expenses and other current assets     1,101       1,632  
Total Current Assets 127,805 96,921
 
Property, plant and equipment 203,256 195,713
Less allowances for depreciation     (133,821 )     (129,720 )
Net property, plant and equipment     69,435       65,993  
 
Deferred income taxes 2,451 2,004
Other assets     11,784       9,568  
Total Assets   $ 211,475     $ 174,486  

STURM, RUGER & COMPANY, INC.    
 
CONDENSED BALANCE SHEETS (Continued)

(Dollars in thousands, except share data)

 
   

March 30,
2013

 

December 31,
2012

 
Liabilities and Stockholders' Equity
 
Current Liabilities
Trade accounts payable and accrued expenses $ 41,461 $ 38,500
Product liability 991 720
Employee compensation and benefits 19,163 15,182
Workers' compensation 4,475 4,600
Income taxes payable     14,622       489  
Total Current Liabilities 80,712 59,491
 
Accrued pension liability 18,873 19,626
Product liability 252 337
 
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
2013 – 23,618,934 issued,
19,319,500 outstanding
2012 – 23,562,422 issued,
19,262,988 outstanding 23,619 23,563
Additional paid-in capital 16,470 15,531
Retained earnings 139,053 123,442
Less: Treasury stock – at cost
2013 and 2012 – 4,299,434 shares

(37,884

)

(37,884 )
Accumulated other comprehensive loss     (29,620 )   (29,620 )
Total Stockholders' Equity     111,638     95,032  
Total Liabilities and Stockholders' Equity   $ 211,475   $ 174,486  

STURM, RUGER & COMPANY, INC.
 
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(In thousands, except per share data)

 
    Three Months Ended
March 30, 2013   March 31, 2012
 
 
Net firearms sales $ 153,440 $ 110,787
Net castings sales     2,465       1,550  
Total net sales 155,905 112,337
 
Cost of products sold 94,596 70,544
         
Gross profit     61,309       41,793  
 
Operating expenses:
Selling 15,764 10,999
General and administrative     8,443       6,378  
Total operating expenses     24,207       17,377  
 
Operating income     37,102       24,416  
 
Other income:
Interest expense, net (16 ) (23 )
Other income, net     265       178  
Total other income, net     249       155  
 
Income before income taxes 37,351 24,571
 
Income taxes     13,633       9,091  
 
Net income and comprehensive income   $ 23,718     $ 15,480  
 
Basic earnings per share   $ 1.23     $ 0.81  
 
Fully diluted earnings per share   $ 1.20     $ 0.79  
 
Cash dividends per share   $ 0.404     $ 0.212  

STURM, RUGER & COMPANY, INC.
 
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 
    Three Months Ended

March 30,
2013

 

March 31,
2012

 
Operating Activities
Net income $ 23,718 $ 15,480

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

Depreciation and amortization 4,501 3,388
Slow moving inventory valuation adjustment 235 (53 )
Stock-based compensation 1,330 928
Gain on sale of assets (70 ) -
Deferred income taxes (2,684 ) (1,365 )
Changes in operating assets and liabilities:
Trade receivables (16,464 ) (6,801 )
Inventories 1,684 2,649
Trade accounts payable and accrued expenses 2,836 2,611
Employee compensation and benefits 3,678 (4,238 )
Product liability 186 (65 )
Prepaid expenses, other assets and other liabilities (2,676 ) 5,119
Income taxes payable     14,133       4,188  
Cash provided by operating activities     30,407       21,841  
 
Investing Activities
Property, plant and equipment additions (7,705 ) (3,047 )
Proceeds from sale of assets 70 -
Purchases of short-term investments     -       (19,994 )
Cash used for investing activities     (7,635 )     (23,041 )
 
Financing Activities
Tax benefit from exercise of stock options 1,747 922

Remittance of taxes withheld from employees related to
share-based compensation

(2,082

)

(884

)

Dividends paid     (7,804 )     (4,059 )
Cash used for financing activities     (8,139 )     (4,021 )
 
Increase (decrease) in cash and cash equivalents 14,633 (5,221 )
 
Cash and cash equivalents at beginning of period 30,978 81,056
         
Cash and cash equivalents at end of period   $ 45,611     $ 75,835  

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

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