Sturm, Ruger & Company, Inc. Reports 2017 Diluted Earnings of $2.91 Per Share and Declares Dividend of 23¢ Per Share

February 21, 2018

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2017 the Company reported net sales of $522.3 million and diluted earnings of $2.91 per share, compared with net sales of $664.3 million and diluted earnings of $4.59 per share in 2016.

For the fourth quarter of 2017, net sales were $118.2 million and diluted earnings were $0.59 per share. The recently enacted "Tax Cuts and Jobs Act" positively impacted earnings by $0.03 per share. For the corresponding period in 2016, net sales were $161.8 million and diluted earnings were $1.10 per share.

The Company also announced today that its Board of Directors declared a dividend of 23¢ per share for the fourth quarter, for shareholders of record as of March 15, 2018, payable on March 30, 2018. This dividend varies every quarter because the Company pays a percentage of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Christopher J. Killoy made the following observations related to the Company's 2017 results:

• In 2017, net sales decreased 21% and earnings per share decreased 37% from 2016. The decrease in earnings is attributable to the sales decline and the unfavorable de-leveraging of fixed manufacturing costs due to the decline in production volumes.
• The estimated sell-through of the Company's products from the independent distributors to retailers decreased 17% in 2017 from 2016. For the same period, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) decreased 11%. The decrease in estimated sell-through of the Company's products from the independent distributors to retailers is attributable to:
  • Decreased overall consumer demand in 2017 due to stronger-than-normal demand during most of 2016, likely bolstered by the political campaigns for the November 2016 elections,
  • Reduced purchasing by retailers in an effort to reduce their inventories and generate cash,
  • Aggressive price discounting and lucrative consumer rebates offered by many of our competitors, and
  • Excess industry manufacturing capacity, which exacerbated the above factors.
• New products represented $137.8 million or 27% of firearms sales in 2017, compared to $192.6 million or 29% of firearms sales in 2016. New product sales include only major new products that were introduced in the past two years. In 2017, new products included the Precision Rifle, the Mark IV pistols, the LCP II pistol, and the American pistol. In December 2017, the Company introduced the Pistol Caliber Carbine, the Security-9 pistol, and the EC9s pistol. Due to the timing of these launches, these new products had only a minimal impact on the 2017 financial results.
• Cash generated from operations during 2017 was $101 million. At December 31, 2017, our cash totaled $63 million. Our current ratio is 3.2 to 1 and we have no debt.
• In 2017, capital expenditures totaled $34 million. We expect our 2018 capital expenditures to total approximately $15 million.
• In 2017, the Company returned $89 million to its shareholders through:
  • The payment of $24 million of dividends, and
  • The repurchase of 1.3 million shares of our common stock in the open market at an average price of $49.10 per share, for a total of $65 million.
• At December 31, 2017, stockholders' equity was $230.1 million, which equates to a book value of $13.21 per share, of which $3.64 per share was cash.

Today, the Company filed its Annual Report on Form 10-K for 2017. The financial statements included in this Annual Report on Form 10-K are attached to this press release. - View Release

Tomorrow, February 22, 2018, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the 2017 operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 9195594.

The Annual Report on Form 10-K is available on the SEC website at Sec.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Annual Report on Form 10-K to ensure that they have adequate information to make informed investment judgments.