Sturm, Ruger & Company, Inc. Reports First Quarter Diluted Earnings of 81¢ Per Share and Declares Dividend of 32¢ Per Share

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the first quarter of 2018 the Company reported net sales of $131.2 million and diluted earnings of 81¢ per share, compared with net sales of $167.4 million and diluted earnings of $1.21 per share in the first quarter of 2017.

The Company also announced today that its Board of Directors declared a dividend of 32¢ per share for the first quarter for stockholders of record as of May 22, 2018, payable on June 1, 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. The repurchase of 1.3 million shares of common stock in 2017 increased this dividend by 2¢ per share.

Chief Executive Officer Christopher J. Killoy made the following observations related to the Company's 2018 first quarter performance:

• In the first quarter of 2018, net sales decreased 22% and earnings per share decreased 33% from the first quarter of 2017. 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.
• Effective January 1, 2018, the Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which modified the timing of revenue recognition related to certain sales promotion activities involving the shipment of no charge firearms. Consequently, net sales in the first quarter of 2018 were reduced by $2.4 million. In addition, certain promotional expenses that had been classified as selling expenses in prior years were included in cost of products sold in 2018. As a result, the first quarter gross margin was reduced by approximately 3% and earnings per share was reduced by approximately 4¢.
• The reduced effective tax rate in 2018, resulting from the Tax Cuts and Job Act of 2017, increased the quarterly diluted earnings per share by 11¢.
• The repurchase of 1.3 million shares of common stock in 2017 increased the quarterly diluted earnings per share by 6¢.
• Sales of new products, including the Pistol Caliber Carbine, the Mark IV pistol, the LCP II pistol, the EC9s pistol, the Security-9 pistol, and the Precision Rimfire Rifle, represented $37.2 million or 29% of firearm sales in the first quarter of 2018. New product sales include only major new products that were introduced in the past two years.
• The estimated unit sell-through of the Company's products from the independent distributors to retailers decreased 5% in the first quarter of 2018 from the comparable prior year period. For the same periods, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) increased 1%. 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 the early stages of the first quarter of 2018, partially offset by increased demand in the latter part of the quarter.
• Favorable distributor sell-through trends in the latter half of the quarter resulted in significant reductions of inventories at the Company and at the independent distributors. During the first quarter of 2018, the Company's finished goods inventory decreased by 51,900 units and distributor inventories of the Company's products decreased by 69,000 units.
• Cash generated from operations during the first quarter of 2018 was $45 million. At March 31, 2018, our cash totaled $103 million. Our current ratio is 3.0 to 1 and we have no debt.
• In the first quarter of 2018, capital expenditures totaled $1 million. We expect our 2018 capital expenditures to total approximately $15 million.
• In the first quarter of 2018, the Company returned $4 million to its shareholders through the payment of dividends.
• At March 31, 2018, stockholders' equity was $238 million, which equates to a book value of $13.67 per share, of which $5.89 per share is cash.

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

Tomorrow, May 9, 2018, Sturm, Ruger will host a webcast of its Annual Meeting of Shareholders at 9:00 a.m. MST (12:00 p.m. EDT) and plans to discuss the first quarter operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 4566028.

The Quarterly Report on Form 10-Q is available on the SEC website at Sec.gov and the Ruger website at 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.