Sturm, Ruger & Company, Inc. Reports First Quarter Diluted Earnings of 87¢ Per Share And Declares Dividend of 35¢ Per Share

May 06, 2020

Sturm, Ruger & Company, Inc. (NYSE: RGR) announced today that for the first quarter of 2020 the Company reported net sales of $123.6 million and diluted earnings of 87¢ per share, compared with net sales of $114.0 million and diluted earnings of 74¢ per share in the first quarter of 2019.

The Company also announced today that its Board of Directors declared a dividend of 35¢ per share for the first quarter, for shareholders of record as of May 18, 2020, payable on June 1, 2020. 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 commented on the financial results for the first quarter of 2020, "Strong consumer demand, exciting new products, and reduced reliance on promotions led to improved earnings and cash flows, which strengthened our already robust debt-free balance sheet as we ended the quarter with $188 million of cash and short-term investments. In addition, inventories were reduced at both Ruger and at our distributors as retail demand outstripped available inventories, particularly in the latter weeks of the quarter."

Mr. Killoy commented on the COVID-19 pandemic and its impact on the Company, "The COVID-19 pandemic has created significant uncertainty and adversely impacted many industries throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the first quarter of 2020. Beginning in March, we took many proactive steps to maintain the health and safety of our employees and mitigate its impact on our business. These actions included:

• Providing all hourly employees with an additional two weeks of paid time off,
• Encouraging employees to work remotely, wherever possible, and implementing social distancing throughout each manufacturing facility, including in every manufacturing cell,
• Communicating with and assisting employees with potential health issues,
• Restricting visitor access to avoid introducing new people to the factory environment,
• Implementing additional cleaning, sanitizing and other health and safety processes to maintain a clean and safe workplace, and
• Manufacturing and donating personal protective equipment to hospitals, health care facilities, and police and fire departments in our local communities."

Mr. Killoy continued, "The impact of COVID-19 has increased in the past month, but we have been fortunate and have been able to keep all of our facilities safe and open with only limited restrictions on production. We are well positioned to manage through this global crisis as we continue to monitor and adjust our mitigation efforts daily. Our financial strength, evidenced by our debt-free balance sheet and our cash and short-term investments, which now exceed $200 million, coupled with our $40 million revolving credit facility provide added financial security and flexibility."

Mr. Killoy made the following observations related to the Company's first quarter 2020 performance:

• The estimated unit sell-through of the Company's products from the independent distributors to retailers increased 37% in the first quarter of 2020 compared to the prior year period. For the same period, the National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) increased 42%. These substantial increases are attributable to increased consumer demand for firearms in the first quarter of 2020, especially the latter stages.
• Sales of new products, including the Wrangler, the Ruger-57, the LCP II in .22 LR, the PC Charger, and the AR-556 pistol, represented $23.0 million or 20% of firearm sales in the first quarter of 2020. New product sales include only major new products that were introduced in the past two years.
• During the first quarter 2020, the Company's finished goods inventory decreased 35,500 units and distributor inventories of the Company's products decreased 77,900 units. In the aggregate, total Company and distributor inventories decreased by 34% during the quarter.
• Cash provided by operations during the first quarter of 2020 was $31.1 million. At March 28, 2020, our cash and short-term investments totaled $187.6 million. Our current ratio is 4.2 to 1 and we have no debt.
• In the first quarter of 2020, capital expenditures totaled $4.1 million. We expect our 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.
• In the first quarter of 2020, the Company returned $3.0 million to its shareholders through the payment of dividends.
• At March 28, 2020, stockholders' equity was $297.8 million, which equates to a book value of $17.03 per share, of which $10.73 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2020. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. - View Release

Tomorrow, May 7, 2020, Sturm, Ruger will host a webcast at 9:00 a.m. ET 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 9986785.

On Wednesday, May 13, 2020, Sturm, Ruger will hold its Annual Meeting of Stockholders live via the Internet at 9:00 a.m. ET. Stockholders will be able to participate in this virtual meeting by following the directions and using the control number supplied with their proxy materials.  Other interested parties may listen to the virtual meeting via the Internet at www.virtualshareholdermeeting.com/RGR2020.

The Quarterly Report on Form 10-Q for the first quarter of 2020 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 for the first quarter of 2020 to ensure that they have adequate information to make informed investment judgments.