Sturm, Ruger & Company, Inc. Reports Third Quarter Diluted Earnings of $1.03 Per Share and Declares Quarterly Dividend of 41¢ Per Share

November 02, 2022

Sturm, Ruger & Company, Inc. (NYSE: RGR) announced today that for the third quarter of 2022 the Company reported net sales of $139.4 million and diluted earnings of $1.03 per share, compared with net sales of $178.2 million and diluted earnings of $1.98 per share in the third quarter of 2021.

For the nine months ended October 1, 2022, net sales were $446.6 million and diluted earnings were $3.90 per share. For the corresponding period in 2021, net sales were $562.7 million and diluted earnings were $6.64 per share.

The Company also announced today that its Board of Directors declared a dividend of 41¢ per share for the third quarter for stockholders of record as of November 16, 2022, payable on November 30, 2022. 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 third quarter of 2022, "Consumer demand remained consistent with the second quarter, which was below the level of demand in 2021, dampened in part by inflationary pressures which often constrain discretionary spending. This resulted in a 22% reduction in our sales from the prior year. Nevertheless, our continued focus on financial discipline and the cultivation of long-term shareholder value is evident in our strong, debt-free balance sheet."

Mr. Killoy discussed some of the Company's most recent new product introductions, "Our new product development teams continue to deliver innovative products, as evidenced by three exciting product launches in the third quarter:

• the LC Carbine, a companion carbine to the successful Ruger-5.7 pistol, both chambered in 5.7x28mm,
• the Small-Frame Autoloading Rifle, or SFAR, chambered in 7.62 NATO / .308 Win., which combines the ballistic advantages of .308 Win. with the compact size and light weight of a traditional modern sporting rifle, and
• the Marlin Model 1895 Guide Gun, chambered in 45-70 Govt, which is our first reintroduction in the Marlin Guide Gun family of lever-action rifles and our first introduction of an alloy steel Marlin rifle with a blued finish.

We remain hard at work and look forward to introducing additional Ruger and Ruger-made Marlin firearms."

Mr. Killoy made the following observations related to the Company's third quarter 2022 performance:

• The estimated unit sell-through of the Company's products from the independent distributors to retailers decreased 29% in the first nine months of 2022 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 14%. These decreases are attributable to decreased consumer demand for firearms from the unprecedented levels of the surge that began in 2020 and remained for most of 2021.
• Sales of new products, including the PC Charger, MAX-9 pistol, LCP MAX pistol, Marlin 1895 lever-action rifles, LC Carbine, and Small-Frame Autoloading Rifle represented $54.9 million or 13% of firearm sales in the first nine months of 2022. New product sales include only major new products that were introduced in the past two years. Several popular firearms that were considered new products in 2021, including the Wrangler revolver, Ruger-5.7 pistol, and LCP II in .22 LR pistol, have now been in production for over two years and are no longer included in new product sales for 2022.
• Our profitability declined in the third quarter of 2022 from the third quarter of 2021 as our gross margin decreased from 36% to 28%. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales, as well as inflationary cost increases in materials, commodities, services, energy, fuel and transportation, which were partially offset by increased pricing.
• During the third quarter of 2022, the Company's finished goods inventory and distributor inventories of the Company's products increased 8,900 units and 30,300 units, respectively.
• Cash provided by operations during the first nine months of 2022 was $50.3 million. At October 1, 2022, our cash and short-term investments totaled $215.2 million. Our current ratio is 5.8 to 1 and we have no debt.
• In the first nine months of 2022, capital expenditures totaled $17.2 million. We expect our 2022 capital expenditures related to new product introductions and upgrades to our manufacturing equipment and facilities to total approximately $25 million. In addition to these investments, in the fourth quarter of 2022 the Company purchased a 225,000 square foot facility in Mayodan, North Carolina for $8.3 million for use in its manufacturing and warehousing operations.
• In the first nine months of 2022, the Company returned $35.6 million to its shareholders, primarily through the payment of dividends.
• At October 1, 2022, stockholders' equity was $398.5 million, which equates to a book value of $22.56 per share, of which $12.18 per share was cash and short-term investments.

Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2022. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. - View Release

Tomorrow, November 3, 2022, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the third quarter operating results. Interested parties can listen to the webcast via this link or by visiting Ruger.com/corporate. Those who wish to ask questions during the webcast will need to pre-register prior to the meeting.

The Quarterly Report on Form 10-Q for the third quarter of 2022 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 third quarter of 2022 to ensure that they have adequate information to make informed investment judgments.