Sturm, Ruger & Company, Inc. Reports 2022 Diluted Earnings of $4.96 Per Share and Declares Dividend of 42¢ Per Share

February 22, 2023

Sturm, Ruger & Company, Inc. (NYSE: RGR) announced today that for 2022 the Company reported net sales of $595.8 million and diluted earnings of $4.96 per share, compared with net sales of $730.7 million and diluted earnings of $8.78 per share in 2021.

For the fourth quarter of 2022, net sales were $149.2 million and diluted earnings were $1.06 per share. For the corresponding period in 2021, net sales were $168.0 million and diluted earnings were $2.14 per share.

The Company also announced today that its Board of Directors declared a dividend of 42¢ per share for the fourth quarter for stockholders of record as of March 10, 2023, payable on March 24, 2023. 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 year, "Consumer demand in 2022 was below the level of demand in 2021, dampened in part by inflationary pressures, which often constrain discretionary spending. This led to an 18% reduction in our sales from the prior year. Nevertheless, we are encouraged by our increased quarterly sales and production in the fourth quarter. Our disciplined approach and long-term focus yielded strong cash flow, investment in our new product development, and a robust, debt-free balance sheet."

Mr. Killoy reiterated the Company's commitment to new product development, "We continue to enhance our catalog of products with exciting and innovative new firearms that were met with strong demand in the marketplace. Our major new product launches in 2022 included:

• Marlin Model 1895 Guide Gun, chambered in 45-70 Govt, which was our first reintroduction in the Marlin Guide Gun family of lever-action rifles,
• Marlin Model 1895 Trapper stainless steel lever-action rifle, chambered in .45-70 Govt.,
• LC Carbine, chambered in 5.7x28mm, a companion to the Ruger-5.7 pistol,
• Security-380 Lite Rack Pistol, a full-featured pistol chambered in light-recoiling .380 Auto, and
• Small-Frame Autoloading Rifle, or SFAR, chambered in 7.62 NATO / .308 Win., which combines the ballistic advantages of .308 Win. with the size and weight of a traditional modern sporting rifle.

Mr. Killoy concluded by reaffirming the Company's capital philosophy, "Our focus on financial discipline and the cultivation of long-term shareholder value is unwavering. We continue to evaluate opportunities, but will pursue them only if they provide long-term value to our shareholders. When we believe our cash position significantly exceeds our foreseeable funding requirements for operations, including capital investment, quarterly dividends, and working capital needs, we will return cash to our shareholders, as we did most recently in January with a $5.00 per share special dividend."

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

• The estimated unit sell-through of the Company's products from the independent distributors to retailers decreased 25% in 2022 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 11%. 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. The greater reduction in the sell-through of the Company's products relative to adjusted NICS background checks may be attributable to the following:
  • More aggressive promotions, discounts, rebates, and the extension of payment terms offered by our competitors,
  • An apparent increase in sales of used firearms at retail, which are included in the adjusted NICS checks, but are not distinguished from new gun sales, and
  • Decreased retailer inventories as the anticipation of further discounting may be encouraging cautious buying behavior by retailers.
• Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin 1895 lever-action rifles, LC Carbine, PC Charger, and Small-Frame Autoloading Rifle represented $78.4 million or 14% of firearm sales in 2022. New product sales include only major new products that were introduced in the past two years.
• Our profitability declined in 2022 from 2021 as our gross margin decreased from 38% to 30%. 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.
• In 2022, the Company's finished goods inventory and distributor inventories of the Company's products increased 92,200 units and 134,200 units, respectively, returning to a reasonable level that will allow for the rapid fulfillment of retailer demand.
• Cash provided by operations during 2022 was $77.2 million. At December 31, 2022, our cash and short-term investments totaled $224.3 million. Our current ratio is 2.2 to 1 and we have no debt.
• In 2022, capital expenditures totaled $27.7 million related to new product introductions, upgrades to our manufacturing equipment and facilities, and the purchase of a previously leased 225,000 square foot facility in Mayodan, North Carolina for $8.3 million for use in the Company's manufacturing and warehousing operations.
• In 2022, the Company returned $42.9 million to its shareholders, primarily through the payment of dividends. An additional $88.3 million was returned to its shareholders on January 5, 2023 through the payment of a $5.00 per share special dividend to shareholders.
• At December 31, 2022, stockholders' equity was $316.7 million, which equates to a book value of $17.93 per share, of which $12.70 per share was cash and short-term investments.

Today, the Company filed its Annual Report on Form 10-K for 2022. The financial statements included in this Annual Report on Form 10-K are attached to this press release. - View Release

On Thursday, February 23, 2023, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the fourth quarter and year-end 2022 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 Annual Report on Form 10-K for 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 Annual Report on Form 10-K to ensure that they have adequate information to make informed investment judgments.