EX-99.1 2 rgr110513_99-1.htm PRESS RELEASE

EXHIBIT 99.1

 

FOR IMMEDIATE RELEASE

STURM, RUGER & COMPANY, INC. REPORTS THIRD QUARTER FULLY DILUTED

EARNINGS OF $1.44 PER SHARE AND DIVIDEND OF 58¢ PER SHARE

SOUTHPORT, CONNECTICUT, November 5, 2013--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the third quarter of 2013 the Company reported net sales of $170.9 million and fully diluted earnings of $1.44 per share, compared with net sales of $118.2 million and fully diluted earnings of 88¢ per share in the third quarter of 2012.

For the nine months ended September 28, 2013, net sales were $506.4 million and fully diluted earnings were $4.25 per share. For the corresponding period in 2012, net sales were $350.1 million and fully diluted earnings were $2.58 per share.

The Company also announced today that its Board of Directors declared a dividend of 58¢ per share for the third quarter, for shareholders of record as of November 15, 2013, payable on November 29, 2013. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

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Chief Executive Officer Michael O. Fifer made the following observations related to the Company’s results:

· Our earnings increased 64% from the third quarter of 2012, driven by the 45% growth in sales and our ongoing focus on continuous improvement in our operations.

· New product introductions were a significant component of our sales growth as new product sales represented $146.6 million or 32% of firearm sales in the first nine months of 2013. New product introductions in 2013 included the LC380 pistol, the SR45 pistol, and the Ruger American Rimfire rifle.

· Demand for our products outpaced the growth in overall industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for both the third quarter and nine months ended September 28, 2013 as illustrated below:

	Period ended September 28, 2013
	Q3	Nine months
Increase in estimated Ruger Units Sold from Distributors to Retailers	31%	26% (a)
Increase in total adjusted NICS Background Checks (thousands)	- %	22%

(a) Insufficient distributor inventory at December 31, 2012 severely limited the estimated sell-through from independent distributors to retailers in the first half of 2013.

· Cash generated from operations during the nine months ended September 28, 2013 was $84 million. At September 28, 2013, our cash totaled $54 million. Our current ratio is 1.8 to 1 and we have no debt.

· In the first nine months of 2013, capital expenditures totaled $31 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $40 million on capital expenditures during 2013.

· In the first nine months of 2013, the Company returned $30 million to its shareholders through the payment of dividends. An additional $11 million of dividends will be paid to shareholders on November 29, 2013.

· At September 28, 2013, stockholders’ equity was $152.6 million, which equates to a book value of $7.89 per share, of which $2.80 per share was cash and equivalents.

· On September 3, 2013, the Company announced that it finalized the purchase of a 220,000 square foot facility in Mayodan, North Carolina. This is the Company's first major expansion in over 25 years, and production at the new facility is expected to begin during the first quarter of 2014.

Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2013. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release.

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Tomorrow, November 6, 2013, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the third quarter operating results. Interested parties can access the webcast at www.ruger.com/corporate or www.earnings.com or by dialing 877-415-3183, participant code 45408758.

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

About Sturm, Ruger

Sturm, Ruger & Co., Inc. is one of the nation’s leading manufacturers of rugged, reliable firearms for the commercial sporting market. The only full-line manufacturer of American-made firearms, Ruger offers consumers over 400 variations of more than 30 product lines. For more than 60 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens,” echoes the importance of these principles as we work hard to deliver quality and innovative firearms.

The Company may, from time to time, make forward-looking statements and projections concerning future expectations. Such statements are based on current expectations and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company, the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

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STURM, RUGER & COMPANY, INC.

CONDENSED BALANCE SHEETS

(Dollars in thousands)

		September 28, 2013				December 31, 2012
Assets
Current Assets
Cash		$	54,256			$	30,978
Trade receivables, net			63,833				43,018
Gross inventories			61,079				55,827
Less LIFO reserve			(39,145	)			(38,089	)
Less excess and obsolescence reserve			(1,966	)			(1,729	)
Net inventories			19,968				16,009
Deferred income taxes			6,818				5,284
Prepaid expenses and other current assets			3,031				1,632
Total Current Assets			147,906				96,921
Property, plant and equipment			225,950				195,713
Less allowances for depreciation			(142,956	)			(129,720	)
Net property, plant and equipment			82,994				65,993
Deferred income taxes			—				2,004
Other assets			19,476				9,568
Total Assets		$	250,376			$	174,486

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STURM, RUGER & COMPANY, INC.

CONDENSED BALANCE SHEETS (Continued)

(Dollars in thousands, except share data)

		September 28, 2013				December 31, 2012
Liabilities and Stockholders’ Equity
Current Liabilities
Trade accounts payable and accrued expenses		$	39,555			$	38,500
Product liability			1,286				720
Employee compensation and benefits			31,659				15,182
Workers’ compensation			4,254				4,600
Income taxes payable			3,390				489
Total Current Liabilities			80,144				59,491
Accrued pension liability			17,223				19,626
Deferred income taxes			137				—
Product liability			279				337
Contingent liabilities			—				—
Stockholders’ Equity
Common Stock, non-voting, par value $1:
Authorized shares 50,000; none issued			—				—
Common Stock, par value $1:
Authorized shares – 40,000,000 2013 – 23,647,026 issued, 19,347,592 outstanding 2012 – 23,562,422 issued, 19,262,988 outstanding			23,647				23,563
Additional paid-in capital			19,296				15,531
Retained earnings			177,154				123,442
Less: Treasury stock – at cost 2013 and 2012 – 4,299,434 shares			(37,884	)			(37,884	)
Accumulated other comprehensive loss			(29,620	)			(29,620	)
Total Stockholders’ Equity			152,593				95,032
Total Liabilities and Stockholders’ Equity		$	250,376			$	174,486

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STURM, RUGER & COMPANY, INC.

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

		Three Months Ended								Nine Months Ended
		September 28, 2013				September 29, 2012				September 28, 2013				September 29, 2012
Net firearms sales		$	167,234			$	116,270			$	497,461			$	345,203
Net castings sales			3,708				1,882				8,915				4,854
Total net sales			170,942				118,152				506,376				350,057
Cost of products sold			108,002				75,587				311,403				220,565
Gross profit			62,940				42,565				194,973				129,492
Operating expenses:
Selling			9,662				7,891				37,250				27,998
General and administrative			8,207				7,271				24,967				21,153
Other operating expenses			287				166				49				377
Total operating expenses			18,156				15,328				62,266				49,528
Operating income			44,784				27,237				132,707				79,964
Other income:
Interest expense, net			(40	)			(18	)			(95	)			(62	)
Other income, net			408				319				769				800
Total other income, net			368				301				674				738
Income before income taxes			45,152				27,538				133,381				80,702
Income taxes			16,481				10,189				48,684				29,860
Net income and comprehensive income		$	28,671			$	17,349			$	84,697			$	50,842
Basic earnings per share		$	1.48			$	0.91			$	4.38			$	2.66
Fully diluted earnings per share		$	1.44			$	0.88			$	4.25			$	2.58
Cash dividends per share		$	0.650			$	0.377			$	1.544			$	0.913

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STURM, RUGER & COMPANY, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

		Nine Months Ended
		September 28, 2013				September 29, 2012
Operating Activities
Net income		$	84,697			$	50,842
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			14,177				10,151
Slow moving inventory valuation adjustment			237				446
Stock-based compensation			3,973				3,317
Gain on sale of assets			(99	)			(65	)
Deferred income taxes			607				(265	)
Changes in operating assets and liabilities:
Trade receivables			(20,815	)			(5,249	)
Inventories			(4,196	)			(3,599	)
Trade accounts payable and accrued expenses			709				2,571
Employee compensation and benefits			15,350				1,709
Product liability			508				(352	)
Prepaid expenses, other assets and other liabilities			(14,309	)			1,656
Income taxes payable			2,901				631
Cash provided by operating activities			83,740				61,793
Investing Activities
Property, plant and equipment additions			(30,600	)			(20,315	)
Proceeds from sale of assets			120				65
Purchases of short-term investments			—				(59,966	)
Proceeds from maturities of short-term investments			—				29,993
Cash used for investing activities			(30,480	)			(50,223	)
Financing Activities
Tax benefit from exercise of stock options and vesting of RSU’s			2,290				1,037
Remittance of taxes withheld from employees related to share-based compensation			(2,414	)			(1,045	)
Dividends paid			(29,858	)			(17,495	)
Cash used for financing activities			(29,982	)			(17,503	)
Increase (decrease) in cash and cash equivalents			23,278				(5,933	)
Cash and cash equivalents at beginning of period			30,978				81,056
Cash and cash equivalents at end of period		$	54,256			$	75,123

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