We live in interesting financial times. Though unemployment is reaching record levels, firearms and ammo purchases have skyrocketed. It has become exceedingly difficult to find most common gun industry products in stock, and what little stock there is typically doesn’t last long. Amidst all of this chaos, TFB recently reported that America’s oldest gunmaker, Remington, has had to file for Chapter 11 bankruptcy protection for the second time in just two years. However, there is a vastly different story to be told at one of the industry’s other monoliths: Sturm, Ruger, and Co. In a July 29th press release, Ruger has announced that they have emerged from the second quarter of 2020 in fine fiscal form, and will even be paying investors a dividend. The release reads as follows.
Ruger Reports Big Q2 Increases, Declares $5 Special Dividend
Sturm, Ruger & Company, Inc. (NYSE: RGR) announced today that for the second quarter of 2020 the Company reported net sales of $130.3 million and diluted earnings of $1.05 per share, compared with net sales of $96.3 million and diluted earnings of 35¢ per share in the second quarter of 2019.
For the six months ended June 27, 2020, net sales were $253.9 million and diluted earnings were $1.91 per share. For the corresponding period in 2019, net sales were $210.4 million and diluted earnings were $1.09 per share.
The Company also announced today that its Board of Directors declared two dividends:
- a quarterly dividend of 42¢ per share based on the results of the second quarter, and
- a special dividend of $5.00 per share.
Both dividends are for shareholders of record as of August 14, 2020, and are payable on August 28, 2020.
Chief Executive Officer Christopher J. Killoy commented on the $5.00 per share special dividend, “Given our strong operational and financial performance, including our consistently positive cashflow, and our current cash balance of $227 million, we are returning some of our cash to shareholders. Our remaining cash holdings will allow us to continue to invest in capital expenditures in support of our commitment to new product development and innovation, maintain our quarterly dividend, and pursue opportunities that would further generate shareholder value.”
Mr. Killoy commented on the financial results for the second quarter of 2020, “Consumer demand, which began to surge in the latter stages on the first quarter, continued to intensify in the second quarter. This increased demand appears to be driven, in part, by concerns about personal protection and home defense stemming from the continuing COVID-19 pandemic; protests, demonstrations, and civil unrest in many cities throughout the United States; and the call, by some, for the reduction in funding and authority of various law enforcement organizations. As a result of this oversized demand, inventories were significantly reduced at all levels in the channel during the second quarter.”
Mr. Killoy commented on the COVID-19 pandemic and its impact on the Company, “The COVID-19 pandemic continues to cast uncertainty throughout the global economy. Nevertheless, any adverse financial impact on our business resulting from COVID-19 was negligible in the second quarter of 2020. Since its onset in March, we have remained proactive in maintaining the health and safety of our employees during this pandemic and mitigating its impact on our business. For example, we suspended hiring from March until June, when we were confident that we could resume onboarding in a safe and responsible manner for all involved. The future impact of COVID-19 remains unknown. We have been fortunate to have only limited restrictions on our operations thus far. Our financial strength, evidenced by our debt-free balance sheet, provides financial security and flexibility as we continue to manage through this crisis.”
Mr. Killoy made the following observations related to the Company’s second quarter 2020 performance:
- The estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 47% in the first half 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 65%. These substantial increases are attributable to increased consumer demand for firearms in the first half of 2020.
- 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 $48 million or 21% of firearm sales in the first half of 2020. New product sales include only major new products that were introduced in the past two years.
- During the second quarter of 2020, the Company’s finished goods inventory decreased 20,800 units and distributor inventories of the Company’s products decreased 106,500 units. In the aggregate, total Company and distributor inventories decreased by 57% during the quarter.
- Cash provided by operations during the first half of 2020 was $78.1 million. At June 27, 2020, our cash and short-term investments totaled $226.6 million. Our current ratio is 3.9 to 1 and we have no debt.
- In the first half of 2020, capital expenditures totaled $5.9 million. We expect our 2020 capital expenditures to total approximately $20 million, most of which relate to new product introductions.
- In the first half of 2020, the Company returned $9.3 million to its shareholders through the payment of dividends.
- At June 27, 2020, stockholders’ equity was $311.5 million, which equates to a book value of $17.80 per share, of which $12.95 per share was cash and short-term investments.
Today, the Company filed its Quarterly Report on Form 10-Q for the second quarter of 2020. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. – View Release.
Tomorrow, July 30, 2020, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the second quarter operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 3253225.
The Quarterly Report on Form 10-Q for the second 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 second quarter of 2020 to ensure that they have adequate information to make informed investment judgments.
It’s interesting to consider how vastly differently the current firearms market environment is playing out for Remington and Ruger. The good news for us shooters is that we should expect to continue being able to purchase our favorite Ruger firearms for the foreseeable future – at least, once our gun shops quit running out of stock so quickly. See you at the range!