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Sturm Ruger Co Inc (RGR) SEC Filing 8-K Material Event for the period ending Wednesday, February 20, 2019

Sturm Ruger Co Inc

CIK: 95029 Ticker: RGR

EXHIBIT 99.1

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FOR IMMEDIATE RELEASE

 

 

STURM, RUGER & COMPANY, INC. REPORTS 2018

DILUTED EARNINGS OF $2.88 PER SHARE

AND DECLARES DIVIDEND OF 28¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, February 20, 2019--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2018 the Company reported net sales of $495.6 million and diluted earnings of $2.88 per share, compared with net sales of $522.3 million and diluted earnings of $2.91 per share in 2017.

For the fourth quarter of 2018, net sales were $121.1 million and diluted earnings were $0.69 per share. For the corresponding period in 2017, net sales were $118.2 million and diluted earnings were $0.59 per share.

The Company also announced today that its Board of Directors declared a dividend of 28¢ per share for the fourth quarter, for shareholders of record as of March 15, 2019, payable on March 29, 2019. 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.

 

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Chief Executive Officer Christopher J. Killoy made the following observations related to the Company’s 2018 results:

·In 2018, net sales decreased 5% from 2017, reflecting an apparent reduction in overall industry demand as evidenced by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation), which decreased 6% in the same period.

The estimated sell-through of the Company’s products from the independent distributors to retailers remained consistent with the prior year due in part to continuing demand for some of the Company’s products, particularly those that were introduced in December 2017.

·2018 earnings per share of $2.88, which were negatively impacted by the reduction in sales, benefited by the following:

 

oThe reduced effective tax rate in 2018, resulting from the Tax Cuts and Jobs Act of 2017, increased diluted earnings per share by 27¢.

 

oThe repurchase of 1.3 million shares of common stock in 2017 increased diluted earnings per share by 20¢.

 

·The comparison of earnings per share for 2018 to 2017 was impacted by 27¢ due to the change in the rates used to absorb overhead and direct labor expenses into inventory in each year:

 

oIn 2018, improved manufacturing efficiencies and favorable leveraging decreased the carrying cost of inventory $2.0 million and resulted in a corresponding increase to cost of products sold, which reduced 2018 earnings by 8¢.

 

oIn 2017, decreased manufacturing efficiencies increased the carrying cost of inventory $4.8 million and resulted in a corresponding decrease to cost of products sold, which increased 2017 earnings by 19¢.

 

·New products represented $145.6 million or 30% of firearms sales in 2018, compared to $137.8 million or 27% of firearms sales in 2017. New product sales include only major new products that were introduced in the past two years. In 2018, new products included the Pistol Caliber Carbine, the Precision Rimfire Rifle, the Mark IV pistol, the LCP II pistol, the Security-9 pistol, and the EC9s pistol.

 

·In 2018, the Company’s finished goods inventory decreased 23,000 units and distributor inventories of the Company’s products decreased 22,000. In the aggregate, total Company and distributor inventories decreased by 10% in 2018.

 

·Cash generated from operations during 2018 was $119.8 million. At December 31, 2018, our cash and short-term investments totaled $152.8 million. Our current ratio is 3.3 to 1 and we have no debt.

 

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·In 2018, capital expenditures totaled $10.5 million. We expect our 2019 capital expenditures to total approximately $25 million.

 

·In 2018, the Company returned $19.2 million to its shareholders through the payment of dividends.

 

·At December 31, 2018, stockholders’ equity was $264.2 million, which equates to a book value of $15.14 per share, of which $8.75 per share was cash and short-term investments.

 

Today, the Company filed its Annual Report on Form 10-K for 2018. The financial statements included in this Annual Report on Form 10-K are attached to this press release.

Tomorrow, February 21, 2019, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the 2018 operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 6481069.

The Annual Report on Form 10-K 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.

 

About Sturm, Ruger & Co., Inc.

Sturm, Ruger & Co., Inc. is one of the nation's leading manufacturers of rugged, reliable firearms for the commercial sporting market. As a full-line manufacturer of American-made firearms, Ruger offers consumers over 600 variations of more than 40 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.

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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.

 

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

 

December 31,  2018   2017 
         

Assets

 

          
Current Assets          
Cash and cash equivalents  $38,492   $63,487 
Short-term investments   114,326     
Trade receivables, net   45,031    60,082 
           
Gross inventories   80,288    87,592 
Less LIFO reserve   (46,341)   (45,180)
Less excess and obsolescence reserve   (2,527)   (2,698)
    Net inventories   31,420    39,714 
           
Prepaid expenses and other current assets   2,920    3,501 
Total Current Assets   232,189    166,784 
           
Property, Plant, and Equipment   358,756    365,013 
     Less allowances for depreciation   (276,045)   (261,218)
     Net property, plant and equipment   82,711    103,795 
           
Deferred income taxes   2,969     
Other assets   17,663    13,739 
Total Assets  $335,532   $284,318 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

 

December 31,  2018   2017 
         

Liabilities and Stockholders’ Equity

 

          
Current Liabilities          
           
Trade accounts payable and accrued expenses  $33,021   $32,422 
Contract liabilities with customers   7,477     
Product liability   1,073    729 
Employee compensation and benefits   20,729    14,315 
Workers’ compensation   5,551    5,211 
Income taxes payable   3,340     
Total Current Liabilities   71,191    52,677 
           
Product liability   99    90 
Deferred income taxes       1,402 
           
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
     2018 – 24,123,418 issued,
                  17,458,020 outstanding
     2017 – 24,092,488 issued,
                  17,427,090 outstanding
   24,123    24,092 
Additional paid-in capital   33,291    28,329 
Retained earnings   350,423    321,323 
Less: Treasury stock – at cost
     2018 – 6,665,398 shares
     2017 – 6,665,398 shares
   (143,595)   (143,595)
Total Stockholders’ Equity   264,242    230,149 
Total Liabilities and Stockholders’ Equity  $335,532   $284,318 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

 

Year ended December 31,  2018   2017   2016 
             
Net firearms sales  $490,607   $517,701   $658,433 
Net castings sales   5,028    4,555    5,895 
Total net sales   495,635    522,256    664,328 
                
Cost of products sold   361,277    368,248    444,774 
                
Gross profit   134,358    154,008    219,554 
                
Operating Expenses:               
Selling   35,111    49,232    56,146 
General and administrative   32,248    28,396    29,004 
Other operating (expense) income, net   (10)   31    (5)
Total operating expenses   67,349    77,659    85,145 
                
Operating income   67,009    76,349    134,409 
                
Other income:               
Royalty income   804    506    1,142 
Interest income   211    27    14 
Interest expense   (330)   (152)   (186)
Other income, net   1,020    916    542 
Total other income, net   1,705    1,297    1,512 
                
Income before income taxes   68,714    77,646    135,921 
                
Income taxes   17,781    25,504    48,449 
                
Net income and comprehensive income  $50,933   $52,142   $87,472 
                
                
Basic Earnings Per Share  $2.92   $2.94   $4.62 
                
Diluted Earnings Per Share  $2.88   $2.91   $4.59 
                
Cash Dividends Per Share  $1.10   $1.36   $1.73 

 

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STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Cash Flows

(In thousands)

 

Year ended December 31,  2018   2017   2016 
             
Operating Activities               
Net income  $50,933   $52,142   $87,472 
Adjustments to reconcile net income to cash
provided by operating activities:
               
Depreciation and amortization   31,972    34,264    35,355 
Stock-based compensation   5,809    3,659    3,054 
Excess and obsolescence inventory reserve   (185)   358    522 
Loss (gain) on sale of assets   (10)   31    59 
Deferred income taxes   (4,371)   1,736    1,836 
Changes in operating assets and liabilities:               
Trade receivables   15,051    9,360    2,279 
Inventories   8,479    14,463    (17,958)
Trade accounts payable and accrued expenses   939    (16,060)   5,602 
Contract liability to customers   5,250         
Employee compensation and benefits   6,009    (11,466)   (3,186)
Product liability   353    (1,000)   1,075 
Prepaid expenses, other assets and other liabilities   (3,757)   13,704    (6,348)
Income taxes payable   3,340        (4,962)
Cash provided by operating activities   119,812    101,191    104,800 
                
Investing Activities               
Property, plant, and equipment additions   (10,541)   (33,596)   (35,215)
Purchases of short-term investments   (114,259)        
Net proceeds from sale of assets   10    3    325 
Cash used for investing activities   (124,790)   (33,593)   (34,890)
                
Financing Activities               
Dividends paid   (19,201)   (23,905)   (32,815)
Tax benefit from share-based compensation           8,825 
Repurchase of common stock       (64,850)   (14,018)
Payment of employee withholding tax related to share-based compensation   (816)   (2,482)   (14,001)
Cash used for financing activities   (20,017)   (91,237)   (52,009)
                
(Decrease) increase in cash and cash equivalents   (24,995)   (23,639)   17,901 
Cash and cash equivalents at beginning of year   63,487    87,126    69,225 
Cash and cash equivalents at end of year  $38,492   $63,487   $87,126 

 

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Non-GAAP Financial Measure

 

In an effort to provide investors with additional information regarding its results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and one non-GAAP financial measure, EBITDA, which management believes provides useful information to investors. This non-GAAP measure may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measure should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA is useful to understanding its operating results and the ongoing performance of its underlying business, as EBITDA provides information on the Company’s ability to meet its capital expenditure and working capital requirements, and is also an indicator of profitability. The Company believes that this reporting provides better transparency and comparability to its operating results. The Company uses both GAAP and non-GAAP financial measures to evaluate the Company’s financial performance.

 

Non-GAAP Reconciliation – EBITDA

 

EBITDA

(Unaudited, dollars in thousands)

Year ended December 31,  2018   2017 
         
Net income  $50,933   $52,142 
           
Income tax expense   17,781    25,504 
Depreciation and amortization expense   31,972    34,264 
Interest expense   330    152 
Interest income   (211)   (27)
EBITDA  $100,805   $112,035 

 

EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. The Company calculates this by adding the amount of interest expense, income tax expense and depreciation and amortization expenses that have been deducted from net income back into net income, and subtracting the amount of interest income that was included in net income from net income to arrive at EBITDA. The Company’s EBITDA calculation also excludes any one-time non-cash, non-operating expense.

 

 

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Sturm Ruger Co Inc provided additional information to their SEC Filing as exhibits

Ticker: RGR
CIK: 95029
Form Type: 8-K Corporate News
Accession Number: 0001174947-19-000237
Submitted to the SEC: Wed Feb 20 2019 5:03:35 PM EST
Accepted by the SEC: Wed Feb 20 2019
Period: Wednesday, February 20, 2019
Industry: Ordnance And Accessories No Vehicles Guided Missiles
Events:
  1. Earnings Release
  2. Financial Exhibit

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