Le Lézard
Classified in: Business, Sports and recreation
Subjects: EARNINGS, Conference Call, Webcast

Sturm, Ruger & Company, Inc. Reports 2018 Diluted Earnings of $2.88 Per Share and Declares Dividend of 28¢ Per Share


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.

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

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.

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.

   
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  
 
   
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  
 
     
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  
 
     
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  
 

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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