Business Wire | Feb 17, 2021 05:05PM EST

Sturm, Ruger & Company, Inc. Reports 2020 Diluted Earnings of $5.09 Per Share and Declares Dividend of 71 Per Share

Feb. 17, 2021

SOUTHPORT, Conn.--(BUSINESS WIRE)--Feb. 17, 2021--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2020 the Company reported net sales of $568.9 million and diluted earnings of $5.09 per share, compared with net sales of $410.5 million and diluted earnings of $1.82 per share in 2019.

For the fourth quarter of 2020, net sales were $169.3 million and diluted earnings were $1.78 per share. For the corresponding period in 2019, net sales were $105.1 million and diluted earnings were 46 per share.

The Company also announced today that its Board of Directors declared a dividend of 71 per share for the fourth quarter for stockholders of record as of March 12, 2021, payable on March 26, 2021. 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 reflected on the strong financial results for the year, "Our tremendous sales growth and profitability in 2020 was driven by the historic surge in consumer demand that began late in the first quarter and continued throughout the year. But that is only part of the story. Our ability to capitalize on this opportunity was only possible through the efforts of our remarkable workforce of 1,800 dedicated employees. I would be remiss if I did not mention the extraordinary work of our COVID-19 Task Force and our leadership teams at all of our facilities. They have risen to the daily challenges posed by the pandemic and have worked tirelessly, keeping our folks healthy and our facilities sanitized. I could not be prouder of everyone's performance. It truly was a team effort."

Mr. Killoy commented on 2021, "I am excited as we head into 2021. Our workforce has been strengthened by 250 folks since the middle of 2020, which drove a 30% increase in production during the latter half of the year. We look forward to launching new products that are sure to create excitement among shooters and we are hard at work getting the Marlin manufacturing cells established and look forward to broadening our catalog of rugged, reliable, and exciting products with the addition of Marlin lever action rifles in late 2021. And as a result of the unprecedented demand in 2020, inventories remain depleted throughout the channel, so inventory replenishment provides further opportunity."

Mr. Killoy made the following observations related to the Company's 2020 performance:

* In 2020, sales increased 39% from 2019 and the estimated unit sell-through of the Company's products from the independent distributors to retailers increased 44% from 2019. For the same period, the National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) increased 60%. These substantial increases are attributable to increased consumer demand for firearms in 2020, and have likely been constrained due to limited available inventory in the distribution channel.

* Sales of new products, including the Wrangler revolver, the Ruger-57 pistol, the LCP II in .22 LR pistol, the PC Charger, and the AR-556 pistol, represented $111 million or 22% of firearm sales in 2020. New product sales include only major new products that were introduced in the past two years.

* In 2020, the Company's finished goods inventory decreased 58,600 units and distributor inventories of the Company's products decreased 231,200 units. In the aggregate, total Company and distributor inventories decreased 86% in 2020.

* Cash provided by operations during 2020 was $143.8 million. At December 31, 2020, our cash and short-term investments totaled $141.2 million. Our current ratio is 2.9 to 1 and we have no debt.

* In 2020, capital expenditures totaled $24.2 million. In addition, the Company acquired substantially all of the Marlin Firearms assets for $28.3 million in November 2020. We expect our 2021 capital expenditures to total approximately $20 million, most of which relate to new product introductions. Our ability to shift manufacturing equipment between cells, and between facilities, improves overall utilization and allows for reduced capital investment.

* In 2020, the Company returned $113.9 million to its shareholders through the payment of dividends, reflecting the customary quarterly dividends and a special dividend of $5.00 per share that was paid in August.

* At December 31, 2020, stockholders' equity was $264.7 million, which equates to a book value of $15.13 per share, of which $8.07 per share was cash and short-term investments.

Today, the Company filed its Annual Report on Form 10-K for 2020. The financial statements included in this Annual Report on Form 10-K are attached to this press release.

Tomorrow, Thursday, February 18, 2021, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the 2020 operating results. Interested parties can access the webcast at Ruger.com/corporateor by dialing 855-871-7398, participant code 7579785.

The Annual Report on Form 10-K for 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 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. With products made in America, Ruger offers consumers almost 800 variations of more than 40 product lines. For more than 70 years, Ruger has been a model of corporate and community responsibility. Our motto, "Arms Makers for Responsible Citizens(r)," echoes our commitment to 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, 2020 2019



Assets

Current Assets

Cash and cash equivalents $ 20,147 $ 35,420

Short-term investments 121,007 129,488

Trade receivables, net 57,876 52,640



Gross inventories 80,487 79,011

Less LIFO reserve (48,016 ) (47,137 )

Less excess and obsolescence reserve (3,394 ) (3,573 )

Net inventories 29,077 28,301



Prepaid expenses and other current assets 6,266 3,467

Total Current Assets 234,373 249,316



Property, Plant, and Equipment 393,843 372,482

Less allowances for depreciation (323,110 ) (298,568 )

Net property, plant and equipment 70,733 73,914



Deferred income taxes 1,530 5,393

Other assets 41,622 20,338

Total Assets $ 348,258 $ 348,961

STURM, RUGER & COMPANY, INC.

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

December 31,

2020

2019

Liabilities and Stockholders' Equity

Current Liabilities

Trade accounts payable and accrued expenses

$ 37,078

$ 29,771

Contract liabilities with customers

84

9,623

Product liability

1,052

735

Employee compensation and benefits

37,275

14,273

Workers' compensation

6,272

5,619

Income taxes payable

-

1,223

Total Current Liabilities

81,761

61,244

Lease liability

1,724

2,176

Product liability accrual

74

83

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

2020 - 24,205,749 issued,

17,495,851 outstanding

2019 - 24,160,424 issued,

17,450,526 outstanding

24,206

24,160

Additional paid-in capital

43,468

38,683

Retained earnings

342,615

368,205

Less: Treasury stock - at cost

2020 - 6,709,898 shares

2019 - 6,709,898 shares

(145,590

)

(145,590

)

Total Stockholders' Equity

264,699

285,458

Total Liabilities and Stockholders' Equity

$ 348,258

$ 348,961

STURM, RUGER & COMPANY, INC.

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

December 31, 2020 2019



Liabilities and Stockholders' Equity

Current Liabilities



Trade accounts payable and accrued expenses $ 37,078 $ 29,771

Contract liabilities with customers 84 9,623

Product liability 1,052 735

Employee compensation and benefits 37,275 14,273

Workers' compensation 6,272 5,619

Income taxes payable - 1,223

Total Current Liabilities 81,761 61,244



Lease liability 1,724 2,176

Product liability accrual 74 83



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

2020 - 24,205,749 issued,

17,495,851 outstanding

2019 - 24,160,424 issued,

17,450,526 outstanding 24,206 24,160

Additional paid-in capital 43,468 38,683

Retained earnings 342,615 368,205

Less: Treasury stock - at cost

2020 - 6,709,898 shares

2019 - 6,709,898 shares (145,590 ) (145,590 )

Total Stockholders' Equity 264,699 285,458

Total Liabilities and Stockholders' Equity $ 348,258 $ 348,961

STURM, RUGER & COMPANY, INC.

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

Year ended December 31,

2020

2019

2018

Net firearms sales

$565,863

$406,326

$490,607

Net castings sales

3,005

4,180

5,028

Total net sales

568,868

410,506

495,635

Cost of products sold

377,427

310,958

361,277

Gross profit

191,441

99,548

134,358

Operating Expenses:

Selling

33,332

29,775

35,111

General and administrative

39,013

30,344

32,248

Other operating expense (income), net

(52

)

54

(10

)

Total operating expenses

72,293

60,173

67,349

Operating income

119,148

39,375

67,009

Other income:

Royalty income

814

698

804

Interest income

1,126

2,594

211

Interest expense

(191

)

(192

)

(330

)

Other income, net

84

552

1,020

Total other income, net

1,833

3,652

1,705

Income before income taxes

120,981

43,027

68,714

Income taxes

30,583

10,736

17,781

Net income and comprehensive income

$ 90,398

$ 32,291

$ 50,933

Basic Earnings Per Share

$5.17

$1.85

$2.92

Diluted Earnings Per Share

$5.09

$1.82

$2.88

Cash Dividends Per Share

$6.51

$0.82

$1.10

STURM, RUGER & COMPANY, INC.

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

Year ended December 31, 2020 2019 2018



Net firearms sales $565,863 $406,326 $490,607

Net castings sales 3,005 4,180 5,028

Total net sales 568,868 410,506 495,635



Cost of products sold 377,427 310,958 361,277



Gross profit 191,441 99,548 134,358



Operating Expenses:

Selling 33,332 29,775 35,111

General and administrative 39,013 30,344 32,248

Other operating expense (income), net (52 ) 54 (10 )

Total operating expenses 72,293 60,173 67,349



Operating income 119,148 39,375 67,009



Other income:

Royalty income 814 698 804

Interest income 1,126 2,594 211

Interest expense (191 ) (192 ) (330 )

Other income, net 84 552 1,020

Total other income, net 1,833 3,652 1,705



Income before income taxes 120,981 43,027 68,714



Income taxes 30,583 10,736 17,781



Net income and comprehensive income $ 90,398 $ 32,291 $ 50,933





Basic Earnings Per Share $5.17 $1.85 $2.92



Diluted Earnings Per Share $5.09 $1.82 $2.88



Cash Dividends Per Share $6.51 $0.82 $1.10

STURM, RUGER & COMPANY, INC.

Consolidated Statements of Cash Flows

(In thousands)

Year ended December 31,

2020

2019

2018

Operating Activities

Net income

$ 90,398

$ 32,291

$ 50,933

Adjustments to reconcile net income to cash

provided by operating activities:

Depreciation and amortization

27,576

29,331

31,972

Stock-based compensation

6,128

6,330

5,809

Excess and obsolescence inventory reserve

-

1,046

(185

)

(Gain) loss on sale of assets

(52

)

54

(10

)

Deferred income taxes

3,863

(2,424

)

(4,371

)

Changes in operating assets and liabilities:

Trade receivables

(5,236

)

(7,609

)

15,051

Inventories

10,624

2,073

8,479

Trade accounts payable and accrued expenses

7,954

(3,646

)

939

Contract liability to customers

(9,539

)

2,146

5,250

Employee compensation and benefits

20,910

(6,646

)

6,009

Product liability

308

(354

)

353

Prepaid expenses, other assets and other liabilities

(7,905

)

(888

)

(3,757

)

Income taxes payable

(1,223

)

(2,117

)

3,340

Cash provided by operating activities

143,806

49,587

119,812

Investing Activities

Property, plant, and equipment additions

(24,229

)

(20,296

)

(10,541

)

Purchase of Marlin assets

(28,316

)

-

-

Purchases of short-term investments

(369,439

)

(282,738

)

(114,259

)

Proceeds from maturity of short-term investments

377,920

267,576

-

Net proceeds from sale of assets

178

14

10

Cash used for investing activities

(43,886

)

(35,444

)

(124,790

)

Financing Activities

Dividends paid

(113,896

)

(14,319

)

(19,201

)

Repurchase of common stock

-

(1,995

)

-

Payment of employee withholding tax related to share-based compensation

(1,297

)

(901

)

(816

)

Cash used for financing activities

(115,193

)

(17,215

)

(20,017

)

Decrease in cash and cash equivalents

(15,273

)

(3,072

)

(24,995

)

Cash and cash equivalents at beginning of year

35,420

38,492

63,487

Cash and cash equivalents at end of year

$ 20,147

$ 35,420

$ 38,492

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 its financial performance.

STURM, RUGER & COMPANY, INC.

Consolidated Statements of Cash Flows

(In thousands)

Year ended December 31, 2020 2019 2018



Operating Activities

Net income $ 90,398 $ 32,291 $ 50,933

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 27,576 29,331 31,972

Stock-based compensation 6,128 6,330 5,809

Excess and obsolescence inventory reserve - 1,046 (185 )

(Gain) loss on sale of assets (52 ) 54 (10 )

Deferred income taxes 3,863 (2,424 ) (4,371 )

Changes in operating assets and liabilities:

Trade receivables (5,236 ) (7,609 ) 15,051

Inventories 10,624 2,073 8,479

Trade accounts payable and accrued expenses 7,954 (3,646 ) 939

Contract liability to customers (9,539 ) 2,146 5,250

Employee compensation and benefits 20,910 (6,646 ) 6,009

Product liability 308 (354 ) 353

Prepaid expenses, other assets and other (7,905 ) (888 ) (3,757 )liabilities

Income taxes payable (1,223 ) (2,117 ) 3,340

Cash provided by operating activities 143,806 49,587 119,812



Investing Activities

Property, plant, and equipment additions (24,229 ) (20,296 ) (10,541 )

Purchase of Marlin assets (28,316 ) - -

Purchases of short-term investments (369,439 ) (282,738 ) (114,259 )

Proceeds from maturity of short-term 377,920 267,576 - investments

Net proceeds from sale of assets 178 14 10

Cash used for investing activities (43,886 ) (35,444 ) (124,790 )



Financing Activities

Dividends paid (113,896 ) (14,319 ) (19,201 )

Repurchase of common stock - (1,995 ) -

Payment of employee withholding tax related to (1,297 ) (901 ) (816 )share-based compensation

Cash used for financing activities (115,193 ) (17,215 ) (20,017 )



Decrease in cash and cash equivalents (15,273 ) (3,072 ) (24,995 )

Cash and cash equivalents at beginning of year 35,420 38,492 63,487

Cash and cash equivalents at end of year $ 20,147 $ 35,420 $ 38,492

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 its financial performance.

Non-GAAP Reconciliation - EBITDA

EBITDA

(Unaudited, dollars in thousands)

Year ended December 31, 2020 2019



Net income $90,398 $32,291



Income tax expense 30,583 10,736

Depreciation and amortization expense 27,576 29,331

Interest expense 191 192

Interest income (1,126 ) (2,594 )

EBITDA $147,622 $69,956

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210217005964/en/

CONTACT: Sturm, Ruger & Company, Inc. One Lacey Place Southport, CT 06890 www.ruger.com 203-259-7843