Sturm, Ruger & Company, Inc. Reports Third Quarter Diluted Earnings of 53¢ Per Share and Declares Dividend of 21¢ Per Share

October 31, 2017

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the third quarter of 2017 the Company reported net sales of $104.8 million and diluted earnings of 53¢ per share, compared with net sales of $161.4 million and diluted earnings of $1.03 per share in the third quarter of 2016.

For the nine months ended September 30, 2017, net sales were $404.0 million and diluted earnings were $2.32 per share. For the corresponding period in 2016, net sales were $502.5 million and diluted earnings were $3.48 per share.

The Company also announced today that its Board of Directors declared a dividend of 21¢ per share for the third quarter for stockholders of record as of November 15, 2017, payable on November 30, 2017. 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 2017 third quarter performance:

• In the third quarter of 2017, net sales decreased 35% and earnings per share decreased 50% from the third quarter of 2016. The decrease in earnings is attributable to the sales decline and the unfavorable de-leveraging of fixed manufacturing costs due to the decline in production volumes.
• Sales of new products, including the Mark IV pistols, the LCP II pistol, and the Precision Rifle, represented $118.8 million or 30% of firearm sales in the first nine months of 2017. New product sales include only major new products that were introduced in the past two years.
• The estimated unit sell-through of the Company's products from the independent distributors to retailers decreased 25% and 16% in three and nine months ended September 30, 2017 from the comparable prior year periods. For the same periods, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) decreased 16% and 10%. The decrease in estimated sell-through of the Company’s products from the independent distributors to retailers is attributable to:
  • Decreased overall consumer demand in 2017 due to stronger-than-normal demand during most of 2016, likely bolstered by the political campaigns for the November 2016 elections,
  • Reduced purchasing by retailers in an effort to lower their inventories and generate cash,
  • Aggressive price discounting and lucrative consumer rebates offered by many of our competitors, and
  • Increased industry manufacturing capacity, which exacerbates the above factors.
• Cash generated from operations during the first nine months of 2017 was $59 million. At September 30, 2017, our cash totaled $45 million. Our current ratio is 2.8 to 1 and we have no debt.
• In the first nine months of 2017, capital expenditures totaled $13 million. We expect our 2017 capital expenditures to total approximately $30 million.
• In the first nine months of 2017, the Company returned $85 million to its shareholders through:
  • the payment of $20 million of dividends, and
  • the repurchase of 1.3 million shares of common stock in the open market at an average price of $49.10 per share, for a total of $65 million.
• At September 30, 2017, stockholders' equity was $223 million, which equates to a book value of $12.77 per share, of which $2.60 per share is cash.

Today, the Company filed its Quarterly Report on Form 10-Q. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. - View Release

Tomorrow, November 1, 2017, 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 Ruger.com/corporate or by dialing 855-871-7398, participant code 99533519.

The Quarterly Report on Form 10-Q 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 to ensure that they have adequate information to make informed investment judgments.