Form 8-K STURM RUGER & CO INC For: Jul 28

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported)

July 28, 2015

 

 

STURM, RUGER & COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

DELAWARE (State or Other Jurisdiction of Incorporation)

001-10435 (Commission File Number)

06-0633559 (IRS Employer Identification Number)

 

 

ONE LACEY PLACE, SOUTHPORT, CONNECTICUT	06890
(Address of Principal Executive Offices)	(Zip Code)

 

 

Registrant’s telephone number, including area code (203) 259-7843

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02

Results of Operations and Financial Condition

 

On July 28, 2015, the Company issued a press release to stockholders and other interested parties regarding financial results for the second quarter ended June 27, 2015. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

Exhibit No.

Description

 

99.1

Press release of Sturm, Ruger & Company, Inc., dated July 28, 2015, reporting the financial results for the second quarter ended June 27, 2015.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

		STURM, RUGER & COMPANY, INC.
		By:	/S/ THOMAS A. DINEEN
			Name:	Thomas A. Dineen
			Title:	Principal Financial Officer,
				Principal Accounting Officer,
				Vice President, Treasurer and
				Chief Financial Officer

 

 

Dated: July 28, 2015

 

EXHIBIT 99.1

 

 

 

 

 

 

 

FOR IMMEDIATE RELEASE

 

STURM, RUGER & COMPANY, INC. REPORTS SECOND QUARTER

FULLY DILUTED EARNINGS OF 91¢ PER SHARE

AND DECLARES DIVIDEND OF 36¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, July 28, 2015--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2015 the Company reported net sales of $140.9 million and fully diluted earnings of 91¢ per share, compared with net sales of $153.7 million and fully diluted earnings of $1.12 per share in the second quarter of 2014.

For the six months ended June 27, 2015, net sales were $277.8 million and fully diluted earnings were $1.71 per share. For the corresponding period in 2014, net sales were $323.5 million and fully diluted earnings were $2.34 per share.

The Company also announced today that its Board of Directors declared a dividend of 36¢ per share for the second quarter for stockholders of record as of August 14, 2015, payable on August 28, 2015. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Michael O. Fifer made the following observations related to the Company’s 2015 second quarter performance:

·

In the second quarter of 2015, net sales increased 3% and earnings increased 14% from the first quarter of 2015.

 

·

New products, including the AR-556 modern sporting rifle and the LC9s pistol, represented $47.7 million or 17% of firearm sales in the first half of 2015. New product sales include only major new products that were introduced in the past two years. The recently introduced Ruger Precision Rifle did not begin to ship until July, and therefore did not impact the second quarter’s results.

 

·

In the second quarter of 2015, the estimated sell-through of the Company’s products from the independent distributors to retailers decreased 22% from the first quarter of 2015. The National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) decreased 21% during the same period.

 

·

Inventory of the Company’s products at the independent distributors increased by 63,500 units during the second quarter of 2015 and the Company’s finished goods inventory increased by 44,100 units during the same period.

 

·

Cash generated from operations during the six months ended June 27, 2015 was $80.9 million. At June 27, 2015, our cash totaled $61.1 million. Our current ratio is 2.2 to 1 and we have no debt.

 

·

In the first half of 2015, capital expenditures totaled $16.3 million, much of it related to tooling and equipment for new products. We expect our 2015 capital expenditures to total approximately $30 million.

 

·

In the first half of 2015, the Company returned $12.0 million to its shareholders through:

 

§

the payment of $9.2 million of dividends, and

§

the repurchase of 82,100 shares of our common stock in the open market at an average price of $34.57 per share, for a total of $2.8 million.

 

·

At June 27, 2015, stockholders’ equity was $208.0 million, which equates to a book value of $11.12 per share, of which $3.27 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.

Tomorrow, July 29, 2015, 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 www.ruger.com/corporate or by dialing 866-318-8615, participant code 30947759.

The Quarterly Report on Form 10-Q is available on the SEC website at www.sec.gov and the Ruger website at www.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.

 

About Sturm, Ruger

Sturm, Ruger & Co., Inc. is one of the nation’s leading manufacturers of rugged, reliable firearms for the commercial sporting market. The only full-line manufacturer of American-made firearms, Ruger offers consumers over 400 variations of more than 30 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.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

		June 27, 2015				December 31, 2014
Assets
Current Assets
Cash		$	61,124			$	8,901
Trade receivables, net			54,113				49,735
Gross inventories			77,923				89,017
Less LIFO reserve			(41,614	)			(40,578	)
Less excess and obsolescence reserve			(2,120	)			(3,750	)
Net inventories			34,189				44,689
Deferred income taxes			8,870				7,246
Prepaid expenses and other current assets			2,802				7,603
Total Current Assets			161,098				118,174
Property, plant and equipment			303,919				288,236
Less allowances for depreciation			(194,487	)			(177,575	)
Net property, plant and equipment			109,432				110,661
Other assets			21,137				25,547
Total Assets		$	291,667			$	254,382

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands, except share data)

 

		June 27, 2015				December 31, 2014
Liabilities and Stockholders’ Equity
Current Liabilities
Trade accounts payable and accrued expenses		$	41,881			$	36,150
Product liability			344				641
Employee compensation and benefits			25,413				18,302
Workers’ compensation			5,327				5,133
Income taxes payable			1,827				156
Total Current Liabilities			74,792				60,382
Product liability			100				204
Deferred income taxes			8,782				8,334
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 2015 – 23,763,877 issued,    18,701,530 outstanding 2014 – 23,717,321 issued,    18,737,074 outstanding			23,764				23,717
Additional paid-in capital			27,125				25,472
Retained earnings			221,831				198,159
Less: Treasury stock – at cost 2015 – 5,062,347 shares 2014 – 4,980,247 shares			(64,727	)			(61,886	)
Total Stockholders’ Equity			207,993				185,462
Total Liabilities and Stockholders’ Equity		$	291,667			$	254,382

 

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

 

		Three Months Ended								Six Months Ended
		June 27, 2015				June 28, 2014				June 27, 2015				June 28, 2014
Net firearms sales		$	139,224			$	153,016			$	274,804			$	322,179
Net castings sales			1,648				641				3,023				1,363
Total net sales			140,872				153,657				277,827				323,542
Cost of products sold			92,364				103,304				187,921				212,066
Gross profit			48,508				50,353				89,906				111,476
Operating expenses:
Selling			14,858				10,062				25,085				24,483
General and administrative			6,957				7,244				14,334				15,976
Total operating expenses			21,815				17,306				39,419				40,459
Operating income			26,693				33,047				50,487				71,017
Other income:
Interest expense, net			(37	)			(36	)			(77	)			(73	)
Other income, net			617				130				1,086				495
Total other income, net			580				94				1,009				422
Income before income taxes			27,273				33,141				51,496				71,439
Income taxes			9,713				10,855				18,433				24,834
Net income and comprehensive income		$	17,560			$	22,286			$	33,063			$	46,605
Basic earnings per share		$	0.94			$	1.15			$	1.77			$	2.40
Fully diluted earnings per share		$	0.91			$	1.12			$	1.71			$	2.34
Cash dividends per share		$	0.32			$	0.49			$	0.49			$	1.03

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

		Six Months Ended
		June 27, 2015				June 28, 2014
Operating Activities
Net income		$	33,063			$	46,605
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			17,841				17,880
Slow moving inventory valuation adjustment			(1,011	)			960
Stock-based compensation			2,298				2,758
Gain on sale of assets			(157	)			(7	)
Deferred income taxes			(1,176	)			623
Impairment of assets			12				—
Changes in operating assets and liabilities:
Trade receivables			(4,378	)			15,680
Inventories			11,511				(18,078	)
Trade accounts payable and accrued expenses			5,925				(10,181	)
Employee compensation and benefits			6,881				(12,751	)
Product liability			(401	)			(35	)
Prepaid expenses, other assets and other liabilities			8,785				(7,639	)
Income taxes payable			1,671				(239	)
Cash provided by operating activities			80,864				35,576
Investing Activities
Property, plant and equipment additions			(16,259	)			(22,817	)
Proceeds from sale of assets			218				275
Cash used for investing activities			(16,041	)			(22,542	)
Financing Activities
Tax benefit from exercise of stock options and vesting of RSU’s			305				1,620
Remittance of taxes withheld from employees related to          share-based compensation			(1,000	)			(2,317	)
Proceeds from exercise of stock options			97				23
Repurchase of common stock			(2,841	)			—
Dividends paid			(9,161	)			(19,989	)
Cash used for financing activities			(12,600	)			(20,663	)
Increase (decrease) in cash and cash equivalents			52,223				(7,629	)
Cash and cash equivalents at beginning of period			8,901				55,064
Cash and cash equivalents at end of period		$	61,124			$	47,435

 

Non-GAAP Financial Measure

 

In an effort to provide investors with additional information regarding its financial results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and EBITDA, a non-GAAP financial measure which management believes provides useful information to investors. This non-GAAP financial measure may not be comparable to similarly titled financial 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 this non-GAAP financial measure 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 uses both GAAP and non-GAAP financial measures to evaluate the Company’s financial performance.

 

EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. The Company calculates its EBITDA 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.

 

Non-GAAP Reconciliation – EBITDA

EBITDA

(Unaudited, dollars in thousands)

		Three Months Ended								Six Months Ended
		June 27, 2015				June 28, 2014				June 27, 2015				June 28, 2014
Net income		$	17,560			$	22,286			$	33,063			$	46,605
Income tax expense			9,713				10,855				18,433				24,834
Depreciation and amortization expense			8,884				8,940				17,841				17,880
Interest expense, net			37				36				77				73
EBITDA		$	36,194			$	42,117			$	69,414			$	89,392

 

 

 

 

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