Form 8-K STURM RUGER & CO INC For: May 02

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)

May 2, 2016

 

 

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 May 2, 2016, the Company issued a press release to stockholders and other interested parties regarding financial results for the first quarter ended April 2, 2016. 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 May 2, 2016, reporting the financial results for the first quarter ended April 2, 2016.

 

 

 

 

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: May 2, 2016

 

 

EXHIBIT 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

STURM, RUGER & COMPANY, INC. REPORTS FIRST QUARTER

DILUTED EARNINGS OF $1.21 PER SHARE

AND DECLARES DIVIDEND OF 48¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, May 2, 2016--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the first quarter of 2016 the Company reported net sales of $173.1 million and diluted earnings of $1.21 per share, compared with net sales of $137.0 million and diluted earnings of 81¢ per share in the first quarter of 2015.

The Company also announced today that its Board of Directors declared a dividend of 48¢ per share for the first quarter for stockholders of record as of May 13, 2016, payable on May 27, 2016. 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 Michael O. Fifer made the following observations related to the Company’s 2016 first quarter performance:

·

In the first quarter of 2016, net sales increased 26% and earnings per share increased 49% from the first quarter of 2015.

 

·

EBITDA was $44.8 million, or 25.9% of sales, in the first quarter of 2016, an increase of 34.7% from $33.2 million, or 24.3% of sales, in the comparable prior year period.

 

·

The increase in estimated sell-through of the Company’s products from the independent distributors to retailers is attributable to:

§

the increase in overall industry demand,

§

new product introductions, and

§

increased production capacity and availability of products in demand.

 

·

New products, including the American Pistol, the Precision Rifle, the AR-556 modern sporting rifle, and the LC9s pistol, represented $50.3 million or 29% of firearm sales in the first quarter of 2016. 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 increased 17% in the first quarter of 2016 from the comparable prior year period. For the same period, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) increased 18%.

 

·

During the first quarter of 2016, the Company’s finished goods inventory decreased by 14,600 units and distributor inventories of the Company’s products decreased by 54,300 units.

 

·

Cash generated from operations during the first quarter of 2016 was $29.4 million. At April 2, 2016, our cash totaled $80.5 million. Our current ratio is 2.6 to 1 and we have no debt.

 

·

In the first quarter of 2016, capital expenditures totaled $6.3 million, much of it related to tooling and equipment for new products. We expect our 2016 capital expenditures to total approximately $25 million.

 

·

In the first quarter of 2016, the Company returned $6.6 million to its shareholders through the payment of dividends.

 

·

At April 2, 2016, stockholders’ equity was $239.7 million, which equates to a book value of $12.64 per share, of which $4.24 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, May 3, 2016, Sturm, Ruger will host a webcast of its Annual Meeting of Stockholders at 9:00 a.m. ET. Interested parties can access the webcast at www.ruger.com/corporate or by dialing 855-871-7398, participant code 94955658.

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)

 

		April 2, 2016				December 31, 2015
Assets
Current Assets
Cash		$	80,463			$	69,225
Trade receivables, net			74,746				71,721
Gross inventories			77,015				81,278
Less LIFO reserve			(42,714	)			(42,061	)
Less excess and obsolescence reserve			(2,027	)			(2,118	)
Net inventories			32,274				37,099
Deferred income taxes			9,852				8,219
Prepaid expenses and other current assets			3,631				3,008
Total Current Assets			200,966				189,272
Property, plant and equipment			304,745				308,597
Less allowances for depreciation			(202,738	)			(204,777	)
Net property, plant and equipment			102,007				103,820
Other assets			22,450				22,791
Total Assets		$	325,423			$	315,883

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Dollars in thousands, except per share data)

 

		April 2, 2016				December 31, 2015
Liabilities and Stockholders’ Equity
Current Liabilities
Trade accounts payable and accrued expenses		$	48,331			$	42,991
Product liability			1,235				642
Employee compensation and benefits			18,555				28,298
Workers’ compensation			5,068				5,100
Income taxes payable			3,849				4,962
Total Current Liabilities			77,038				81,993
Product liability			89				102
Deferred income taxes			8,548				6,050
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             2016 – 24,025,085 issued,                         18,962,738 outstanding             2015 – 23,775,766 issued,                         18,713,419 outstanding			24,025				23,776
Additional paid-in capital			24,765				29,591
Retained earnings			255,685				239,098
Less: Treasury stock – at cost              2016 – 5,062,347 shares              2015 – 5,062,347 shares			(64,727	)			(64,727	)
Total Stockholders’ Equity			239,748				227,738
Total Liabilities and Stockholders’ Equity		$	325,423			$	315,883

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands, except per share data)

 

		Three Months Ended
		April 2, 2016				March 28, 2015
Net firearms sales		$	171,520			$	135,579
Net castings sales			1,589				1,375
Total net sales			173,109				136,954
Cost of products sold			113,996				95,557
Gross profit			59,113				41,397
Operating expenses:
Selling			15,074				10,226
General and administrative			7,838				7,377
Total operating expenses			22,912				17,603
Operating income			36,201				23,794
Other income:
Interest expense, net			(35	)			(40	)
Other income, net			206				469
Total other income, net			171				429
Income before income taxes			36,372				24,223
Income taxes			13,094				8,720
Net income and comprehensive income		$	23,278			$	15,503
Basic earnings per share		$	1.23			$	0.83
Diluted earnings per share		$	1.21			$	0.81
Cash dividends per share		$	0.35			$	0.17

 

 

STURM, RUGER & COMPANY, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 

		Three Months Ended
		April 2, 2016				March 28, 2015
Operating Activities
Net income		$	23,278			$	15,503
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			8,344				8,957
Slow moving inventory valuation adjustment			(91	)			(748	)
Stock-based compensation			632				1,151
Loss on sale of assets			4				(60	)
Deferred income taxes			865				3
Impairment of assets			—				12
Changes in operating assets and liabilities:
Trade receivables			(3,025	)			(13,296	)
Inventories			4,916				16,145
Trade accounts payable and accrued expenses			5,308				(2,690	)
Employee compensation and benefits			(9,798	)			2,476
Product liability			580				(350	)
Prepaid expenses, other assets and other liabilities			(471	)			2,599
Income taxes payable			(1,113	)			3,081
Cash provided by operating activities			29,429				32,783
Investing Activities
Property, plant and equipment additions			(6,346	)			(4,302	)
Proceeds from sale of assets			—				60
Cash used for investing activities			(6,346	)			(4,242	)
Financing Activities
Tax benefit from exercise of stock options and vesting of RSU’s			8,792				280
Remittance of taxes withheld from employees related to         share-based compensation			(14,001	)			(1,000	)
Proceeds from exercise of stock options			—				97
Repurchase of common stock			—				(2,841	)
Dividends paid			(6,636	)			(3,178	)
Cash used for financing activities			(11,845	)			(6,642	)
Increase (decrease) in cash and cash equivalents			11,238				21,899
Cash and cash equivalents at beginning of period			69,225				8,901
Cash and cash equivalents at end of period		$	80,463			$	30,800

 

 

 

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 one non-GAAP financial measure, EBITDA, 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 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.

 

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
		April 2, 2016				March 28, 2015
Net income		$	23,278			$	15,503
Income tax expense			13,094				8,720
Depreciation and amortization expense			8,344				8,957
Interest expense, net			35				40
EBITDA		$	44,751			$	33,220

 

 

 

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