Form 8-K STURM RUGER & CO INC For: Feb 23

February 23, 2022 5:10 PM EST

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EXHIBIT 99.1

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FOR IMMEDIATE RELEASE

 

STURM, RUGER & COMPANY, INC. REPORTS 2021

DILUTED EARNINGS OF $8.78 PER SHARE AND

DECLARES DIVIDEND OF 86¢ PER SHARE

 

SOUTHPORT, CONNECTICUT, February 23, 2022--Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2021 the Company reported net sales of $730.7 million and diluted earnings of $8.78 per share, compared with net sales of $568.9 million and diluted earnings of $5.09 per share in 2020.

For the fourth quarter of 2021, net sales were $168.0 million and diluted earnings were $2.14 per share. For the corresponding period in 2020, net sales were $169.3 million and diluted earnings were $1.78 per share. Diluted earnings per share in the fourth quarter of 2021 were increased by 18¢ due to a reduction in the effective income tax rate for the year which was recognized in the quarter.

The Company also announced today that its Board of Directors declared a dividend of 86¢ per share for the fourth quarter for stockholders of record as of March 11, 2022, payable on March 25, 2022. 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, “2021 was a year of great accomplishments and financial results. We began the year with virtually no finished goods inventory, so our 28% increase in sales and 109% return on net operating assets were only possible due to the tremendous efforts of our dedicated workforce who kept our factories humming throughout the year. In addition to increased volume, enhanced labor productivity and other manufacturing efficiencies drove greater profitability. While we were ramping up production of our legacy products, we kept our focus on new product development and launched the MAX-9 pistol and the LCP MAX pistol. We remain committed to our strategy of pursuing manufacturing excellence and vigorously developing innovative and exciting new products.”

Mr. Killoy continued, “Another highlight in 2021 was the reintroduction of the Marlin brand as we shipped the first Ruger-made, Marlin lever-action rifles in December. Our expansive product offerings, which range from personal protection pistols, to bolt-action hunting rifles, to our classic revolvers, to the new Ruger-made, Marlin lever-action rifles, provide some stability in the volatile firearms market and allow us to fulfill demand in many of the diverse sectors of the industry. Our cash-laden, debt-free balance sheet allows us to pursue acquisitions and other capital opportunities.”

Mr. Killoy made the following observations related to the Company’s 2021 performance:

·In 2021, sales increased 28% from 2020 and the estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 4% from 2020. For the same period, the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) decreased 12%.

The increase in the sell-through of the Company’s products compared favorably to the decrease in adjusted NICS background checks in 2021 and may be attributable to:

·Strong consumer demand for the Company’s products,
·Increased production in 2021, and
·The introduction of popular new products.

 

·Sales of new products included the Ruger-57, the PC Charger, the MAX-9 pistol, the Wrangler, the LCP II in .22 LR, the LCP MAX pistol, and the Marlin 1895 lever-action rifle. New product sales represented $155.5 million or 22% of firearm sales in 2021. These sales include only major new products that were introduced in the past two years.

 

 

·In 2021, the Company’s finished goods inventory increased 11,800 units, but remain significantly below pre-COVID-19 pandemic levels. Distributor inventories of the Company’s products increased 125,000 units, but remain below the level needed to support rapid fulfillment of retailer demand for most products.

 

·Cash provided by operations during 2021 was $172.3 million. At December 31, 2021, our cash and short-term investments totaled $221 million. Our current ratio was 4.3 to 1 and we had no debt.

 

·In 2021, capital expenditures totaled $28.8 million. We expect our 2022 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 2021, the Company returned $59.1 million to its shareholders through the payment of dividends.

 

·At December 31, 2021, stockholders’ equity was $363.7 million, which equates to a book value of $20.67 per share, of which $12.56 per share was cash and short-term investments.

 

·In 2021, the Company incurred $1.5 million of expenses to help maintain the health and safety of its employees during the COVID-19 pandemic.

 

Today, the Company filed its Annual Report on Form 10-K for 2021. The financial statements included in this Annual Report on Form 10-K are attached to this press release.

Tomorrow, Thursday, February 24, 2022, Sturm, Ruger will host a webcast at 9:00 a.m. ET to discuss the 2021 operating results. Interested parties can access the webcast at Ruger.com/corporate or by dialing 855-871-7398, participant code 7268098.

The Annual Report on Form 10-K for 2021 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, across both the Ruger and Marlin brands. For more than 70 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens®,” 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,  2021   2020 
         

Assets

 

          
Current Assets          
Cash and cash equivalents  $21,044   $20,147 
Short-term investments   199,971    121,007 
Trade receivables, net   57,036    57,876 
           
Gross inventories   100,023    80,487 
Less LIFO reserve   (51,826)   (48,016)
Less excess and obsolescence reserve   (4,347)   (3,394)
    Net inventories   43,850    29,077 
           
Prepaid expenses and other current assets   6,832    6,266 
Total Current Assets   328,733    234,373 
           
Property, Plant, and Equipment   421,282    393,843 
     Less allowances for depreciation   (347,651)   (323,110)
     Net property, plant and equipment   73,631    70,733 
           
Deferred income taxes   536    1,530 
Other assets   39,443    41,622 
Total Assets  $442,343   $348,258 

 

 

 

STURM, RUGER & COMPANY, INC.

 

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

 

 

December 31,  2021   2020 
         

Liabilities and Stockholders’ Equity

 

          
Current Liabilities          
           
Trade accounts payable and accrued expenses  $36,400   $37,078 
Contract liabilities with customers       84 
Product liability   795    1,052 
Employee compensation and benefits   33,154    37,275 
Workers’ compensation   6,760    6,272 
Total Current Liabilities   77,109    81,761 
           
Lease liability   1,476    1,724 
Product liability accrual   97    74 
           
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
   2021 – 24,306,486 issued,
               17,596,588 outstanding
   2020 – 24,205,749 issued,
               17,495,851 outstanding
   24,306    24,206 
Additional paid-in capital   46,847    43,468 
Retained earnings   438,098    342,615 
Less: Treasury stock – at cost
   2021 – 6,709,898 shares
   2020 – 6,709,898 shares
   (145,590)   (145,590)
Total Stockholders’ Equity   363,661    264,699 
Total Liabilities and Stockholders’ Equity  $442,343   $348,258 

 

 

 

STURM, RUGER & COMPANY, INC

 

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

 

 

Year ended December 31,  2021   2020   2019 
             
Net firearms sales  $728,141   $565,863   $406,326 
Net castings sales   2,595    3,005    4,180 
Total net sales   730,736    568,868    410,506 
                
Cost of products sold   451,179    377,427    310,958 
                
Gross profit   279,557    191,441    99,548 
                
Operating Expenses:               
Selling   33,259    33,332    29,775 
General and administrative   43,289    39,013    30,344 
Other operating expense (income), net   (127)   (52)   54 
Total operating expenses   76,421    72,293    60,173 
                
Operating income   203,136    119,148    39,375 
                
Other income:               
Royalty income   1,975    814    698 
Interest income   49    1,126    2,594 
Interest expense   (164)   (191)   (192)
Other income, net   1,598    84    552 
Total other income, net   3,458    1,833    3,652 
                
Income before income taxes   206,594    120,981    43,027 
                
Income taxes   50,695    30,583    10,736 
                
Net income and comprehensive income  $155,899   $90,398   $32,291 
                
                
Basic Earnings Per Share  $8.87   $5.17   $1.85 
                
Diluted Earnings Per Share  $8.78   $5.09   $1.82 
                
Weighted average number of common shares outstanding - Basic   17,585,604    17,486,054    17,461,421 
                
Weighted average number of common shares outstanding - Diluted   17,757,834    17,769,856    17,778,832 
                
Cash Dividends Per Share  $3.36   $6.51   $0.82 

 

 

STURM, RUGER & COMPANY, INC.

 

Consolidated Statements of Cash Flows

(In thousands)

 

Year ended December 31,  2021   2020   2019 
             
Operating Activities               
Net income  $155,899   $90,398   $32,291 
Adjustments to reconcile net income to cash
provided by operating activities, net of effects of acquisition:
               
Depreciation and amortization   26,152    27,576    29,331 
Stock-based compensation   8,280    6,128    6,330 
Excess and obsolescence inventory reserve   953        1,046 
(Gain) loss on sale of assets   (127)   (52)   54 
Deferred income taxes   994    3,863    (2,424)
Changes in operating assets and liabilities:               
Trade receivables   840    (5,236)   (7,609)
Inventories   (15,726)   10,624    2,073 
Trade accounts payable and accrued expenses   (392)   7,954    (3,646)
Contract liability with customers   (84)   (9,539)   2,146 
Employee compensation and benefits   (5,433)   20,910    (6,646)
Product liability   (234)   308    (354)
Prepaid expenses, other assets and other liabilities   1,217    (7,905)   (888)
Income taxes payable       (1,223)   (2,117)
Cash provided by operating activities   172,339    143,806    49,587 
                
Investing Activities               
Property, plant, and equipment additions   (28,776)   (24,229)   (20,296)
Purchase of Marlin assets       (28,316)    
Purchases of short-term investments   (681,940)   (369,439)   (282,738)
Proceeds from maturity of short-term investments   602,976    377,920    267,576 
Net proceeds from sale of assets   203    178    14 
Cash used for investing activities   (107,537)   (43,886)   (35,444)
                
Financing Activities               
Dividends paid   (59,104)   (113,896)   (14,319)
Repurchase of common stock           (1,995)
Payment of employee withholding tax related to  share-based compensation   (4,801)   (1,297)   (901)
Cash used for financing activities   (63,905)   (115,193)   (17,215)
                
Increase (decrease) in cash and cash equivalents   897    (15,273)   (3,072)
Cash and cash equivalents at beginning of year   20,147    35,420    38,492 
Cash and cash equivalents at end of year  $21,044   $20,147   $35,420 

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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 two non-GAAP financial measures, EBITDA and EBITDA margin, which management believes provide useful information to investors. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA and EBITDA margin are 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,  2021   2020 
         
Net income  $155,899   $90,398 
           
Income tax expense   50,695    30,583 
Depreciation and amortization expense   26,152    27,576 
Interest expense   164    191 
Interest income   (49)   (1,126)
EBITDA  $232,861   $147,622 
EBITDA margin   31.9%    26.0% 

 

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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