Sturm, Ruger & Company, Inc. Reports 2015 Fully Diluted Earnings of $3.21 Per Share and Declares Dividend of 35¢ Per Share

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SOUTHPORT, Conn.–(BUSINESS WIRE)–Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for 2015
the Company reported net sales of $551.1 million and fully diluted
earnings of $3.21 per share, compared with net sales of $544.5 million
and fully diluted earnings of $1.95 per share in 2014. In the fourth
quarter of 2014, the Company recorded an expense of $41.0 million
related to the termination and settlement of its defined-benefit pension
plans. Excluding this expense, 2014 fully diluted earnings were $3.22
per share.

For the fourth quarter of 2015, net sales were $152.4 million and fully
diluted earnings were 88¢ per share. For the corresponding period in
2014, net sales were $122.6 million and the Company realized a fully
diluted loss of 77¢ per share. Excluding the aforementioned
defined-benefit pension-plan expense, fourth quarter 2014 fully diluted
earnings were 53¢ per share.

The Company also announced today that its Board of Directors declared a
dividend of 35¢ per share for the fourth quarter, for shareholders of
record as of March 11, 2016, payable on March 25, 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 results:

  • After a year of declining demand in 2014, demand rebounded in 2015 to
    slightly higher levels and followed typical historical seasonal
    patterns.
  • Inventory of Ruger products declined in the fourth quarter at both the
    Company and at the independent distributors, supporting our assessment
    of improving demand.
  • In 2015, sales to the independent distributors and the estimated
    sell-through of the Company’s products from the independent
    distributors to retailers increased 1% and 7%, respectively, from
    2014. The National Instant Criminal Background Check System (“NICS”)
    background checks (as adjusted by the National Shooting Sports
    Foundation) increased 9% in 2015 from 2014.
  • New products represented $115.4 million or 21% of firearm sales in
    2015, compared to $89.4 million or 16% of firearms sales in 2014.
  • Cash generated from operations during 2015 was $113 million. At
    December 31, 2015, our cash totaled $69 million. Our current ratio is
    2.3 to 1 and we have no debt.
  • In 2015, capital expenditures totaled $29 million, a decrease from $46
    million in 2014. We expect our 2016 capital expenditures to total
    approximately $25 million, as we continue to prioritize new product
    development.
  • In 2015, the Company returned $24 million to its shareholders through:
  • the payment of $21 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 $3 million.

Today, the Company filed its Annual Report on Form 10-K for 2015. The
financial statements included in this Annual Report on Form 10-K are
attached to this press release.

Tomorrow, February 25, 2016, Sturm, Ruger will host a webcast at 9:00
a.m. ET to discuss the 2015 operating results. Interested parties can
access the webcast at www.ruger.com/corporate
or by dialing 866-515-2911, participant
code 25263783.

The Annual Report on Form 10-K 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 Annual Report on Form 10-K 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.
 
Consolidated Balance Sheets

(Dollars in thousands, except per share data)

               

December 31,

      2015     2014
         
Assets
 
Current Assets
 
Cash and cash equivalents $ 69,225 $ 8,901
Trade receivables, net 71,721 49,735
 
Gross inventories 81,278 89,017
Less LIFO reserve (42,061 ) (40,578 )
Less excess and obsolescence reserve         (2,118 )       (3,750 )
Net inventories         37,099         44,689  
 
Deferred income taxes 8,219 7,246
Prepaid expenses and other current assets         3,008         7,603  
Total Current Assets 189,272 118,174
 
Property, Plant, and Equipment 308,597 288,236
Less allowances for depreciation         (204,777 )       (177,575 )
Net property, plant and equipment         103,820         110,661  
 
Other assets         22,791         25,547  
Total Assets       $ 315,883       $ 254,382  
 
STURM, RUGER & COMPANY, INC.
 
Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

               

December 31,

      2015     2014
         
Liabilities and Stockholders’ Equity
 
Current Liabilities
Trade accounts payable and accrued expenses $ 42,991 $ 36,150
Product liability 642 641
Employee compensation and benefits 28,298 18,302
Workers’ compensation 5,100 5,133
Income taxes payable         4,962         156  
Total Current Liabilities 81,993 60,382
 
Product liability 102 204
Deferred income taxes 6,050 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 – 23,775,766 issued,
18,713,419 outstanding
2014 – 23,717,321 issued,
18,737,074 outstanding 23,776 23,717
Additional paid-in capital 29,591 25,472
Retained earnings 239,098 198,159
Less: Treasury stock – at cost
2015 – 5,062,347 shares
2014 – 4,980,247 shares         (64,727 )       (61,886 )
Total Stockholders’ Equity         227,738         185,462  
Total Liabilities and Stockholders’ Equity       $ 315,883       $ 254,382  
 
STURM, RUGER & COMPANY, INC.
 
Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

                     

Year ended December 31,

      2015     2014     2013
             
Net firearms sales $ 544,850 $ 542,267 $ 678,552
Net castings sales         6,244         2,207         9,724  
Total net sales 551,094 544,474 688,276
 
Cost of products sold 378,934 375,300 429,671
                     
Gross profit         172,160         169,174         258,605  
 
Operating Expenses:
Selling 49,864 44,550 48,706
General and administrative 27,864 28,899 35,394
Defined benefit pension plans settlement charge 40,999
Other operating income, net         (113 )       (1,612 )       (401 )
Total operating expenses 77,615 112,836 83,699
                     
Operating income         94,545         56,338         174,906  
 
Other income:
Royalty income 1,084 468 658
Interest income 5 2 4
Interest expense (156 ) (152 ) (135 )
Other income (expense), net         622         584         (201 )
Total other income, net 1,555 902 326
                     
Income before income taxes         96,100         57,240         175,232  
 
Income taxes 33,974 18,612 63,960
                     
Net income 62,126 38,628 111,272
 
Other comprehensive income (loss), net of tax:
Defined benefit pension plans 10,240
                     
Comprehensive income       $ 62,126       $ 38,628       $ 121,512  
                     
Basic Earnings Per Share       $ 3.32       $ 1.99       $ 5.76  
 
Fully Diluted Earnings Per Share       $ 3.21       $ 1.95       $ 5.58  
 
Cash Dividends Per Share       $ 1.10       $ 1.62       $ 2.12  
 
 
STURM, RUGER & COMPANY, INC.
 
Consolidated Statements of Cash Flows

(In thousands)

                 

Year ended December 31,

  2015     2014     2013
         

Operating Activities

 
Net income $ 62,126 $ 38,628 $ 111,272
Adjustments to reconcile net income to cash
provided by operating activities:
Pension plan settlement charge 32,218
Depreciation and amortization 36,235 36,706 20,362
Stock-based compensation 4,530 5,647 5,288
Excess and obsolescence inventory reserve (1,468 ) 1,347 693
Loss (gain) on sale of assets (113 ) (1 ) 1
Deferred income taxes (3,257 ) (12,015 ) 5,736
Impairment of assets 178 911
Changes in operating assets and liabilities:
Trade receivables (21,986 ) 17,649 (24,366 )
Inventories 9,058 (22,775 ) (7,945 )
Trade accounts payable and accrued expenses 6,808 (11,047 ) 9,231
Employee compensation and benefits 9,378 (17,435 ) 17,897
Product liability (101 ) (391 ) 179
Prepaid expenses, other assets and other liabilities 6,553 (13,075 ) (19,340 )
Income taxes payable     4,806         (83 )       (250 )
Cash provided by operating activities 112,569 55,551 119,669
 

Investing Activities

 
Property, plant, and equipment additions (28,705 ) (45,571 ) (54,616 )
Net proceeds from sale of assets     222         24         233  
Cash used for investing activities (28,483 ) (45,547 ) (54,383 )
 
Financing Activities
 
Dividends paid (20,569 ) (31,446 ) (41,079 )
Tax benefit from exercise of stock options 436 1,621 2,302
Repurchase of common stock (2,841 ) (24,002 )
Payment of employee withholding tax related to share-
based compensation (999 ) (2,363 ) (2,423 )
Proceeds from exercise of stock options     211         23          
Cash used for financing activities     (23,762 )       (56,167 )       (41,200 )
 
Increase (decrease) in cash and cash equivalents 60,324 (46,163 ) 24,086
Cash and cash equivalents at beginning of year     8,901         55,064         30,978  
Cash and cash equivalents at end of year   $ 69,225       $ 8,901       $ 55,064  
 

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 the Company’s financial
performance.

 
Non-GAAP Reconciliation – EBITDA
 

EBITDA

 

(Unaudited, dollars in thousands)

 

Year ended December 31,     2015     2014
       
Net income $ 62,126 $ 38,628
 
Income tax expense 33,974 18,612
Depreciation and amortization expense 36,235 36,706
Interest expense 156 152
Interest income (5 ) (2 )
Pension plan termination expense, net of cash payment               32,218  
EBITDA     $ 132,486       $ 126,314  
 

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, such as the pension plan termination expense in
2014.

Contacts

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