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| 8-K - 8-K - STURM RUGER & CO INC | form8k-15276_rgr.htm |
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
STURM, RUGER & COMPANY, INC. REPORTS 2015 FULLY DILUTED
EARNINGS OF $3.21 PER SHARE AND DECLARES DIVIDEND OF 35¢ PER SHARE
SOUTHPORT, CONNECTICUT, February 24, 2016--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.
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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.
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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.
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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 | ||||
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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 | ||||
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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 | ||||||
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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 | ||||||
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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 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.
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