Sturm, Ruger & Company, Inc. saw revenues contract further in the fourth quarter while diluted EPS were nearly halved versus the prior-year period in the process.

Fourth quarter 2023 net sales were $130.6 million, a 12.5 percent decline compared to net sales of $149.2 million in the 2022 Q4 period. Diluted EPS were 58 cents per share for the quarter, compared to $1.06 per sharefor the corresponding period in 2022.

Full-year 2023 net sales were $543.8 million, an 8.7 percent decline from net sales of $595.8 million in 2022. Diluted EPS was $2.71 per share for the year, compared with diluted EPS of $4.96 per share in 2022.

“Our profitability declined in 2023 from 2022 as our gross margin decreased from 30 percent to 25 percent,” said company CEO Christopher J. Killoy. “The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales, inflationary cost increases in materials, commodities, services, wages, energy, fuel, and transportation, a product mix shift toward products with relatively lower margins that remain in stronger demand, and increased promotional costs, which were partially offset by increased pricing.”

Killoy said consumer demand remained soft in 2023, likely dampened by inflationary pressures and rising interest rates.

“Nevertheless, we remained disciplined and continued to focus on the long-term, reducing production levels where appropriate and offering only modest promotions on select product families, resisting the temptation to enhance short-term results at the expense of our long-term strategy. Encouraged by our increased quarterly sales and profitability in the fourth quarter, we enter 2024 with a strong, debt-free balance sheet, reduced inventories at our independent distributors, and a full pipeline of new products recently launched into the market and others still under development,” Killoy added.

The estimated unit sell-through of the company’s products from the independent distributors to retailers decreased 7 percent in 2023, compared to the prior-year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 4 percent. Killoy surmised that the greater reduction in the sell-through of the company’s products relative to adjusted NICS background checks may be attributable to aggressive promotions, discounts, rebates, and the extension of payment terms offered by our competitors.

Sales of new products, including the MAX-9 pistol, Security-380 pistol, Super Wrangler revolver, LCP MAX pistol, Marlin lever-action rifles, LC Carbine, Small-Frame Autoloading Rifle, and American Centerfire Rifle Generation II represented $121.7 million, or 23 percent, of firearm sales in 2023, an increase from $78.4 million, or 14 percent of sales, in 2022. New product sales include only major new products that were introduced in the past two years.

In 2023, the company’s finished goods inventory increased by 30,700 units and distributor inventories of the company’s products decreased by 39,100 units.

Cash provided by operations during 2023 was $33.9 million. At December 31, 2023, company cash and short-term investments totaled $117.7 million. The company’s current ratio is 4.3 to 1 and has no debt.

In 2023, capital expenditures totaled $15.8 million related to new product introductions and upgrades to manufacturing equipment and facilities. In 2024, the company expects capital expenditures to approximate $15 million.

In 2023, the company returned $122.6 million to its shareholders through:

  • The payment of $110.8 million of dividends, including a $5.00 per share special dividend paid in January 2023; and
  • The repurchase of 264,062 shares of its common stock in the open market at an average price of $44.71 per share, for a total of $11.8 million.

The company also announced that its Board of Directors declared a dividend of 23 cents per share for the fourth quarter for stockholders of record as of March 15, 2024, payable on March 28, 2024. 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 percent of net income.

At December 31, 2023, stockholders’ equity was $331.7 million, which equates to a book value of $19.00 per share, of which $6.74 per share was cash and short-term investments.

Image courtesy Sturm, Ruger & Co.