Sturm, Ruger & Company, Inc. Q4 2024 Earnings Report

Sturm, Ruger & Company, Inc. EPS Results

• Actual EPS: $0.62
• Consensus EPS: $0.62
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.58

Sturm, Ruger & Company, Inc. Revenue Results

• Actual Revenue: $145.78 million
• Expected Revenue: $137.77 million
• Beat/Miss: Beat by +$8.01 million
• YoY Revenue Growth: N/A

Sturm, Ruger & Company, Inc. Announcement Details

• Quarter: Q4 2024
• Date: 2/19/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 20, 2025
• Conference Call Time: 9:00AM ET

Sturm, Ruger & Co., Inc. engages in the business of designing, manufacturing, and selling firearms to domestic customers. It operates through the Firearms and Castings segments. The Firearms segment focuses on manufacturing and selling rifles, pistols, and revolvers principally to a number of federally licensed, independent wholesale distributors. The Castings segment offers steel investment castings and metal injection molding parts. The company was founded by William B. Ruger in 1949 and is headquartered in Southport, CT.

Sturm, Ruger & Company, Inc. Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the Q4 twenty twenty four Sturm Ruger Earnings Conference Call. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question and answer session.

[Operator]

I would now like to hand the conference over to your speaker today, Chris Culloy, President and Chief Executive Officer.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Good morning, and welcome to the Sturm, Ruger and Company year end twenty twenty four conference call. I'd like to ask Kevin Reed, our General Counsel, to read the caution on forward looking statements. Tom Denine, our Chief Financial Officer, will give an overview of the fourth quarter and 2024 financial results, and then I will discuss our operations and the market. And after that, we'll get to your questions.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Kevin?

[Kevin Reid, VP, General Counsel & Corporate Secretary at Sturm, Ruger & Company]

Thanks, Chris. We want to remind everyone that statements made in the course of this meeting that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained from time to time in the company's SEC filings, including but not limited to the company's report on Form 10 K for the year ended 12/31/2024, which of course we filed last night and on the Forms 10 Q filed previously.

[Kevin Reid, VP, General Counsel & Corporate Secretary at Sturm, Ruger & Company]

Copies of these documents may be obtained by contacting the company or the SEC or on the company website at ruber.com/corporate or of course the SEC website at sec.gov. We do reference non GAAP EBITDA. Please note that the reconciliation of GAAP net income to non GAAP EBITDA can be found in our Form 10 ks for the year ended 12/31/2024, and our previously filed Forms 10 Q, which are also posted to our website. Furthermore, the company disclaims our responsibility to update forward looking statements. Chris?

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Thank you, Kevin. Now Tom will discuss the company's 2024 results. Tom?

[Thomas Dineen, Principal Accounting Officer, Senior VP, Treasurer & CFO at Sturm, Ruger & Company]

Thanks, Chris. For 2024, net sales were $536,000,000 and diluted earnings were $1.77 per share. For 2023, net sales were $544,000,000 and diluted earnings were $2.71 per share. Our profitability declined in 2024 from 2023 as our gross margin decreased from 25% to 21%. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales, inflationary cost pressures and a product mix shift toward products a product mix shift toward products with relatively lower margins that remain in stronger demand.

[Thomas Dineen, Principal Accounting Officer, Senior VP, Treasurer & CFO at Sturm, Ruger & Company]

In the fourth quarter of twenty twenty four, net sales were $146,000,000 and diluted earnings were $0.62 per share. For the corresponding period in 2023, net sales were $131,000,000 and diluted earnings were $0.58 per share. Our fourth quarter results improved significantly from the third quarter as our production increased 10%, sales increased 19% and our profitability more than doubled. At 12/31/2024, our cash and short term investments totaled $105,000,000 Our short term investments are invested in United States Treasury bills and in a money market fund that invests exclusively in United States Treasury instruments, which mature within one year. Our current cash and short term investments totaled $120,000,000 At 12/31/2024, our current ratio was 4.2:one and we had no debt.

[Thomas Dineen, Principal Accounting Officer, Senior VP, Treasurer & CFO at Sturm, Ruger & Company]

Stockholders' equity was $320,000,000 which equates to a book value of $19.03 per share, of which $6.28 was cash and short term investments. In 2024, we generated $56,000,000 of cash from operations and invested $21,000,000 in capital expenditures. We expect our 2025 capital expenditures will total $20,000,000 In 2024, we returned $46,000,000 to our shareholders through the payment of $12,000,000 of quarterly dividends and the repurchase of 835,000 shares of our common stock at an average price of $41.19 per share for a total of $34,000,000 Our Board of Directors declared a $0.24 per share quarterly dividend for shareholders of record as of 03/14/2025, payable on 03/28/2025. As a reminder, our quarterly dividend is approximately 40% of net income and therefore varies quarter to quarter. Our variable dividend strategy coupled with our strong debt free balance sheet allows us to continually and consistently provide returns to our shareholders without sacrificing our ability to capitalize on opportunities that emerge.

[Thomas Dineen, Principal Accounting Officer, Senior VP, Treasurer & CFO at Sturm, Ruger & Company]

That's the financial update for 2024. Chris?

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Thanks, Tom. Ruger celebrated its seventy fifth anniversary in 2024. As a tribute to our founder, Bill Ruger, and the thousands of hardworking men and women who have left their mark on Ruger since its humble beginnings in 1949, there were many events throughout the year that brought people together to honor our past and celebrate our future. We kicked off the festivities in January 2024 with the seventy fifth anniversary gala at the SHOT Show.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

We were honored to

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

co host the event with our friends at Hornady Ammunition, who were also founded in 1949. Two American manufacturing companies that stood the test of time and are thriving after seventy five years. Maybe there will be a co hosted Centennial anniversary gala at the two thousand and forty nine SHOT Show. I wouldn't bet against it. Last year's National Ruger Day, which of course is October 22 or tentwenty two was another highlight.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

It was our biggest Ruger Day yet with hundreds of events at ranges, shooting clubs and retailers where Ruger fans came together to shoot and spend time with friends and neighbors that share their passion for Ruger and our products. The most satisfying and fitting way that we celebrate our seventy fifth anniversary was with the flurry of new product introductions, culminating with the December launch of the new RXM, a nine millimeter pistol that was imagined, designed and developed in collaboration with Magpul Industries. This partnership resulted in a truly innovative product that offers maximum flexibility and customization with a removable stainless steel fire control insert set inside an interchangeable Magpul enhanced handgun grip. Demand for the RXM has been tremendous. Our roster of new product introductions in 2024 also includes the American Rifle Generation II family of rifles in standard, ranch and predator configurations, Marlin models eighteen ninety four, 18 90 five and three 30 six lever action rifles, including the Dark Series models available in point four five -seventy Government and point three zero -thirty Winchester with other calibers to follow.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

BLC carbine chambered in point four five auto and 10 millimeter auto to go along with our original offerings in the 5.7 x 28 caliber. The Mini 14 with side folding stock and seventy fifth anniversary commemorative models of some of our most popular classic firearms, including the Mark IV target pistol, the tentwenty two rifle and the LCP Max pistol. New product sales totaled $159,000,000 or 32% of firearm sales in 2024. New product sales include only major new products that were introduced in the last two years. On the strength of these offerings, particularly American Center Fire Rifle Gen two and the Marlin lever action rifles, the estimated sell through of our products from distributors to retailers increased for both the fourth quarter and the full year, despite the decrease in adjusted NICS background checks during the same periods.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

As a reminder, we use adjusted NICS as a proxy for overall consumer purchase activity at retail, and adjusted NICS does not distinguish between used gun sales and new gun sales. Some data suggest that used gun sales in 2024 represented a larger percentage of overall retail firearm sales in 2023, which would not be surprising given higher interest rates and rising consumer debt. This would suggest that our market share gains are perhaps even greater than the adjusted mix data would indicate. We entered 2025 with a strong debt free balance sheet, reduced inventories on our independent distributors and a full pipeline of recently launched new products and many others still under development. We remain focused on the long term goal of creating shareholder value.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Our disciplined pricing and market strategy promote consistency throughout the distribution channel. This allows both distributors and retailers to confidently invest in our inventory regardless of market fluctuations and volatility is essential to Ruger's long term success and leadership in the firearms market. In January, we announced that Todd Seifert will become President and Chief Executive Officer on March 1, allowing for a smooth transition before my planned retirement in May. I want to take this opportunity to publicly welcome Todd to Ruger. Todd attended the SHOT Show last month and spent time with many of our employees and customers and a host of industry folks, many of whom we already knew from his past experience in the industry.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

I have been very impressed with Todd and know he and the rest of the team will continue to deliver innovative and exciting new products to our consumers, profitability to our independent distributors and retailers and long term value to our shareholders. Those are the highlights of 2024. Operator, may we please have the first question?

[Operator]

Thank you. Our first question comes from Mark Smith with Lake Street. You may proceed.

[Mark Smith, Analyst at Lake Street Capital]

Hi guys. First question for me. I wanted to dig in a little bit more into new products, Chris. I don't know if you can quantify or talk at all about maybe the impact that just RXM had during the quarter.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Yes. Thank you, Mark. Yes, RSM was a big impact in December. We had preplanned the launch of the RXM for a while. We had conducted a series of retailer summits is what we call meeting the key retailers throughout The U.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

S. Over the course of 2024. And at those summits, under the under an NDA, we introduced and unveiled the RXM to those key retailers and solicited preorders, so that when as we are closer to our actual launch date, we shipped both to those key big independent retailers, some of the key national accounts as well as our distributors. So product was in place at both wholesale and retail prior to our public unveiling in December. That made for, I'll say, smooth launch at all levels.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

We got a lot of hype our sales and marketing folks combined to do a great job getting the word out. Social media really kind of blew up the Internet with great reaction to this firearm. And as a result, we had quite a few of those products those guns shipped in December. We don't disclose the exact amount, but it was a significant launch. The most we've ever had out in the marketplace at time of launch.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

And then because we had already ramped up the product, we didn't see a dip at all. We just continued right through filling orders that came in from our distributors over the next couple of weeks. So it was really a fun way to launch a really great product.

[Mark Smith, Analyst at Lake Street Capital]

Perfect. And then correct me if I'm wrong, but it seems like RXM really gives you a platform for other frame sizes, other things that you can do with that fire control insert. I mean, is that how you view it? And then you in this partnership with Magpul, are you guys able to move pretty quickly on new products?

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Yes. Mark, as you let me know, we've had other projects with Magpul, the stocks for our ten twenty two and some of our other rifle products. But this is the biggest and strongest collaboration we've ever had. And the folks at Magpul were a lot of fun to work with, really creative and good engineering, good marketing. And so we're going to continue to work with them on that.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

In fact, we've got a meeting in the next couple of weeks to talk about some other new products that we can collaborate on. But to the point of the RXM, there's going to be continued rollout of new frame sizes, grip colors, things like that. So you'll see us flesh out that accessory pipeline for the different versions of the grip as well as different sizes. So you'll see those different frame sizes coming out. That's something that we have planned and are still working on.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

We're going

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

to roll that out in

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

a logical fashion. And again, our teams at both places, Magpul and Ruger, are very excited about it.

[Mark Smith, Analyst at Lake Street Capital]

Perfect. And then just one hit kind of balance sheet and cash flow. As we look out of this next year, are there any other any new uses of cash that we should be looking at? It seems like your plans, everything's in a good place, but any other uses of cash? And then if you can give any insight into kind of your desire and appetite for continued share repurchases?

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Well, we've done both special dividends over time as well as share repurchases over time. And both of those remain an option. Of course, we're always open to if there was another strategic acquisition that came our way along the lines of Marlin for a few years back, that would make sense for us. But one of the reasons is I think you know, we're pretty conservative on our cash balance, Having been fired by both Bank of America and Wells Fargo over the last five or six years during my tenure, we remain pretty cautious about the banking situation in The U. S.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

There are steps being taken now to shore that up with the FIND Act at the federal level. But again, we're going to keep that conservative approach and we'll probably have both share repurchases and certainly our quarterly dividends. And of course, if we get to a certain balance, we'll look at special dividends as well. That's something we always take a hard look at. Number one, we want to make sure we're funding the business with our capital expenditures, investing in new products, that's probably our highest and best use, watching for acquisitions.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

And if neither of those make sense, of course, return it to shareholders in either special dividends or share buybacks.

[Mark Smith, Analyst at Lake Street Capital]

Excellent. Thank you, guys. Thanks Mark.

[Operator]

Thank you. Our next question comes from Omer D'Onizio with Aegis Capital. You may proceed.

[Rommel Dionisio, Head of Research at Aegis Capital]

Thank you, Goran. Good morning. Just a question on gross margins. I realize you mentioned the adverse product mix shift. But then again, on the flip side, you've had such strong success with new products, which I imagine are coming in higher margin.

[Rommel Dionisio, Head of Research at Aegis Capital]

I wonder if you could just give us a little more granularity on that on those trends? Thanks.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Thanks, Rommel. The biggest thing we saw in 2024 when we talk about our gross margin as it relates to product mix, was you'll recall the seventy fifth anniversary models, 10/22, Mark IV and LCP in particular, were really well done, well executed, but we priced them pretty competitively. We stayed away from promotional programs and discounting, but we were pretty aggressive in pricing those seventy fifth anniversary models. And that from a mix standpoint was probably the biggest, I'll say, mix related contributed to decreased gross margins. And again, they were very successful.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

They did the trick. They didn't disrupt inventory at retail or distributor level. So they really worked well with our strategy for 2024.

[Rommel Dionisio, Head of Research at Aegis Capital]

Okay, great. That's very helpful. And just wanted to personally wish you all the very best, Chris. Hopefully, we'll chat again soon, but wish you all the best in your transition.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

Thanks, Rama. We appreciate it and appreciate your support and your

[Operator]

Thank you. I would now like to turn the call back over to Chris Coloy for any closing remarks.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

In closing, I would like to start by thanking all of you for attending our call this morning and for our shareholders for their continued investment in our company. And I would like to thank our loyal customers and the 1,800 hardworking members of the Ruger team who design, manufacture and sell rugged, reliable firearms every day at our American factories. I hope you will be able to join us at our virtual twenty twenty five annual meeting on Thursday, May 29. Further details will become available in April. And on a personal note, I want to thank everyone who has helped me since I joined this industry in 1989.

[Christopher Killoy, President &CEO at Sturm, Ruger & Company]

For the past thirty six years, I have been fortunate to work with some truly great people. It's been a fun ride and I'm going to miss it, but I look forward to continuing to serve on the Ruger Board of Directors and supporting Todd and the Ruger team as we head into 2025. Thank you.

[Operator]

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Participants

Executives

• Christopher Killoy, President &CEO
• Thomas Dineen, Principal Accounting Officer, Senior VP, Treasurer & CFO

Analysts

• Kevin Reid, VP, General Counsel & Corporate Secretary at Sturm, Ruger & Company
• Mark Smith, Analyst at Lake Street Capital
• Rommel Dionisio, Head of Research at Aegis Capital