Wednesday, May 2, 2012

Ruger Has Stellar Quarter

The gun prohibitionists are desperate to promote the meme that the growth in NICS checks do not accurately reflect the growth in firearm sales. Unfortunately, they just cannot ignore financial statement releases from public companies such as Sturm, Ruger & Co. Financial statement releases from public companies are not only released to the public but filed with the Securities and Exchange Commission. They must be accurate unlike any statement made by the likes of CSGV and other gun prohibitionists.

Yesterday, after the close of the stock market, Ruger released its first quarter results and they were impressive. Their net earnings per share - profit - nearly doubled as compared to the same quarter in 2011. Moreover, they have orders in hand for 1.2 million firearms which exceed the number shipped in 2011.

The highlights of the results as pointed out by Ruger CEO Michael Fifer:
  • Our earnings nearly doubled from the first quarter of 2011, driven by the 49% growth in sales and our ongoing focus on continuous improvement in our operations.
  • New product introductions were a significant component of our sales growth as new product sales represented $40.8 million or 37% of sales in the first quarter of 2012. New product introductions in the first quarter of 2012 included:
    • Ruger American Rifle
    • SR22 pistol
    • 10/22 Take Down rifle
  • The estimated sell-through of our products from independent distributors to retailers in 2012 increased 62% from the first quarter of 2011. During this period, National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) increased 23%.
  • On March 21, 2012, the Company announced that it temporarily suspended the acceptance of new orders. In the first quarter of 2012, orders for 1.2 million units were received by the Company, which exceeded the total units shipped during 2011. The Company anticipates resuming the acceptance of orders at the end of May 2012.
  • Cash generated from operations during the first quarter of 2012 was $21.8 million. At March 31, 2012, our cash, cash equivalents, and short-term investments totaled $95.8 million, an increase of $14.7 million from December 2011. Our current ratio is 3.1 to 1 and we have no debt.
  • In the first quarter of 2012, capital expenditures totaled $3.0 million. We expect to invest approximately $20 million for capital expenditures during 2012.
  • At March 31, 2012, stockholders' equity was $149.8 million, which equates to a book value of $7.82 per share, of which $5.01 per share was cash and equivalents.
  • On March 31, 2012, the Company completed the fourth and final quarter of its "1.2 Million Gun Challenge to Benefit the NRA." During this year-long challenge, Ruger donated a total of $1,253,700 to the NRA. We believe that Ruger is the first firearms manufacturer to build and ship more than one million firearms in one year.
The financial tables that accompanied this release can be found here.

I am not an accountant but I generally can understand balance sheets, income statements, and statements of cash flows. Just looking at a few key items you see that their cash from operations increased by over $1 million dollars as compared to the same quarter in 2011, their net inventories are down, and their allowance for obsolete or slow moving inventory fell by almost 60%. The last two items tell me that not only are firearms flying out the door but Ruger is making mostly what people want.

If you have the time and the inclination, you can listen in on Ruger's Annual Meeting which is today and starts at 9am. I'm sure you will hear lots of cheers from shareholders. If I could have been in New Hampshire today, I would have been one of those cheering the loudest as the stock is trading near its all time high and the quarterly dividend just tripled.

For instructions on how to view or listen to the annual meeting, go here.

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