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RGR Sturm, Ruger & Co.

Participants
Chris Killoy President and Chief Executive Officer
Kevin Reid General Counsel
Thomas Dineen Chief Financial Officer
Brian Rafn Morgan Dempsey Capital Management
Rommel Dionisio Aegis
Bill Ledley Cowen & Company
Chip Saye AWH Capital
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2017 Sturm Ruger Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce President and Chief Executive Officer, Mr. Killoy. Chris sir. ahead go Please

Chris Killoy

on morning, and yearend ask Ruger Company your the financial the Reid, of we’ll our I Tom Chief an Financial welcome conference call. to Officer caution read our will XXXX overview to to General XXXX operations fourth Sturm, statements. Kevin? I Then our Dineen, & Counsel Good forward-looking would the I then then questions. Kevin and quarter the give And to will state market discuss go and will and the of results. ask – like

Kevin Reid

We are remind that from in state Chris. forward-looking statements. to important forward-looking predictions hopes, the that meeting the or such statements. Company's statements or management's intentions, It actual materially is Thanks, made differ want that results to could the beliefs, those note this future course Company's in the of projected expectations everyone of

all of for to www.sec.gov. website posted on the the of reconciliation Chris? XX, the income three Forms reference update net that forward-looking information XXXX, do contained could Company's the to, are We year reports in at cause forward-looking factors to the in on from to XX-Q but those results actual our the also not responsibility filings EBITDA. Company's statements XXXX XX-K non-GAAP limited Additional including, www.ruger.com/corporate concerning SEC differ Form non-GAAP found disclaims statements. the is ended Form time-to-time note from for EBITDA quarters materially our for second Copies the Company Furthermore, website third the ended for Forms in of XX-K at course first, SEC the of website. or by Company the GAAP the our Company or of SEC can may on to XX-Q Please first December December XX, which XXXX XXXX. and that be documents of or year the the be these quarters obtained and and contacting

Chris Killoy

discuss the now will Tom Kevin. company’s results. you, Thank XXXX

Thomas Dineen

Chris. Thanks

and per sales earnings XXXX, net were million, were $X.XX $XXX.X For diluted share.

$X.XX diluted and For XXXX, $XXX.X were net share. sales million earnings per were

XXXX, For $X.XX The Cuts recently quarter million $XXX.X share. positively and by earnings $X.XX of Tax the were and fourth net diluted Jobs impacted per per were earnings Act share. enacted sales

the period and million XXXX, diluted were For were sales per net share. in corresponding $XXX.X $X.XX earnings

XXXX sales. EBITDA XX% Our million, $XXX.X EBITDA $XXX or sales, of our was XX% or and of XXXX million, was

fourth EBITDA was The the $XX.X or XXXX, For of XXXX our to quarter XXXX, XX, sheet. million sales. cash December XX% $XX.X million. of our sales, totaled $XX of At XX% fourth million of our or quarter compared EBITDA balance

X from equates XXXX, of Our of was no capital a XXXX estimate expenditures. cash. current of to operations. $XXX.X $XXX in which ratio million. cash XXXX, X.X debt. At to back and be million, was equity share the of the approximately In in $XX.XX which Company we that per XX, Cash share, value We reinvested we will $X.XX per that $XX book had expenditures generated million was stockholders' $XX flows. December into million We form of capital

XXXX, common Since stock $XX returned $XX of be of $XX.XX or million XXXX, at future the and we dividends million to of X.X% At to shares. return repurchase developments. repurchased X.X repurchases. continue new remain XXXX, a focus to of X.X a million. will primary stock Our product million outstanding of shareholders. $XX of $XX through average investment shareholders total for an In Company shares of for payment the for share November authorized shares Cash the its million per price have million XX, December our

dividends in income per as our directly share, per our outstanding of also it dividend, the not paying of will XX% earnings only will practice Given shares net reduction share. benefit our our benefit

quarterly of share per XX, Our record XX, Board payable of March as for XXXX. shareholders a XXXX of March declared $X.XX dividend on Directors

quarter-to-quarter. therefore our and quarterly financial is net That's of XXXX. reminder, a XX% income approximately dividend As update the for varies Chris?

Chris Killoy

Thanks, Tom.

the First XXXX to firearms industry. for I a talk was want challenging year about demand.

the our distributors XXXX, the estimated products in from XXXX. decreased retailers XX% wholesale independent sell-through For of to

National for offered one, During Foundation as during and consumer the this demand reduced commonly sell-through the by reduce demand generate to manufacturing which lucrative Criminal normal XXXX in competitors; checks independent Two, three, Background rebates many decreased retailers in period, as attributable XX%. and Check the background The in to four, price to decrease referred retailers factors. of the Instant consumer stronger National the XXXX, distributors from an by products than of or XXXX company’s election; decreased Shooting most by effect our aggressive by industry of the cash; overall capacity, increased campaigns System exacerbated NICS purchasing and is November political adjusted to to inventories the bolstered Sports due estimated likely discounting their checks above and adjusted

believe driver new that are We of the developments. product demand. key the New products

impact mind; models XXXX, ECXs Due new the unique New had products carbine, of families. the XXXX. these firearm launches, sales introduced the XX in XX% to In product company Pistol the Precision IV pistols, products pistol, Mark or XXX in the firearm Keep and catalog XXXX XX% Rimfire shipped the In only these December XXXX, represented the of in sales approximately have XXXX, we and million new to Pistol. XXXX, compared million minimal or a over only rifle. of the pistol-caliber Rifle, American $XXX.X LCP results. major over Pistol, the $XXX.X the included on we models. Precision the XXX Security-X II in timing products In

of we models models. of non-catalog featuring length models were half different that or year So These were shipped derivatives existing barrel the more last than caliber, a finish.

as as to due XXXX independent but semi-monthly decrease on been and significant total only – our our included our XX% inventory were exclusives include focus unit and two the These resulted that to Regardless, XXXX. products flat to strong distributors distributor derivatives to breakthrough the a products these inventory production result to tough for This in years new past warehouses as standard, Production operations while in allowed compared products. us sales the the goods because estimated during we total, inventories which in in well in levels. new of in review Some new the XX,XXX of at total of a to units were independent pretty inventory. levels by major products stay are We refer continuing demand, retailers, and many sessions, introduced production decrease new distributor have others we to offered in XXXX. essentially inventory not reviews in and helps in from distributors finished It’s XXXX. sell-through years. inventory manage planning, a the plan decrease and levels SIOP sales, our

Our total by or inventory decreased $XX in XXXX. million XX%

capitalize themselves We moderate our that inventory growth actions. and XXXX. expect on present opportunities production to Workforce in manage to

production While mindful our XXXX, on of profitability. people, would and were we reduced in that we operations the impact have

From make assignments monitoring year, These period, second were which However, all decisions. positions indirect is we vacated focusing difficult people strategic XX, ended labor XX%. XXXX, January temporary we carefully to work reduction in and by In We XXXX, half XX and overtime headcount. XX our plan positions. a month developed through while of the on of the and decreased our cut our XXXX, of the January some January approximately all eliminated or had made attrition X, locations a all approximately in we not reductions disciplines. headcount consolidated to and XXX across selling

every to couple succeed our better and is positioned a These of the in Ruger SIOP highlights weeks As of of XXXX. result, at workforce our The needs review business semi-monthly occurs meetings. XXXX. are our

moment take take we recent in want Before upon the events Florida. reflect tragic questions, I a to and

call this all like shock horrible struggle focus business, events. sadness these to also is intended Although and we of Americans, with our the on

citizens our model people continue we have question? we first like arms are We impacted as communities. are but our responsible will please in by the may to this tragedies makers and when occur too Operator, for stand

Operator

Morgan Instructions] comes Brian line [Operator first with the question Rafn Our from Dempsey. of

Your open. line now is

Brian Rafn

Good morning, guys.

Chris Killoy

Brian. morning, Good

Thomas Dineen

Good morning, Brian.

Brian Rafn

Black quarter off maybe the moved did a the from as hunting sense maybe how quarter me the to sales, sales, Yes. October fourth December, Friday progressed? Give you November into played season, holiday

Chris Killoy

and I some this new stories X.X non-standard better American very the we bolt-action of about much calibers, did strong. think, in the of on saw and Creedmoors the – nature, XX.Xs know NICS like Friday Black rather Bushmaster, fall the that was XXXs. What XXX some things traditional as like we the as Brian, calibers checks, as from frankly of hunting well you than season was the things rifle,

through. little of of atypical So, in good bolt-action good which it – a was it’s season, sales Ruger but for terms in a were terms products in moving the hunting very

Brian Rafn

some regardless hunting that Modern of couple Rifles cannibalization last that Scoped the of Sporting of Rifle that Bolt-Action is to over caliber, the taking has a been It’s see normally a little? Yes. subsided or a from continuing seasons of kind you

Chris Killoy

XXX that’s think probably real other, for the calibers or it of X.X that good season, like but I by again and committed for it surprising those somewhat have amount non-standard – confirm think particular like which that and categories. the on data was it I Ruger hunting we the said, the Bushmaster SKUs newer but those found given the we stabilized. we I the dominated us to fall more was any in don’t one but way to season was was good,

Brian Rafn

Okay. team a you talk, organic Give you designing. me engineering sense, guys really on anchor when pipeline growth

maybe really normalized little type the the a malaise, give kind this little a and to frame, their don’t I more type product derivative Rifle caliber, market, but of or order like maybe look at more guys and guys is kind new kind caliber at designs, pipeline like the do three are this am When the and you different new Precision you you the platform finish, high-end, like Rifle, to at, type of development looking third you or just grip. of you the a just are products versus that derivative give run the iteration grip stage the or a look product of frame going priority a of really Precision or breakthrough iteration, products ways, more finish more a versus new frames area the more a the it having versus the breakthrough preference? like is product If it a new projects frame of

Chris Killoy

major they teams from and manufacturing and support Well, of new engineers initiatives, et cetera. specialists tooling really disciplines product engineers, purchasing typically involve folks and Brian, the the

solid Newport Security of of Carolina North of teams facility, Pistol-Caliber recently the those the that out for launched we out Arizona. Pistol Carbine and duration be pretty things that are So and of Examples of out the would Rimfire the the project. together like Precision stay the Prescott, X

in both those and while terms people commitments exclusives. So, that and are committed substantial those other and those on of all engineers of stay and distributor folks those other on have working up time tied involves some so folks projects we

year So really sometimes, with popular, both or the may we do we’ll happening see when caliber the different – Bushmaster patterns. are special the distributors we and involve XXX are like additional get a throughout like that something as frankly derivatives camel opportunistic make-ups

little You the scope of a combinations things XXXX, from major on detract but differentiation, product nature might that a have initiatives. new that don’t allow

Brian Rafn

exclusive do in no, the you of they hundreds these they versus in you say or just I multi-year distributor that am get curious. run XXX and/or that. models do or run they a are runs I XXX run specials, you batch different – catalog, lifespan, things run Yes, – and if are are When thousands what got kind on the production multi-year? the

Chris Killoy

time a run categories, say for have short that of for and kind Single next – do then that thousands know in reputation that distributors they categories then move units the on and those seek have duration, We some lot will them be particular and that are Actions maybe out a will in thing. certain the retailers and XXX that multiyear some smaller are make-ups to some special we them of should

they’ll reorder. And depends on It a reaction when The and would we that’s into if said acceptance combination. there one come of strong, is the a of only that retailers. a for then back stick be that exception typically obviously by it’s course, a with limited preordained thousand really it’s launched if distributor number. or edition market something their will we that, like So

Brian Rafn

think you back Got status you. IV, safety the done X.X get of for million. Ruger XXXX, more in and I’ll one the that’s deal? line. I about And a that finished ask Mark The recall, just booked Is

Chris Killoy

now way. up expenses going of the the of you mean, I customers the future. those our and tracking got got Well, leg down part to models. potentially service recall go customer is and have what in of you’ve for folks on one may a years following individual work is, work The the of are out big who on detective lot

XX% will But, be we the all are go IV affected all are by on down Mark are serial by We those frankly, that’s that units through And approximately good. It and recall. of big that – shipped expenses customers. a tracking our forward behind the while at us. as individual large very the numbers

Brian Rafn

get in I’ll right. All Thanks. line.

Operator

Thank you. And line next the Aegis. Dionisio question from Rommel our of comes with

now line Your is open.

Rommel Dionisio

Thanks, good morning.

the there specifically could recent some of the Jerry’s Ellett and financial is So, the Is junction know could financial on given extensive going the talks about distributors, if industry, in just press address wonder the any Brothers. in you have if about financial Thanks. of the I that’s health I you if receivables impact talk side that? – just you any any there risk do and to business? foresee

Chris Killoy

we Well, for Rommel, distributors. asking. XX only of monitor Frankly, distributors. thanks We have our all

have that largely export We of network pay another advance. customers in

So of that and XX% we’re number will we their Each have a all to on to one letters and receivables. a XXX% are credit you limit mitigate our loan insurance our of primary distributors them of monitor commercial credit credit customers, this risk. and do of all but balances. has a at current portion We time current of we small if combination use

all but of point of not very we are are closely. say watch all we distributors in distributors comfortable So, don’t time, at where our with to our this that’s

Rommel Dionisio

Okay.

Just a few since if in major last us channel that SHOT share anything these quick you Thanks. you just tradeshow? with are becomes alleviated and promotions the Show, follow-up. wonder here I could in weeks seeing Since whether discounts somewhat

Chris Killoy

Well, X, along all big Precision I as projects. Pistol The very it’s Ruger, of launches. since three the and things the addition our new factories that far out positive Caliber Rimfire product some SHOT as Security to of the Show been came in three mentioned Carbine. those for the

those consumers We of solid distributors of have very been Pistol get out and lot retailers. also products. the had A looking ECXs four those demand All to from very we’ve had our Prescott. strong and of

a positive very been in for of that’s and winter So programs. now, closing following-up Right us. we our are out show process

those May. the orders in for retailers we end and you programs programs launched this far through year recall, programs the at If ends We the as those those December earlier of programs as normal. those than ability continue then and February write end to under launched those of to we’ll deliver on

that right And so are in far, we right now. cycle

orders So of under before terms dealers a February. bit it’s a get to bit sprint additional as little finish a of happens for end little typically a written program the to the of those –

Rommel Dionisio

Thanks Okay. much, Chris. very

Operator

of question next & our from Bill And the you. Cowen Ledley line Thank Company. comes with

Your line is open. now

Bill Ledley

say strong, playing flat inventory and were Thanks into a at the level just you morning. inventory just Hi, the wondering I the distributor they the Could of the pretty to broadly and about QX you would were levels the good side. level, how the ammo am question. next reported at for versus distributors taking at out on especially talk dig bit, side, on firearm goods the channel end my like Ruger what year-over-year. Wanted in it’s year inventory I inventory see

Chris Killoy

a year-over-year. flat target inventory We, is distributor we for in turns business. the and we you ideal with is to six our what internally, distributor keep try our kind an as as saw level, inventory wholesale of deal basically distributor eight the Well, a level between

We six. to the are close

turns pleased that where frankly, with by we thousand XX odd levels, inventory an than We from units some we last like down much. not inventory standpoint but pretty are compared more slightly are to year. are six from And we’d over and

So, about our the levels & down other Raw inventory that, point WIP I’d total. in make also is XX% are

what that with realistic as and we the been we’re what up you it’s well meet a we’ve profitable with, field frankly. And as XXXX. difficult at factory down our down is in was in be in as going to felt small XXXX of three So, factories working company inventory pleased the a challenge out manage still we all in are demand facing when show very to was

Bill Ledley

broad And How What do view industry that? you just your saying? level what about are customers inventories?

Chris Killoy

other really I We large, the but and well. all by manufacturers’ into They think, specific visibility navigated had levels, good watch XXXX inventories. for part their pretty inventory retailers most

engaging Some other retailers were – our of from so downturns we’ve practices. inventory and they them and for levels – job looking managing largely in in of buying frankly deals some their that were terms a did than seen much in previous better of materialize were smart competitors

So I how the probably year out shake are well positioned for depending fairly things forward. they think on going

Bill Ledley

the of just it especially QX, are XXXX. Ruger QX? new QX that Okay. large Is Is then, – outperforming QX step-up the drove What products? drove the in in good What in orders for that? kind order to And on Is of peers? relative trends quite orders it restocking channel? the

Chris Killoy

think may them of December our time orders. call had – January we show started a I in X. what things on we to paying we X, this we But programs winter we QX, know, year that several incoming run on. going you beginning Normally, don’t programs lot spend or our attention our

in So Caliber December. the platforms, big Carbine we launches some those And Security Pistol. might of other thing Pistol see new the X that orders and January, in major Rimfire saw four of then normally we ECXs, those those product is Precision, the

all positive from that So, standpoint.

Bill Ledley

more. could I if just then, And Okay. one in squeeze

that capacity be you a of capacity how will lower? few demand it offline going What gun do think level goes quarters. forward happens do if view capacity? that You’ve think Do you to mentioned excess industry or you for

Chris Killoy

say. it’s to Well, tough

then challenge for on and varies plans two if the current from discount and they company it cut depending over production. to it suffering move I downturn the families. product are to how the they continuing they only broad companies rates are. or a that by are some In with their either cover got case, build one or we’ve XX to what are mean, categories Ruger’s obviously maybe think faced I product

So to how we what in be equipment. it and we of our pretty us diverse repurpose build terms allows

redeployed production most difficult we’ve factories in our but seems mean, balance to other production, And all. so far three it have me of all say, move again factories their between our things equipment to this competitors, at like to cut try as not point and for and I as throughout

Some and like to than discount are continuing out to build potentially we’d and ship there. more see

Operator

And next question Services. the Great. of Thank you. from line [Indiscernible] our comes Max with Max Financial

line now is open. Your

Unidentified Analyst

question. Hey, the good taking morning Thanks guys. for

Just of a squeeze let questions. me in couple

there The or that’s distributors, a today first, year importantly is currently possible is new is there it that mix more so product say the ago? can any you so color older into or provide versus substantially the of product different mix was, than the

Chris Killoy

we you, Max, stock-keeping the any Ruger We in with level, our have. of pretty don’t down of Not other to inventory balanced. disclose we it’s don’t large, that comfortable eyesores do see of distributors products. the tell unit. be monitor SKU the manufacturers, pretty individual I we by that. terms sure at will But, and candid, are but mix

Unidentified Analyst

Awesome, terrific.

from just rebates thing Whether obviously to XXXX, to and want and for get up Ruger continue of the see guys you offering to see promotions as has need start The changing to that they your Do inventories especially second demand. some have. anything or deals? changing peers of such in question, you respond? right you they your Do doing rid competitors direct-to-consumer stayed even though you’ve been away

Chris Killoy

consumer We away going route you. not route. rebate we’ve don’t to channel. value us be to the go or consumer the try the the some But past anybody and see distribution take the be in the we like see may I us that done product do from creative in – with I in of honest promotions in rebates don’t

of and well think new innovations we production forward are for like our what cuts and to our said to XXXX. that’s continue we and I product on think the going do realignment I we us, For significant factories, earlier, to try us going position to focus

and levels with on monitor our look know, anecdotal even rates and more force but So, we are we ideally or distributor there, data inventory. where doing. think get you what sure our we much how what Inventory, production make as the major are want do, ever and out comfortable from at that production selling problems incoming our retailers to no I and is distributor drives order there we really from and into sales That’s sales we they retailers are closely certainly is we mix. our than

Unidentified Analyst

for Awesome, have thank Whether one, final the you. possibly some opportunities any it’s question, or any to thoughts Remington’s up open And third going on impact bankruptcy? you?

Chris Killoy

million Well, going got that is We that with great and a our monitor watching to great we debt hand brands of $XX we our if great maybe if process, may obviously since been It’s some be Remington with given company. themselves. on I through see the opportunities They’ve opportunities you, and were think the and XXXX. some around structure, honest road, some cash to going strategy provide down are present closely. they road – capital products. are mean, down there no we and

Unidentified Analyst

thank you. Awesome,

Operator

of Saye And with AWH from our you. Chip question Capital. the comes Thank next line

open. now is line Your

Chip Saye

CapEx, my Can talk on million $XX CapEx. what taking questions. you looks spent few for I around you a have you it about in that Thanks all? spend QX. like

Chris Killoy

in Precision was of QX. service in Carbine QX. Chip, placing that went in All started in We in guns, late Prescott, December. guns in frankly, shipping in producing QX, the Pistol Well, it big Newport. Caliber Rimfire three frankly spent service sometime Mayodan, into of those three the always projects, But we’ve X the before Pistol was – most the Security cash the

in those went products And of into a was It cash hit wasn’t big the why It service. so, that outflow. QX. that’s one

Chip Saye

$XX a as for this million year about that because lower this the dramatic and high that as Okay. front, $XX than say What your about now that, same on little for does million talk that business? and reason guidance is CapEx recent was drop? a and what is And in XXXX around a I anticipated. averaged your you then years, Can

Chris Killoy

CNC it’s one, a We’ve products. machine number factories redeployed for be got throughout three of tools all Well, redeploying lot that of can equipment. existing new

capital the tools new fixtures, big normally gauges machine need all we products procure. that certain tools typically expenses. need those So, that CNC But – and are need would by they dwarfed are to

So, year, and in those when machines like lot a lot production those year a we this, machines, last a those of we’ve we frankly have have XX% machines bought since and of cut available.

a So, that’s the not on. to will reinvest buy have say if now, in need be tools we won’t to see lot million an new more down CNC But we machine right double equipment. to see opportunity think to buy what existing likely that we gauges new and those them to still And we tools but brand and that $XX that not CapEx make you and will machines do. products, there fixtures, make of support

Chip Saye

Okay.

what that continue, new hear? is CapEx, the less with but product development can I So,

Chris Killoy

three and going full all I are mean, teams facilities new ahead we slowdown steam in with whatsoever. no Absolutely, product in that

Chip Saye

– you And absorption those are I margin your Okay. control, decisions when carbine, cost what slow to in, having you the try can such can fixed factories SX, a to on commentary the same XXXX prior, in have as products the XXXX? your as you say are and you products new reductions down, workforce you listen the did the but you when making and you about I control to

Chris Killoy

anything is those impacted don’t four be to Well, we by know, walls as factory to going level the disclose margins. product-line absorb within the costs. But fixed you ability

walls up, be impacted products do, years. to I you cost So, volume you margins. I would But that’s quarters which prior as four would is think, what within from see are like obviously prior mean fixed that by of facing it to picks going improve all that those deleveraging are or those say,

Chip Saye

see the The ran six just of and you what you and in do creative, a more don’t I the about couple environment mind. continuing, lot discounting nine in What you discounting months? the see terms just And the of to M&P question terms discounts being for earlier environment, Ruger, maybe you of see say, year – in that last if do not do but Okay. know you retail rebates. next

Chris Killoy

to not predict. have it��s from, hard it aggressive. to Well, as stabilized Right say, seems somewhat now,

rebate out biggest that programs plenty and there. and nature you we a spring manufacturer back And you again, product say, I challenge, of if deals the last tend are lines cover different more has any diversity still through that are But of to us to the one be where get they product reliant the be the in over early summer not too saw Some one families us and product Ruger’s to the ones there on the get the are that’s others aggressive categories, product or and again think of two XX than things helps or us navigate year. quarters of that single hopefully of in get family that through only year.

Chip Saye

I the I right, Okay. did night, buybacks no but And K in it over lastly, QX? last there ran were read

Chris Killoy

That’s correct.

Chip Saye

questions. All taking for Thanks Okay. appreciate. the right. I

Operator

of our next question you. Dempsey. And with line Thank Brian the comes Morgan from Rafn

is line open. now Your

Brian Rafn

and retailers that the because you guys being them not that you it’s give does the Yes, for channel launches wholesale in less appetite Chris, anymore given very, slotting careful, these very come new inventory a thanks. line inventories? the might are in that out with shrinkage little with, product risk

Chris Killoy

will allows distributors sales exciting contact new regardless about. no about products people people it to it. their give into is something There retailers doubt the to also The get Absolutely. store

to opportunity be better better they into buying retailers’ us provides their them get a impact positive think, been with channel and a of a I kind it’s for might for the in little So shape and have opportunity some better than throughout inventories a time those stores. products it ago,

Brian Rafn

Yes, okay.

Mayodan you there? at talked lines that on covered XX% now last Mayodan added talk and about you about Have some talked moderation all – are you anymore you of around. a product moved the the bit the down would were we shop floor we’ve anymore you pace little business, – maybe the the time XX%, tooling CNC shifting Given have of space. be What floor

Chris Killoy

We’ve got down several lines there. product

in the are We process.

down we American down American build are pistols all Precision and the Rimfire Rifles in still and SRXX We LCPX building We Rimfire Bolt-Action Rifles the build locations. We both there. build the there. Centerfire also the

And are some just we we there, last like more room probably when certainly we in XX%, but were we grow so, down probably are still XX%, full – probably, but we go if you some ways to still can got Mayodan, than do. more got to

Brian Rafn

Got you. got you, got you,

talked of that. From you standpoint, always about that Okay. Sigma in kind remanufacturing, if might get the at look Six Kaizen

WIP – now, when back if you back changes more at incremental Ruger family guys owned of things on shop it at reduction in super piece, and You it space for square is it some – specific the it a flow? are you go continue in forward lien were single what work floor? demand sell? do way manufacturers, the What at point? looking floor you Is the way, this up? of looking pull Is to a Is process it can

Chris Killoy

Well, a to related small is taking lot improvements. But the cost at the of Kaizen related of really center Continuous is and in a maybe one ergonomics nature, obviously process. bottom-line. the maybe improvement to out safety maybe work

are the out short daily is positive. by I fairly, cost Kaizen I work all can that and employees benefit, the in them the best am a some the to safety out them everyday see, provides of of to the and down. that also certainly process. three all all improving it as the shop factories, they involvement impressed report in product that, fairly coming each top blockbusters Kaizens in always do of you’ve shop process savings not do of that from where conditions, we aspect of our the other some small, of terms just when is a but and That’s financially, got the So, daily a great the terms be real from are continuously but they employee could be floor, and or not ideas the of in coming

So…

Brian Rafn

Got you.

Chris Killoy

the terms it’s positive of So been Kaizen very ongoing all in efforts.

Brian Rafn

or on to that I so you being a attrition near the to is haven’t at at found your incrementally all, assuming because and anywhere what guys? at had side. in just with XXX time rationalize Yes. driving have. they guys any When you at think the new teams sales you number had you on And six five it from big add that about Are that have am guy. to one look engineering all, is you I seven do product eight focus

Just that kind to to you relative is that guys? where important engineers, design in of more you? metallurgist are that How hiring engineers,

Chris Killoy

Well, right those actively of we any for positions. are now not recruiting

of in other have to We engineers on Product have, we the you operations XX committed a and lot have factory R&D/New are in then the engineers sustaining involved the might mechanical as seen effort and Engineering those folks about floor. K,

a person. not whom for chasing of great with always somebody opportunity we we’ll we providing opportunistic All skills, something engineering a are new that – and the talent, home to and us are that’s are particular be for potentially we actively unique products of we while set are not that service if got pursuing, find in

Brian Rafn

you. Got

guys very, or have is engineering curve of elderly you an don’t how shape that have design team XX there element. bell age - – fairly lot engineers. Obviously, old very you don’t paternalistic, a pool? You I year Is don’t

Chris Killoy

and the history firearms are design it understanding It’s really great that got things some been the as a a folks to help navigate coming little the youngsters and things. have great they block is will, around Ruger. place they’ve and They and great design talented of help and out to as mix. firearms in but a benefit skills you inside with is veterans balanced firearms can us like We’ve know the – if that, maybe us really CADD are, and very that having with

areas in all group a the factory. as that So, we mix of in we’ve do good got

Brian Rafn

conversations to optimism, Yes, of and getting reception kind was just SHOT and the Show of with with of okay. you some your your relative the And the the optimism, guarded wholesale showed? of the products pessimism, cadence, that some dealers, exempt what

Chris Killoy

will our were very be very distributors, really as We at key and they new independent products that. new are with our Show meetings and launches. had make national And only That excited key the key. very with not accounts. about excited SHOT well products but retailers again, difference the that about a the mean, I They very, very received. of lot product are the

a think channel and when I think, and some was most of I think well. maybe I part these said waters I retailer than for the the wholesale the little the pretty retailers level navigated manufacturing the of before, wiser have portions part

Brian Rafn

got at that? Any on running? relative Newport, are you, the versus anything two integrated you. Up Got foundry to the main foundries you mini thoughts that

Chris Killoy

few a the there that And rollover – terms for Tree got the down. before those are great migrate remanufacturing is and main still furnaces. you focus furnaces. into is The so, some by were is runners get rollover and foundry I like or in to – mini foundries we will. of still legacy gone use the from byproducts, done state furnaces Castings legacy two the that that of foundry got We have probably steady ready doing to that parts We’ve at winding the very two then if the the a close than still pretty need and well But material are mini and the and Pine qualifying for they great. folks that’s furnace things primary large job there with that’s to rollover the think foundries the

Brian Rafn

nice down that in Okay. is any is have had And main got or furnace flexibility is of that if and there the you there legacy, do caught-ups – – flexibility? guys the some integrated kind

Chris Killoy

if of But of handle now, terms byproducts I foundries to or rollover you right to Yes, from still the like need in will. up. ability flexibility furnaces it’s some good mini we it it’s the also, been said, ramp the leftover

don’t having had to good have main with foundry we right furnaces if – flexibility rollover always, could those able question. materially bit we we open that we place. cast down outside, be parts not still two foundries of to other the then our back, pretty to but an the So that’s go We in shut do, situation, as want and surge a and now but if in little the it still source

Brian Rafn

on material resins, price-wise? raw Yes, commodity got you. sand woods, alloys, feedstock, anything steel waxes, Anything

Chris Killoy

Nothing really significant that we’ve seen.

have is of the challenges our really the not of on products one on but frankly that’s where One wood the wood the customers some highly procuring like the things it, of side or grained Hawkeye challenge a that in we are Rifles beyond the and that shape remains in good like No. highly terms grained And pretty the configured that, highly of wood. Xs. But getting commodities. we

Brian Rafn

discounts, what we some on right ceiling be of – aggressive What Yes. season, be, as Christmas think – might now What I MSRPs the kind of the saw you discounts? might went through upwards XX%.

Chris Killoy

I in depends a the wholesaler programs those product. our that individual of sometimes on the do mean, potentially focused lot on I know. don’t winter we spring, I the retailer. promotional think, strength and that’s moving or retailer the are the When in

more it devaluing the So it inventory product additional to the advantageous is not we making bring are in. retailer but for wholesale, at

For example, a program whatever be. buy one it ten one get might the might free be get or a free, buy nine case

so, his and retailers doesn’t overall but down, And cost wholesalers. the assists that in benefits netting inventory impact

may though of they distributors, And you’ll the all product the and the amount more and flexibility so, maximize in their have their to aggressive and to discounting. have appetite level be advertising then the hand strong is more sometimes, even on in with retailers their same, see discount they discount, have big of go from orders they

you primarily are where So, at. that’s seeing I think

Brian Rafn

plan sense Friday Okay. What your was national advertising, of your for kind promotions What sales was Black efforts your of match budgets? sense Black and did in Maybe Friday? on your or your guys? you your internal

Chris Killoy

say, that would in challenged those level, they some Mountain account the I all Gander customers. for the mean, world, did. micro world has the retail at I I of been mean, you Yes, saw bankruptcy. national

year, XX months I think were that probably last beyond was now. maybe

of the Cabela’s at acquisition folks the see Bass by You Pro.

through one when hand, distributions, are additional level other working Gander Bass injected the from store Pro make strong is with and we the with at are hard store. but the a on and and on every retail that when bankruptcy So the insulated Pro level Cabela’s store standpoint there in out, a a selling sure an hand, acquisition there Bass that certainly is level at credit excitement like to of two-step for that every went assortment when is we both like us Cabela’s staffs

Brian Rafn

okay. Yes,

of a of little bit kind ask, a question. legacy me Let

was, one time were versus You Any a levels there an shot guys product. of and was again, the gun market, at issue quality it to an $XXX think in – of new price $XXXX – it’s my point. I kind comment

Ruger gun? future side-by-side I get the either a that, with So but could one any of hundred on thoughts shot

Chris Killoy

at was the for there our market be that we Red It head Well, right Brian, you I cost. higher right fair deliver than one that the up product to thought the raise the we market. on hit the much with couldn’t were side-by-side was the just price like the where margin. We Label. wouldn’t a necessary product felt would costs profit we nail mean, the on the would be on to we just we and if level competitive make

we back. like be we of why pulled wouldn’t couple the that’s plug Not there So years to Red that again. Label the on

say products. never, talk wouldn’t know, don’t but I new about So, you as we

tell can you off I that So the one table.

Brian Rafn

Yes, okay, okay.

X.X XX-millimeter, those some Let you extensions that had been in guys? some XXX casull, calibers how me additional ask, successful the the of you your kind calibers, in unique the some derivative products, Creedmoor, guys of of XXX Ruger, for line

Chris Killoy

and strong. exceeded Creedmoor the Bushmaster, Like them a X-millimeter been example XXX I has Well, very has X.X our the Creedmoor before, some mentioned like strong. really American start. little expectations. very Other for is Centerfire slower of the ones

in like as kind other. a don’t niche one the way Redhawk like of Ruger and a have hit, of So lot was again, was for Part previously or or driven the Caliber that they very A some what a season. cartridges the of me big XXX certain during calibers Bushmaster years. allowing slug product, by said XXX But a legacy states surprise used steady laws it strong was. Super varies. really things a kind I those a of Ruger, caught it be been as the see Things say, the Varmint line, like the of as over I XXX think vary and I how the by straight-wall shotgun just far to

the kind on are driven the laws those consumer think the Others driven catches And by changes XXX notes. in both with of and just by what hunting I the struck state so, some on level. at core are

Brian Rafn

had supply? is than we’ve allocation more the whether demand you. product you, Precision got now that’s on Got Any like limited Rifle, there on any – it’s or right

Chris Killoy

sure, the for end in I that of X-millimeter dealers shipping it where a Pistol is is now been one allocation. day of Right every on Caliber very is Carbine product. looking one get since We We’ve the lot December. And think get well. for that can they done

platform. with Ruger that looking, trying However, online there in – them, find It’s are every because day are some of and available a independent look we the that keep Pistol we tell other are right to supply up. the folks for looking Rifle XX-millimeter for shipping at chasing lot I XX frustration lot ramping we go ACP, request frankly Newport saw of there. XX a where calibers. People outstripping and those S&W, on Precision But gun out or is all demand guns retailer like people and have now there product. to your out for people would that say is I’ll looking Caliber Carbine the or that

So very successful very, been that’s us. for

Operator

from Richie line Gavin with comes the of [Ph] question RCM. next our And you. Thank

is line open. Your now

Unidentified Analyst

Hey guys.

Just question. quick really one

mentioned balance level right on would you deal the for sheet. your debt take terms in or of of dollars? multiples either What You EBITDA actually

Chris Killoy

right it the to needed sense of came financing have that gives pass think, as think like future. wouldn’t again limit with the we for be think us equity lot we able really it our don’t now, as get we us. we to it or know, along, either with balance I debt, debt But, made on. if preordained I I any opportunity something would mean, a – you opportunity sheet no speculate I it’s Yes, in

Unidentified Analyst

Thanks.

Operator

today. for that the our have and time all we session for is question answer And

said, that to I Killoy back So over turn would call remarks. to the like Mr. CEO, Chris for and closing with President

Chris Killoy

interest thank thank XXXX to for and working I Ruger in like the would like your would customers the you Ruger I hard closing, of In you. team and Thank our loyal members to in Annual and forward Arizona. American many May Wednesday, look X at to our our you design every in firearms I manufacture reliable XXXX day rugged of Prescott Meeting seeing factories. who on

Operator

does have disconnect. wonderful participating Ladies and you for This in may you all today's Everyone conference. gentlemen, program conclude a and the day. thank