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RGR Sturm, Ruger & Co.

Participants
Chris Killoy Chief Executive Officer
Kevin Reid General Counsel
Tom Dineen Chief Financial Officer
Rommel Dionisio Aegis
Brian Rafn Morgan-Dempsey Capital
Chip Saye AWH Capital
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Sturm, Ruger Third Quarter 2018 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 follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Mr. Officer. Executive Chief Killoy, Chris Sir, you begin. may

Chris Killoy

the Good third Kevin, quarter and financial to ask our our Reid, state to Chief welcome Tom statements; would to Company get Officer, & market Kevin read Counsel, of let's will General Ruger quarter Financial Sturm, our on XXXX Dineen, to forward-looking then and give your operations; I the then update like morning caution conference I of overview and an on then the get we'll will questions. third you the results; discuss started. the call.

Kevin Reid

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

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

Chris Killoy

Thanks, Kevin.

of quarter. summary financial a provide the will Tom? Tom third Now,

Tom Dineen

Thanks, Chris.

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

XXXX, prior of the period, per and $X.XX earnings adoption million $XXX.X by share were $X.XX. quarter the by In XXX, third which revenue rate of income reduced per as following. of in benefited shares the XX%, by EPS For from inventory the in net million the $XXX,XXX. sales in by in year repurchase and prior to EPS in of Two, XX% by of increased leveraging increased Conversely, The favorable $X.XX. for was comparison tax XXXX, share. XXXX. XXXX diluted inventory cost decreased third of and earnings to sales standard, to the ASC And adversely increased current the X.X One, XXXX recognition quarter by quarter which improved which the the year comparable were $X.X increased cost increased federal new three, current in quarter carrying quarter of carrying known stock common earnings the sales deleveraging of quarter. of This third due manufacturing of the the share reduced the efficiencies third impacted per of $X.XX, million XXXX by cost and the cost the EPS of $X.XX. unfavorable

American may Xmm slide forward. safety some results, Our going bulletin Pistols we In in Ruger chambered exhibit announcing October of premature barrel. locking wear surfaces adversely that will us a and improved efficiencies our QX between impacted XXXX, benefit the but the issued

safety is cost customers free retrofit a affected bulletin. a of the total of of million recorded pistols offering and third the $X to quarter therefore are which expense the We in XXXX, expected

months and earnings share. diluted million net were $XXX.X the $X.XX of per XXXX, For were nine first sales

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

XXXX. of For or million million. the sheet, $XX.X cash totaled XX% quarter our the sales XXXX, of was $XXX.X of September our third or in balance XXXX, of third compared XX% quarter $XX.X to The million EBITDA at sales, XX,

nine months XXXX, X, September XXXX, $XXX.X to million, X.X XX, months shareholders $XX.XX its Cash the of first to have payment we we returned of is of equity company ratio the shareholders. to first value debt. million totaled per Cash stockholders’ the At million to $XX.X flows. and operations. of XXXX, dividends. returned no $XX.X which generated cash from book a current In through share. In the Our of nine equates

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

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

Chris Killoy

Tom. Thanks,

We gradually financial of are fourth year. lowered and we quarter financial condition the third with our as we reduced the enter the results our we as mid-XXXX, pleased production In workforce. quarter strategically

relatively soft sell-through achieve inventories distributors. from demand, one, extending strengthen Number with a And which all reducing results; hindering the independent and able a retailers year distributors were of achieved the large to most our inventory; past As in reduce prior and result, quarter of sheet, promotions solid comparable over discounts the ourselves three, independent the period. from in we third of the to and retailers. is X% the year, at two, or increased products Demand, our our estimated period distributors products XXXX balance to: we without by by sell-through financial this our of the unit importantly, from

independent prior products increased year X% the from period. of of period, background comparable the checks, from Background first unit XXXX For same System the the or Check X%. the nine decreased months retailers in Instant Criminal to checks, sell-through NICS estimated distributors National our The

Rifle. pistol, the X%. PCC, We the our our the recently II same the and Rimfire pistol third introduced commonly first LCP strong Security-X include is IV pistol, as believe reception the Caliber ECXs XXXX period, the attributable NICS Pistol of products. and These pistol, checks Mark of of decreased to the both months NICS Carbine, nine For in referred outperformance the quarter Precision to the the line,

months product sales firearm New XXXX. $XXX.X first XX% the of nine in or represented million, of sales,

this new products New include competition line past earlier that product like proudly I calculation. month, Ruger we announced the and XXXX are along Shop, the Derivatives sales announced One, the The competition years, two Custom only six products pistol, we a sales first the in that not offerings. introduced Custom new rifle. Koenig Shop two the extensions included just were also mentioned. and Shop Custom major in Doug our with was XXXX

very products off We’re to great been have well by the market. a both of the received as start

we their The style, features. loyal embody and will While the Shop all Custom from Ruger our independent innovative and of Production products our levels, to distributors and shooters primarily hunters retailers. of collectors. quality have our base pinnacle inventory our products long through semi-monthly been guns customers to reviews from and competitive for of design, performance, manage sell-through to production estimated and the excite of inventory, the Ruger recognized will

and We inventories. also review the inventory independent distributors' our

Our months total year. nine of was the for production XXXX first below X% months first the unit of last

production that the reduced in allow of inventory and both our warehouses in Our decreases distributors. independent levels, significant for

finished inventories year direction during perennially targeted XXX,XXX very the that fact, the decreased in combined have additional expenditures, $X.X the Capital production goods well-balanced those over product our units cyclical in strategically capital The first In in build market inventories quarter, expenditures products. months third September. accelerated Nonetheless, last since healthy to turns. very million, for we us. us families of regardless of which well-positioned nine low which were to succeed inventory is

commitment of a this mentioned last attributed two not quarter, as signal lack new to it it does to nor of in Rather, is However, our can new key change indicative factors. products. development activity we product be a

timing. The is first

XXXX XXXX million, new into is This Our products of was products attributable high. the expenditures expenditures year-to-date four two last If been uncommonly capital that one totaled the to quarter those in fourth significantly would lagged major introduced XXXX, have capital were greater. our or which December. $XX of

reason second on machinery of We repurposing relocation million the units built site. X.X The XXXX. is in equipment and and already

has operating rate; the Tom relatively the tax months key federal cash ago, freed nine and contributors continued just us strong. reduction, very capital $XX As our of of production solid cash a despite allowed our expand of level significant low few which the we minutes first generation generation I solid and were which the year the positive have million cash industry; as mentioned create income in foregoing to reduced our the some performance, The outcome accounts collections, capital sales, inventory a some another ago, mentioned Cash, levels reduced was some was in by covered. production, bolstered headwinds expenditures, equipment. minutes receivable while up the our This of few outlays. reduced manufacturing

our support balance of philosophy we changed. more has Nevertheless, million normal capital operations. is to $XXX allocation our not Our daily need than cash

of stewardship Our shareholders' primary the creation of our the assets shareholder responsibility and value. is

to Sporting dividends. XXth we will of Meeting held If note, return very Association form the employees be Annual the the award The a on to our with generate our returns We will and our the in shareholders of a decide One firearms to to company employ question Operator, honored the X,XXX mid-October. third are not in make Ruger constantly year be recognized the strong Ruger the we Wholesalers final may looking in for capital, capital. and of we NASGW honored year we our where to the firearms customers by Goods that able point have for National that we manufacture get accepted for behalf that were opportunities of in cash please. of innovator We its our hardworking as first we the the year run. row, XXth time. Pittsburgh

Operator

Instructions] from Our comes Dionisio Rommel from [Operator you. Thank question Aegis. first

now line Your is open.

Rommel Dionisio

a returns of the you obviously share, firearms just performance, a if impressive talk that if seems gaining you been a market? but about maybe on little market It which the overall have is just Chris, lot could I could bit. Thanks. much. very very overall Thanks comment bit state soft, little of wonder as

Chris Killoy

look out of There of soft are is our being NICS as Well that noted, at things competitors. checks. there. are activity There lot Rommel. you by still a been have deals the Thanks, somewhat some cut you when promotional

so, And that face day. marketplace we every the in

the overcome are to that. ways best products New

there inventory take at our is and distributors offerings still in distributor work level, work still of think level, We the day, We continue through Although, inventory a to situation certainly share, a to process. with probably there stabilized to market, the large is We that and Ruger wholesalers. last through lot and overall, think out there. at compared even of the will lot by we is capacity end has may think better throughout but level, a benefit that that think We of near-term. while do year, our much and capacity our retailers. at participate distributors, the for in the manufacturer both retail promotional with our the we

Rommel Dionisio

last material a Thanks, just asked but the Chris. we this year, prices? impact of I tariffs rising question Thanks. can get on comment follow-up raw and

Tom Dineen

the impacted majority the raw been because not vast tariffs directly we’ve Rommel, we materials by of domestically. source our

tariffs tariffs find domestic raw have Take the indirectly. sourcing getting the sources. This steel as domestically has steel for led us shortages risen made demand to increases domestic who attractive, our we’ve their steel price have some from some so in and have overseas has However, been impacted more manufacturers for been materials. to decades, and somewhat example, steel look

have Our price of balance we’re very the suppliers. year. purchasing this our Frankly, through with worked folks closely protected

Next material. some to pressure pricing steel on and raw year, do expect see we

availability. biggest concern our remains However,

balance to bringing we’re raw make be our So, given of mind things of and that out don't the we any steel strength we facing. market need front when closely we in shortages watch sure that to, sheet, may very in materials and like the

Rommel Dionisio

much. Thanks, Great. very

Operator

you. Rafn Instructions] with Thank comes Morgan-Dempsey Our Capital. Brian from [Operator next question

open. now is line Your

Brian Rafn

morning Good guys.

Chris Killoy

Brian. Hi

Tom Dineen

Brian. Hi

Brian Rafn

July, Give period little me cadence summer how tempo a kind out, a tempered, layered sense August, into play market that season? seasonally bit that’s pre-hunting did of September slower business, a that of is a

Tom Dineen

actually some effect, Frankly in September. be sales to lasted but seems results. of We in probably of than sometimes very through are but were best bad that reps at to later, good that captured to our a Brian, retail season while longer. they as are and not promote, July think one things it normal, summer traffic advertise willing but it hunting took slowdown start retailers those a little seasonally, as And saw kicked later seemed we it who terms for in off,

on back that I of slower and think we’re stronger to it’s fall that into – period period. normal So, summer then quarter seasonality a fourth

Brian Rafn

season, Yes. Any, kind standard of the hunting deer on bolt to rifles are back. bolt shifts modern in any rifles, of the action action supporting the kind

– that’s any have years, or We of couple is – anything have seen caliber to descent trends the deer last looking for that season trends the some sell-through? hunting

Chris Killoy

in may we’ve very straight-wall Calibers XXX good the rifles recall to changed were of Rifle strength hunting past their that cartridges Series, those particularly and success you year restricted. Bushmaster have the American X.X and this the – in their up regulations with states Brian Creedmoor Well, seen that, opened adopt previously

So, we’ve uptick particular, in places seen like and a in XXX moving Michigan to with Ohio, people Bushmaster. the nice

our Bushmaster We AR-XXX platform. also recently XXX in introduced

So, existing well. And a platforms. impact nice potential as things XXX who both want and people we has think that up with have hunting a will to seen community with some Bushmaster resurgence just change

Brian Rafn

Got you.

trend more larger You it hunting certainly or Lapua to the the launched, the toward in the Creedmoor. you that precision Bushmaster, heavier range You seemed or a see you caliber, XXX what Magnum X.X a we mentioned seeing? Is of AR-XXX [indiscernible] or question, is think of calibers kind from the some there also rifle. I you mentioned

Chris Killoy

Well, years kind a Ruger category, I long-range reset Precision in that the launched participants in we shooting. of couple we Rifle think and a we precision ago, lot new the precision that rifle, the of of attracted

we’ve to it with had interested, thousand and so, have a they just have us out can comfortable Lapua got those of just certain size folks targets may got ranges to taken they because result, lot on in out feel to receiver you people now, a to Lapua results fantastic. meters, where there, a targets know XXX there might which to those are while at, and a for staggering. we increase and Mag, they a rifles they that request hitting particular, precision it took as that get in a the hitting XXX little locations and rifle. That and And Win that is shoot both we ranges be of been X,XXX the XXX And a but us crazy, were far, get as were while of those lot starting the plus there

disciplines So, precision long-range and than it say, more a I it’s would events shooting is for sure. rifle hunting

Brian Rafn

Yes.

you that different look a is something or more XX-caliber Chris, trend that migrates forces for to as Now, a that that market Barrett, at completely up special is guys?

Chris Killoy

get a requests. We of question. Good lot

You other we bores. we spot request know, calibers in a and website those big a our called, Email the of have for get on CEO, lot

up and we're we’ll So, know Mag that but Lapua that’s Win good a trying that and with going the caliber. at, likely just adopted think teams and with XXX so take the many something XXX to and have Forces we're XXX look is, now right you around the units by success to country, SWAT keep I as has been Special

can those who Although somewhat we’re shoot it ranges – find at place a by is customers that far. limited to

Brian Rafn

you. got Sure, right. Yes,

President, I Democrats frenzy obviously hear and politics have ask we’re believe what polarization and if me temporary the plan any the seeing your back elections, production in re-take you the quickly mid-term Let turned with have you out MPs, actually to roaring – basically the back, and reduction lot having crazy or and, given for SIOP how of have a know comes Can you employees were it don't up don't the anymore, is house the you with the to things go gun-control fast? back hiring? bring some you do and headcount, up

Chris Killoy

this before. through type been have we know, might you as Brian Well, of cycle

or guidance, would our on saleable where be aware these to demand, increased likely they have inventory discussions demand, we’re be it or with like some we think capitalize we’ve called is impacted about to think, reduced very our for additional have an very building of exact show rates. distributors been give at in and we of build the we I also So, if ready things Pittsburgh. that so to sure we’ve, where forward-looking strategic what uptick that, and our distributors where mindful they in even been a some in degree we were we’ve SIOP would do that we with talk what if And there one in an pretty regards, but we’ve rates inventory, wholesale it’s models gun-control our with SKUs don't SKUs are – by our were product, both I though make we very And have inventory. this last I and capacity month's think,

We also number specific for those have a very lines. target capacity on

though and a on of a even infrastructure we can in those machine so be there full line, people rates and So, move might at capital way operating increase not fairly we’ve retained we tools on gauges, the quick capacity a basis. over particular

if for we're the it. and are we changes, goes we’ll if like goes market think – that not, think I for market ready well. for up, as be said, ready it I down, for if ready If So, we’re we ready

sheet helps balance Our there. certainly

Brian Rafn

the Yes, dealer, important were the how kind got wholesale of, the you. level specials, quarter, those In quarter? of your in your exclusive

Chris Killoy

be us. with makeups. to continue times important in They in our comes those Unlike it competitors, and to when work very wholesalers some of We special our for good bad.

So, some series to from of or themselves us. our of on groups tend a buying, of particular those wholesalers buy buy like the TALO individual when products slow things do would the we well collective very for buying models distributor one might with just that down,

TALO initiative as offerings In on are of initial the Shop fact, they’ve supportive the our distributors, been going very well. Custom go to and through that

Brian Rafn

years, is that as Is is been a has The that production buried or how Yes. for limited that that a SKU? something of long a of you’ve Ruger on Custom that? had Sturm, kind operating Shop, concept Ruger that type in couple within development a or brand-new

Tom Dineen

the of for there products. higher to to It’s go time, of talent. something goal a Shop us mean, some or introduce that very out been that some after would people, a I us end while has those challenges both competitive for and been Well, Custom allow it time

of those things And factories so, engineers the got closely ideas very, very all expertise our think are with with is by modest have that that our teams. out shooters, exciting folks got into the also place, – gaining some right is really Koenig, working to we access have I what’s And from expert came the and some entry there our in Team great of the shooting in engineering we’ve at that some captained about of three our we’ve team, been coming really mix, Doug woodwork. with world Ruger one shooting competitive

people, every pulling know, show idea, can got new factories, people we're we’ve up you take and one us. got I time So, so a in the where of design, this we’ve about excited new out very

Brian Rafn

you. Got

kind been a your national Okay. this know think the do standpoint last that running season fairly the of sales – on from for the your, plan, you years, or be promotion, season? Christmas advertising or this has efforts of going for season. and from What seven of There’s standpoint firearms. high watermark holiday Black the I how build-up is eight Friday your for is the been of are kind expectations holiday guns the of you you see estimating to guys bigger and a sales

Tom Dineen

hard forward guidance, give that we predict well It’s it. we’re prepared for and don't to but

good side, late distributors, might accounts spring. ad job on team imagine making have and both as and begins inventory of our at the the planning a support retailers Our actually laying ads, national of those folks sure in to schedules, that at you in there sales is very done

ads. Friday Black those for looking We’re

So, we��re for prepared I it. well think

retailers. about for got I we’ve that for right – and products got certain we’ve We’ve fourth prospects think got going think, for specific place products quarter. Friday excited it’s And the they’re to in I the Black be it.

Brian Rafn

talked any, and Are the guys about is you talent your usually of finding Got past – to have talk team, that guys to is of that in their you – about somewhere you still Is Mike XX the has you’ve hiring neighborhood plus you. X the XX about pool same? engineering any? had still engineering in lost X guys, teams,

Chris Killoy

It’s probably around same. the

– see some looking there, out for looking that. we always talented always some for we’re We’re folks

good of with an We all good or are a work them new get mechanical three working our projects for one real us. degree, engineering of on bring and folks world intern stream our on opportunity two have provides of that talent summers, program engineers We hiring in Ruger for a factories. mechanical at out for that

got, communicating more different of little So, bit one got major now between we’ve things functional is, some know, a you teams the our we’ve cross of factories. use our that’s three

likely engineering New of where and product regardless where particular both matter adaptable be that built on So two or but those own of working flexible in it our more facilities. North of though terms it’s Carolina. going may we product we’re it that have might Arizona places, be our in-house built, ultimately using be built, and Hampshire, from one Even doesn't to between in much talent engineers

Brian Rafn

Okay.

about too is know your space plants? the more on the it plants or lines. between mentioned floor Have You you tools, of some moved machine you repurposing, within just assembly tooling less or

Chris Killoy

to the and start-out look plant. we four freed-up between then looking of we Well, for move within walls the We plans. equipment,

a this we’ve So, done year. lot

the as SIOP rate free-up equipment between as factories may one cut. line. get Moving things

place. looking to increase are We another

be Our engineers out for can my within coming see I first than a order to our floor can their going manufacturing new phenomenal a up purchase and next the job, freed that’s and the put have rather then walls up, into looking a divisions plans new that on other equipment. something that what four month to done engineers CNC

Brian Rafn

running the and many furnaces, two have you’re furnace, Okay. up changes the still in there about Is in furnace, same? the been Has that that? I the you is any think main then operating integrated, Newport,

Chris Killoy

through the in a still that pretty and to products but very a to able to runs process. amount products furnace, revert those down we’re We’re Certain that close handful to of furnace. legacy of be we’ve be the got small winddown need old furnace. running got new the We’ve through items legacy just qualified the material

Brian Rafn

running the still up at you of Okay. Newport? And two are minis

Chris Killoy

molding our folks have folks great on Missouri. done initiatives. efficiently job running done that pretty both addition Castings supporting and new Tree we Yes, facility product in they’re of well. that metal our job a The have Both Pine have to sir. are injection those in great running They very a

Brian Rafn

Okay. be at And are two sufficient or staging looking at or Newport plant? still the production, that the at – another Chris, given going we number of either current does current, the is minis to three,

Chris Killoy

Brian. something we We looked actually at place on We’ve the just in got the It’s plans forward. pulled it. trigger haven't

that pike, can, on from major one we we as capacity products the forged on down investment Today, pike, MIM coming because parts? we know the having using the components? strategy, don't overextend you the ourselves used too a on new Is the So, we in it, depends furnaces. are well from making as rollover coming lot the we’re You components, product standpoint that’s with Are what casting made is, know part to the down of technology. that and casting? be that go sure using where what’s new things depending much and old depends investment days, that on anything the we gun with what

Brian Rafn

I’ll ask line. one then, And in back more, Okay. just and get

kind vertical the you SKUs operations I Your usage, integration more as on the in from seeing the injection-molded these parts are used of go content years City, maybe part Earth on? your more think at more NIM, within plastic

Chris Killoy

injection-molding is parts. out Metals our do it’s still in of having the to the city more I we think Precision timed operation our mean, market. metal I of quite Ruger a bit really of benefit

the prototypes, capability, that on to suppliers, of do both having our is benefit metal of the outside and on top provider captive but in-house injection-molding on rapid what investment we casting both development. market with time our tooling from source side Our own and

look been a upon short different production to that’s cycles. very, benefit product new very big in or behaves, how So, we time be and three prototype, ways can be it either our at order, to in

Brian Rafn

Alright. I’ll Thanks. get back in-line.

Operator

comes Thank Instructions] Our with AWH you. Chip [Operator Capital. from next Saye question

line open. is Your now

Chip Saye

like it based are as be taking it, thank it a back. it’s while, discounting I promotion, year last know sound them. are you retail, promotion for manifesting, commentary abating seeing like, of your questions. just your it there as? that is was and the seemed people seated seated around or that you Brian you how where and have about distribution couple I a talk but commentary the worked-off today morning so, may made on and what inventory it you can at good Yes, like but asked that for at appeared it it both Looks appearing in And my if

Tom Dineen

ever did I run think you will completely. did Well, think show don't industry is than it what normal promotions last if will. and We period remains within this I promotional away our year you went fewer January a that year, window seasonal we see

when is typically January in So, wholesalers distributors or have, shows.

of them of promotions window Some that rich question just is physical electronic it’s but how it in be of Again, nature, are shows, a more them to some going in there. those retailers. are towards

might you gone if a out to little that I it’s to very, go get to the XXXX. then don't than with away are the in compete there, away promotions and softer example, expect we I richer it’s it think expect is see we folks a go those if as For market don't market certainly completely, but other

right some puts see our pressure you on the that account try into know prices to on we’re to the continue puts at and keep take direction. always and in seeing promotions margins on will steel level margins we’ve rising we going think, I of such got to that time all

Chip Saye

up promotion industrywide, Okay. like you same holiday think be you That your will or Ruger hold or this kind the Will season I guys? you plan? of but is down, what’s for do mean, line fall? this the for about what

Tom Dineen

do typically, year. Ruger is I let December. plan about take to we We’ve typically the think ahead that got January what our price a seen increase know if likely We is be on we’ve trade of or going in time to the very last similar X. to that

in increase order. pricing or bring desire when because a enforcement So, don't to a increase, it’s price protect it, price military they do everything we of affects that inventory and so We they and can respond law if advance order. unless to on it

is, we just expect rich early our hear did in that’s I so, normal than they offerings would versus at going aren't are And promotional to election, we late to see those of same like our trade, of that that or balance promotional year. either our how And would happens question November announced last some cycle what or how retail, they? when just demand the we normal just on the want post-demand and efforts And we competitors. part would on post-mid-term we depends what’s cycle, and have that December,

Chip Saye

I kind question the the that’s working next NICS Got number level? little is, a I and was you it. number out harder what at, adjusted My number we to you I adjusted is the time you going I industry the and and that’s that to the crystal And don't how industry at September came us all uses, think a have like I appreciate – time saw I of few numbers but its do capacity a industry think lower at mentioned that. to where mentioned than or mean, frame? last the capacity was a and we levels. that cyclical in And others excess months good at back think you you little XXXX, in kind get excess look to of XXXX it the one the see just think ball, to, the wondered, but and NICS and as but that last reminder I the look perennially best that the that’s it way

Chris Killoy

position we're has capacity tier say some are my our comments, as said smaller still get think the as In manufacturers. that at as is be with inventory news exists, into that there sporting largely very frankly, And in-house, its and out. they modern I Ruger's in but and inventory well some good earlier to distributors, the other Ruger our that, would worked into platform the both I or may AR I rifle, way third some of MSRs, manufacturers degree the position inventory happy case, business. get business Well,

ramped or maybe hanging some know, I That few of and couple may think them not shakeout couple does largely of has a couple capacity. challenge away, the years, gone is the shake have category, you out Over They there. past same period be still still if be not them to. the where still of need everybody may and further years but that that making same not through They increase a – in they so firearms, are business could has they those we headcount. went everybody of a some on, of up, have number may there still

And at of we’re the that’s competitive. piece I as retail that challenge counter, pretty biggest pie all it’s so, and the the chasing think

our wood to rifle that Hawkeye, value at it’s own one sales gets at and have our real some for really grained You're of it highly the come example our value those pretty price got that price they’ve of, mean, whether years is but shifted higher the I blue or bolt the the product ago. bulk looking action prices the our Hawkeye, nice Fire those a you from even of at counter Ruger points retail they our at XX polished from line value look when a points of made Ruger part line is vast And steel, customer today bolt get lower majority there. still the away up strong. which American Center down competitors, of the line, the rifle, the pricing days action that the in have of

key that be are to would that So, expect I those trend to retail price us at. at points for going to particularly continue be

Chip Saye

Okay.

have you to capacity it’s industry then, XXXX is sounds hearing, AR think, in just…? like, I’m take and anticipate the ASPs in capacity the lower and may some and that what you may go So, going a you It out. while

Chris Killoy

mean, lot a is in a lines, demand. industry, I lines in and uptick on mean, an we whether put like max I rate design already I target I necessarily know. way, don't depends there in, target don't I the our think, we’re we daily our a I said, mean, we design either rate.

And up pretty given facility. down or within so, we flex quickly, a can

need that’s trying or is to lower year. necessarily that, don't don't case. this going to price selling we’re think I say know certainly but I average necessarily necessarily a be don't to I both keeping so, think share products up market be. sure can to we the And putting next make if value think respond the as necessary of lot and like they and we’re where our into to margins our of a we ourselves

Chip Saye

Thank I you. Alright. it. appreciate

Operator

you. Thank

Rafn Our with Morgan-Dempsey next Capital. from Brian comes question

is line now Your open.

Brian Rafn

versus a are fall reports tool Chris the that little out maybe OEMs? BATF at of amazing shops kind you XX, production of in follow-up you is larger Yes, you tiny seeing, It’s some capacity where a the are just think your capacity. many XX, when XX, producing on machine look year, how in there XX guns

Chris Killoy

OEMs reduced around back and but machines or Well, production, of us, guns are forward, those in in cut they thousand folks a be distant not a I in small you the larger where they’ve think the people advantages probably business have could those we like on the XX, some not under take around a cases. may said, those producers, yes, like And XXX XX to or probably year, too moved of headcount even reports folks that ATF in lot go as future. under have their

Brian Rafn

inflation, at, talked if woods about green The anything sand bit across or seeing aluminum, stock spectrum? little feed steel, you Yes. the commodity anything you lubricants, oil or are look you gun resins, woods in full wax, a

Chris Killoy

we're see for going with obviously capacity the don't sources injection-molded products something There’s to there. where those of pricing is do out think, components there that’s like I pressure some of of some petroleum-based ourselves plenty we there. products, plenty

polymer commodity may stocks, the that keep we now related that those we but some or to nylon of right one biggest stocks impact glass-filled rifle is either pricing, our use, some example, steel. eye an have on For the

laminates. when use to terms we that with we comes those balance We – can and stable. frankly, less opportunistic build in Ruger those sheet bring pretty bring to, is it in used we’re pretty wood in to at sure than in products. when wood but those we and buying think, our again ready always that’s would make something I to we're or them And need

Brian Rafn

you merger kind the on of – without Yes. the may deals be specific mentioning seeing What are acquisition front.

a You or be it that of kind product? more forward know, of Columbia deals River either you, the would kind by of cobranded ammunition or going we more seeing Knife, for accessories type like is viable is where and

Chris Killoy

the opportunity for capital a where to acquisition. our use hesitate strategic there, if right we wouldn’t Well,

manufacturers made I We not have bringing doing sense only seen a the cash for the be job thing would necessarily market better with leverage, it. our couple think we really do and something could to on date. we be a and than us, accessory haven't that the because of they’re to They party would

on our too the a things at hesitant the core of are to little competency, some outside going So, and it’s far right price. that we’re be

given our we know, right multiples we’re you necessarily because something make buying don't at and our we’re You just of at, conscious the it. that to very spend a pressure feel to money trade sure know we wanting have price,

Brian Rafn

Yes.

operations? Now that with Shooting period, ambassador Doug short provided integrated a type brand that had shooting Koenig's you that has bit your may field-testing for insight kind you’ve of some design, be up, Ruger these team about has a How little you? You like prototyping, to Team guys. how mentioned loyalty talked

Chris Killoy

really our they engineering ranks. that, on, shooters at be like that month, planning amongst and the we’ve three They around like a tell of have brain, the the up or what got on the a spend sponge. rolling it’s impact are him have the pro-shooters we their fun we the some in like do stand just of – that I They show competitive we're deer have factories. working can been want them when they and with rotate of to engineers sessions may our show sessions to lot his Well, you product they getting range. somebody Doug our level to either we at every weekends one those out factories, not and The there, of on engineers. really they see the will been just want to are pick at our competitive so but

So, right that engineering they room. bring into back knowledge the

Brian Rafn

is long recall American several of to a take that you is to The Pistol, something years, I fairly that that the you. how couple that? safety guys be you’ve does execute Got short-term retrofitted, on taken months, can a the charge, be know going know but Ruger that you that

Chris Killoy

of we is, that look at safety couple away. What barrel average that that to gun first there. replace do we the really doubly and the to that any slide, the barrel. but somebody, Well is thing I the high make we replace lifetimes. refit replace that’s the – a look to the just will a bulletin firearm, seems we're out but we is, very over round for guns, typically is, solves count itself customer be But in relationship, we rounds, going actually XX,XXX a put abnormalities, do this a do at the And we party and which once get take sure, that, barrel pretty the the be the to much and we what if realistically see we problem slide, goes will probably offending

our things repair those it because guns, not a for to wear firearms and a, a first time to are it exhibit just the the make buy sure may that to a any may it’s be takes the third on He takes they maybe excess beyond change that downstream that, long the maybe a come long time the customers largely in. safety it’s somebody owner. So, – a notified long realizes second so these and barrel was purchase, time then there back take and from somebody reason wind for time down gun, is bulletin they a

a So, it take does while.

even it took $X us it that million takes that while, or will. that to So, years you charge referenced, through use though we typically up if go many you either for a

Brian Rafn

salary for obviously seeing inflation, and wage question maybe and a then inflation? Maybe what Tommy, are and the Yes. healthcare you on,

Tom Dineen

in or we’re insurance you a imagine, constantly more looking our the HR medical are we overall of fish we and as less usual. business That’s can folks, at nothing Yes, small something but as with norm pretty pool. the out

they you're seeing national us, hit what else. So, hit in they like trends terms anybody of

those we And So, keep provide, and a it’s not fight, provide provide to we got doing. great we it’s healthcare to plan think act. constantly keep. a and our have We’ve benefits. employees, balancing need I they to keep have real employees, provide employees. that a what want great It’s battle inexpensive, to good to do we but we benefit it’s we benefit frankly good appreciate that, we That’s to to but to a

Brian Rafn

Okay.

Mayodan, Prescott, might you plans, seeing And running different what guys be the over shifts? in at Newport, look that plus are time? and you you If what labor maybe

Chris Killoy

probably, as Brian, product on one varies, it’s It’s it lines product would it’s two. others by line. shift, it’s expect you – some

some So, we were two net-net like lines shift. in four-day is and probably in but a X.X, that somethings somewhere do

on to odd machines free-up we cycles. So, can use

do depending of it the So, to really what functional our what there, is and for capacity lines the varies out to product what and lay fully them two-shift most try depending be a operation. is, on on we line

putting would we line our have, you we we that one know product shift to smartly, can with – shifts to good those start-out try new a where in be super two, expand look to at So, and and sales and we place. out lay in so that’s we’re but may run it at order

Brian Rafn

think been I it been you couple years now, seeing to would out I’ve I XX%, in Carolina? was we like it’s What lines, many floor were what How there, of the [ph]? North you. down a be build mean, since when Got in space might be Mayodan.

Chris Killoy

Rifles year not for we’ll I’d Brian say, of XX%, example at, at down them probably added those, this all We’ll if down things be of and there. Centerfire plans we’ve couple year, in of but making XX% probably got. be most American next past a We’re bulk making Mayodan. We’ve

So, Precision line, really Rimfire demand job standard and product. and because homegrown to of like the as Rimfire an that’s a those mean they’ve their done that expanded evolved just Rimfire for own the I the American out in lines existing product Precision lands well which as the Precision both area Rimfire, the integrating great half that we’ve lines, developing and the split

Brian Rafn

Yes.

you the we’ve they XXXX, late in terms? seen You the that talked more guys saw asking that, guns discounts. dollar we everybody Chris really do it’s of earlier obviously know or XXXX, know you discounting, XX, maybe just in price for saw don't abated aggressive a some XX little were we about less hemorrhaging XX, XX Has at, I bleeding, is XX.

the you still pricing that we're heading number that volume You do kind is might unit just you if of from seeing type here of what discounts a see standpoint discounting thing, that but to more industry? the across XXXX, hunting and look prevails the overall at in MSRP into holidays of the down

Tom Dineen

It it’s think, little. gone certainly down I away. a hasn't

typically there’s you you of cards will promotional coupons go still with the of lot If level at of We standpoint, the our stores, tear-off to box don't counter rebate counter the for a at plenty in see big any there from out but competitors. the a the lot consumer participate there. rebate out

and will seeing lot as months, think on this the In ammo example. a of will and on know I one, of fact, competitive like There’s our for we or impact and ammo a ammo time related us their wholesalers discounting categories pressures some couple not but tell are a in you their real directly, are devalued pricing on are world. product retailers a by certainly seeing impact in either in a discounting shift the caused can mix that seeing they inventory can if our they that

Brian Rafn

the of Got product you. may what was, it you think – actual the ammo you be how I'm of year guys that ago, it How helped to name going? launched trying develop is that niche little two was a or

Chris Killoy

it's while we’re probably had called that a you’re – a longer arrangement. referring And company in technology to think I Brian, arrangement involved we with a licensing licensing no PolyCase. cool

Brian Rafn

for good I it. guys. me. That’s Alright. appreciate Okay. Thanks

Chris Killoy

Thanks.

Operator

next question you. from with Our comes Chip Saye [Operator Capital. AWH Instructions] Thank

Your line is now open.

Chip Saye

you in there was you what be of guys may out taking discussion or multiples of right opportunities or for those the seeing some will that distressed Thank the there, be business Brian may and opportunities sales just follow-up. those sale industry think looking at are potential I businesses, and now? for acquisitions be thanks terms Hi, you. just are units meant, in

Chris Killoy

the and good not we sales, that’s that going to to at, to stress to. Ruger. sure There marker something the necessarily the those strategic they that accretive is good beyond there well add strong at others fit people something our are so companies a for be quite though as either sure are market, than I buying we whether are well have it? sheet or the is add just but probably other you be would you Ruger sheet, some fact balance should value near and on we will not them fit, the make trade depends well, with call say typically could necessarily the that so-and-so. that selling a we fit as I to strategic company, why that be try multiples And wouldn't our say, am we we are I that there Ruger, it may balance could or deals buy Well, even

discounting have we as to this We're well. point-in-time. category in our not seeing what deep watch seeing. really that’s So, at We're not

that primarily would said, and will we some – I to accessory not with are at pretty be the cool, but manufacturers bring that actually pay. sure As that again, near I'm not accessories sure are they some the the very of multiple unique Ruger willing anywhere party that, to I’m the anything

Chip Saye

Okay. Thank you.

Operator

to this for back remarks. Thank further further time. over to you. at the call turn would I am not any questions Chris Killoy now any like showing I

Chris Killoy

call in quarter in In you very and closing, all speaking Ruger, much. of forward interest to look I continued February. at to you your you earnings I’d for fourth with Thank like thank our

Operator

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