RGR Sturm, Ruger & Co.

Christopher Killoy President &CEO
Kevin Reid VP, General Counsel & Corporate Secretary
Thomas Dineen SVP, Treasurer & CFO
Ryan Meyers Lake Street Capital Markets
Rommel Dionisio Aegis Capital
Ryan Hamilton Morgan Dempsey Capital Management
Call transcript
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Good morning and welcome to the Q3 2021 Sturm Ruger Earnings Call. At this time, all participants are in 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. to please conference go like host, to now Killoy Chris ahead. would turn over the your I

Christopher Killoy

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

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

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

Christopher Killoy

Thank you, Kevin.

quarter Now third company Tom will discuss results. the XXXX

Thomas Dineen

Thanks Chris.

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

For comparable and earnings $XXX.X per share. diluted $X.XX were sales net million period, were prior the year

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

number our quarter the profitability work July, costs. days to in week well-deserved of which XXXX, de-leveraging in in in were the QX. corresponding three primarily facilities The This reduced indirect to unfavorable second days took XX $X.XX earnings sales all to in the very first, substantial including work firearms the attributable favorable the For in for and million increase Compared diluted and period sales XXXX of of profitability XXXX, in and quarter expenses. of quarter to sales per leveraging resulted engineering principally fixed labor fixed was and factors; some to resulting in $XXX.X in share. production the to production reduced due declined net quarter, increase costs, shutdown third of were compared other third compared the a of decrease XX depreciation

adversely decreased second following in resulted and impacting Second, in significant production than exceptional profitability. cases sales increases third loss quarter, after overall the a quiet tripled from quarter. quarters second in relatively our plants COVID third, the This our accessory demand, of in more positive six quarter

generation. results significant delivered cash financial strong Our

approximately in product into to $XX related months the $XXX of XXXX, company that predominantly cash During will we the $XX.X back the capital million million operations. of capital nine expenditures. We of expenditures of that new form reinvested We estimate development. first from XXXX million generated be

investment. shift improves overall for our facilities between utilization reduced to and Our allows manufacturing and between capital ability equipment cells

October at sheet remains balance Our X, XXXX strong.

invested are in which and million. cash totaled UST investments, $XXX.X bills Our short-term

Our X.X X, had and we current ratio debt. was to no

$XX.XX of which payment our was nine was through $XX.X per stockholders' to of we value book a In million which dividends. share the the of XXXX, of $XX.XX shareholders Our first equates returned cash $XXX.X months and to share per equity million, short-term investments.

per $X.XX Our November dividend board of XXXX. for XXXX directors share the XX, XXXX. of receiving per dividend, Upon record declared shareholders dividends quarterly as a of payable year will $X.XX quarterly November on in shareholders XX, $X.XX receive of

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

Christopher Killoy

of Thanks shipped of despite in quarters the of past putting our Tom. we been the distributor moderation largely reflected as the without promote discount We've mix, or industry strong estimated through sell prior as that which The great to that the position from products months independent built and head in any remained XXXX retailers quarter, this of strong, depleted in for the period. over inventories aggressively first firearms company's just a the increased compared to the period our the the distributors Demand has traditionally the quarter XX we months, retail replenish demand. all products adjusted demand us two units need last nine products. a begun to of we fourth a into overall were X% to year

with XX%. referred decrease check by Foundation, been checks commonly Ruger the attributable in background For for and to the products background that in background of checks consumer of strong strong Nick's the new checks through to increase Nick's XXXX national the adjusted demand. system demand adjusted the instant increased maybe production and introduction as products, have compared met criminal favorably National the products to period, decreased sell The Shooting company's in the Sports as same

sales MAX-X in which XX% firearm of the to development the MAX the or compared XXXX were in results. of Ruger product both nine remain in In to months months sales pistol million first continues New launched XXXX. of nine $XXX XXXX million firearm first LCP new demand. pistol, represented and product or The drive $XX XX% sales strong of

eight two years products past ago new sales the major models our of Derivatives included. product include than more mature we and quarters in families line, introduced are metrics. product not product introduced reminder, extensions in a As only

end exciting a We are plan of fourth of we on at strengthened Marlin March begin our the XX% which been accomplishment increase the quarter has end A by new over teams production production at levels. near were in were inventories plants. XX% and and increase hard XXX distributor lows historic finished of pre XXX,XXX XXXX, in folks, products goods time growth an than at quarter. increased inventories units lever of product normal unit return lower of Since last in workforce than more what shipping initiatives, the that a personnel operations XX% of the XXXX, inventories the quarterly in XXXX, work during tremendous units were at our action to later at our our manufacturing expected by or is including just rifles, period. we has COVID-XX third production, would some by yielding our XX% that all Ruger they Despite the or remained of increase consider XXX,XXX

sales first operations. two some third thing first of product did of It well-deserved gave our in I'm that was earnings, production, price maintenance As right small The shutdown to pay. glad the some to and us perform break routine was do it. our and reduced quarter and manufacturing but and monthly a unprecedented insatiable week month during a allowed our week one to the we July. demand of reconfigure run we years, was XX took continual workforce Tom which our shutdown earlier, This an increases, mentioned a and shutdown after production seemingly very

business. shutdown, the of have Since what and our employees Our fourth in the continue deserved and of a to COVID-XX social we time onset were as we additional XXXX, dedicated employee sanitizing prepared our proactive head and mitigating and follow and XXXX. be employees incentives employees who workplace. If and pandemic hardworking and distancing hourly a allow after March we folks will cleaning, a vaccinated. with we protocols safety all and cleaner off busy remotely practical, paid break its we and the in We better to health maintain safer work expect maintaining to the any provide we and remained needed impact robust to offer becomes into on quarter

the States, in vigilant COVID-XX and accordingly we business. safe to and adjusting rise any seeing our and our once associates cases a remain are plan and again, minimize positivity to rates, proactively With disruption to healthy United keep our

the are XXX,XXX we XXXX. on financial the the third our our in first to goods the original added in of size Our the long-term In Ruger of Mayodan third strength of foot manage finished debt-free the a room provide in some focused building down facility. our Mayodan and me, quarter security our inventory, sheet COVID-XX to in the the available the a the about provides square we freed overall, financial our and highlights evidenced into space may addition excuse in have that half balance by we quarter, facility mile Carolina, This and goals our shareholder remain new doubled challenges North Mayodan, purchased facility road our and from value. a of building creation we like as flexibility footprint the This us our call new moved new original expansion. the XXXX. center service in shop operations question customer space Those the manufacturing Operator, facility. for and We through


Capital from the Markets. Ryan Meyers line your Lake And comes All righty. with Street first of question

Ryan Meyers

Again, my this questions taking for thanks morning.

So several come units to about ordered is looks past we down lower. a a XXX,XXX bit quarters, to compared which the like bit saw little quite

you going and there. a what's Just guys commentary if on us can bit little that some wondering on unpack give

retailers been lower seeing past this ordering why it's than you're was less a quarters. If the several what quite or firearms bit in number

Christopher Killoy

Ryan, the thanks question. for

at we're order distributors last is million pay X.X monthly our Ohio on the follow a in look are ordered distributors And about order. book full QX. have to million units that's at a think pretty and have then had most Association weekly at This on is What it, when attention Columbus, still healthy the enough we we book entered point a QX units. we distributors and week. -- selling. still Ruger with we basis. Wholesalers When our units show you as very what at our at of when know we think just -- end X.X order Sporting entered on order QX, full met Goods of And you I or at don't of a as much some National that we very orders that really

order think that's some primarily incoming I the would slow. the companies other orders They orders on the so in think some and Ruger Ruger. I know So they've unlike They at are know non-cancellable that point rates enough reason. with got

Ryan Meyers

the you sense are thinking into pricing Okay. about then how guys then XXXX? and and That makes quarter into fourth

Christopher Killoy

Good question. I changes in anticipate don't major QX.

likely are pricing not adjustment we're alone for need to seeing we XXXX, we're what going -- We're However, some supply with to I in compensate think in that. to channel. really additional not

to think that we within a commodities and I probably material and the the I right not costs everything about industry modest commerce. in expect or Those or between price industry increase increasing any now unique January X. and prices Ruger that's else on freight pricing, within are raw take use we'll or

Ryan Meyers

everybody's most sort just And kind that manufacturing of might supply obviously any you guys supply seeing which are positive, components in guys of your like here then, as done at impacted problems sourcing, or anywhere challenges be by chain detail Okay. how looking any United seems about? the as is guys States, far on a chain the talking you of certain wise,

Christopher Killoy

virtually you're United into States. goes procured question. firearm that the that is in in Ruger a Good correct everything

job just there. a shipping in factories suppliers folks cost come the industry of chain may that. like trucking offshore have of things factors things all things our like about, navigating fuel as from supply and to that resins at the an some materials However, raw move that those as amazing acquire lot done But in well our for and through of the of

model I down. So think anything where We've pivot some probably able haven't make far, different close, that's site, perhaps we've able shut come of a shortages a based but by shift been we'll had to we've don't we've knowledge, operations to spot one particular my but a stock all shortage we gears make teams. our particular or worked been one on XX-XX and through to been

Ryan Meyers

you didn't impact there That's itself? And as as then, can helpful. able were one-week that the you units actual out way shutdown guys there? a Okay. you far to the quantify way can is that get you production of think quantify Any any shutdown

Christopher Killoy

at look the we you week you when in use working a of number Well, four a quarter. or got, days five quarter,

working. weren't basically So you that five five days you've got extra,

what So is to it's that X% typically X% impacts.

Ryan Meyers

you. Thank you. for got I all That's right. All Okay.


And question Rommel comes Capital. Dionisio the your next with from Aegis line of

Rommel Dionisio

all? the there's feel that couple of clearing did you could in issue what And room additional Good shortages but expansion on out this, you expansion facility us second in the Thanks. Yeah. or sort lot labor is talk what current an just morning. the just of, difficulty I in for and talk Chris out for of labor give about that. first, of I the just the of if all about the Could the the move. near missed that of many questions at timing of these some procuring parts wonder a know particular Mayodan of country? part manufacturing of country. a it clearing of Is timing some in you talk a I just about

Christopher Killoy

newest a done down Initially job. and manufacturing Carolina. the team of been We to lines That's area in. sent acquired that XXXX a transaction are Mayodan, Remington then great Arizona, new major with to integrated three into our moved also our that on the there New to Rommel, Prescott, plant was and was you we've it Mayodan. think main Marlon has I and adding as center gravity from our staging steadily a we The Hampshire, is facilities acquisition. everything North Newport, a facility. Mayodan Well, Virtually factory. in acquired Marlin for come Yeah.

manufacturing our our there. us our really and of The a ability strong And folks provides good move it between does particular team doesn't only line other or close workforce us so any anything it add anything to significant solid. factories. in And resources one. it we road hire occasion, from allows out other to allows in what is as We're or opportunity. Mayodan trying And to for this pretty getting mean opportunity, we're in being process a us is as a us working upfitted The future frankly, flexibility shift down existing of but needed. basically to mile to plant. been to the On the of our But to doesn't that Ruger half management and allow our like do use a footage. we're mean plant the square think has It Mayodan. move move we people same one lot or down us the may locations, that lines is It expand it from a a give doubles speak in footprint lines I factories.

Rommel Dionisio

be Okay. here. Marlin be But shape the just to clarify Chris, that you're you'll going and -- action launch Mayodan. It'll done to in for in lever for be good ready

Christopher Killoy


a of So line. launch the we're Marlin mid-December planning product

market down last we'll meetings week, we reviewed the probably initially Now it'll wants. at at less with as our wholesalers the NASGW than the be be just

December on it the about fewer or sure will overwhelming fact, but shipments from calls emails be In Marlins and distributors. on based first retailers, looking those again and sure more demand XX, I'm And there'll guns I'm and somewhere the probably just the we the lots in that were fewer outstanding. launch frankly, of for seen to say wants, time market will SKUs we've I expect into samples consumers be than it period, because begin

XXXX first that few a sample just ago looked the line model, gorgeous. saw The came and I was was caliber weeks XX-XX it and off it in beautiful a

about to on and that QX excited track very So that we're we into launch. are


is Ryan Dempsey Capital question from next Your instructions] Management. [Operator with Morgan Hamilton

Ryan Hamilton

June of everyone. I on how July us the you ask, looks us you always compared the quarter, a morning, through so good on? Could Good Congrats walk to and could quarter. walk cadence through,

Christopher Killoy

was years back we'd picks July as saw little in like information I'll of a we'd for and of breakout, a see that was come we call season. nothing this start did bit a Typically slows that, June on past. people typically to slowdown. May, out hunting typically than in and We but little what seen get we don't the and the but It in deafening more say up see we give business, in a muted seasonality into August, the bit past. summer still monthly Well, ready our down

a down nothing past those of And some so while we in with like traffic down there's really at store. the years that as hit months dies warmer slow little that bit

there what or So little difficult given so was, as the it as was thing that to inventory interesting was was here far retail, tell impact.

friends rifle and go better I And One now of the XXXX. the is better best our get caught to you're calibers supply, get things but right seeing up. as every ammo product to we certain seen business day we short availability think hunting doing are it's continues hear many getting we'll into We've ammunition categories. in impact in their

Ryan Hamilton

my answered question. just next You

know you think, me too well. I

So refresh know pistols a higher do and than this you as a Chris, revolvers? I out most and that my break margin demand traditionally memory, rifles don't generalization,

Christopher Killoy

margin A that I'll are ones. lot in margin other it, some as of of some significant terms dollar from Not standpoint the percentages. relatively, necessarily. expensive have dollars, not gross a But margin versus great percentage again, as say got less models of we've

So it's of face competition the there. obviously content the depends the a lot most specific marketplace. we composition really have on in in Marlin is family materials The we and and significantly probably labor

Ryan Hamilton

where what out, I And Sure. break this is should know to you from that's to or going impact don't I'm I trying so out, be. was the kind model of going. be, Marlin

Christopher Killoy

wood be it's in other got plant it's great I up I job existing your, the line with New Maiden and And, We've The expect rifle going think we'll all wood Ruger. making have but our and yeah, with been up so I together it -- got be laminate teams made in that stocks it in comparable be line those folks expect working there still Ruger would and, at with obviously we be a would line, I the to that. existing to be build we it we're products working in would incremental, through Marlin products. Hampshire. our doing in Newport, product rifle

Ryan Hamilton

stamped Ruger the the be Well, firearm on somewhere the name rifle. on

Christopher Killoy

won't Marlin things. and Marlin brand to very its brand. No, the We're the maintain a it We've We're going of proud of be. got history. couple

numbers. I as configure the excited we be collectors think far about as will serial will how Marlin very

Some the think minor the legacy particularly what Marlin, great with will enjoy action collectors some but changes enhancements. that we that and maintaining Marlin we great some about things lever seeing are Sapphire -- guns think

So more of think got we're product have operations marketing team I fun that about very to good rollout to on working and and that, and come excited We've a it. but folks we're on with. going

Ryan Hamilton

No, great. where at goes, quarter, Last XXXX, roughly? as you were it sounds are I today far headcount said believe at you as you roughly

Christopher Killoy

A X,XXX little, probably days a little folks, the about few from recall more, about I so numbers X,XXX if ago,

Ryan Hamilton

And the I really products. new that know pushed

missing on key manufacturing So any mostly are where a design bodies? you like you'd is or elements on more engineering it

Christopher Killoy

more we're great to need factories product certainly folks postings. we for got right three the committed line. job And, the all guns. there's as few think as far Marlin have sure in a those always engineers. Well, lot We've the our a now. on engineers lookout been for building of again, of I That's But quite so

lots If you, positions our salaried of Ruger got think lot engineering well factories. look we've as website, I a at the opportunities in of as

Ryan Hamilton

and is little And one you're you seeing fall pickup business maybe then maybe me, -- back a bit, the in that slowing that slowdown, more I kind normal down that what summer talked a expect of just so about for here. the know is accessories

Christopher Killoy

some It of been could have that.

and up XXX, of mini we of things on magazines, like that think We trying with on that a up particularly the etcetera. backlog driver that for to while. I magazines, some is those really were catch the XX primary accessories caught

think, is of bit fine. cyclicality again, We some up. got going just that. in demand be a to And ramped chain supply there. just It's of Our still the long-term I little a

Ryan Hamilton

Excellent. Thanks a lot for the guys. time


questions further time. this in have We no queue at

any the closing like management over to I'd remarks. back So turn to for conference

Ryan Hamilton

that like for and to like again, to continue of you Ruger would And Thanks drive put more and X,XXX team results. our exceed thank you, in closing, outstanding thank Thank interest I I the than would to the expectations operator. hard your together In work to Ruger. continued financial members


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