The leading publicly traded U.S. firearms maker,
Sturm, Ruger & Company, Inc.
) reported second quarter 2014 earnings of $1.12 per share, missing
the Zacks Consensus Estimate of $1.28 by 12.5%. The reported figure
also plunged 31.3% from $1.63 per share earned in the year-earlier
quarter on lower sales.
The company booked $153.7 million of total revenues during the
quarter, down 14.3% from $179.5 million a year ago. Revenues also
failed to meet the Zacks Consensus Estimate of $179.0 million. The
lackluster performance was due to soft product sales across the
Firearms sales dropped 13.5%, while castings sales decreased 76.6%
year over year. New product sales represented 18% of firearm sales
in the first half of 2014.
The company declared a quarterly dividend of 45 cents ($1.80 per
share annualized), payable on Aug 29 to shareholders of record as
of Aug 15. This dividend is about 40% of net income.
Payouts vary every quarter as it is based on a percentage of
earnings rather than a fixed amount per share. The previous
quarterly payout was 54 cents per share.
Gross profit dropped 28.8% to $50.4 million in the quarter from
$70.7 million in the year-ago quarter as its sales shifted away
from higher-margin firearms accessories sales. Increased
depreciation expenses also ate into margins.
Total operating expenses were $17.3 million, down 13.4% year over
year. Operating income was down 35.0% to $33.0 million during the
quarter from $50.8 million in the second quarter 2013.
Sturm, Ruger & Company's earnings before interest, taxes, and
depreciation and amortization (EBITDA) were $42.1 million in the
quarter, down 24.6% year over year.
The company ended second quarter 2014 with cash of $47.4 million
versus $55.1 million at the end of 2013.
Cash generated from operations was $35.6 million in the first six
months of 2014. The current ratio is at 2.3 to 1 with no
Capital expenditure was $22.8 million in the first half of 2014,
the majority of which was invested in machinery and equipment for
new products and to upgrade and modernize manufacturing equipment.
It expects to invest about $40 million on capital expenditures this
year mainly on new product development.
Sturm, Ruger & Company returned $20.0 million to its
shareholders through the payment of dividends.
This Connecticut-based company is the only full-line manufacturer
of American-made firearms. It offers consumers more than 400
variants of over 30 product lines. Presently, it plans to increase
firearm production at a 220,000-square-foot, $26 million gun plant
opened in Mayodan last year. The company acquired this facility in
September last year.
However, companies like Sturm, Ruger & Company and Smith &
Wesson Holding Corporation (
) are apprehensive of tighter regulations for the sale of weapons
in the wake of a series of unfortunate shooting incidents in the
past. The Boston Marathon terror attack on Apr 15, 2013 and the
tragic shootout at the Sandy Hook Elementary School Newtown,
Connecticut on Dec 14, 2012 had sparked off fierce controversy
about the proliferation of firearms.
Sturm, Ruger & Company currently holds a Zacks Rank #3 (Hold).
Investors may also look into Marine Products Corp. (
) and Malibu Boats, Inc. (
). Marine Products carries a Zacks Rank #1 (Strong Buy), while
Malibu Boats holds a Zacks Rank #2 (Buy).
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STURM RUGER&CO (RGR): Free Stock Analysis
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