Strum, Ruger & Company Earnings Beat Estimates, Fall Y/Y - Analyst Blog

The leading publicly traded U.S. firearms maker, Sturm, Ruger & Company, Inc. 's RGR first-quarter 2015 earnings of 81 cents per share comfortably surpassed the Zacks Consensus Estimate of 64 cents by 26.6%. The reported figure was however down 33.6% from $1.22 per share earned in the year-ago quarter due to lower sales.

Sturm, Ruger & Company Inc. - Quarterly EPS | FindTheCompany


The company reported revenues of $137 million in the first quarter, beating the Zacks Consensus Estimate of $121 million by 13.2%. Quarterly revenues, however, declined 19.4% year over year. The lackluster performance was due to soft product sales across the board.

Firearms sales dropped 19.9%, while castings sales plunged 90.4% year over year. New product sales represented 17% of firearm sales in the first quarter.


The company declared a quarterly dividend of 32 cents ($1.28 annualized), payable on May 29, 2015, to shareholders of record as of May 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. The company did not take into account the pension plan termination expense while calculating the dividend.

Operational Highlights

Gross margin contracted 578 basis points (bps) to 30.2% in first-quarter 2015 from the year-ago quarter. Gross profit declined 32.3% year over year to $41.4 million.

Total operating expenses decreased 24% year over year to $17.6 million. The decrease was attributable to lower selling as well as general and administrative expenses. Operating income was down to $23.8 million from $38 million a year ago.

Sturm, Ruger & Company's earnings before interest, taxes, and depreciation and amortization (EBITDA) were $33.2 million in the quarter, down 29.7% year over year.

Financial Performance

The company ended the first quarter with cash of $30.8 million compared with $8.9 million at the end of 2014.

Cash generated from operations was approximately $32.8 million in the first quarter 2015 compared with $15.7 million in the year-ago quarter. The current ratio is at 2.1 to 1 with no outstanding debt.

Capital expenditure was $4.3 million in the quarter, down from $9.6 million in the first quarter 2014. The company expects capital expenditure of about $30 million in 2015.

Sturm, Ruger & Company returned $6 million to its shareholders through the payment of dividends and buybacks. Of this, $3.2 million was paid as dividends.

Our Take

Sturm, Ruger is a major manufacturer of rugged, reliable firearms for the commercial sporting market. This Connecticut-based company is the only full-line manufacturer of American-made firearms with more than 400 variations of over 30 product lines.

Firearm companies like Sturm, Ruger & Company and Smith & Wesson Holding Corporation SWHC have been hit by low demand for weapons, as the earlier rush to possess firearms triggered by the fear of tighter regulations has ebbed to a large extent. Sturm, Ruger is experiencing persistently weak demand for its products.

Yet, net sales and the estimated sell-through of the company's products from independent distributors to retailers increased 12% and 15%, respectively, on a sequential basis. The company has also managed to lower its inventory level. An inventory of its products at independent distributors decreased by 64,700 units during the first quarter of 2015 and its finished goods inventory decreased by 53,100 units during the same period sequentially.

Sturm, Ruger & Company currently holds a Zacks Rank #1 (Strong Buy).

Peer Release

Louisiana-based Pool Corp.'s POOL first-quarter 2015 earnings of 19 cents per share beat the Zacks Consensus Estimate of 14 cents. Earnings also increased substantially from the prior-year quarter's 9 cents.

Upcoming Release

Malibu Boats, Inc. MBUU is expected to report third-quarter fiscal 2015 (ending Mar 31, 2014) results on Mar 5, 2015.

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POOL CORP (POOL): Free Stock Analysis Report

STURM RUGER&CO (RGR): Free Stock Analysis Report

SMITH & WESSON (SWHC): Free Stock Analysis Report

MALIBU BOATS-A (MBUU): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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