Despite roof collapse, Ruger reports explosive sales
New product sales represented $102.7 million, or just short of a third of all sales
Even the roof caving in didn’t slow down production at Sturm, Ruger and Company Inc. very much, and won’t really put a dent on the manufacturer’s escalating profits.
A week before announcing another quarter of record sales, a late July thunderstorm caused a portion of roof to collapse on the gun manufacturer’s equipment in its Phoenix, Ariz. plant, halting production for over a weekend. But the company was up and running after a few days, chipping away at about $600 million of backlog (about 2 million guns) as of June 29 (the end of the second quarter), more than double what it was during the same point the previous year.
That’s just one number indicating the explosive growth of the Connecticut-based company, which recently announced a plan to build a third facility in North Carolina to augment the ones in Newport, N.H. and Phoenix.
Here are some others numbers announced on Wednesday: The company sold $180 million worth of guns during the second quarter and $335 million for the half, about 50 percent growth compare the comparable periods in 2012. It posted net income of $32 million ($1.63 a diluted share) and $56 million ($2.83 a share) for the quarter and half respectively, compared to $18 and $33 million the previous year. And since dividends is based on earnings, that translates to 49 cents dividend for shareholders for the second quarter alone.
The company partly attributes this growth to the “current political environment,” which CEO Michael Fifer spelled out in a conference call as the sales spike caused by “really tragic events at Sandy Hook” which caused politicians to start “talking about restricting legal gun use.” But he noted that Ruger sales growth exceeded that of the industry, and he attributed that to the introduction of new products.
New product (products less than two years old) sales represented $102.7 million, or just short of a third of all sales, in the first half of 2013. Ruger introduced the LC380 pistol and the SR45 pistol in the first half. The company has a lot of money to introduce more. It had $64.8 million in the bank at the end of the first half, more than twice the amount at the same time last year. That figure does not include the July purchase of the North Carolina plant, which he expects will impact earnings by less than a nickel a share in the second half of this year and add to earnings thereafter.
The damage caused by the roof collapse: less than $5 million.
Fifer expects the gun run to slow down and the industry is already experiencing “a normal seasonal slowdown” this summer.
Barring yet another tragic event, “We think it’s going to return back to sort of, what I would call, more normalized growth rates,” he said.