Ruger sees 62 percent hike in 3Q income
Sturm, Ruger & Co. Inc. has a problem most companies would love: It's selling its products so quickly that the company can barely make them fast enough.
The Connecticut-based gun manufacturer, with a major facility in Newport, N.H., reported a net income of $17.4 million in the third quarter (88 cents per share, with nearly 38 cents disbursed as dividends) -- a 62 percent increase, compared to the third quarter of 2011. The growth was mainly due to net sales of $118.2 million.
That brings year-to-date sales and profits to $350 million ($2.58 a share) and $50.8 million, respectively. The former figure is a 60 percent increase.
Gun sales are up all across the nation -- a phenomenon widely attributed to the fear (thus far unfounded) that a Democratic administration would be tough on gun control. But the increase, as measured through national background check statistics, is pegged at about 20 percent. The increase in sales of Ruger units has gone up three times as much.
Ruger attributes the increase to new products, which account for 38 percent of sales year to date. The big sellers include are the Ruger American Rifle, the SR22 pistol, 10/22 Takedown rifle, and 22/45 Lite pistol.
That has left Ruger with a healthy balance sheet. The company has $105.1 million in cash equivalents, no debt and stockholder equity of about $174 million.
The problem is that it has been hard for Ruger to keep up with all of the orders, which caused the company to recently stop taking new orders for several months. (The company had orders for 1.2 million guns in the first quarter of the year. It was the company's goal to sell a million guns the entire previous year.)Indeed, "keeping pace with retail demand" has now been added as a risk factor, because it could possibly alienate customers and push them to competitors.
But in the last year, Ruger invested $30 million in capital expenditures to increase production. It has since gotten its backlog below a million (908,000 guns at the end of the quarter, worth about $250 million), and its inventory, which dropped to 70,000 units in the first quarter, is now up to a more comfortable 118,000 guns.