Ruger sees Covid-19 revenue jump
20% income increase reported as sales rise by 7.8%
Gun sales declined noticeably last year, but they rose in the first quarter, especially in mid-March when states of emergency were declared by governors throughout the country, shutting down many retail operations. But most of those orders exempted gun shops as essential business.
The Connecticut-based Ruger, which has a large manufacturing operation in Newport, reported sales of $123.6 million, an increase of about 7.8%, over the same quarter in 2019, leading to net income of $14.3 million (87 cents a diluted share) – a $2.3 million increase, or nearly 20%, according to May 6 financial filings.
But the sales surge wasn’t fully reflected in quarterly results because estimates of unit sell-through of Ruger’s products from independent distributors to retailers increased 37% in the quarter.
In some way the surge was so strong it was comparable to the run on guns seen in previous election cycles, when fears spread that legislation might affect gun rights.
“Obviously, a change in the political spectrum can be anticipated, and that can drive some changes, but that was not as rapid and as sudden as we saw in the middle of March,” said Ruger CEO Christopher Killoy, according to a company-released transcript of an earnings call. “The other obvious difference is with the Covid-19 pandemic in our communities, we have to be extraordinarily careful in how we take care of our employees, how we manage production and how we ramp up production.“
The company said it found one employee was infected at its North Carolina plant. But the pandemic caused “minimal disruption” last quarter, Killoy said.
He said the company has taken steps to prevent an outbreak, providing hourly employees with two weeks of paid time off, encouraging remote work, implementing additional cleaning equipment and providing personal protective equipment to its employees as well as first responders in communities where Ruger plants are located.
This has cost the company $2.5 million, of which only $400,000 was recognized in the first quarter.
The company warned that it was unclear whether the initial buying surge is sustainable, and that the production impact might be greater in the second quarter.