Sturm, Ruger & Company (RGR) 1 Nov 172017 Q3 Earnings call transcript

Company Profile

Participants

Chris Killoy	President and Chief Executive Officer
Patricia Shepard	Assistant General Counsel
Thomas Dineen	Chief Financial Officer
Brian Rafn	Morgan Dempsey Capital Management
Rommel Dionisio	Aegis
Bill Ledley	Cowen & Company
Jonathan Mueller	Invesco
Chip Saye	AWH Capital

Call transcript

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Third Quarter 2017 Sturm Ruger Earnings Conference Call. At this time, all participants are in a listen-only-mode to prevent background noise. [Operator Instructions] And as a reminder, this conference is being recorded.

Now I would like to turn the call to Mr. CEO. and President Killoy, Chris

You may begin.

Chris Killoy

then Assistant morning, Thank statements. Ruger to Then to read our Sturm, Tom Dineen Financial welcome Company you. ask caution third forward-looking Shepard, like Good & I'd quarter the call. to Chief and XXXX on Counsel General our Patricia the conference overview your the and quarter my state Patricia, the market financial on will started. thoughts And then Officer the to of give results. our we’ll operations, let’s get and discuss an questions. share third get I will of

Patricia Shepard

is want in Chris. We that Company's the remind Thanks, such management's or forward-looking projected made statements could important in results Company's actual It the the course just intentions, materially forward-looking meeting to to this note of from everyone beliefs, those expectations are predictions that that of hopes, statements. differ or the future state statements.

to GAAP Form ended income www.sec.gov. non-GAAP our all EBITDA. to reference the net posted the XX, Chris? statements. year We to the time-to-time Additional EBITDA our Please actual to, ended cause found information from results year the not on ruger.com/corporate but for reports Company's at SEC update contained XXXX, on are the from the XX, Form these ended materially the XXXX. factors the also at website XXXX website that may reconciliation is of XX-Q limited SEC responsibility for Company's course in on that concerning in Company forward-looking filings including, statements our differ of those disclaims the SEC the could or for September XX, by can Form XX-K XX-Q December note XXXX the Furthermore, in the for XX, ended non-GAAP our the Company Copies website. XX-K Form quarter and documents obtained be which September Company of the and or fiscal contacting quarter December or be forward-looking

Chris Killoy

you, Thank Patricia.

third the quarter. of summary financial a provide will Tom Now

Thomas Dineen

Thanks Chris.

the and net $X.XX sales were For million, XXXX, third $XXX.X were earnings share. diluted of quarter per

period, of sales $XXX.X year the earnings net were per and share. prior diluted million For comparable $X.XX

nine first diluted million the per earnings net were $XXX For sales share. of were and months $X.XX XXXX,

and For net $X.XX the were $XXX.X share. per million corresponding in earnings sales diluted were XXXX, period

third EBITDA or of At XXXX. XX, sales, our was or quarter our the million. of of million, the quarter to XXXX, of For $XX.X XXXX million, sales $XX.X XX% cash $XX.X compared XX% totaled third in September

million, capital the any in this total in machine XXXX $XX we acquired, quarter Our per the form of anticipate already capital book We have months of million, the for equity significant approximately been current XXXX, ratio operations. expenditures million for $XX.X we share. fourth estimate X.X cash $XX fourth flow are will At Company $XX.XX equipment Since cash do million. expenditures we from anticipate capital stockholders' that back $XXX.X no September generated and We reinvested the value we of In first totaled a of million of $XX to was that quarter. not expenditures. equates to out XX, CapEx XXXX, nine as X in most of debt. into which of has

its dividends Our and share the of of million. focus months shares. returned repurchase X.X% XXXX, nine the at to investment the In payment be X.X million first our $XX of $XX million million of total primary stock new an for common $XX product will development. for to $XX.XX Since of have price or our of shares Company per shares stock through continue the shareholders a of outstanding XXXX, repurchased we November average of the of million X.X

XXXX, dividends the our per of our remained benefit September per shares share it also authorized as our income XX% repurchases. future reduction XX, net outstanding dividends, will stock paying earnings only increase for million of in will $XX share. practice our At Given not

Board Our XXXX XX, as XX, on for dividend of a XXXX. of November record quarterly declared $X.XX November share payable shareholders per of Directors

As the financial a Chris? quarterly reminder, of update. net therefore That's our quarter-to-quarter. dividend XX% income varies and is approximately

Chris Killoy

Tom. Thanks,

third quarter As year. challenging in three was decreased unit ended Demand us. summary September and sell one from months the distributors from nine retailers the a products XXXX the estimated in prior the considerably Company’s the slowed the XX, quarter through the comparable and prior The of for from illustrated to financial XX% year. the independent XX% third

through of Instant were Three, reduced effort and aggressive from price as industry our through many the by or Criminal chase inventories For System to distributors discounting We and decreased And aggressive our short-term cash. exacerbated purchasing by in results. by offered most retailers, the rebates lucrative XXXX and in background better bolstered achieve year, NICS Two, competitors' Company’s to competitors. four, than their increased promotions retailers by estimated The but than National we the one, decreases Nor adjusted Background our in Check consumer independent decreased products of is stronger manufacture customers. our generate the demand of which last demand to consumer due and moderately XX%. payment the attributable to an Number capacity same the reduce factors. checks any likely to we offerings that above for overall more the terms the November offer campaigns offer more NSSF extended normal did political a XXXX XXXX, sell period, elections. XX% few to factors. not

X% net payment days XX Our remain XX days. terms

financial demand. term a area the key products potential approach promotions of driver measured implications We and product will are and sales both take to rebate to new development, the In new both of and opportunities reputational. considering the continue benefits and thoughtful longer short-term

the nine $XXX.X or of sales of first XX% represented million products firearm in New months XXXX.

of years. levels. Precision projects the were the underway. in product XXXX, pistols, LCP new and include IV New new pistol, products to we have as inventory production well exciting the reviews we XXXX. some of months quarter a production the pistol inventories during first reduced first of X,XXX of firearm two nine our through manage excessive area our same – production sales levels from decreased and major products third unlike only independent levels The included not review distributors domestic In inventories independent our current to In XX% of resulted sales all the as warehouses is our The products in semi-monthly that These the Mark at out units level units Rifle of of past of or LCP distributor our production from months levels line. total introduced of our go most Remember, the II and the in the effectively inventory and XX,XXX Distributor goods the inventory, XXXX distributors for retailers, plan and competitors, distributors. unit decrease period. in nine of sell-through the to estimated decrease inventory of XXXX. allowed finished

XXXX inventory our quarter we and the of We will manage into continue head into as to fourth and XXXX. production

we behalf by they its the on recognized day-to-day X,XXX running award honored on our Ruger two ago of were keep the our question. XXth over Operator, be Ruger Annual weeks year our a for have the customers year National company may manufacture as Just the in we basis. Meeting, Sporting firearms at employees, and the accept honored Goods very a We of first XXth Wholesalers the Association to of row.

Operator

Morgan first Brian Rafn our [Operator is you. Capital line from Dempsey question of And with the Thank Management. Instructions]

open. Your line is

Brian Rafn

Tom. Good morning, Chris and

Chris Killoy

Brian. Hi

Thomas Dineen

Good morning.

Brian Rafn

in, you getting of flow potential obviously give was But certainly it the the did of you kind in of sell cadence, it’s anti-gun. or looking just off of the the a after Hey, kind and weak trends? sense a July, erratic to summer, administration of always was guys a in know, just, Hilary what you of with August, it to business it the, Obama – kind of we’ve see September, been the month-to-month kind was would

Chris Killoy

I Well two, saw we normal three, more seasonality. Brian, a you know, return to think

pretty a The a consumer is overall was all year. third quarter comp know, of promotions, levels and demand, you aggressive last distribution it as market and some decreased is very weak tough rebates, at quarter it historically from inventory plenty of been

some going of extending XX We also XXX providing terms on and days. in cases competitors some saw payment our

it So, you hunting then September, starting close August get as a we little season bit business, bit a very do a the nature improving in saw more our the summer to was you better quarter. through know, again little and seasonal – to a July much tough, the

Brian Rafn

it off, seen it? you maybe Okay, to, seeing just know, levels of out know, how may have you discounts what are seeing deep you okay. kind of MSRP, of What you XX off, – anecdotally, of, you are XX

Chris Killoy

promotions combine benefit They without by vary Some we with have pretty retailers were inventory. of – we work devaluating Ruger, rebates wholesalers Brian that significant. our at when you there we some out the them manufacture, to and our of

the not not of on down with results of them XX of buy nature. things promotions way So for free consumer we’ll you’d a of to of did all the get I’m offered, by some that challenging published, a some it promotion, were them in some competitors, inventories combine deals do in things our being people the rebates wholesalers. unpublished a money We rebates consumer that devalued rings are the typically some sure may for we’re and making of that many our some something environment. And that and one pretty the sure I’m participate

Brian Rafn

been the the precedent, at thanksgiving hunting just years shopping seasonal big standard a promotion in last kind take guys environment much Friday more get selling season And is How is got guys? after is for does a is is or into you you, What, Friday it Good that? you. Thanksgiving much or you Got important weaker that trying it significantly day Friday that the Good to obviously How the day. of and and hunting several day. Good season

Chris Killoy

our you’re of a Friday it’s really to. planning standard is I referring especially a with accounts, know Black what Well, national process part the

Brian Rafn

Yeah, Black Friday.

Chris Killoy

accounts, you market now, deal a deals And with you’ll significant products Ruger are first that’s and see of new our that out to is And from some foremost there there be for for products, there national combat we great independents, bigger with it is some out some right the big that the new like of of see flyers you expect bigger and some the it that late We become consumers. some – the flyers. as of know, out of buyer’s or really the a consumers. a

were in bright seems also and Fire Standard saw day, Precision other seeing You’ll American we’re the actions the just American to X.XXxXX as both rifle. X.X both mentioned, And atypical, I I Cabela's see the X.XXxXX hunting Standard Rifle the chassis. be some the like number Fire real even though the They one with Fire, products. some a the in the an then the on things XXX Bushmaster bit and Predator little like just the American then spots flyer Standard okay, things season

little a non-standard into couch what’s So really and off the gets that’s the but people bit to calibers, store see what new.

Brian Rafn

Yeah, let in hunting ask back I’ll the and you of question just me then get line.

sporting the taken much used kind scope? legacy hunting has you of rifle capture season, enter As the to bolt how from be action the or modern the what

Chris Killoy

Brian. Yeah, that’s a good question

looking with year I said, their I Last really decent that. it we multiple of year and action the dollar the gas MPR, AR-XXX sector we launch good the sporting very those pleased we particularly for calibers, really passing category, category, modern maybe to an saw are people the tube, M-LOK we the results that bolt a and seen market And family, it, on things purpose that saw, got know, the accessory of had right sales actions. non-standard we’ve that traction made and it in think This for, in amount Magpul even you now. Ruger were rifle the rifle last addition that a and soft right good value in like over really on definitely what’s bolt all slots, we people discretionary Furniture, things had like features very MSR rifle. spending the they a the of the been then some like consumers. with things year, It’s

consumers, excites So, of something seeing, out you like their with you as as long those category new get still we’re attention like can and get the a I MSRs, you even can discretionary that think dollars. and come some

Brian Rafn

Thanks. All right, the Chris. just I’ll line. get back in

Operator

next our comes the Rommel of Dionisio with line And you. Thank from question Aegis.

Your is open. line

Rommel Dionisio

good Yeah, gentlemen. morning,

sell-through you than warm season, warmer could to the been of The to in just a early it’s usual it’s Midwest? in to but – what fairly potential start seeing first the still weather retail hunting maybe impact terms you’re make talk the and Northeast question and of

Chris Killoy

Rommel, this is Chris here.

the and as right now saying, But think the we’d like haven’t I American I that things XXX with did bolt-action been, bolt-action those fact had as on etcetera. in hunting our Standard like XXX in seen we in production plan in Predator line. we’ve very we maybe results, increase we Fire, like the just again XX terms like calibers, actually much and X, the the was X.XXxXX, activity of ranch traditional some and rates rifle at pleased have those X.X been the our

very dramatically think think seen but be one, back rifle and to we put that. willing hunting improved of season are into purchase money. So were that were get people retailers the they a I And some year still with store may I happy weather, even last warmer we’ve hunting though not are spend season, decent hunting off who where coming their optimistic a decent, maybe again, that going to that

Rommel Dionisio

out haven’t anything incidents, of we’ve are fall the spikes was from the last sunburn specifically I October some the, quick Okay, you about – and fallout of channel follow-up. weeks? anything you know, some after the hearing on I’m yet if come referring industry in could few and sort Las just you ago seen for if to, and comment number seen there the guys Vegas if NICS a know in year demand Orlando but, any one I

Chris Killoy

checks. know, we internal Really we those event, reported our haven’t from haven’t we’ve force on, that seen very impact seen but anything seen again nothing results significant. you from a Obviously but any either seen sales or haven’t we tragic that channel our certainly

Rommel Dionisio

Okay, fair Chris. enough. Thank you

Operator

Bill comes Ledley our & Cowen you. of Thank question the from line Company. with next And

Your open. line is

Bill Ledley

Hi, good questions. for taking morning. Thanks my

number little Just the fell talk a go just QX for start, QX that distributors to can on to you going beyond? what’s in at there and versus bit inventory you QX, and about where expect

Chris Killoy

them big end with finished Well, the to one don’t two competitors, distribution. up sell at boxes is sure as QX remind was that Not show XX,XXX from We the vast And ago. our weeks which about QX, see. of business retail I is the commercial in NASTW you mean of domestic we we was that to inventories tell going as all the direct goes you sell our far two the our wholesalers in I down we’re finish good the don’t things the majority step buying of groups unlike direct. meetings saw just would of to and units Antonia I where think San at we our

we if made So, course production you about – we’ve into of the numbers at taken production we’re look back in our down, we’ve our QX. down where QX, the XX% finish over year

worked their our by we’ve And discount product distributors considering selling safe productions, we distributors and our our the – that devalue them we that of it and So don’t remind inventory. think is without Ruger managed we with we inventory. again, inventory around we don’t

as So, certainly their turns concerns with get to I now, understand we well. comfortable think are where their and it see them we’re that up, is they understand where we’d but we like

Bill Ledley

are And seeing most Where it MSR pressure handguns is of a is it what’s the you and going there? discounting. some lot just it are about the then or on or me is in on Okay. pricing – give you you lot mentioned color of could category pressure, in there

Chris Killoy

Yeah, of was or in it QX the pretty There hardly, a was I’d MSR heavily. category discounting. say QX mean that pretty the I lot hit really and

price. platform, then you is thing off trying if down And – and only very the XXX very, is one is to can you part brand of And cut you it avoid only some to you’re category. again was attributed make some all and not who for, compete really cutting manufacturers try there out the production discounting. that to in prices if MSR saw You ARs to of the going heavy do

in of so of a lot erosions of we saw discounting, pistols margin And millimeter on summer pistols very in lot it months the this X we bloody where of fire that’s lot say we I’d a go center saw summer, center the industry. the QX. Then fire and in that lot across through particular. rebates, was saw

Bill Ledley

Okay, me. just last then, one thanks. for one And

quarters of increased capacity given capacity the being weakness if the do couple a You've highlighted the point industry for the see At all? industry you as at issue the exacerbating now that what that. out industry of coming

Chris Killoy

they're of cut seeing of to or than that much this not consolidation maintain some some play player, go you're I and do category the them places time kick all unless business, a try their fire tried of of one where and There's think competitors have or workforce. can to But our category pistols. cut Well, in again we're they that, if their particularly type out if single most price you have other production. MSR they out with going facilities of make again center is a maintain particular to harder

more away, So that going until that we're consolidation unless we – excess and going see people some I think capacity. to see

Bill Ledley

Thanks, Chris.

Sorry, up worried little are be or could in be your and from could I aware then industry around they pressure? order just issues, on years yours follow distribution those more of if of that rationale to customers competitors these bit next given not that. the a a might just three Are

Chris Killoy

distributors of that. I mean definitely we've XX XX known think years, most these would done folks business plus like years. our to for with I have that

throughout the not and group, these country. there is independent this are So, small a XX wholesalers

going to week. their others down there deal next that street this the be inventory So, in they go small the know into eyes very a know Ruger being don't is deal is to They that – they a wide or folks, better it something far terms they it's basis. as discounted a whether of we group as regular about wondering worry their is, open risk where they on talk and of devalued. But them best is are their

– that. been not as wise So, their rodeo They've they they say. think are I first it's to

and So, think by savvy managers I inventory. our large, and pretty are distributors whole buyers of

Bill Ledley

sir. Understood. Thank you,

Operator

And of from Invesco. Jonathan question Mueller with you. Thank the line is next our

Your line is open.

Jonathan Mueller

Hey guys, that that a couple just asked said think you just or were follow-ups your of on not thanks I time. inventories, line. the color like out the any comment earlier, but few from you questions were for Maybe of a excessive feel more distributor

Just how come at now? right that or gauging metrics are you you to are looking sort to conclusion that what of

Chris Killoy

what that is slightly that's, now. to better like on that we'd typically time. bills six the and inventory Well, is our at Ruger or distributors their again reminded healthy. They're paying turns below But them see they're we

sometimes if, distribution they the manage need a to in turns help As commented, and order is not good, higher sell us Tom with where through of market. they Their of to there inventory out or in their for lot current. national inventory stay softer we're buying those maybe some of there by terms some need this standpoint. large comfortable not they're know sacrifice and they two-step dogs to from to Ruger XX% And other and but brands, they sell mix accounts are the of be is maybe groups Ruger direct, in us category, that a an partner

Jonathan Mueller

you. Got

they wholesalers And if inventory guess comment that that brands that overall different correct? based a that be so, specific, I on you're is other at well, on Ruger have their that the story they’re Sturm, as look you could saying

Chris Killoy

Yes, there's other no way.

way a get mom-and-pop, than there's to whether Ruger an XX national of one a other you're or or it's If product to of wholesalers. the retailer, our chains no independent one big

and… direct anybody sell to going not we're So,

Jonathan Mueller

saying quality they're is actually the inventory total is, that carrying? the what thoughts No, on that any outside inventory of I'm Ruger, of distributors no

Chris Killoy

into don't total We inventory. their Yeah. Okay. visibility give

with some things nothing financial could other but are right that. may statements their about conversations and Obviously, brands, we're financial candid comment specific reviewing health. that good have of we some on. But concerns they that the have like there now, We

Jonathan Mueller

you else Okay. earlier, release capacity. in increased manufacturing then someone mentioned the And press but

of or like in we decrease in see actually just going if actually when in So demand are not that And we down absolute demand – we're field? environment? increases we capacity what seeing seeing to this given capacity so, you do like capacity say clarify, are – in relative increase seeing that the what's spite to

Chris Killoy

Yeah.

new that either people I have place ground or those largely I breaking of will stopped actively capacity see had think right I the throttling and expansion plans now. back. on people in delayed facilities going don't see projects. out

and a products done trying moved the was capital to one our time that move know operations lot us redeploying products increase lot of brakes now plant the to machinery job think take CapEx I moved that folks a we facilities that XXXX they from some we at some the maybe with of have. new A there new cross of expansion that the niches to a to XXXX maybe put may, facility, period. people one repurposed maybe down the on have repositioned the and to think at one within And Ruger, from exciting something are fantastic I we've out have of I line. our right are of is our other to coming expense or there. advantage allow avoid factories side

Jonathan Mueller

to you. that your color are about you're of talking when of overall to Okay. in the stands, And Got distributors inventory of you given channel sort they you just general? sort and what, where retail in the know, what kind maybe then

Chris Killoy

both as with better work our key actually I that our to certainly us been retailers. help these particularly know they a counter the this retailers. formal think inventory, They our they’re good side in where time inventory it over fairly, particular We go pretty good surveying weekend, us is have patterns lot work one think I our have flavor positions, management a Ruger promotions, have their don't through manufacturers retail see lot I times know and independent as on our force and we're And we've gives we well retailers do wise retailers the with retail some those in is distributors senior on. of smarter of we Well, some key tell day-to-day than a a them we contact that inventory of going sales around, and days other touch with and all the out on the shape. and retailers. would buying really what's pretty cycles, you fairly for their inventory in I think the lot of informal of maybe

Jonathan Mueller

to maybe, industry for XXXX a the just general, year obviously other maybe for the And maybe more as longer, good today, company? That's couple thinking hear. the then XXXX tough speak company here Okay. about in this but – but how a is just about you're longer-term in longer-term, sits

Chris Killoy

you Well, capital metrics of at look Tom I with shape. the of structure, good that we some the the We've got -- million cited $XX mean, on – in our ended terms of very in hand. quarter cash we're

we more During X%. offered repurchased – reduced haven't stock, pay of don't that the generated of the accounts million. we our operations, doing. we $XX we XX% receivable our $XX first year-to-date variable outstanding cash million third some from We $XX three cash by see anybody from extended the competitors generate in quarters, and at got generated the a million shares current. our We've terms And we than we operations. In quarter, We dividend.

plan you ability So And $XX going with future may as paid to been is, guaranteed, thing that comments, and new already structure to that's that's million bring our hope we from you've to got are the and million we've is for to our we to, the and – not our in service products but spend that for one seen business that's the million in spent $XX single really equipment strategic biggest up we've our our or new currently means is exciting have at market. goal, fourth spent, picked number bought to the XXXX. drive Tom's in The capital And which $XX quarter. achieve products plan. a year, and certainly our what's support what CapEx in going

got exciting still things So come we've from to Ruger. some

Jonathan Mueller

we XXXX. distributor what that through just And at absorb mean, your assumingly environment? do levels, XXXX in be of positioned levels, of, growth to of we and high term, sort work that sort excess company of return you. in just demand are to like of sort at metrics I from maybe normalized company position – and we more inventory any operating would the then the the sort maybe sort level the in a Got XXXX inventory about longer

Chris Killoy

for cited long I Cox trends show Well, XX% mean, a recent of them XXXX. got his by now that our articles, one the mean - are in Chris by that were of the we've poll started that's the households in solid. industry American poll term particular highest gun since very are I are that Rifleman was owners,

so, think of We've ownership. new a And we've firearms got runway younger We've very great a diverse us. solid more customers, ahead we base. got customers, got more customer

And lot out think of there there so, good signs is we a us. for

drawing the now, through to with the board, manage tough the chances right to are market our like We of I on than things some have with you. honest in products have still the this better we're our way but that be new that competition we teed and up

Jonathan Mueller

Okay. bought And me, of Great. obviously then for stock. back just question a last lot

aggressive strategically, thinking the XX-ish you from and company see buying you year-to-date, company trends buying about, back is on was, there. at thing maybe that opportunistically just whatever pretty your and thoughts why think pretty that buying being much Maybe to perspective back relative to the more the a opportunistic? do but little right versus here Just fundamentals in and the choppy out stock

Chris Killoy

then – put you we're the the as in XXbX-X there stock not advance to buy of – back. stock fairly we're purchase our in which place of stock. if trying back advance a going would stock, we're is plan, we're the back. it company And buy buying probably we know, back, the valued, of make actual to Well, think And tip sure through that we do only to we're we we well think in goal Ruger undervalued, is buying as

that XXbX-X those still authorization. some are. got by definition the I last open our levels think not are on particular still we of $XX know disclosed again what and million at you So, believe those levels But you

going part remains So, forward. of that plan our

Jonathan Mueller

said you're you then when buying you the it's so, think undervalued. Well, when Okay. follow-up back maybe the stock would be

So maybe at saying trying the company company that Maybe or long-term just, the how today, just the company value think value we the we is to look $XX, company that sit are you undervalued. here as of this then? -

Chris Killoy

it's historic we things it on have may amount were specific where we've we're back historical also stock an We Well, what we trend and necessarily we the do of and and I future. that's to that's whether disclose XXbX-X try with that, used a on at And we what eye we some mean look we pretty a what modeling multiple to did we is, like with that's look them to of things you not levels, went or that one of we price, answer. based both EBITDA a it's this were trying look the don't we obviously tiered and were work point, with in and but at all through we historical in I'm the back, an it And based through, those sure we at. and dollar resources, EBITDA type to XXbX-X don't where trends commit with specific know, specific what's on. the right those plan. model,

Jonathan Mueller

Okay.

think the price decision that just correctly, then of drives you what the I understood that of stock what the and value buyback? of sort some the the out and analyses compare ideas is to of to currently different is, of come long-term if pace that's So, company where intrinsic

Chris Killoy

Pretty much. Yeah. Yeah.

Jonathan Mueller

lot, Appreciate it. guys. a Thanks Okay.

Chris Killoy

you. Thank

Thomas Dineen

Thank you.

Operator

Capital. line comes And next Austin you. with the AWH question our of from Thank Hopper

Your line open. is

Chip Saye

This Austin. Yes. Saye questions. taking Chip my Thanks for is for

that's year that was can looks and and First, XX% benefit. then talk what a Can around XX.X% like just ago, $X.XX Tom, housekeeping rate the a can – in had I It you you a about question. XX% that versus tax QX change? caused

Thomas Dineen

on through into that standard, P&L, tax now all that did current the quarter. Chip, some where were those current awards drop a directly the lighter so on primary tax excess benefits impact for benefits some standard had reduction the the and that sheet. the in a a perspective on year equity-based we the the little cut and company driver, benefits those before rate. And you're greater – to new current to of again, comp, a additional this chase under of Sure. amount seeing this in primarily to the just this our earnings the of that's effective these through recognized to are rate new standard capital had going recorded quarter effect And related the higher, a the liabilities receives the a quarter the the from tax to And same was balance provision liabilities and benefits year. equity-based paid being compensation the accounting of is effect to adjustment, get kind attributable went

Chip Saye

Okay.

rifles? represented type those look percentage and by with question, what that Second would like question you’ve like a you maybe talked though a even your of that represented of there is capacity the What challenges is in by – earlier platform bit is or type rifles ARs little MSRs about ARs like your business business. is, there of percentage business aren’t. AR your said This sporting be

Chris Killoy

that's base of it's those on. Mark a Mini-XX. Centerfire I and other know we Rimfire of disclose got some percentage Well, our diversified as When But of would the rifles maybe broad at pistols you, not business pretty or the that particularly of tell things you big Bolt-Action like We've our revolvers comment look don't our one to you a our everything up or pistols, IV products. the manufacturers. then as

not part MSRs dominant our our the product an of line they're Our part certainly any but important of line means. by are product

Chip Saye

mean, was a I or X% ARs forward? MSRs to you your XX% much tied Ruger, when it, you and XX/XX the we of XXXX, to number know just I'm was it is what will of wondering it how a I Ruger, to that that think be can driver going get in had normalized like, more ago, is how I of platform your like But XX years that I of think when talk driver AR because like I'm trying that sales or look a whatnot. business business? or Yeah. at of because XXXX MSR So, of much business, to

Chris Killoy

-- I particular say I closer a but we certainly than as I largely I chasing business was honest mean, were capacity. it trying is were period, increase XX%. that that into to to throughout getting throughout would to business, wouldn't that number, we it And MSR you tell be mean X% time the

we're that And So, as we'd far get as expanding. hoped. was market increase to didn't trying capacity as we frankly,

We have additional need a lot to started be we been of equipment that has where already other redeployed on capacity. lines

flexible, pretty, folks So, comes when our pretty that. it to are

but on remain market earlier out QX, it's bloody I solid last family. forward, we of the as QX discounting That's the the it's of business, competitors with part that some has commented part the the from started something there a So, back year. pretty a this before AR-XXX solid in that still of while very Rifle, Multi-Purpose much MPR, MSRs our of part pretty going see our the

Chip Saye

Okay.

segment mentioned be a this yeah, haven't with but then are today. a summer. the that capacity the being or are the in when I of handle of week and the so at do rebates, to foundries lot part in talked you industry do Ruger? we Do you're environment of terms or seems business. this that referring to at in a about and of Is – increased need took capacity release think December, a this mostly yet, what So you of manufacturing your And going to have press long you What commentary, for a challenging of it's in do business? to couple I - people business. looking The that a one-week know part that done like off you you additionally know January, it holiday, this because how you holiday challenging you

Chris Killoy

of do of like I production anything Christmas in that. don't or shutdown or anticipate is years and off the couple – nature. we the manufacturers the summer closely. down some price We've as a in it things did other the furloughs slightly, do numbers manufacturers in slightly, planning Yeah. over are industry take our But managed holiday inventory – done that years, didn't our pretty rates our the of chasing shutdown down traditionally demand. are Well, where I is we're we last know over plants have distributors inventory shutdown some we which our of

down in managing we As our I two QX that mentioned, we're at manage to new cannibalized work level possible, and force QX Every every weeks. the distributor distributors about going new by our SKU match production taking close dovetailing or look trying sell we finished product of ramp and inventory, what's through be as our we weeks, then since to two the our plan with that think production as we products, that the we're that, our XX% line, where looking can at and on our with and to to. where

we very SIOP a so, operations, sales, it's you process And inventory, planning. know process, dynamic it call

so, foresee any And lower things type at a of for holiday like – thing don't time that. need I for at a least this like

Chip Saye

wonder excess outstripping inventory are and Okay. was looking the just continue? in looks And the manufacturing included your about like I just units it are that I at ordered. just specialist, how units, at still firearms I'm long looking units but we tables you the the queue no produced capacity, the commentary

Chris Killoy

see or don't capacity. pure a now, to go until also either business a you're away from get pay consolidated too capacity people some but know into of right completely, many the don't that going lot competitors I we have you Well, jumping attention.

what to a to get distributors selling we're to if on we they're don't incoming based we really really run the run ordering. it from order lot our distributors, we past, If ordered. we selling. And are do you the attention units orders what not to could trying We frankly, pay on don't they're that in match rates, business what calls needed our listen of because

when will in behavior, see a deliver. can example, – maybe new shoot irrational And or launch for product the rate XXx order you’ll up what we so, we some Xx sometimes you’ll see

times we in rate. to lot in So, good don't incoming pay and order of attention bad, a the

the So, watch that their in don't do sell we a chains level, wholesale through we to distributor what a and happened our have have for and inventory, know week and anecdotally retailers' they with where we for to we getting we do as handle be major independence but don't as production, standpoint. course competitive of need are good their our is a our every with – on feel inventory what's on the sales you – force, which sales, it we

by to completely be again I so, think some from acquisition. going standpoint, it's go there until an And industry consolidated people capacity get away or

Chip Saye

Thank appreciate answers. you. the I Okay.

Chris Killoy

Thank you.

Operator

Dempsey Brian Morgan next our with And Rafn line of from you. Capital is Management. Thank question the

Your is line open.

Brian Rafn

when to Xx, orders. guys than that kind industry? was, a down on of the fever When to the of things softer certainly build a job launch more let new you things When get tough Chris, that that you levels. allow one kind maybe XX% did Mike inventory little does and your a day things a bit you, product me little are things that really a you the your of in inventory are settling from just neck a are in mentioned Yeah. to ask at now content XX-month. little concept design and great XXx you The go guys you pitched, break have early little trailing prototyping, you to launch less product was irrational and look it launches say of new always when the

Chris Killoy

writing That's new can launch, question, is the Good seasonality good shows business, in actually thousand front more our of the January, mean, take excuse on inventory that's put out When the some Brian. getting kind that several make the but January. in of got in shows you've get for big of you so it that care always our have sure when for buy challenge me we in of of when to also out the those a – writing open be the generated, distributor The thing. is cycle we front opportunity and year. with distributor the demand in that's are the products I orders. we show a guns Shot to to does us you're of critical deal depending there a you're distributors to retailers. particularly is of a ready retailers

to But make we're shows. launch January just that out inventory, offense where, can launch to distributor of year. the a of most hit in that's those we can't one And there that's we move, we sometimes extra accumulate there, so, to retailers sure front want move if that parts in about get dates to the all

we're come out So, on that our buy product booth, when and showing not missing writing new orders they and it.

Brian Rafn

Yeah.

Okay.

Chris Killoy

So, that's, one that's exception. the

Brian Rafn

I All Okay. right, color. the appreciate

are bottoms were see Rifle little guys development? Let kind product me new consumer maybe versus of going more down you between up like mix did a design you something you they trend that design, is up on with bottoms forward, down like lot up that palm of kind of new maybe is you consumer top How where up guys this. range like Newport that's in self-defense these more that of important product that product and you at some with engineering had top of kind the your component came Precision guns. a guys to designs look what trend your ask a new when What

Chris Killoy

Hampshire staffed that big mean of a projects New product bottoms new part are that's bottoms-up development very got certainly the heavily Mayodan, I top said resourced those like you is facilities, and Newport North up Carolina. down, But and homegrown the each from our the Prescott things big the important. efforts. of and are things We've Arizona, that some major

models Newport, this LCRx. things you've in got four they've like up of us given Just quarter, the different

a a mag, of the mag XXth in with got that XA, a rifle. and number then one up and of X anniversary XXX LCRx Magnum the millimeter then version XXX at XX X mag, and the – millimeter and model X-inch came XX Federal X-inch the You've the a a of version LCRx SPXXX XX

big the mean your big the are very are product in things just are very And of environment. important our efforts those these because you're doesn't that's our that meetings project, a team, is and important company. in to singles this of us critical engineers planning clean so, on I the it one one health And very, big not to remind smaller

a brand us at engineering special great for us. make-ups. we the folks that is The that special, a gate. rail, plant the not other a do be the So, job a it of rifle something different They've that's precision it of from do a where And might with right level our coating, Cerakote rifle, an that them a got that's may be aspect lets accessory special a market out our for precision gives make-ups of an and got to distributors have to very, it a but opportunity be very not successful new to go might lot that it and them that proven then gate them out discount whatever out different sites, of to of standpoint. it preserve because have the duke margin they don't and some model SKU price or for have be

Brian Rafn

that or anything component, Hey, you that special that Is I is exclusives? fit your very you're seasonality read or to kind exclusives make-ups, a minds, exclusives, Friday a was distributor sharp to going plan on year, is kind that. has and in of, with does promotional Black the or distributor season distributor about the so throughout how there ask you that make-ups, of fill, of just hunting more

Chris Killoy

Academy. Bass Well, very on Friday the be which Black Pro, Gander year, Mountain Cabela's national And is very of was but accounts, we couple course guys distributors, can saw Black with like Flyers, honestly those last people and the Friday big focus really that our those effective. a of sometimes

can get a distribution special make-up through even right in their though – of the folks, selling part there got we're that that's you've with strategy. big those If two-step that you

DICK'S Sporting SRXXs, fourth quarter distributor going December, other did a that nice not enjoy. think a I we The just battle buying, Black but nice the camel holiday throughout that those you the some XX/XXs, the and November come We Goods special of really patterns did things to in like of affordable did we've the those Friday, some out, of just variety on one got as – for XX/XX, into people as XX/XXs, SRXXs, are course is, specials. with on

a compete else work our the on that decent with same of part Again, have try value We in marketplace. base extra they is to and sure that make model. the not plan. differentiations some that make that can distributors with head-to-head the so, everybody to And cooperatively in to or enough skew margin

Brian Rafn

some that you. something Okay. whether look you an can that's the mentioned with or launch at of asked these, said, people And in so I've stocks Well, you do SR we past ask as you you to Can with things were maybe kind in the you something with aftermarket design? you're if to that Magpul, acquisitions again let CCH some the making more and things that of doing trick of came area. important or mean Is But on lot platforms, the it and clips or partnerships in laser about tricked these AR out also little seems a the me a and of more that box that's, product out. area about of you MPR, also or joint MPR. when of scopes build I the that. I've to But the is that me past the new alliances it's asked – there's might the it's – accessorizing

Chris Killoy

looking might choice to cool a we're sale to for looking you accessory that accessories choose make example, between I a and when to also your don't from have for or retailer. then away pick on own. consumer sensitive making when and prefer sure is we're careful, for and make not like is, be that selecting there product a the on the there's optics accessories those the And is what their to very MPR, they aftermarket taking Magpul with over-niche you consumer a an balance always It cool you're balance a you're mean

of a So it's kind balancing act.

go as that those site online, top margin we're strategy. of higher Ruger retailers, happy of but just consumers from with products – as things got the shop some go-to-market right the business to and maybe guns, on get certainly for it's on those like add our rails, M-LOK to buy chassis for provides can our their add know, so retailers that's on MPR where sales the and opportunity have to to You see an – those they it's got we'd like accessory

Brian Rafn

Yeah.

Okay.

and at, You legacy foundries still where running know, up two changed the I'm the but furnace at Newport assuming that you're mini we're given nothing's there?

Chris Killoy

they're Well, Tree. very Even of those our at parts well, Right mini two process finishing the everyone geometry dimensional have the to foundries present and all up now, both you're from the and up make different when qualifying is though transition are to casting can you part standards. to up into running, quality parts, doing snuff Pine mini foundries. we're those in a challenge, two sure a of

least transition that's now be like now part which kind legwork foundry that So of byproduct parts as for through at right this process. things that putting re-melt of the able to that's at those of are runners in waste use run comes in things is in still revert going anticipate don't off time. this as we But the with point we the then rates, we running legacy like point runners the much third right pretty to and at foundry current to planned the material, time that the mini and we're proceeding the in

Brian Rafn

it a or see Is you Yeah. at possible down maybe Mayodan might MIM? or that at either Prescott mini-foundry

Chris Killoy

things facility lot on the our for resources doing right we've of consume lead looked and at products. a job that, I talked We've still about we prototyping City, now, time mean they're on reducing foundries Earth great that. and new particularly a us, MIM have Missouri in

MIM We still have at that. talked capability, but out on adding jury about point is the this

Brian Rafn

lines in you any any then sell – normal? plants just shipped quarter, And right. or guys all or between Okay, production you did the did any move or add

Chris Killoy

American know to some No, Mayodan. did we from production actually between LCP – production Mayodan, down to some our move Newport between moved some some and also moved Centerfire of you from Prescott rifle

the see see will LCP will Mayodan you you those rather Carolina I, LCPs, rifles than as marked marked more So, American as North Newport. you will see original and and in of more the made

Brian Rafn

What have years we What two there Okay. in space you Mayodan? your floor would were floor back ago. in now down build usage, out might space probably

Chris Killoy

full. quarters three ballpark probably We're

Brian Rafn

Okay.

Chris Killoy

things got on are there we've there. some coming things that really then some cool, going new And

three know that fourth It's of that we at is hasn't all what on. plants, – you to in when quarter. some $XX of some going that over to we've hope when at you tied out again, hope look service. got That's you up we and get plan, of in that we come Some that that yet CapEx have million in really

Brian Rafn

know, stay the and clubs the Okay, and have, past you some okay. Anything with in Golf had again, you – guys stuff you times casting continue doing at and ancillary looking hammers going fill stuff? any guys had you concentrate are Callaway you during weaker to Are just Stilettos, out some impellers. casting to gun of that you on or of the just business,

Chris Killoy

That where Callaway, was also we capability... back with -- had the Yeah. the and titanium

Brian Rafn

Right.

Chris Killoy

in out But long been a We're in primarily business. not care factories since – down. of that's we're actively time, our this lot ... of at Prescott. in-house. that Yeah, non-gun point pursue interested don't we shut taking in

far them, work So, new continue We'll to outside. that's as we chasing good outside have as do but emphasis heavy customers. business a some with real not from

Brian Rafn

right. All

you forward. one Chris more, of a Let me kind ask

mean a people a As market, you your rich, guys net most I would to market. tough cash peak in margin in are love have

no debt, know stellar are sheet. solid So, you very balance guys reporters' certainly you

markets, a you into weakness like if themselves As not you you targets might – weakness gun you might the be of, the might there in fairly Are with capitalized? that there in present are see that, have see that may of XXXX general know that know, sales? poorly opportunities we continuation are they potential kind there have

Chris Killoy

we And borrow And pay. of lot that bit if Brian. money, our could coming down a be that's at, us. Right a there do of little think things on firearms, some some the powder, the opportunistic. keep higher multiple question paying we some rather got we with better good be a do And always to a of opportunities categories, for we'd to sense we've we now, Yeah, dry like we We might the makes things, particularly – than our it in teams, to. can a those, we one we need seen in-house, and some the than road. it haven't is investment look of ourselves maybe in know

in and to too, of part great resources. party could resources we but opportunistic, need standpoint, where stock add some people we not going mean going the what will and in valued any and versus continue because really to – decisions where we've we and we've we we're given to of such, one bad know, people the terms looking really some their at of engineering to analysis, acquisitions, from great to make our mindful bring for value, not that of equaling manufacturing be got a that's of and And and a both yeah we're some terms financial plus still is get where be lot when blocking that's realistic, about it talk synergies one that's value the to making part that, of You what for more and business, than are be and in can add is tackling we multiples two. our the running of to businesses, got

Brian Rafn

down, you XX%. down look and QX, being Yeah. units went XXX,XXX about that at you in being talked back Again XXXX. with production are if I guys If

So, engineers those Does teams new to you with move again any move pretty softer product development, give about generally, you floor, or production softening engineers. team? production that people guys really market. around a those So, design the development manufacturing the much? product Can don't they static don't off talk new used a – if a having new some little engineers, of on to you different much Mike and volume that the pull does very design couple maybe

Chris Killoy

of the of to – factory bit, part do coming you floor, needs terms setting. off the tremendous in engineers off especially them the We experience off in and of move – within the the do what shop a with actually quite bringing mechanical coming Yeah.

the And to so, of and lot product of a development their challenges know like our new are rotation, as engineers the through both through factory from that's some factor standpoint. time rotate as part spend shop really exactly engineers, see the designing come in on by well best then standpoint what a a folks, product product, we floor, human they're machining they have and the those floor, that on really time where,

Operator

Company. Thank you. from with & of Ledley Cowen the line And our next question is Bill

is Chris his to open. the final remarks. is for open. your right, Bill, would call All line Your Killoy to like line I ladies and back turn gentlemen,

Chris Killoy

like would I operator. you you, continued thank interest Thank for to your in Ruger.

thank our We the American to Thank improvement will of new much. like every strategy you would factories. very our operations. in firearms to our and products we dedicated loyal I closing, exciting driving in our our committed remain developing all and of who design In focusing employees facets continuous use reliable manufacture day and customers rugged that and on all

Operator

And ladies in all you conference. the and a program This gentleman, thank may Have participating concludes wonderful disconnect. today's day. for and you

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