RGR - Earnings call transcript Q1 2020 | Sturm, Ruger & Company, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter Sturm, Ruger Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session [Operator Instructions]

Please be advised that today's conference is being recorded. [Operator Instructions]

to conference like speaker to now Mr. would hand over the our I Executive Killoy, Officer. Chris Chief may you Sir, begin.

Chris Killoy

and Ruger quarter & morning, Company Good welcome first XXXX to conference the Sturm, call.

Reid, I on caution statements. to get read forward-looking would we Counsel, to started, ask Before Kevin our General the like

Kevin?

Kevin Reid

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

information Additional ended filings, December not and of XX-K ruger.com/corporate limited forward-looking obtained of XXXX, that SEC, Form the statements year SEC filed results of the actual is or at reports company the for to we last or at sec.gov. contained the the including, for website documents to the but company's quarter in first cause the on SEC differ on these company's XX-Q the course, concerning from Form contacting the XX, from company's on in factors website materially those time-to-time night. or may Copies XXXX, which could by be the

update for our We first XX-K are all website. which the to the of Please statements. XXXX, for year non-GAAP XXXX, on do to reference December Form in note of company income XX-Q Form non-GAAP ended Furthermore, reconciliation GAAP disclaims both EBITDA found posted net EBITDA. that the responsibility our can and quarter be the of forward-looking XX,

Chris?

Chris Killoy

Thank you, Kevin.

that had coronavirus update I results, on pandemic on quarter or first the to want our has discuss provide we Ruger. COVID-XX an the impact Before

actions significant economy. daily an humbled responders. is and the and workers COVID-XX heroic across of uncertainty of sorrow heartbreak first watching global many left anxious impacted you created basis, all industries were on nation. also It a a our As of throughout healthcare the and trail has the pandemic adversely know, We

quarter and of steps the on mitigate business Any impact employees our financial proactive we adverse health Nevertheless, on of maintain XXXX. in first and our safety its impact took the business. our many was negligible to

These included and factory possible weeks introducing paid additional throughout potential implementing assisting encouraging each social with employees environment, and personal of and health remotely manufacturing maintain off, time approximately departments people which safe with to restricting and employees work to two hourly an local implementing and to quarter recognized avoid employees providing clean our fire cell, and in are approximate manufacturing including facilities, access first visitor to hospitals, manufacturing actions of with communicating and all million cleaning, and wherever of XXXX. to expected the safety health issues, distancing to every in new additional actions sanitizing processes XXXX, a total $X.X cost police was and during of in these The workplace the donating other $XXX,XXX protective communities. equipment healthcare facility,

we kept be prouder of the crisis. other not all risen of how could but productive and have responded to keep facilities with each the restrictions dedication I this have feat this been of our X,XXX in our on circumstances. rallied impact on our without who employees to difficult production. around past increased The we our able not businesses limited and determination been under have We the and of open occasion, only fortunate well have could month, accomplished to COVID-XX factories

this to well-positioned daily. is manage We we know to and the We're not over. through monitor and continue efforts COVID-XX adjust our crisis, pandemic mitigation

flexibility. coupled exceed abundant facility and short-term million security sheet our financial balance credit investments, which by provide financial $XXX million, evidenced strength $XX and Our our with and cash now free unused debt our

the of our we'll get results quarter discuss then on Dineen, Tom and financial overview the operations, current to first give an questions. you and and Officer, our market Now, Chief update I your Financial will then will

Tom?

Tom Dineen

Chris. Thanks,

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

comparable and net Strong our million diluted reliance sales prior $X.XX all $XXX new contributed per sales and share. period, were year the earnings exciting products on promotions, were consumer For earnings. improved reduce to demand,

The $XXX.X balance At March XX, cash totaled and investments sheet. XXXX, short-term our million.

was debt. no ratio we Our have current and X.X to one,

million. April, quarter At As cash was Chris strong collections now exceed XXXX during share. operations cash to Cash equates investments XXXX, provided million, $XX.X our value due equity a to short-term totaled which million. stockholders' first the of our per $XXX.X by March in just mentioned, XX, book of and $XXX $XX.X

to through the shareholders. million shareholders first of the its XXXX, return In $X payment quarter to the returned Cash dividends. of company

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

approximately As income, of is varies a reminder, XX% net dividend our quarterly and quarter-to-quarter. therefore,

the That's for first update Chris? quarter. financial the

Chris Killoy

Thanks, Tom.

a latter been increased there's increase the consumer of period. year products quarter The to first Ruger the independent retailers the unit stages of talk to of let's distributors in prior quarter the demand. first demand. compared Now, the XXXX Since significant sell-through estimated from XX% in about XXXX, of

Foundation, same the period, adjusted NICS, by commonly XX%. referred National adjusted Check For System the National checks Shooting the background Background increased to Criminal Instant as Sports as

likely the quarter impact the concern of heightened suggests may COVID-XX, few evidence to protection. increased related restrictions demand, weeks this to during especially level last of be for state that and personal the Anecdotal

represented first our new the XX% new of sales New firearm products. million Sales in or of of XXXX. quarter $XX products

include pistols, the the and caliber, include product products II XX the years, LCP Ruger-XX the major in in pistol Revolver, PC New pistol. introduced Charger, Wrangler only sales that AR-XXX new the which were two past the

new not but line value XX lost Notably, in included exclusives and quarter ultimately immediate of distributor mature product our and new product sales product in great are line to independent As and families reminder, extensions distributors, opportunity a and first customers, the provide derivatives wholesale the calculation, the our product retailers, the we they consumer. extensions.

levels our inventory inventory inventory reviews and our and our distributors base our the semimonthly of that and Production retailers of products independent our primarily sales the inventory. independent and our distributors. sales, from to estimated through of We and manage production

to ramp-up production the in unable increased demand meet were quickly to enough We March.

a combined of during As at of distributors our first XXX,XXX warehouses quarter our inventories units XXXX. result, the and decreased the

do as not inventory or have the other brands depleted the Although, data a at last been do we the as comprehensive has we inventory that month retail two. in Ruger level, firearms most suggest gather of information retail retailer well

expenditures year Capital $X.X expenditures. of quarter in first were Capital million. the the

teams its optimistic Our Accordingly, engaged updates actively XXXX. expenditures approximate activity to and new forward remain product products are our and to total providing pace $XX XXXX. are expect that engineering our look is development exciting in we throughout forward at in usual new capital million going

Cash and investments. short-term

was balance the currently $XXX at March Our million. $XXX cash support million exceeds end our Obviously, this is normal and to and need short-term of we operations. more investments than

philosophy changed. has allocation capital long-term not Our

on remaining strong, is and focused predicated on to strategy value Our financially disciplined, delivering long-term fiscally shareholders.

We returns with are we're at quickly strong move opportunity for capital to opportunities looking arises right if our to the generate the prepared price. and right

we capital COVID-XX Our short-term as philosophy allocation pandemic. face uncertainty of the the has changed

to the employees. shareholder this opportunities and will on security we and navigate protecting remains value. Our top will current and as through priority our lookout continue maintain flexibility employ create we for to be financial And such, Nevertheless, our abundant as crisis. Ruger we capital

question. may first have we Operator, the

Operator

[Operator Instructions]

from Street. of come first line question Smith the the will of Lake And Mark

Mark Smith

Hi, guys.

looks if here. picture you current big like that that of environment through How XXXX kind similar most got is if how big a XXXX we've of Just the you just way? gun to the should -- will. or us picture, similar precedent It and historical kind at the late surge, walk same can this that looking through -- different this should we be from time how we in is

Chris Killoy

Mark. Thank you,

difference that that time period is to the demand. and think, time I in between period of we're suddenness biggest this referring this surge likely the

an was period think, was the can that and rapid think difference. not cycle. we changes. the it mentioned you But as biggest that in drive It I changed saw middle I as in March. political and previous And was sudden the in of spectrum. the anticipated Obviously, some election as be it that in time can falling

The we and our COVID-XX care production. in extraordinarily our other be with production is take how careful how obvious the we ramp-up -- how of we in have pandemic to we communities, employees, manage we difference how

that it's -- bit in period a we So than my different time mind. quite

Mark Smith

to Okay. take pandemic up? up And higher end, need units that that leads able per kind and to be of to ramp this of during you ramp my back the next to production question. quarter more, steps navigate to how What it that call do XXX,XXX production do you kind or to let's

Chris Killoy

jobs of are and our they a question. process Good now. can we've in place If in hiring to interested active people right www.ruger.com, We've website, a working at got lot Ruger, got go very posted.

have tell new will folks that make is the coming We And our the a our a environment process sure process in more to folks together. I seeks put our as into teams we involved. safe. workspace. is HR introduce particularly existing to workforce have However, XX-step that potentially They're safe lot in their are you really actually

through got -- our big to to and factor that's this. a fortunate have And that in been -- manage nurses several we're so, we've ability work Ruger nurses for

existing protecting go extra sure like, way And capacity. production the so, and quickly we it's our delay we cumbersome, a protecting prudence, it's ramping more it think while to think that might our as lot but employees make we may as we're right to

Mark Smith

level, there to just level and million of that guess, level, can to confidence at you keep X.X high more look produced get look getting directly, -- you that do per you quarter to I from do that Okay. is units get if production? impediments we or maybe that -- and you again at to it that at can back it you have feel high

Chris Killoy

million of Well, a previous you you those cetera. product LCP, on lines, some the where those at of have in produced were like a history in very in to excess in remember of -- individual units XXXX, et look years X lot focused some of year, the when Ruger those

be Our is more mix honest. balanced, today to much perfectly

product revolvers individual more a lot They lot more and rifles, pistols. lines, cover a have We models.

line. challenge. challenge so, the And a a up supply It's that's also ramping

of as guidance. So, of manufacturing demand as get forward chain. looking capacity to after a in the well that don't people, where terms combination we're do supply see But going to the both you as best go we And the machines, it. our it's we know,

pursuing what in sure involved are we doing, want make those to we're long-term. and that makes of sense All

-- down year-over-year managed kind got downs. last me the had say of reminder years, few up but had ups a a years, about heard you've a XX of XX year-over-year XX in XX, we've through as years. we've also or these XX and we've And before, We've quite it

sure down years. and make up both to try ready we so, we're those succeed in And to

Mark Smith

any outbreaks sorry, have missed cases hurt you Okay. a or And had late commentary. quarter, the temporary quarter that I to or have then, or the But during date? if in look during the shutdowns either guys we any production quarter, as it

Chris Killoy

and may an We've press, been of have only Carolina you very in fortunate, disruptions. COVID-XX reported We've employee. North as seen have the one of very minor frankly, with we had, case some did active

in rigorous a suspicion areas, to to We and a place ahead to work get Even we procedures of to through manage disinfect we have have process somebody's standard waiting it. that. entire a the clean very high disciplined go if clean test, factory a

-- only and today, through like quarter through and disruptions. I today minimal we've So, first had, said,

remain our open as and we forward. of factories our health employee All go priority will have top remained

Mark Smith

think, Okay. one from And the last then, me. I

lower have a little pricing aged going which orders the ASP and up the on, a at you would clean any your little the the given was other on I shipped or there dynamic of received. maybe on that looking shipped inventory, the pushed ASP Just to able on unit? than it's expected, backlog lower, on some Were price some maybe units,

Chris Killoy

mix were is year revolvers Wrangler line kind full up finite Again, this introduced. hit just look the the details, if the last probably there without you there. in of you stride. was of products, line in single-action the year, into change remember the think -- biggest of getting the beginning saw been production And had when its you Wrangler this ramping We time I at of

model. So, the There's a lots Wranglers of lower mix. Wrangler price that is in

We while they're selling the lot the brand lower also particularly of like to the chambered have terms generate great price, pistol. in of new a models that, of LCP guns volume mix, XX lots and in rifle. things all of of than slightly the LCPs they're average some in include Ruger-XX And

Mark Smith

guys. you, Thank helpful. That's Okay.

Chris Killoy

I up question. Operator, is for think Ryan right Hamilton

Ryan Hamilton

Good morning, everyone.

Chris Killoy

Good morning.

Tom Dineen

Good morning, Ryan.

Ryan Hamilton

know, I that. to about don’t what questions But couple happened. exactly I'm ask Sorry happy a here.

what Could of You little of March a just kind last if in the on the cadence give touched January and in things us maybe a relative how us of Kind mind. March. of through up bit little year? don't cadence picture February quarter to and picked you like the the you walk quarter look

Chris Killoy

had moving we January kind Yeah. certainly had a frankly, but And in we February. it was a doing Ryan. at Thank a that pace. in And factor, were, January, you, good quarter fairly were things actually, -- pretty we and Yeah, through a again, a well a good we the March, good -- accelerated of was when February.

pistol. And to -- Our extremely and both we doing particularly launched near mentioned were Ruger launched LCP then quarter, the new its end Show, Wrangler PC also -- the The new products we're SHOT the Like Charger products, pistol had before, the in Ruger-XX fantastic the well. off of I starts. hit at that we we II the the stride. -- in XX, the

that obviously country in impact of it spread again, positive good of ways. so as quarter. all story in to many of excitement standpoint, devastating its contributed impact only this the across the part the the from the And So, COVID-XX, and is news and that's

Ryan Hamilton

cash kind couple bit, you than you I of like give kind Thank it's I'm could investments of you that's usually over guys, the us you. recall. Could investments? Is cash on invested? level years. for are of looking higher short-term kind where know in short-term can and a the there touch that's makeup of could -- Looks the back last a you -- I --

Chris Killoy

investments, we -- It's short-term T-bills. it's say when

Ryan Hamilton

T-bills?

Chris Killoy

than obviously our much those accounts. in cash into cash, state, very started be keep to able approach. we liquid to -- in pure that we that We us. if makes sense a move a So, But like conservative years rather quickly few with a to opportunity put we're in very an and treasuries that ago see for a we

Ryan Hamilton

of see today, bottleneck sure. as when accessibility what about as a ammunition a in front. a also the on ammunition? talk Oftentimes be It's good in -- spikes seeing you position a see for bit far market demand buying kind you're firearms, of to in you these that in you the Could sometimes little

Chris Killoy

talking our retail scarce. and anything my primary nine-millimeter buying ammunition people know could and to ammo, the friends at I Well, and in were anecdotally was certainly, in A very talking customers taking get. like they business level, of particular to nine-millimeter wholesale lot

Ruger-XX by about manufacture fine the XX One of with the things job we keeping uses the folks that were a concerned And that. millimeter with XX -- our that success cartridge. the of pistol a that have up done

we negative far so the see the having so, the ammunition And guns. new on don't impact a of sale

Ryan Hamilton

to on different little Sweet. in That's production. the like give us slowdown your and of I at shifts you look know hear. a just bit picture any a you kind headcount plants, good please? touched what Can

Chris Killoy

You shifts. said

… Okay. Yeah, I sorry about know that. don't

Ryan Hamilton

Sure.

Chris Killoy

by total the Well, of shifts plants driven not are our just capacity lines. individual demand, largely at but

and staggered to number work flex production a short-term Sometimes machines weekend basis the that shifts on lives shifts without of of we can our increase we increasing committed so have capacity where line. we that

plant-by-plant. it on strongest. varies Obviously, is shift So, first

shift three all We of shift. the not but some think on shift on of we the auto have same third thing on it's typical plants we then flex And in up. is done Second manufacturer where some those third to a and use first goes of plants. an school, in done operations. in like second not It's old is the it, that shift,

all being varies and of second but all plants have third on it done shifts. have three in terms that And -- what so, it three is all we shifts, those

Ryan Hamilton

Any last to commodity one inflation note? for me. Perfect. And

Chris Killoy

large, able vendors sheet, with of have we've we try sure remember of time been work vendors, -- line first -- our we We by haven't all pandemic sure We and can pays first given seen And look of they to this our make took forward. care well. to sure our terms our when strong and No, to balance be any. we hit on vendors make supply. always very we in in been Ruger make

steel, haven't offices okay good challenges And and keeping their working on We we're suppliers We've with their factories through as impacts our they pricing. open as well. to own we've of seen there. commodity supply manage so a got any been their

supply in a So, have the our folks but us it's job and production. a pump done been keeping chain challenge, keeping great primed

Ryan Hamilton

And close overly be to know I you down? are seeing a it's of with? or you been anything on are -- it, any to potential said as anything you touched vendors them having you bottlenecks kind you that from see as we seeing suppliers that should concerned challenge, note, far but are Or or

Chris Killoy

couple actually and did while a procedures with their like it's they back in a and plant short been very rapid in pretty individual cleaning -- No, dealt through illnesses in had that, that the went folks minimal. they so manner We've of got and things online order.

suppliers. with in been pleased And supply we've well folks very our the and so, chain They've facilities. a great as our as job done our

Ryan Hamilton

there [ph]. you Thank Kudos, much. moving very

Operator

Instructions] [Operator

And the no queue. at are time, questions this there further in

Chris Killoy

would at I medical pandemic dedication are thank want also fighting On personnel and for attack. nurses, all and of employees work the like our emergency at again doctors, and the helping these that and X,XXX difficult point their other this of all times. first to I hard responders, during behalf our to the of thank fellow Ruger, Americans us of

our everyone Ruger workers and to service I other workers, truck essential grocery dedicated thank our of drivers, military like workers, carriers, course, sanitation also members, factory work, store performing want postal employees.

place take next be XX into earnings conference Thank in to I to for their which the continued received last of annual you and materials proxy www.virtualshareholdermeeting.com/rgrXXXX. to X:XX when listen meeting attending release Ruger. encourage Wednesday, your you month. of our our all will Time. they information end can at interest and our virtual instructions The for shareholders, the found log Eastern call meeting annual at log-in Shareholders AM May received their at

and safe. again you stay Thank

Operator

gentlemen, thank for you participating and Ladies conference in call. today's

You now disconnect. may

Sturm, Ruger & Company (RGR) 7 May 202020 Q1 Earnings call transcript