RGR - Earnings call transcript Q2 2022 | Sturm, Ruger & Company, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2022 Sturm, Ruger Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Killoy, President and CEO. Please go ahead, sir.

Chris Killoy

to call. Ruger welcome quarter Company's and conference XXXX morning, the & Sturm, second Good to Kevin Tom of the like of then caution Financial I'd I ask will the the on read Counsel, Officer, our financial forward-looking market. the second to will quarter statements; results; an discuss state then give Dineen, XXXX Chief Reid, our overview our and General and operations your questions. After we'll get to that, Kevin?

Kevin Reid

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

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

Chris Killoy

Kevin. you, Thank

company's the second quarter XXXX discuss Tom Now will results.

Tom Dineen

Chris. Thanks,

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

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

of quarter in and second our highest in sales The quarter was history. profitability XXXX the

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

For the million $XXX.X XXXX firearms unprecedented for share. $X.XX and sales significant in earnings demand the sales for year most surge XXXX, in consumer net of reduction period early of corresponding were XXXX. reflects levels remain that began per diluted in the from last The decreased from and were

decreased increases investments short-term costs XXXX, plus in Our the profitability commodities, July aforementioned partially fixed in totaled and services, increased million. unfavorable transportation, $XXX from pricing. of At offset declined sales inflationary production, our cash by X, XXXX deleveraging resulting from cost the in materials, energy and

the invest in United Our fund a Treasury short-term year. within market which money in that exclusively mature investments States X instruments are

Our current ratio we was debt. and X.X:X, had no

share, short-term Our opportunities equates beyond. provides sheet which balance book and per cash per $XXX was of of value as July emerge and versatility investments. At strength explore X, stockholders' which robust million, a was XXXX and that equity $XX.XX share to debt-free XXXX, may $XX.XX and in we consider

and development of be form expenditures million During will months to through to of dividends. estimate $XX the the and returned million that manufacturing cash approximately back X and $XX we In We of XXXX, from in We we company operations. capital XXXX XXXX, the related that generated first payment X first million $XX reinvested predominantly the product into our facilities. the capital of of months equipment upgrade million, modernize $XX shareholders of to new expenditures.

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

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

Chris Killoy

Tom. Thanks,

Our family as overall us broad the consumer half XXXX through navigate of demand subsided. and diverse product helped first

certain families modern families, of levels. product of below polymer pistols our in and many product remain some sporting inventory largely desired rifles, channel While including replenished, have inventories been

mix remain focus products prioritize rifles, demand, in production XX/XX that continue the We the pistol-caliber carbines, development Marlin precision centerfire the many These in rifles, of about new undersupplied LCRs, and rifles. teams and families rimfire year. our American single-action our rifles, have remain our to lever-action am our SRXXXX, include: marketplace. course, made and that product excited double-action of revolver progress this XXXX I which

talk new they products until tuned. launched, you As don't know, we about are but stay

reintroduction rifle expand is the a of our line the .XX-XX chambered Marlin We lightweight product XXXX to stainless hammer are forged very Model This cold and threaded in accurate to Marlin with trapper. barrel. excited continue lever-action steel features

increase million continue $XX.X introducing Marlin to of Sales lever-action Marlin Charger, of including firearm X to rifle production rifles near and rifles MAX XXXX. in look sales XXXX the our Marlin the Ruger-made lever-action pistol, pistol or the in We of and of LCP represented the MAX-X products, PC additional forward future. XX% first new the months the

of extensions product .XX rifle popular just sell or firearms were considered that the of and not in sales are are calculation. families included new products sales the for in new the Ruger-X.X pistol new LR captured no the been calculation they metric. reminder, and product are firearms LCP over for the Those product no mature well for II half in first longer the XXXX, revolver, years Several product continue in line us, product a now longer Wrangler in As XXXX. production have derivatives X included to in including our new

stay tuned I earlier, back As year. the the for half in of products new some exciting mentioned

committed of disciplined products. vigorously have exciting and Those the please? strategy innovative to the remain first second manufacturing and developing excellence of and the new of will XXXX. our we pursuing may We highlights Operator, are question, quarter

Operator

[Operator Mark Smith is of the with Instructions] And from Lake first question our line Street.

Mark Smith

were declined any pretty high, issues? production quarter? as significantly look that sequentially. Anything shortages? down of production Labor for the production drove at backlog but that planned? First me remains is, question during the looked it solid, pretty orders we kind there Or pretty Was

Chris Killoy

teams something several with call production, But decision supply we it our Mark, we on Certainly, families in issues saw bring down we our chain day. product the in face good based question. sell-through. distributor moderate to made what labor every are what and frankly,

we the have marketplace. meeting, what -- sales rates see recall, what's We our those distributors' first half year, this some So we in planned. X and inventory several production, there and weeks. And that production of to of meetings, inventory those families we proactively went like, they're in some that and SIOP case, production looks course selling the of operations were what the the over take each move may meeting, in every down. on levels, typically up you we our retail in planning see going indeed down. one We down was In

Mark Smith

Okay.

backlog? as is fill at is situation back So the not decide, how going "Hey, of aged that guys these cancellations? looking look Or that numbers, at sell-through, we there some a to we're we backlog firm Could see distributor orders?" where you could

Chris Killoy

Well, our orders noncancelable. with our wholesalers are all

orders those individual be distributor. So the can't by canceled

we're particular distributor we're overloading a cautious line. not However, to sure product with a very make

back particular looking see, SKU, model, order perhaps get deep them decision inventory, they're already at and we on cetera. to as them the what's -- to ship not financial So in want we a a we et trouble get burden particular don't in only make because, again, if their

But that street, noncancelable. backlog is So the that current we it's everything watch ships a it in X-way backlog. again, at And price.

at it's entered at been going time the even the was were while, to if orders a today's price, So for price on placed. it not there it's ship at those

Mark Smith

kind to there back you're as we're retail comfort kind And look of out prepandemic Okay. the inventory we we you of inventory. what with then your from look the all back kind distributor of What's your inventory? at far at guys as and as seeing way to as inventory, level

Chris Killoy

inventory, now, Yes. channel in I right our mean, particular, very in the comfortable. what's we're and

and is our settled of more on have Things like are asking revolvers. and course, "Can they're and particularly like X turns lines, Frankly, XX/XXs, and there's call, get product some double- estimate, asking, pistols the the for in Marlins?" what IV around earlier of is I every more distributors Marlins, -- in we There mentioned we looking somebody remarks. we right single-action of they're Mark target Our that. with inventory, think track into

Mark Smith

that's And next of kind my question. Okay.

at But where delta a gross profit humming. obviously, were a you as that kind As given the do of that, walk basis? business, in profit how we any margin, gross ago, look on year maybe that really through things as gross very kind the industry of normalized? margin settling then see margin in looks high And Marlin has margin profit

Chris Killoy

in provide I course, and Mayodan margins, forward-looking up are it not -- are will Well, running. Mark, us increasing line as down year. production, going SKUs, into we Marlin doing would that the steadily the you their We're add the particularly tell great you help focus of we think to don't job we in product those the they're own but and -- I getting throughout break challenges, so But a guidance. don't particular, know, in line gross as without more

at mean to I terms saw, the you overall, the remember, sales highest that look history. we in cost. think of as when the is biggest gross profit thing, our of a and was ago compared I year company's fixed in single deleveraging time, this margin quarter numbers

of of that XXXX. to And tough in decline gross those very attributable got that margin we've majority I second think to so And deleveraging back vast costs. fixed comps of is the quarter going

Mark Smith

the any reason differ significantly levels? profit a margin of from is question, asking different prepandemic way should there gross Maybe that

Chris Killoy

taken course the taken pandemic increases depends on over increase We've onset price to forward. of in that can of period. so what lot with time costs, of pandemic, be that we we're going on increases of A since that the and hit way, can price with the costs, -- do -- will the Along part X depend in do pricing. the transit what we've the the way we freight continuing of material

Operator

from is Capital. the next Dionisio Rommel line question Our from of Aegis

Rommel Dionisio

in little you're pretty sounds it. Marlin about prepared comments, It bit. talked excited the about Chris, your a business like you

quarters, granularity it since entering Obviously, that give a you've product changed you there. terms since new since launched in Now little a drill a lever of you that glimpse little I from acquired the that that and the the had extent acquisition? going the just down, seen forward? standpoint? you in a really to if a business standpoint? business more the can -- in business you've maybe us production marketing future what So maybe What major that several wonder you've into could you've From the action for you've outlook

Chris Killoy

Rommel. woodworking acquisition. line facility that of getting of from up company the rallied our takes Marlin of Like New I been rifles in guns. itself those Thanks, Yes. X running. example, We Hampshire involved for North Mayodan, focused the and And in the had quality. makes all them production in Carolina. factories exceptional teams our delivering behind said, whole all the place down have major for But stocks on The

So focused quality really quantity. we've on over

And not us, but the gate. customers from to higher quality. so know there's lot had coming of out a we're of certainly to get -- volume see it there a out to want production who of We I we're going sacrifice right

product of and start far, some part all other are And the to all forward. that and later in and future, things so year, SBL you'll our XXXX family And then the all centerfire in planned. XXXX the lever-action in they're of the the XXX family, of going rifles, is likely those this models and that the trapper plan XXXX now the see

ball. roll we are first few new was the again, keep to annual time Marlin at they product folks So to to were the who customers a to We've attention belle they've we and the from delighted those in kept those great the the back. familiar the when meetings the chance put from of excited I display NRA I'd a love as detail. former had weeks in we the line, branding Marlin that first what with standpoint older out And one Houston we name. hear mean, see guns it the rolled of Marlins, And we of salesman, the they're really those guns, Marlin with were fact, the super and a the we in evolution got what seen. when of some out out,

public -- so I think far, wholesalers. our proving guns and And with themselves it's are retailers those

as you're more think see at the the saw show, it of Again, well really branding you booth our going branding. Marlin So NRA was the if as that. I Ruger to

take Right term, now, you'll So as we're and it's forward as to there great. going priority, go the standpoint, marketing lines looking on things of working focus really, the long at but on. we part Ruger. meantime, that sense, as in point. move excited Model about scratching that. that there's has it and be the XX. forward to But And see the rifles, look much continue centerfire not this brand and from but think, makes of product Marlin we're we're we'll just like the a as lever-action surface They're a still been those We at out some at a still

Operator

question from Misago FactSet. is next of Jim [ph] Our Instructions] [Operator the from line

Unidentified Analyst

same? questions my per but of ask maybe seeing on little can the getting the the Any relief already a And you're there. I Most have better? answered touch here, Getting walk what more inflation, cadence quarter, us you there? been actually the if kind through Staying usual, of of worse? bit

Chris Killoy

Sure.

of But normal figures. we do industry those As say I the more that you we follow summer typically, enter don't a statistics season. slow as we're would time May, and out in into June, as much period. July you you the down And know, know, break monthly

The again, like a many other other manufacturers, thing we, take shutdown July shutdown. it's X-week is, a and in

inflation, came see to couple a significant and question of I from XX% very be up The our up steel The news about XX%. last good the we And is up stainless summer, steel so Things things on hunting we've interest strong and seeing into X% like see seem rifles, we some some that seen as centerfire the slowing in with carbon coming increases retail did aluminum fall years. positive. now. year, as over past mean, of season American we traffic. associated We're lot of the

that practices So are we efficiencies And but of have a in every drive factor stomach some in go those at Ruger, increases. are of tough we to as price business aspect trying keep mind just looking also us our only and to to not lean through forward. in potential

Unidentified Analyst

what all? helping reverting you in my assume from I'm seems at more be universe on ammunition seeing At comments least guys to here, that? would that's Any helping. Is that available. I

Chris Killoy

still But seen think availability from it back in strong standpoint. back we've We've helping. is down, settle down I ammunition settle seen that an demand.

be Ruger range, think their our and it the IV Ruger enjoying thing Mark and pistol Things the it customers like them gets out gets a meant good shot I -- a products. that is gets XX/XX to for out to enjoyed. are

on the as Ruger prices can the they think, you stabilize to I getting some and and our are the back consumers platforms good that they're that's that shelf, seeing, products. we're enjoying when range out so And those we of comfortable always find have. fun-to-shoot ammo And for news have

Unidentified Analyst

said, And when could range. the you piece, nice your would there? gun, it's Absolutely. like you seeing? buy if you accessories a I think business? new ammo I be you that thoughts comments it to a any you to Any can, had know on take but you're What go small

Chris Killoy

accessories run largely tend firearms the parallel I think Well, to business. with our in

purchased, gun they go come our lot new buying a their those bought. to that as of are firearm for ShopRuger, with to into look website, is accessories particular that people As they firearms, times,

parallels we And see of there. so a lot

Our trying team year, for last things as as demand I QX especially the think so some we and up and with well well really like magazines up exceptionally keep cool strong. compared to has saw a things the on-gun was the business that of very in to stable. again, done of apparel with side, gun sportswear and And some run that's business accessories

of comp for was same overall, toughest we've accessories thing for -- had, accessories. That comp So the a again, one the tough ever toughest but also.

Operator

Killoy to for to like the remarks. closing over Chris now call would I turn back

Chris Killoy

I team members Ruger. customers day X,XXX our in design, reliable would I like our you. your rugged, Thank loyal sell and would for our factories. Ruger closing, and you the American every And thank to hard-working thank of like to our in continued In interest manufacture firearms who

Operator

conclude Thank disconnect. participating, for call. now does and Thank you. This today's may conference you you

Sturm, Ruger & Company (RGR) 4 Aug 222022 Q2 Earnings call transcript