RGR - Earnings call 3 2023 | Sturm, Ruger & Company, Inc.

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Operator

Hello, and welcome to the Q3 2023 Sturm, Ruger Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to introduce President and CEO, Chris Killoy.

Christopher Killoy

Good morning, and welcome to the Sturm, Ruger & Company Third Quarter 2023 Conference Call. I'll ask Kevin Reid, our General Counsel, to read the caution on forward-looking statements. the Financial quarter then then XXXX discuss operations Chief of an I our our third the financial and Dineen, Officer, give will overview will Tom market. results, and your After that, questions. we'll to get

Kevin?

Kevin Reid

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

actual Additional the to XX-K for information company's concerning from the factors that ended is but year statements the filings, materially could time in the XX, cause not those SEC on time XXXX. to in results company's reports from Form contained December to differ forward-looking including, limited

Copy the XX-Q disclaims of EBITDA XXXX, reconciliation Furthermore, website And -- filed all of the the net of of website. of or, Forms statements. note posted XX-K Please the or first, latter last company of reference third that company or at found on quarter income can to second are be the update the do third for of SEC all on the ended for responsibility company ruger.com/corporate/ Chris? the GAAP again, forward-looking to night. December the the and the on non-GAAP non-GAAP XX-Q the sec.gov. year be and we for Form quarter our which our to Forms XX, XXXX, SEC second and obtained website by the XXXX, of We the course, EBITDA. which course, contacting at documents may for first, last

Christopher Killoy

Thank you, Kevin.

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

Thomas Dineen

Chris. Thanks,

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

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

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

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

the in margin XX% third promotional declined was profitability from gross original LCP production, XXXX resulting of and sales to the of activity, fixed XXXX driven our lower by from price including of quarter Our XX%. repositioning our decreased The increased from margin as models the our third deleveraging pistol. unfavorable costs of Security-X quarter decreased

lower Our product cost relatively increases mix shift wages, higher materials, fuel with margins commodities, in products relatively and transportation. demand toward in energy, services, and

discipline debt-free and evident Our value long-term strong sheet. our continued in balance financial focus on is shareholder

$XXX XXXX, million. XX, September At our and investments totaled short-term cash

United year. X.X:X, was in XXXX, Treasury investments invested mature September fund States the and and no which within Our had in we market Treasury At a exclusively short-term debt. bills in current our XX, States are money invests X that instruments, United ratio

of which company book to months XXXX, equity value capital that which $XXX.X a in $X.XX Stockholders' In reinvested million we equates cash per million of expenditures. was back $XX.X of and cash million of We form was $XX.X from first short-term of of generated operations. X investments. into the share, the $XX.XX the

will manufacturing approximately related product to to improvements upgrades introductions, expenditures equipment total capital XXXX $XX our facilities. our our expect We to million and new

a In million through XXXX. our January the share $XXX.X shareholders the months in returned $X of paid payment dividends our we dividend first to quarterly X of special and XXXX, per

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

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

Christopher Killoy

Tom. Thanks,

the independent our unit decreased of X to retailers from months Our profitability marketplace. products third year first decreased last XXXX from the year distributors promotion-rich quarter X% and estimated sell-through period. a firearms as overall demand creating in challenging sales compared to declined, of the The prior

by rates Sports adjusted remain various strategy from as Foundation, adjusted focused checks, production. our first product which decreased production We months Shooting long-term National the and of on on match Comparably, X% NICS overall our XXXX. lines X the background better reduced demand, to

production a our successfully change managed seasonally goods slow decreased we and during hindered essentially our in period levels current increase quarter with nominal inventory inventories. the warehouses in profitability, While distributor in finished no only

Wrangler We one and quarter. American third retailer and fourth modest for ensure rifle product quarter. families centerfire XX/XX, positioned are at to disciplined X each we well in only maintained heading of stayed into retail. promotions, strong ran the We the We offered the promotions the our presence the

our retailers on pistol to in tight pistol channel; the market, the and earlier, pistol. for profitability also these offer the X mentioned ensuring retailers. September, we pricing As LCP products Security-X X the very in and participants distribution while products: in all at prices distributors the Ruger, repositioned allowed Tom This competitive

MAX-X may the on we quarter You recall XXXX. that in our pistol pricing repositioned the of first

the extremely of the this resulting are performance with results MAX-X. of and We pleased price strategy the

forward protected continue MAX-X, with inventories we LCP make in distributors investment our and our the As adversely appreciation demonstrate pistols, will but for we we us and independent the to benefit the did going as Security-X margins, distributors impacted which of Ruger current products. commitment

in They is that assured investment can sound and rest profitable. their Ruger

have rebounds. offerings Our market debt-free and the balance well sheet on diverse positioned us firearms capitalize product to

enhance portfolio our and product We to our expand current through products product look for to to continue development. innovation opportunities and

Marlin year. other the rifles firearms chambered and Winchester, more Marlin look enhance the a XX-XX and Classic, XXXX a XXX busy a product classic been introductions to Series in chambered Model Classic rifles Other appeal lever-action Earlier rifles, the include in which to this in rifles, has new enthusiasts features week, broad .XX variety will Magnum. we modern design. introduced Model XXXX in lever-action XXXX Dark lever-action interested of the X Ruger-made

Super rifle powerful .XX we cylinders, X for and ] launched In LR ammunition. for the one .XX April, one inexpensive revolver, the with a comes [ which ammunition Wrangler more Magnum

the in years, first about brought on we capitalizing recent opportunity some mentioned the by we pistol requirements. to new California changes the last in As pistols are offer XX time XXXX, in Ruger quarter, for in

a certified well Ruger months, IV, LCP exciting introducing date, to X look the Mark in added SRXX, offering additional a we pistols forward California coming as including new and roster market. to Ruger pistol. brands Marlin the to both To have as the an MAX-X firearms California been In handguns, the and of pistol the

revolver million product Super major New the rifles. the totaled the Security-XXX Super like XX% Rifle, new Small-Frame in the just first all of MAX-X LCP the Carbine, months only pistol, X mentioned, pistol include includes and the Wranglers firearm Marlin This Marlins that X Autoloading the XXXX. which sales, sales aforementioned years, were introduced Wrangler in MAX $XX.X the LCP products of pistol, and past and or I

Firearms better we we attended We known Sporting the in distributors week, Goods Columbus, Ohio. and hardworking Annual and X,XXX New to as the Rifle Best by Wholesalers of Year Association honored associates. XXX. a New Model great Marlin named Last Expo, of the Product loyal NASGW were testament independent to awarded Overall as were be Best show the for and National our Manufacturer the This recognized was

first please of Operator, the highlights may the we have the were quarter of third question. XXXX. Those

Operator

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

Mark Smith

you for this A questions of here morning. handful

you really First towards see the one, Was quarter, did shift? were like during pistols biggest just mix it part and during we that lower-priced quarter? looking at promoting shift shift the the of of that's sounds it the mix what kind

Christopher Killoy

would, we if the it's that looking price outbound moved of numbers that I If wondering fact, distributors' repositioning by And higher, the orders and I'm part the selling Mark, the price to I metrics down, for part is of $XX, we're that's those but -- comes average on at Well, price those you're that be or think, where lower both also potentially about point we use that mentioned the, sales. that, particular that's and incoming inventory, protect -- say, those true, if recall. at not in from.

Mark Smith

was was the seen that years so. ASP on X moved year, certainly orders Okay. the Yes, X.X received, the or we've that really thing last the lowest in the

higher still if other during And of potentially of ASPs rifles hunting kind that kind rifles Is those and core question of then mix that? similar to similarly would that demand so, are or out of Marlin some able backlog be ahead So meet of orders high. long -- -- this really here, a driving on you October season. shipped get and that's

Christopher Killoy

Good order been XXX the a price back question. of the rifles, Marlin in includes XXXX. points introduced have both the certainly, December, on higher I the mean the lot introduced back XXXXs we recently and XXXX, even

up. working capacity. adding backlog. done We're to Mayodan significant great a We very hard The folks have catch have in job a

XXXX, The in see folks it Magnum. capacity gives in the Mayodan. Magnum. XXXs are And when about And of the basically and the before. me XXXXs .XXX helps added shortly, that talk heard you'll line. on XXXX, a the us double one us our very That built doubles Basically, capacity. we have Some .XX may which

So we'll the up I'm sign remains a able good backlog it's that catch still that optimistic that on backlog. intact. to be But

eat with New sure Marlins like to backlog. that week. and focus gradually to the backlog. into want Dark we pleased we we've the but that first, Series shipping we're on just Again, We'd we'll this be introduced then more, quality make

Mark Smith

comfortable recent of guys higher you at the with it like you you sounds warehouse? of like record then moved the pretty on inventory, the that your have history, are least and But here? look you're inventory, talked that goods, bit finished highlighted kind and as company's Okay. with highs little How it we and that is a at And comfortable inventory. sounds kind inventory in about

Christopher Killoy

to there's when want the one were glad quickly ensure into for we're well at artificially that wish as of ramp to inventories look well accelerate, those some a know Yes, the that up it. pretty market things maintain the is of we're XXXX of that When do reasons And current down. but positioned inventory you and we rebounds, we faster, we XXXX, categories inventories certainly, balanced. ability we to have back the is biased we couple really something that inventory,

was as business, very wagon. in remind low. me you I artificially I go mentors to empty about can't an inventory, sell from one my And of mean too it the That's really early old you XX,XXX XXXX sales of back think low.

hit certain production think good we took that's so production watch this in frankly, as of categories, safety very and the kind we stock got moved we've inventory, levels we And rates reason, a closely, mix. those it we down. good quarter our down We

Mark Smith

me. on And in updates you distributor you especially demand, data, the shift Okay. for your one NICS last partners, seen on the kind but any about think point XX we retailers, of view we're waiting but your still demand? the as talk really as of -- from Have any last to days,

Christopher Killoy

with with meetings, new excited them that show in confidentially NASGW meetings the out good very Great products of some works had with in all we Columbus. have of about wholesale very distributors they're We the about. our talked

We particularly saw in couple the also seen the an uptick certainly, exact question. a some same or of Have in the ammunition weeks? movement, category. last you asked in they change demand And

the to it came included which it that movement, firearms side, very we when seemed on MSR little there's of make, But focused to be low-priced most rifles. bit a don't products but of

we be seen. so hadn't impacted primary And in was in. operates the it Ruger May really it what most of to the that future, heard categories remains

was in from -- helped some we [indiscernible] retail fill some and for heard retailers holes it think I at move level, I cash, probably wholesale some which to that inventory it perhaps customers. think, inventory, generated our out in

and along say it like Nothing things COVID we I magnitudes. not but saw beginning a think had positive of that. like early effect, those XXXX, the So

Mark Smith

Okay. here. squeeze more one I might in

around some Just could recent here potentially the at shifts impact as changes environment, exports we that business? any regulatory your look with

Christopher Killoy

to XXXX companies look out when of were -- were normal, in XX% unaffected. regarding headlines think that temporary back XXXX announcement on Department Ruger's probably Commerce and you're that allowed we banned. I all When the export referring they to a carved it Mark, case, being to you on XX-day that date, ban specifically sound the little like look firearms at in were deceptive the Well, our as the exports, and from the continue made are

export certainly, issue. and are expanded, not could you But on -- business, our are So exports to allowed as it the be impacted And that. right it be now, by goes specifically of X%. like it X% between be were based remember, could our XX% countries that typically typically, if an to

year, maybe but X%, overall, of it. it's pretty do a with part our business think year-to-date we this well but big not I around

top based on major [indiscernible], It's see I the is our this and impact just that export administration. don't from really we've team unless on were guidance currently it of to this, the from got a expand

Operator

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

Rommel Dionisio

chat we'll the to this talk be just receptivity regards where year time picture preview trace going few and on in you the environment a inventories have the -- and period critical you're just will the if just given [indiscernible]. I new you'll you sort after over a and launching here think meetings overall broad short of into Chris, next the few could months products. distributor seeing about wonder taking Could that months be new next you with of terms? in products going

Christopher Killoy

The meeting. NASGW We was -- mentioned, Tom are the good like I Rommel. we and Thanks, typically show -- I a have there.

marketplace. wholesale wholesales We a have very great partners, is of very every one We single our candid folks we our and conversations. this very with we And recognize some that remains -- promotionally there deal driven the force. time are a one spend of with, things

working, asking the So things what's what's that's one not. see our distributors to of we're

NDA us the gave the works. the of that that down for are new some go great the things opportunity also to are an reception And coming under some through of the pipe. We in to products was the

course, when of we Now are going great works. products But never we've to some the got predict in those things new launch. exactly

see pleased they closely. retailers because their a situation at They in retailers see being patterns to little Our cautious and very terms retail remain that. just watching credit distributors of cautious they're buying the and were

tighten just those they stay much we very wholesale though So risen, what's even on CFOs little something those keep bit talks them. with going availability the we levels. retailers some tightened distributors, to a to credit closely. why little credit rates It's Tom I have in their up credit of sync may think as bit. a we've sell a very exclusively with up to as to that's on pulse that seen to And just watch interest have for retail

distributors to as in pretty positive the show. the few we've I think far, have going shape But that in so good struggled, far a reports There I be received. drive with as done has distribution I most on may for receivables heard accounts I part, additional new products maintain business been our commitment other that are And been demand. X-step products shot distributors. expect the new think XXXX have we're the the competing most decent everything think model. looking well us there'll retailers help we'll into to but downturn with. part and our of pretty be So on our for be managing we And in

Rommel Dionisio

just Okay. California demand? And there. new you've follow-up. these been in offer wonder that. that on or it's just quick some able maybe got decade California so you could a Obviously, obviously, major Could I the if products market, you've products about chat pent-up moving some you to I of the mean, roster. And talk been into

Christopher Killoy

are firearms pent-up lot there. roster on still press do lot demand and Rommel. still media has when for Thanks, a that hype some successful been there It's to course, were in like on the Yes, trade but that a things honest. because guns so. of and sure are MAX-X There of to lot to be in Ruger, of be a very a lot in continues that that of got the of was it particular, launched been and The

residents that, but participate California are. in weren't And now able to they

pent-up good some near-term a example that's So demand. of

for we have the The The in the strong. market been it's and kind ball terms the SRXX not other has the think quite been as products of belle the model I Mark us. IV of in and LCP of the like there, California MAX-X

here very pleased California got going join couple been to roster distant a it. not future. And the in are we've too the So with that we've more

Operator

with of Ryan Capital. Hamilton question Morgan Dempsey comes next from line Our the

the with moment our our next please next Josh of from question And Capital. question. One for Okay. line comes Kurzban Aramas

Joshua Kurzban

When post the you Was of or in met date meeting? East? was with that your events tragic the distributors, pre Middle what the that

Christopher Killoy

Columbus. was that just Association That Expo in week. Goods at last was of Yes, National Wholesalers the Sporting

meetings last the run the . was Thursday, X last Wednesday, days, that So week, week. typically Friday

Joshua Kurzban

to talk guidance, media it explicit quarter-over-quarter. give that about market tragic assume to in seasonality, guns there's the and know Xx in market to been and would I opening of those don't a but the the anecdotal surge lots Xx, of would firearm participants given normal safe Because firearms better never both be in the considered past? you Right? a events firearm than owning -- Xx,

Christopher Killoy

Well, that's one of the is things current in quarter. the

don't distributors I last financial like So same the we mentioned, that at seen to manufacturers quarters seen of removed sales talk hadn't Again, model events of manufacturers. typically X-step little increased we media about We've of those future or current we are in at bit back the a it. a our as a week, and But seeing reports, from from upstream were standpoint. retail. least reports moving lot

the of through. particularly level at there level work still and to But wholesale a goods in inventory, are lot retail

So in-store there wrong coming perhaps, the reasons may but we're that very sales. is day, modern for week, in be every signals field every sales our watching some force And good closely. demand all the

we from on what's pretty moving what's not. a So get good them read and

think in I any to sales and if be occurs. increased we'll capitalize on bump well when So that positioned

Joshua Kurzban

going expect bit? protective families? measures has been And some adverse anti to given this a wake to that, political what be being a question turned expect enduring be increase related this to a [indiscernible] left happened and theoretical, you the less would is the Obviously, a new you you think of is to by those taken than be population. of more the is Do down more while. COVID, Would people And to that that in pressure

Christopher Killoy

from multi-gun customers a did It bring to a can potentially terms say. on gun of segments get some being get enjoy that purchase one a And helpful they of in to a the that's XXXX, saw to the purchase COVID lot of shooting one the into fold. to to those We and with XXXX. new a new of That's ability and try go into always in going hard sports things the customers long-term.

For it. take a example, IV really XX/XX or in using it of our up family could enjoy rifle pistols,they range and Mark

shoot course, goal is arms, business always, to when with also the the and to our so understand family to shooters welcome and much get firearms then And into opportunity, can they deep to of taking of try them open them and how we learning new get the get to how and enjoyment how range, out to community have out broad the is their safely.

now far I that. political their hard changing And as adequately wakes they're it's do may I to not comment think and views, of past, reconsider think that as previous they considered the like in they up their beliefs. a are realize they to and amendment say. supporting, rights it people political have maybe could don't they that to while firearm idea purchase have worth the I'd second some

Joshua Kurzban

October? for When get background data would the you check

Christopher Killoy

Pretty And Foundation it would as for or expect days fast pretty quickly. tomorrow. as to permits and to seeing these fairly nature. maybe account probably they I quickly then adjustments today turns around with turnaround National It's the that Shooting make Sports far their of late that a that. things

Joshua Kurzban

your what expectations And are that? on

Christopher Killoy

For I don't candid, be October, the October was. where last of year to month recall

a I wouldn't So hazard guess.

Operator

Morgan the Hamilton Dempsey line next our of comes question with Capital. And from Ryan

some to Looks technical difficulties. be having Ryan like seems

remarks. with Chris any call I'll . Killoy hand So President back now that, closing to for and over the CEO,

Christopher Killoy

our for I'd today, call like attending you shareholders. this of all to especially thank

next X we towards dates year, important I end to week. of mention As the want head the

Tuesday is defining the day, election event democracy. in Next any

yourself and and Please to about the head that of on candidates importantly, your into important poles the global issues you, of are vote. we most future, uncertain political voice is educate tremendous As the importance. learn an economic

Veterans in is freedoms, moment a to ability next great to those served of great And look service these the Ruger to the all thank forward to country. say right fought quick Please thanks us. who February. attain of our their rights We service country, have many all for quarterly call our the sacrifice service XX, Day. veteran of to men members including our our We and next our we Without exercise who family wouldn't Saturday, protect a vote. the and November and prayer to veterans, and of the especially all through women take sacrifice

Operator

gentlemen, program, participating. may disconnect. and you now for concludes today's thank and This you Ladies

Sturm, Ruger & Company (RGR) 2 Nov 232023 Q3 Earnings call transcript