RGR - Earnings call transcript Q1 2024 | Sturm, Ruger & Company, Inc.

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Operator

Thank you for standing by, and welcome to Sturm, Ruger's First Quarter 2024 Earnings Conference Call. [Operator Instructions].

I would now like to hand the call over to Chris Killoy, President and CEO. Please go ahead.

Christopher Killoy

Good morning, and welcome to Sturm, Ruger & Company's First Quarter 2024 Conference Call. our to Reid, on the Kevin statements. forward-looking ask General read Counsel, caution I'll Chief will Financial overview our Dineen, Tom Officer, first XXXX of then quarter financial results. the an give our will our profitability I plan market. the and in then And improvement operations, including force recent discuss and reduction

After that, Kevin? your to we'll get questions.

Kevin Reid

Thanks, Chris.

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

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

Christopher Killoy

you, Thank Kevin.

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

Thomas Dineen

Thanks, Chris.

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

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

commentary product gross from Our quarter the to decrease decreased driven The margin and XX%. XXXX quarter deleveraging the stronger production, in of a charge costs as first products services, in XX, the earnings sales wages, and was Chris by declined and our our provide fixed energy, the lower resulting and force impacted of from in reduced per we XX% by This first first sales fuel XX related remarks. our resulted unfavorable about in $X.X margin decreased investments a profitability of short-term increases our $X.XX. demand to reduction with of million. implemented and XXXX margins will totaled expense improvement $XXX quarter million. severance a that further of transportation. In XXXX, and lower share XXXX, At relatively production employees of in his from during March remain a the cost shift mix materials, on profitability commodities, inflationary in relatively cash that this plan in action

in Our funds money United the fund that within X and United and are year. -- in short-term States exclusively bills invested treasury in a mature Treasury market invests in investments which market instruments States the money

$XX.XX generated $XXX At ratio history. March debt. no equates million current highest of ratios we Stockholders' current XX, expenditures. operations. of investments. share, is among back a from per in X.X into capital in XXXX, was of short-term to the In $X.X XXXX, cash We X.X:X quarter of of equity form $X.XX our which was and we the value the book reinvested that our had recent $X.X million million was first which company of cash and

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

of $X.X quarterly an average $X.X million first of at in the of dividends market the quarter XX,XXX open per total shares price the and returned $XX.XX $X.X stock our payment we million the of our of common through of XXXX, In share million. to of repurchase a shareholders for

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

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

quarter. shareholders with variable That's to to and our debt-free Our that emerge. provide on the dividend us coupled consistently strategy, ability the balance update our sheet, for returns capitalize allows strong to opportunities continually Chris? sacrificing first our financial without

Christopher Killoy

Thanks, Tom.

streamline we key success organization, and service. focus During continued to profitability improvement strategic ensure our on to our of manufacturing, efficiency productivity. restructured better a leadership and and and ourselves implemented quarter, to of the our product workforce, our new market. positioned resources our functions streamlining are priorities product plan We development, and the strengths greater long-term in some align first By and achieve allocate and engineering we core firearms and better customer

force As direct be the action of impact and will $X many quarter for approximately demand of able million products that made of part annualized the given Difficulty] this reassigned those first difficult million. of restructuring, decisions folks were a and impacted resulted manufacturing of in skill some savings in sets [Technical in This undertook half of the and reduction approximately strong our involved, $X.X the positions. to we to severance result expense in

and of reduction force, facet the every cost for we in company. opportunities reduction the elimination versus In addition cost of identified to

keep expect fruition. lot and quarter, to of realize We take to collaboration the these it time plan and will quickly to working creativity more benefit hard while to work, a pull as hard second took others initiatives analysis, some to materialize, of together, see the as we'll of this

as respect, reduce will functions pursue continue and we guided integrity, abide possible. we to by core opportunities values by our teamwork. of Throughout to them innovation And or this wherever consolidate additional expenses were we eliminate process, and

target sales XXth Auto. Generation MAX II anniversary overall the and car of XXth folding of declined quarter, and our in strong, in LC the products LCP The the IV pistol, retail. our American several Mini-XX chambered firearms XX/XX first the products. the estimated first our families rifles, fourth from retailers Rifle Mark with Although increased generated to year quarter of rifles, prior X% to independent family remain including the the for our market increase introduced pistol, Tactical the our product of of stock demand of in strong wing in to quarter distributors anniversary many recently sell-through XXth drove period. sell-through XXXX products the The unit distributor This compared XX anniversary

checks. background Next

Shooting X% of quarter the XXXX. adjusted Foundation, the As by National from Sports decreased first

to Our prioritization of developing off. pay exciting new products continues innovative and

X $XX million only sales only us. that totaled second the or below products include second This which new the which of first in new firearms were a for memory, slightly our XX% of sales, quarter product quarterly New major product past is record recent of in sales highest the XXXX, XXXX. introduced quarter year in years, is

products the consumer shifted our the production in goods capitalize inventory increased with units conjunction a that for over strong during we to our production our improvement XX,XXX fourth and inventory on opportunities quarter. resources offers quarter. profitability at of this combined in and distributors In and of products strong reduction demand The from our plan, first resulted the demand increased the our finished

XXXX XXX,XXX XXXX. sits quarters, X the over replenished this units in when past since were the now this started lowest dropped and after at inventory demand being the inventories inventory combined surge has quarter that advance the Over in still -- of of first

Simply conform said, our demand. we with production adjust continually levels to

production quarter we help mentioned rifles our been fixed new on us such, product The and has I As to and of American has second extraordinarily margins. inventories, family products most production well received costs quickly especially one impact will our become sought our Generation after in the favorably again II of Increased our replace earlier. plan increasing the to those leverage begin for lines. Rifle

in Since introduced the launched this SKUs, standard models. ranch XX December, premier new including platform was and we've

offerings further planned new Rifle We of broaden in were American the of XXXX. are quarter II excited introductions XXXX. several with the additional highlights to models the of Those first Gen

Operator, question. may the have we first

Operator

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

Mark Smith

planned? the some when just the between about little for pretty this question quarter big. difference of in First was of That kind shipments, of production during dig orders thoughts and I there that's meet the me. the bit Was walk your more the there around strength orders, demand? this orders kind and of of to a demand timing your kind difference ship Maybe and of wanted to to produce ability in? came me out through in and kind

Christopher Killoy

Wrangler Generation Mark, rifles, American II we and say, received launch orders what when higher-priced product lines in than and of that And the XX/XX a it's course, of product I of than, And we a rifles. QX end the the such those really saw happened, Gen LCP. of lot of family as a have were QX. higher XXXX, at a

those QX. So ramping a facility few And the take launched It to calibers to in that will as fill received take in that us our models other and additionally that will contributed we're time other in SKUs QX. then received a of and time in resulted again, line We Maryland. quite that. orders other up lot orders in

sure as the throughout the closer capitalizing those So QX, be we QX, orders we'll I'm on get come and that hunting to to in season. continue will I'm sure

Mark Smith

in categories, strength to Okay. Anything within demand? where you're rifle, or out And seeing any handgun other maybe where of versus weakness you're any kind movement action. call lever seeing

Christopher Killoy

of our XXth of models. Right now, we some talked strength anniversary about the

sell. XX/XX shortly. Mark All LCP of priced were all those to IV and anniversary priced were models models

So desired they our be would that's We had think available effect. the of all customers. to

American an stock hit. And of folding the the We course, also have, Gen like also been been things have enormous with rifles a hit. Mini-IV big the team have centerfire II

So positive. extremely XX with of The lines been series strong very of in continues additions in XXXX and and XXXX well. Magnum dark XXX demand. And the late to addition have met Marlin in it's of do very, been Magnum recent the very course,

firearms to And guns help reduction labor force, up X all our frankly direct in at have we direct sign for the labor wanted despite plants. we're of build hiring the

Mark Smith

Okay.

are Looking that at you're seeing on today margin anything there I on to wanted gross anything pressure pressures primarily particular? labor it gross or that's our profit putting is profit -- -- there Is little bit. see margin. else, in in cost a

Christopher Killoy

of biggest modest thing then that we But pricing. services, got and this also partly had got got as all we inflationary increases. deleveraging impact decrease we cost. on very of And price is was that's we've we've wages, fixed year, decreased increased commodities, offset by we impacting -- or the unfavorable Well, had sale cost materials, the production

our product. thing other mix The is of

demand the than product LCP our line. XX/XX lower models. are counterparts the on shifts and Those So for slightly lower-priced margin lower sell price that when IV like products we standard MAX, to the price because Mark commemorative example, those in original the

think all those I that to of So contributed margins. decreased

And QX. will I biggest will on factor be going margins. positive effect gross forward think and a rates think production up. that, taking we that QX the in have

Mark Smith

Great.

As we profit you lower-margin solid on the demand maybe that LCP, price more typically products? margin? Super what those lower putting inflationary gross of is the would kind talk think guess, Wrangler, pressure about Wrangler even as some for products. than Are pressures I of

Christopher Killoy

And your XX/XX, it's first the but I'd we've part other example, price mix. make lower say margins. good to it's where of strong products, we yes, a LCP, about, for typically, we examples make a question very margins, got

And still within slightly making those our but some good so we've got margins. standard than opportunity lower price counterpart,

all to some competitive. product certain And capitalize the working all thing centerfire But of where to the them most But the out pistol hard move biggest for folks them exactly We to think labor I factory. like labor mix, very to the be trying efficient are get well. doing lines direct factories, our X where of are remains and very within trying we're turn mix. market I seeing big can us production got up. levels right each our we of is hire said, to of are

Mark Smith

last the Okay. think And me. I one for

your love kind are peers some today, think -- have market? on market you going discount more Are that there forward? give thoughts the the in out you of any on competitive be insights would Just promotional, headwinds is that seeing specials you pricing more

Christopher Killoy

has particularly sure, that folks make for a X if not deep It's for seeing part for been manufacturer example, product is this in some only or tough them market. wide, We're strong the ARXX the of be to That discounting line market. this platform. say, only

And discount pistols, of seeing there again, rebates And so we're there. additional some Centerfire be well. a as seeing may there lot we're that

price like before, increase XXXX, I X. So had -- that years bad, we years annual not fact, an it's hasn't I into gave X% we're that too for lines been several modest increases about we had but far, price we going too. certain January only said, In appointed think -- cautious product in past, to

those this nature not able level year. implement Just of based increases on the were we to price market, competitive this of

Operator

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

Rommel Dionisio

the we're just I active numbers time if your behind inventories us the an could Is thoughts Chris, Or to that? would towards it something more looking improvement, outlook restructuring. you flexible with industry wonder on more kind backlog this continuous like of a at enact a different to the companies seem long-term perspective supply motivate give efficiency? in industry, some think and restructuring. spin I mean doesn't move How here? restructuring that manufacturing, seeing are we you you chain permanent about should normally your

Christopher Killoy

indirect jobs. them are folks, are real of labor, these the indirect or all folks labor of personnel working thing indirect is most salaried folks fact, Rommel, Well, either labor in hourly

Best it activity partially trying efforts gained and our Way our costs large opportunity to is had consolidation and structure. result a plants, a to difficult be our terms of And that we market we plants. order, in it future, sure green having our where restructuring this the amongst as we're our getting get And well so X and involved, we're as make focusing that's our the foreseeable was for folks initiative, lot as for as some as for right of consolidate it order painful to X manufacturing positions activity. efficiencies to long-term getting of is was take future there's Again, was, of we've a we're manufacturing One eliminated when as in those right competitive our of we on in to thought going us for in margins that knowing the cost action with

intended those The to half this we is into to we're what labor of news positions. direct folks able do. as said, that's good And move, about

And several person lines was who an now example, been is labor product on itself, firearms. job, that for indirect serving the our a line intent. have working So working might perhaps building

Rommel Dionisio

Maybe then. into industry getting much years surge right. The deal. seen not All a demand now Okay. just has we're few a for a near follow-up and

Given the if flex corresponding name, and rapidly obviously, your of brand ability that still would industry necessary. does you If the the effects see to -- of surge the demand do up, that industry tend have to every years? own quickly restructuring, see as kind few

Christopher Killoy

of got and now. will year-over-year, production in though QX NICS going we're things the speak direction of flexing are those just as getting in for moved be ready terms some to forward-looking now. absolutely. the that's perhaps some of increasing that process Despite of lines right we've new ahead goal, you'll our of or QX from typically for part products already we production well. increasing opportunities I I I guidance, new coming this got And Yes, and we've that's And like being said, of can I now started that new year. And our be where even and so some mean, down -- ahead was. products see some or those reason suspect up the don't Like great muscles flexing us. shift existing later people in great quarter-over-quarter has QX products of that our demand

Operator

would like for now remarks. to Chris turn I conference to the closing Sir? back Killoy

Christopher Killoy

like their for rugged, for company. morning In this customers and thank team closing, build and of of to reliable Ruger who you I X,XXX thank and members thank And our I loyal continued to like our would our in you mid-April, notifications please out so shareholders design, the our May attending our call sell hard-working will all your to our XX. the investment Proxy on lookout be vote the I shares support. to able your sure Meeting advance were XXXX and be in at be sent to appreciate in firearms. hope shareholders on virtual I Thursday, us join Annual meeting. of would

all. freedoms. As XX, Thank those we our members remember approach Day you to ultimate on the please secure May sacrifice Memorial made service who

Operator

conference for today's concludes This participating. Thank call. you

now disconnect. may You

Sturm, Ruger & Company (RGR) 8 May 242024 Q1 Earnings call transcript