Q1 2022 Sturm Ruger & Company Inc Earnings Call

May 5, 2022

[music].

Good day, and thank you for standing by and welcome to the first quarter.

Stern Ruger earnings conference call at this time, all participants are in a listen only mode.

Presumably taken it will be a question and answer session.

A question during the session you will need to press star one on your telephone.

If you require any further assistance please press star zero.

The conference over to your Speaker today, Christopher <unk>, President and Chief Executive Officer. Please go ahead.

Good morning, and welcome to the <unk> Company first quarter 2022 conference call.

I'd like to ask Kevin Reid, our general counsel to read the caution on forward looking statements then Tom Dineen, our Chief Financial Officer will give an overview of the first quarter 2022 financial results and then I will discuss our operations in the state of the market after that we will get to your questions Kevin.

Thanks, Chris.

Remind everyone that statements made in the course of this meeting that state the companys or managements intentions hopes beliefs expectations or predictions of the future are forward looking statements is important to note that the companys actual results could differ materially from those projected in such forward looking statements.

Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained from time to time in the company's SEC filings, including but not limited to the company's reports on Form 10-K for the year ended December 31, 2021 and of course, the Form 10-Q for the first quarter of 2022, which we filed just last night.

Copies of these documents may be obtained by contacting the company or the SEC or on the company website at <unk> dot com or slash corporate or the SEC website at SEC Dot Gov. We do reference non-GAAP EBITDA. Please note that the reconciliation of GAAP net income to non-GAAP EBITDA can be found in our Form 10-K for the year ended December.

31, 2021, and our Form 10-Q for the first quarter of 2022, both of which are posted to our website. Furthermore, the company disclaims all responsibility to update forward looking statements Chris.

Thank you Kevin now Tom will discuss the company's first quarter 2022 results.

Thanks, Chris.

For the first quarter of 2022 net sales were $166 6 million and diluted earnings were $1 70 per share.

For the corresponding period in 2021.

Net sales were $184 4 million and diluted earnings were $2 16 per share.

The 10% reduction in sales from last year reflects decreased consumer demand for firearms from the unprecedented levels of the surge that began early in 2020 and remain throughout the first quarter of 2021.

In fact sales in the first quarter of 2021 were the second highest in the history of the company outpaced only by the second quarter of 2021.

Our profitability declined in the first quarter of 2022 from the first quarter of 2021.

Gross margin decreased from 39, 4% to 34, 9%.

And operating profit margin decreased from 28, 2% to 23, 2%.

The lower margins resulted from the unfavorable deleveraging of fixed costs, resulting from the decreased sales and production plus inflationary cost increases in materials commodities services energy fuel and transportation, partly offset by increased pricing.

On April <unk> 2022, our cash and short term investments totaled $212 million.

We invest available cash in the United States Treasury instruments, which mature within one year.

Our current ratio was $5 one to one and we had no debt.

Our robust debt free balance sheet provides versatility and strength as we explore and consider opportunities that may emerge in 2022 and beyond.

At April 2nd 2020 to stockholders equity was $378 million.

Which equates to a book value of $21 43 per share.

Of which $12 per share with cash and short term investments.

During the first quarter of 2022 <unk>.

We generated $19 million of cash from operations.

We reinvested $11 million of that back into the company in the form of capital expenditures.

We estimate that 2022 capital expenditures will be approximately $25 million predominantly related to new product development and to upgrade and modernize manufacturing equipment and facilities.

In the first quarter of 2022, we returned $15 million to our shareholders through the payment of dividends.

Our board of directors declared a <unk> 68 per share quarterly dividend for shareholders of record as of May 16 2022.

Payable on May 31, 2022.

As a reminder, our quarterly dividend is approximately 40% of net income and therefore varies quarter to quarter.

That's the financial update for the quarter Chris.

Thanks, Tom.

As overall consumer demand subsided during the first quarter of 2022, our finished goods inventory increased 29800 units and the distributor inventories of the Companys products increased 8400 units.

Channel inventory of several of our product families has largely been replenished over the past few quarters inventory of many of our product families remains lower than desired.

We continue to focus on our production mix and prioritize the product families that we remain in strong demand.

Often but under supplied in the marketplace.

These include the American set a fire rifles 10 years 22 rimfire rifle the.

The Ruger precision rifle the pistol caliber carbine LCR.

Sorry, 1911 are single action and double action revolver families and of course, our model an $80 95 lower action rifles.

Our operations and logistics folks have done a great job navigating the challenges brought about by tight labor markets transportation issues and supply chain delays, which allow for greater flexibility in our production mix and mitigated the adverse impacts of these challenges.

We will continue to be responsive and proactive in our manufacturing approach right.

Right down to the individual model to optimize the inventory mix of Ruger firearms in the distribution chain and allow for continued healthy replenishment of Ruger guns at the retail and distribution level.

Our new product development teams continue to design and create the firms of the future many of which are often recognized by the industry. Most recently the Ruger custom shop 10, 22 left handed competition rifle was awarded the prestigious Golden Bullseye Award as the American Rifleman rifle of the year.

We are excited to see the ongoing progress of our model and product line. We continue to increase production volumes I look forward to reintroduce so additional ruger made marlin lever action rifles throughout the year.

We are really just scratching the surface of the value of that Marlin products in the mall and brand will bring to Ruger.

We're looking forward to more Ruger and model and new product launches in 2022.

Sales of new products, including the PC charger and the Max nine pistol LCP, Max pistol and tomorrow at 895 lever action rifle represented $21 $4 million or 13% of firearm sales in the first quarter of 2022.

As a reminder, derivatives and product line extensions on mature product families are not included in our product sales calculation, our new product sales calculation.

Several popular firearms that were considered new products in 2021, including the wrangler revolver. The Ruger 57 pistol and the LCP II in 'twenty two all rifle have now been in production for over two years and are no longer included in the new product sales for the first quarter of 2022.

Thus far has continued to sell well for us. They are just no longer captured in our new product metric.

We will remain disciplined and committed to our strategy of pursuing manufacturing excellence and vigorously developing innovative and exciting new products.

Those are the highlights for the first quarter of 2022, operator may we have the first question.

At this time I would like to ask a question. Please press star one on your <unk>.

Telephone.

I'd like to.

We track a question just okay.

Again, Thats star one for questions one more for questions.

Our first question will come from the line of Ryan Meyers from Lake Street Capital. Your line is open.

Hey, good morning, guys.

First question for me. So when you look at the overall firearms market do you think demand has kind of moderated and we'll sort of be operating at steady level going through.

Through the rest of 2022 and into 2023.

Thanks, Ron.

Look at the first quarter next.

Down just over 20% and then you look at.

April next which I think came in down like $19 seven or just about 20% adjusted <unk>.

And so thats fairly consistent trend.

We can't predict the future, but certainly the last couple of months have shown that decline over those historic highs that we saw last year. So that's.

That's what we've seen so far and we saw it in April as well.

Okay that makes sense and then can you just unpack a little bit the delta between the Asp's on new orders and then Asps on units shipped during the quarter.

I think the biggest thing on the new orders you have got some.

Got some new products that are in there you've got if you look at the moral and $8 95 for example, it's a fairly expensive gun.

<unk> also got some things that have changed over time.

Far as what we shipped in the fourth quarter and Thats. What was open open auto on on Q1, we don't typically pay a lot of attention to that mix, what's on order either the ASP or the actual mix just because we're focused more on what selling from our distributors we look at that.

Frankly, a weekly basis and then every two weeks two weeks, we moderate our production up or down in particular product families. As best we can to meet that demand.

Okay now that makes sense. So it's largely just based on kind of the product mix. There is that kind of drove most of the ESP.

It is not not anything significant.

Yes.

That sounds good and then how are you guys thinking about price increases for the rest of this year.

Well, we're keeping an open mind to it yeah, obviously, we've seen a lot of inflationary pressures.

As Tom mentioned in his remarks, and some of our commodity prices are up significantly.

Last year and then this first quarter however.

However, I should point out we've taken three price increases over the last 18 months each of those was about 3% pretty much across the board the exception being accessories were up a little higher than that but yes.

We've tried to get some of that back through pricing.

To be seen based on the competitive market, we see out there weather.

We can do that going forward.

Great. That's all I had thanks guys.

And once again Thats star one for a question Star one.

Question will come from the line of from now do an ACO from I guess capital you may begin.

Thanks, Good morning.

I wanted to ask about the product mix I think Christy referenced some.

Ex that are selling particularly strong for you in the new products, but also your product mix that you were talking about.

Seeing in the industry.

The industry is sort of coming back to a more normalized level.

Categories that were pretty hot during the search like MSR is in a classic vessels starting to moderate.

Just a ruger specific thing that you guys are seeing some strength in those.

Non MSR categories. Thanks.

Thanks, Rommel I think there are some industry wide trends I mean, obviously the.

The hunting category for Sapphire bolt action rifles has stayed strong for Ruger I think it's relatively strong.

For the industry, but youre right in terms of the.

We're seeing some moderation of demand, particularly in the MSR category and set a fire.

Vessels.

Are seeing some.

I will say coming off the highs that we saw the last couple of years, those two categories or accelerated the most and we're proud of the two categories that had decelerated the most as we've gone into 2022.

Okay.

And maybe just a follow up to the prior question on pricing I Wonder if I could just.

Just your thoughts on the promotional environment also the competitive promotional environment, obviously, a lot of moving parts with the cost increases that you guys are facing obviously youre not alone in that and at the same time industry demand is somewhat decelerating as you mentioned in <unk>.

Just wondering what you.

You guys are seeing from the competitive promotional front and how you want to respond to that.

Yes, good point.

Through the first quarter with fairly almost minimal promotional spend outside of our normal advertising campaigns as such.

We did not have the deals that we had some years past <unk> seen some of those programs that have been out there theyre very detrimental to margins.

We didn't didn't participate in any of that in Q1 and haven't so far we are seeing the promotional environment.

Heat up.

We're seeing more and more discounting were seeing deals being cut by some of our competitors. Some of which are published some of which are not and we're seeing more promotional rebates and things like that offer to the consumer to try to move product, but so far we're not seeing the really heavy duty discounting.

That is so.

Detrimental to margins, but again as we enter the summer months, we're just going to a few mindful of watching.

Watching our competitors and see what plays out at the wholesale and retail levels.

Okay very good thanks, so much.

Thanks Rommel.

Once again, it's time for questions.

Next question comes from the line of Ryan Hamilton from Morgan.

Morgan Stanley you may begin.

Good morning, guys Morgan Dempsey.

Could you walk us through the cadence of the quarter I know, sometimes you touched as far as it was at the beginning of the quarter is still pretty strong and then it tailed off.

Or was it kind of consistent through the whole quarter.

Thanks Ryan.

I don't think it was a dramatic shift over the quarter. Some quarters you do see things like that we typically don't comment on monthly numbers.

Sure.

I think it was fairly.

Consistent throughout the quarter this quarter that we saw things tapering off at the end of Q4 and last year and then January was okay. We saw a slight decline in that.

That's how we finished out the quarter. So there wasn't a big trend up or down in Q1 that we saw anyway.

That's great.

Thanks for the color on the commodity front is it is it more of a matter of paying more for your commodities or is it just lack of availability, where you just can't get something.

Our supply chain teams have done a fantastic job doing able to.

We'll go over every nook and cranny of it.

In terms of suppliers to get what we need and because of our broad mix of products. We think we can shift and pivot.

If we struggle with stainless steel on a particular line, we can move over to alloy steel.

But we're seeing some pretty heavy increases things like stainless steel, we're seeing as high a 7% increase last year.

Alloy steel up 15% aluminum up 20%. So those are some pretty heavy hits when you look at commodity prices as well as things like freight costs and things of that nature. So we just have to keep watching it but shout out to our supply chain guys.

They've done a wonderful job keeping us in stock and keeping the lines running.

That's great.

Comments in your workforce.

As far as head count and where would you like to be.

We're just shy of about 1900 people well, we still have to help wanted sign up particularly for engineers, we're trying to balance some of the lines and make sure that.

Particular lines slows down we're moving the people over as best we can to take advantage of where we have increased demand. So we're fairly stable right now, but again offer in the pulp still have that quantified out for our sales team of associates, all certainly for engineers.

Alright, and then last one for me.

And I may have missed it here on the viral remind our newer full production.

Yes.

None of our objective production well.

Fairly close to hitting our current sign up rates on a daily basis, sometimes we meet them Sundays, we beat them, but we will be steadily ramping up that marlin production, particularly as we expand beyond the $80 95 family and in fact, <unk> got some exciting products and 895 family that youll be seeing in the next couple of weeks, adding to the <unk>.

195, SDL and then after that Youll start to see things like the <unk> hundred 94, and the amount of $3 36, and once we get all of those models into the mix that will get us to our target production levels.

I gotcha.

The early reviews have been fantastic so.

Keep up the good work guys. Thank you very much for your time.

Yes.

Thanks Ryan.

And I'm not showing any further.

Speakers into Q any further participants in the queue.

Call back over to Chris for any closing remarks.

Thanks, operator.

I Hope you will all be able to join us at the virtual 2022 annual meeting on Wednesday June one.

Hopefully you all had a chance to review our proxy statement and I voted your shares.

Please be sure to do so as soon as possible.

Mortgages recommendations are detailed in our proxy statement and are pretty self explanatory.

However, I do want to mention proposal for specifically proposal four is another shareholder proposal on the same folks who requested the sector report in 2018.

As you May recall, we spent enormous last time on that report and explained in great detail all of the things we saw probably due to promote the safe and responsible use and ownership of firearms.

While these folks so that satisfy and now we're seeking a so called human rights impact assessment.

As described in the opposition statements contained in our proxy we do not believe that the proposal is necessary or appropriate and that will only serve to harm the company to the detriment of our shareholders.

Note that one only needs to hold $2000 worth of stock for one year to submit a proposal.

And about $70 per share that's less than 30 shares of Ruger stock.

The proponents of the Ruger proposal are all members of the interfaith center on corporate responsibility or ICR.

<unk> members purchase stocks for the sole purpose of advancing their own agenda.

In fact as of February 16th ICC, Our members sponsored 436 proposals.

I can assure you that these folks who own the bare minimum.

Minimum of our stock.

Do not have the interests of Ruger shareholders in mind, we're advancing their own anti gun agenda.

All the reasons set forth in our opposition statement, which begins at page 26 of the proxy statement.

The board has recommended that you vote against proposal four.

In closing I would like to thank you for your continued interest in Ruger.

And especially I would like to thank our loyal customers and almost 1900 hard working members of the Ruger team, who design manufacture and sell a rugged reliable firearms every day.

American factories, thank you very much.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

[music].

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[music].

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Okay.

Good day, and thank you for standing by welcome to the first quarter.

Bluestem Ruger earnings conference call at this time, all participants are in a listen only mode. So to.

To speak of presenting presentation, there will be a question and answer session.

Question during the session you will need to press star one on your telephone.

Any further assistance please press star zero.

I'll now hand, the conference over to your Speaker today, Christopher <unk>, President and Chief Executive Officer. Please go ahead.

Good morning, and welcome to the <unk> Company first quarter 2022 conference call.

I would like to ask Kevin Reid, our general counsel to read the caution on forward looking statements then Tom Dineen, our Chief Financial Officer will give an overview of the first quarter 2022 financial results and then I will discuss our operations in the state of the market after that we'll get to your questions Kevin.

Thanks, Chris we want to remind everyone that statements made in the course of this meeting that state the companys or managements intentions hopes beliefs expectations or predictions of the future are forward looking statements is important to note that the companys actual results could differ materially from those projected in such forward looking statements additional information concern.

Factors that could cause actual results to differ materially from those in the forward looking statements is contained from time to time in the company's SEC filings, including but not limited to the company's reports on Form 10-K for the year ended December 31, 2021 and of course, the Form 10-Q for the first quarter of 2022, which we filed just last night.

Copies of the documents may be obtained by contacting the company or the SEC or on the company website at <unk> dot com or slash corporate or the SEC website at SEC Dot Gov. We do reference non-GAAP EBITDA. Please note that the reconciliation of GAAP net income to non-GAAP EBITDA can be found in our Form 10-K for the year ended December 31 2012.

And our Form 10-Q for the first quarter of 2022, both of which are posted to our website.

More of the company disclaims all responsibility to update forward looking statements Chris.

Thank you Kevin now Tom will discuss the company's first quarter 2022 results.

Thanks, Chris.

For the first quarter of 2022.

Net sales were $166 $6 million.

Diluted earnings were $1 70 per share.

For the corresponding period in 2021.

Net sales were $184 4 million and diluted.

Earnings were $2 16 per share.

In fact sales in the first quarter of 2021 were the second highest in the history of the company outpaced only by the second quarter of 2021.

Our profitability declined in the first quarter of 2022 from the first quarter of 2021.

Gross margin decreased from 39, 4% to 34, 9%.

And operating profit margin decreased from 28, 2% to 23, 2%.

On April <unk> 2022, our cash and short term investments totaled $212 million.

We invest available cash in the United States Treasury instruments, which mature within one year.

Our current ratio was five one to one and we had no debt.

Our robust debt free balance sheet provides versatility and strength as we explore and consider opportunities that may emerge in 2022 and beyond.

In April 2020 to stockholders equity was $378 million.

Which equates to a book value of $21 43 per share.

Of which $12 per share with cash and short term investments.

During the first quarter of 2022.

We generated $19 million of cash from operations.

We reinvested $11 million of that back into the company in the form of capital expenditures.

We estimate that 2022 capital expenditures will be approximately $25 million.

Predominantly related to new product development and to upgrade and modernize manufacturing equipment and facilities.

In the first quarter of 2022.

We returned $15 million to our shareholders through the payment of dividends.

Our board of directors declared a <unk> 68 per share quarterly dividend for shareholders of record as of May 16 2022.

Payable on May 31, 2022.

As a reminder, our quarterly dividend is approximately 40% of net income and therefore varies quarter to quarter.

That's the financial update for the quarter Chris.

Thanks, Tom.

As overall consumer demand subsided during the first quarter of 2022, our finished goods inventory increased 29800 units and the distributor inventories of the Companys products increased 80400 units.

While channel inventory of several of our product families has largely been replenished over the past few quarters inventory at many of our product families remains lower than desired.

We continue to focus on our production mix and prioritize the product families that we remain in strong demand and have often been under supplied in the marketplace.

These include the American set a fire rifles, 10, 22 rimfire rifle the.

The Ruger precision rifle the pistol caliber carbine LCR.

Sorry, 1911 are single action and double action revolver families and of course, our model an $80 95 lever action rifles.

We will continue to be responsive and proactive in our manufacturing approach Paulo right down to the individual model to optimize the inventory mix of Ruger firearms in the distribution chain and allow for continued healthy replenishment of Ruger guns at the retail and distribution level.

Our new product development teams continue to design and create the farms in the future many of which are often recognized by the industry. Most recently the Ruger custom shop 10, 22 left handed competition rifle was awarded the prestigious Golden Bullseye Award as the American Rifleman rifle of the year.

We are excited to see the ongoing progress of our model and product line.

We continue to increase production volumes and look forward to reintroducing additional ruger made marlin lever action rifles throughout the year.

We're really just scratching the surface of the value of that mall in products in the mall and brand will bring to Ruger.

We're looking forward to more Ruger and model and new product launches in 2022.

Sales of new products, including the PC charger and the Max nine pistol LCP, Max pistol and tomorrow at $8 95 lever action rifle represented $21 $4 million or 13% of firearm sales in the first quarter of 2022.

As a reminder, derivatives and product line extensions and mature product families are not included in our product sales calculation, our new product sales calculation.

Several popular firearms that were considered new products in 2021, including the wrangler revolver. The Ruger 57 pistol and the LCP II in 2002, our rifle have now been in production for over two years and are no longer included in the new product sales for the first quarter of 2022.

Thus far has continued to sell well for US there are just no longer captured in our new product metric.

We will remain disciplined and committed to our strategy of pursuing manufacturing excellence and vigorously developing innovative and exciting new products.

Those are the highlights of the first quarter of 2022, operator may we have the first question.

At this time, if you would like to ask a question. Please press star one on your telephone.

We'd like to retract.

We track your question Okay.

Thats Star one for questions one more for questions.

Our first question will come from the line of Ryan Meyers from Lake Street Capital. Your line is open.

Hey, good morning, guys.

First question for me. So when you look at the overall firearms market do you think demand has kind of moderated and we'll sort of be operating at steady level going through.

Through the rest of 2022 and into 2023.

Thanks, Ron.

Look at the first quarter next.

Down just over 20% and then you look at.

April next which I think came in down like $19 seven or just about 20% adjusted <unk>.

And so that's fairly consistent trend.

We can't predict the future, but certainly the last couple of months have shown that decline over those historic highs that we saw last year. So thats.

That's what we've seen so far and we saw it in April as well.

Okay that makes sense and then can you just unpack a little bit the delta between the ASP on new orders and then Asps on units shipped during the quarter.

I think the biggest thing on the new orders you've got some you've got some new products that are in there you've got if you look at the moral and 1090 Fives for example, it's a fairly expensive Gunn.

You've also got some things that have changed over time.

As far as what we shipped in the fourth quarter and Thats. What was open open order on on Q1, we don't typically pay a lot of attention to that mix.

Order, either the ASP or the actual mix just because we're focused more on what's selling from our distributors we look at that.

Frankly, a weekly basis and then every two weeks two weeks, we moderate our production up or down in particular product families. As best we can to meet that demand.

No that makes sense. So it's largely just based on kind of the product mix. There is that kind of drove most of the ESP.

It is not not anything significant.

Okay.

That sounds good and then how are you guys thinking about price increases for the rest of this year.

Well, we're keeping an open mind to it you obviously, we've seen a lot of inflationary pressures.

As Tom mentioned in his remarks.

Some of our commodity prices are up significantly.

Last year and then this first quarter.

However, I should point out we've taken three price increases over the last 18 months.

Each of those was about 3% pretty much across the board the exception being accessories were up a little higher than that but yes.

Tried to get some of that back through pricing.

To be seen based on that on the competitive market, we see out there weather.

We can do that going forward.

Great. That's all I had thanks guys.

And once again Thats star one for questions number one.

Our next question comes from the line of email do an issue from I guess capital.

You may begin.

Thanks, Good morning.

I wanted to ask you about the product mix I think kristi you referenced some of the.

The products that are.

Particularly strong for you in the new products, but also your product mix that you were talking about.

See in the industry.

The industry is sort of coming back to more normalized level.

Categories that were pretty hot during the search like MSR is in high capacity vessels starting to moderate.

Just a ruger specific thing that you guys are seeing some strengthening there.

Non MSR categories. Thanks.

Thanks Rommel.

There are some industry wide trends I mean, obviously the.

The hunting category for Sapphire bolt action rifles has stayed strong for Ruger I think it's relatively strong.

For the industry, but youre right in terms of the.

We're seeing some moderation of demand, particularly in the MSR category and set a fire.

Vessels.

Are seeing some.

I will say coming off the highs that we saw the last couple of years, those two categories or accelerated the most and they are probably the two categories that had decelerated. The most as we've gone into 2022.

Okay.

And maybe just a follow up to the prior question on pricing I Wonder if I could just.

Just wondering what.

You guys are seeing from the competitive promotional front and how you want to respond to that.

Yes, good point I mean, we went through first quarter with fairly almost minimal promotional spend outside of our normal advertising campaigns as such.

We did not have the deals that we had some years past <unk> seen some of those programs that have been out there theyre very detrimental to margins.

We didn't didn't participate in any of that in Q1 and haven't so far we are seeing the promotional environment.

Heat up.

That is so.

Detrimental to margins, but again as we enter the summer months, we're just going have to be mindful of that watching our competitors and see what plays out at the wholesale and retail levels.

Okay very good thanks, so much.

Thanks Rommel.

Once again.

Again, it's time for questions.

Next question comes from the line of Ryan Hamilton from Morgan.

Morgan Stanley you may begin.

Good morning, guys Morgan Dempsey.

Could you walk us through the cadence of the quarter I know, sometimes you touched as far as it was at the beginning of the quarter is still pretty strong and then it tailed off.

Or was it kind of consistent through the whole quarter.

Thanks, Ron.

I don't think there is a dramatic shift over the quarter. Some quarters you do see things like that we typically don't comment on monthly numbers.

Yes.

I think it was fairly low.

Consistent throughout the quarter and this quarter that we saw things tapering off at the end of Q4 and last year and then January was okay. We saw a slight decline in net net pretty much. How we finished out the quarter. So there wasn't a big trend up or down in Q1 that we saw anyway.

That's great.

Thanks for the color on the commodity front is it is it more of a matter of paying more for your commodities or is it just lack of availability, where you just can't get something.

Our supply chain teams have done a fantastic job doing able to.

We'll go over every nook and cranny of.

In terms of suppliers to get what we need and because of our broad mix of product. We think we can shift and pivot.

If we struggle with stainless steel on a particular line, we can move over to alloy steel.

But we're seeing some pretty heavy increases things like stainless steel, we're seeing as high as 7% increases last year alloy steel up 15% aluminum up 20%. So those are some pretty heavy hits when you look at commodity prices as well as things like freight costs and things of that nature. So we just have to keep watching it.

But shout out to our supply chain guys.

They've done a wonderful job keeping us in stock and keeping the lines running.

That's great.

Comments in your workforce.

As far as head count and where would you like to be.

We're just shy of about 1900 people where are we.

We still got to help wanted sign out, particularly for engineers, we're trying to balance some of the lines and make sure that as <unk>.

Particular lines slows down we're moving the people over as best we can to take advantage of where we have increased demand. So.

We're fairly stable right now, but again offer and still have that quantified out for our sales team of associates all certainly for engineers.

Alright, and then last one for me.

And I may have missed it here on the reminder, full production.

Yes.

Our objective production.

We're fairly close to hitting our current sign up rates on a daily basis, sometimes we meet them, sometimes we beat them, but we will be steadily ramping up that marlin production, particularly as we expand beyond the 895 family and in fact, <unk> got some exciting products and 895 family that youll be seen in the next couple of weeks.

Adding to the 18 95, SDL and then after that Youll start to see things like the $80 90 for an amount of $3 36, and once we get all of those models into the mix that will get us to our target production levels.

I gotcha.

The early reviews have been fantastic so.

Keep up the good work guys. Thank you very much for your time.

Yes.

Thanks, Ron.

And I'm not showing any further.

Speakers into Q any further participants in the queue.

Call back over to Chris for any closing remarks.

Thanks, operator.

I Hope you will all be able to join us at the virtual 2022 annual meeting on Wednesday June 1st.

Hopefully you all had a chance to review our proxy statement and have voted your shares if not please be sure to do so as soon as possible.

Mortgages recommendations are detailed in our proxy statement and are pretty self explanatory.

However, I do want to mention proposal for specifically proposal four is another shareholder proposal on the same folks who requested the sector report in 2018.

As you May recall, we spent enormous last time on that report and explained in great detail all of the things we saw probably due to promote the safe and responsible use and ownership of firearms.

Well these folks so that satisfied and now we're seeking a so called human rights impact assessment as.

As described in the opposition statements contained in our proxy.

We do not believe that the proposal is necessary or appropriate and that will only serve to harm the company to the detriment of our shareholders.

Note that one only needs to hold $2000 worth of stock for one year to submit a proposal.

And about $70 per share thats less than 30 shares of Ruger stock.

The proponents of the Ruger proposal are all members of the interfaith center on corporate responsibility or ICR.

ICR members purchase stocks for the sole purpose of advancing their own agenda.

In fact as of February 16th ICR members sponsored 436 proposals.

Can assure you that these folks who own the bare minimum.

Minimum of our stock do not have the interests of Ruger shareholders in mind, when advancing their own anti gun agenda.

For all the reasons set forth in our opposition statement, which begins at page 26 of the proxy statement.

The board has recommended that you vote against proposal four.

In closing I would like to thank you for your continued interest in Ruger.

And especially I would like to thank our loyal customers and our almost 1900 hard working members of the Ruger team, who design manufacture and sell a rugged reliable firearms every day.

American factories, thank you very much.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Q1 2022 Sturm Ruger & Company Inc Earnings Call

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