Sturm Ruger & Company Inc. Q1 2023 Earnings Call

Good day and thank you for standing by welcome to the first quarter 2023, Sturm Ruger earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session you'll need to press star one one.

Your telephone you within here an automated message advising your hand is raised to withdraw your question. Please press star one one again.

Be advised that today's conference is is being recorded I went out again to conference over to Speaker today, Chris Keller, President and Chief Executive Officer. Please go ahead.

Good morning, and welcome to the Storm River and company first quarter of 2023 conference call I would like to ask Kevin read our general counsel to read the caution on forward looking statements John Dane, Our Chief Financial Officer will give an overview of the first quarter 2023 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.

Remind everyone that statements made in the course of this meeting to see the company's management's intentions, cokes beliefs expectations or predictions of the future afford a few statements.

It is important to note that the company is actual results could differ materially from those projected in such Florida. He statements.

Information concerning factors that could cause actual results of different materials from those in the forward looking statements.

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 31st 2022 and of course on the form. Thank you for the first quarter of 2023, which we filed last night copies of the documents may be obtained by contacting the company or the SEC or in our company website.

Dot com forward slash corporate or the says your website. It says dot Gov redo referenced on gap 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, 2022, and our form. Thank you for the first quarter of 2023, both of which also are posted on our.

Website. Furthermore, the company disclaims all responsibility to update forward looking statements Chris.

Thank you Kevin.

Tom will discuss the company's first quarter of 2023 results.

Thanks, Chris.

For the first quarter of 2023 net sales are $149.5 million.

And diluted earnings were 81 cents per share.

For the corresponding period in 2022 net sales of our $166.6 million and diluted earnings for one dollar and 70 cents per share.

Decreased consumer demand led to a 10% reduction in first quarter sales compared to the prior year.

Our profitability declined in the first quarter of 2023 from the first quarter of 2022, as our gross margin decreased from 35% to 26%.

The lower margin was driven by unfavourable deleveraging fixed costs relating from <unk>.

Decrease production and sales, resulting from decrease production and sales and.

Inflationary cost increases and materials commodities services energy fuel and transportation.

An unfavorable product mix shift toward products with relatively lower margins as he focused on fulfilling demand for products. We had undersupplied since early in 2020.

And increased sales promotional costs.

Our continued focus on financial discipline and the cultivation of long term shareholder value is evident in our strong that for your balance sheet.

At April 1st 2023, our current ratio was 4.3 to one and we had no debt.

Stockholders equity was $322.1 million, which equates to a book value of $18.19 per share.

Of which $7.35.

Was cash and short term investments.

In the first quarter of 2023, regenerated $5.3 million of cash from operations.

We reinvested at $1.7 million of that back into the company in the form of capital expenditures.

We expect our 2023 capital expenditures to total approximately $20 million relating to new product introductions upgrades to our manufacturing equipment and improvements to our facilities.

Our board of directors declared a 32 cents per share quarterly dividend for shareholders of record as of May 15th 2023.

Payable on May 31, 2023.

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

That's the financial update for the first quarter of 2023, Chris.

Thanks, Tom.

We remain faithful to our long term disciplined approach in the first quarter by targeting at production mix had better aligned with consumer demand and responsibly managing our overall production levels to reflect market conditions.

This resulted in a slight decrease in production about 4% from the fourth quarter of 2022.

I made a generous seltzer of our products from the independent distributors to retailers in the first quarter of 2023 was essentially flat complaint compared to the fourth quarter of 2022 <unk>.

C P. Max pistol Tomorrow, 18, 95 lever action rifles the.

LC carbine.

Small frame auto loading rifle Super Wrangler, and the security 380 pistol represented $30 million or 21% of firearms sales in the first quarter of 2023.

Our new product development teams are hard at work so far in 2023, we've introduced the Marlins 336 classic an iconic lever-action rifle chambered in the popular and timeless 30, 30, Winchester presented in Polish Blue alloy deal with a classic American Walnut stock and foreign.

The new lightweight model of the river SRM 1911, a full size five inch 1911 pistol built on a forged aluminum frame brought to market fully featured in at a competitive price that our customers will be sure to appreciate it.

Carrying light conditions.

Virtually all of our single action and double action revolvers, the Ruger precision rimfire rifle, the mini 14 rifles, and our bolt-action hunting rifles.

We're hopeful that federal legislation to discourage such practices, including the firearm industry non discrimination Act or find act will be enacted to put an end to this unjust treatment of our industry.

Operator may we had the first question.

[laughter].

Hey, guys. This is jason onto her mark Thanks for taking my questions. Just curious if you could talk about production and shipment products such as wrangler other lower priced products make up a larger mixed this quarter.

Thank you Rob a good question.