Q4 2023 Sturm Ruger & Company Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Sturm Ruger 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Thank you for standing by and welcome to this sort of broker fourth quarter 2000 twenty-three 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 this session you'll need to press star one one on your telephone.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again.

Your question has been answered and you'd like to remove yourself from the queue simply press Star One one again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program, Chris Calorie President and CEO. Please go ahead Sir.

Operator: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Chris Killoy, President and CEO. Please go ahead, sir.

Christopher John Killoy: Thank you. Good morning and welcome to the Sturm Ruger & Company year-end 2023 conference. I'd like to ask Kevin Reed, our General Counsel, to read the Caution on Forward-Looking Statements. Tom Dineen, our Chief Financial Officer, will then give an overview of the fourth quarter and 2023 financial results, and then I will discuss our operations and the state of the market. After that, we'll get to your questions.

Thank you.

Morning, and welcome to the Sturm Ruger and company, you're L 2023 conference call.

I'd like to ask how read our general counsel to read the caution on forward looking statements colony, and our Chief Financial Officer will give an overview on fourth quarter in 2023 financial results that I will discuss our operations in the state of the market after that we'll get your questions Kevin. Thanks.

Kevin Reed: Thanks, Chris. We want to remind everyone that statements made in the course of this meeting that state the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements. It is important to note that the company's 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 ending December 31, 2023, and, of course, the Forms 10-Q for the first, Copies of these documents may be obtained by contacting the company or the SEC or on the company website at ruger.com forward slash corporate or, of course, on the SEC website at sec.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 ending December 31, 2023, and our Forms 10-Q for the first three quarters of 2023, which also are posted on our website. Furthermore, the company disdains all responsibility to update forward-looking statements.

Thanks, Chris we want to remind everyone that statements made and of course this waiting to see if the company's romantic for instance, temperatures oops beliefs expectations are predictions of the future are forward looking statements is important to note that the company's actual results could differ materially from not projected and such bordering statements I.

Additional information concerning factors that could cause actual results to differ materially from those before looking statements that the data from time to time in the company's SEC filings, including but not limited to the company's reports on from 10-K for the year on your December 31st 2023 and of course, the farmers 10-Q for the first second and third quarters of 2023 copies of documents mailed.

Paid by contacting the company or the a C. C. One of the company website I remember dot com forward slash corporate or of course the F. C. C website that S. E C. Dot Gov, we do references on Jeff EBITDA. Please note that the reconciliation of GAAP net income to not even I can be found in our Form 10-K for the year ended December 31st 2023, and our form. Thank you for the first record.

2023, which also are posted on our website. Furthermore, the company just makes all responsibility to update forward looking statements risks.

Christopher John Killoy: Thank you, Kevin. Now Tom will discuss the company's 2023 results. Thanks, Chris.

Thank you Kevin now Tom will discuss the company's 2023 results.

Thomas A. Dineen: For 2023, net sales were $544 million, and diluted earnings were $2.71 per share. For 2022, net sales were $596 million, and diluted earnings were $4.96 per share. For the fourth quarter of 2023, net sales were $131 million, and diluted earnings were $0.58 per share. For the corresponding period in 2022, net sales were $149 million, and diluted earnings were $1.06 per share. Our profitability declined in 2023 from 2022 as our gross margin decreased from 30% to 25%. The lower margin was driven by unfavorable deleveraging of fixed costs resulting from decreased production and sales.

Thanks, Chris.

For 2023, net sales were of $544 million and diluted earnings for $2.71 per share.

For 2022.

Net sales were of $596 million and is diluted earnings were $4.96 per share.

For the fourth quarter of 2023.

Sales were at $131 million and diluted earnings were 58 cents per share.

For the corresponding period in 2022.

Sales were $149 million and diluted earnings were one dollar and six cents per share.

Our profitability declined in 2023 from 2022 is our gross margin decrease from 30 per cent to 25 per cent.

The lower margin was driven by unfavorable deleveraging of fixed costs, resulting from decrease production and sales.

Thomas A. Dineen: Inflationary Cost Increases in Materials, Commodities, Services, Wages, Energy, Fuel, and Transportation. Our product mix shifts toward products with relatively lower margins that remain in stronger demand and increased promotional costs. Our continued focus on financial discipline and the cultivation of long-term shareholder value is evident in our strong debt-free balance. At December 31, 2023, our cash and short-term investments totaled $118 million. Our short-term investments are invested in United States Treasury bills and in a money market fund that invests exclusively in United States Treasury instruments, which mature within one year, at December 31st, 2023. Our current ratio was 4.3 to 1, and we had no debt.

Inflationary cost increases and materials commodities services wages.

Energy fuel and transportation.

Our product next shift toward products with relatively lower margins that remain in stronger demand.

And increase from a professional costs.

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

At December 31st 2023 are cash and short term investments totaled $118 million.

Are short term investments are invested in the United States Treasury bills and in a money market funds that invest exclusively in the United States Treasury instruments, which mature within one year.

At December 31st 2023.

Our current ratio was 4.3 to one and we had no debt.

Thomas A. Dineen: Stockholders' equity was $332 million, which equates to a book value of $19 per share, of which $6.74 was cash and short-term investments. In 2023, we generated $34 million of cash from operations. We reinvested $16 million of that back into the company in the form of capital expenditures related to new product introductions and upgrades to our manufacturing equipment and facilities. We expect our 2024 capital expenditures to total approximately $15 million. In 2023, we will return $123 million to our shareholders through the payment of $111 million of dividends, which included $88 million in the form of a $5 per share special dividend paid in January 2023, and the repurchase of more than 264,000 shares of our common stock in the open market at an average price of $44.71 per share, for a total of $12 million.

Stockholders equity was $332 million, which equates to a book value of $19 per share outward $6.74 was cash and short term investments.

And 2000 twenty-three regenerated $34 million of cash from operations, we reinvested $60 million of that back into the company in the form of capital expenditures.

It's a new product introductions and upgrades to our manufacturing equipment and facilities.

We expect our 2024 capital expenditures to total approximately $15 million.

In 2023, we return $123 million to our shareholders.

The payment of $111 million of dividends, which included $88 million in the form of a five dollar per share special dividend paid in January 2023, and.

The repurchase up more than 264000 shares of our common stock in the open market.

Average price of $44.71 per share for a total of $12 million.

Thomas A. Dineen: At December 31, 2023, approximately $75 million still remained authorized for share repurchase. Our Board of Directors declared a $0.23 per share quarterly dividend for shareholders of record as of March 15, 2024, payable on March 28, 2024. As a reminder, our quarterly dividend is approximately 40% of net income and therefore varies quarter to quarter. That's the financial update for 2023. Chris?

At December 31, 2023, approximately $75 million still remained authorized for share repurchases.

Our board of directors declared a 23 cents per share quarterly dividend for our shareholders of record as of March 15th 2024 payable on March 28th 2024.

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

That's the financial update for a 2023 Chris.

Christopher John Killoy: Thanks, Tom. Consumer demand remained soft throughout most of 2023, likely dampened by inflationary pressure and rising interest rates, leading to a 9% reduction in sales from the prior year. The estimated unit sell-through of our products from the independent distributors to retailers in 2023 decreased 7% compared to 2022. In 2023, Knicks back route checks, as adjusted by the National Shoe Sports Foundation, decreased 4%.

Thanks, Tom.

Consumer demand remains soft throughout most of 2023 likely dampened by inflationary pressure and rising interest rates, leading to a 9% reduction in sales in the prior year.

The estimated unit shelter of our products from the independent distributors to retailers in 2023 decreased 7% compared to 2023 <unk> excuse.

Excuse me compared to 2022.

2023 next background checks is adjusted by the National Shoe Sports Foundation decreased 4%.

Christopher John Killoy: Nevertheless, we remain disciplined and continue to focus on the long term, reducing production levels where appropriate and offering only modest promotions on select product sales, resisting the temptation to enhance short-term results at the expense of our long-term strategy. As a result, inventory of our products at independent distributors decreased 39,000 units in 2023, despite decreased demand. We are encouraged by our increased quarterly sales and profitability in the fourth quarter, and we enter 2024 with a strong debt-free balance sheet, reduced distributor inventories, and a full pipeline of new products recently launched into the market and others still under development. 2024 is an exciting year for Ruger as we are celebrating our 75th anniversary. To honor our proud heritage, we are offering commemorative firearms that will only be available this year, all of which are engraved with our 77th anniversary logo.

Nevertheless, we remained discipline and continued to focus on the long term.

Using production levels, where appropriate and offering only modest promotions on electronic families resisting the temptation to enhance short term results at the expense of our long term strategy.

As a result inventory of our products at the independent distributors decreased 39000 units in 2023, despite the decrease demand.

We are encouraged by our increase quarterly sales and profitability in the fourth quarter.

We enter 2024 with a strong jeffrey balance sheet reduce distributor inventories at a full pipeline of new products recently launched into the market and other still under developed.

The only 24 is an exciting year for Ruger as we celebrate our 75th anniversary.

A proud heritage, we're offering commemorative firearms that will only be available. This year all of which are in grave with our 75th anniversary logo.

Christopher John Killoy: A Mark IV target pistol featuring a fully adjustable rear sight, an undercut Patrick front sight, and a heavy tapered barrel, a pair of 10-22 Sporter Rimfire Kirby, each featuring a stainless steel barrel, silver-finished receiver, polished bolt, and a matte-sanded butt plate, and an LCP Maxx Double Sack 10-Round Pistol chambered in.380 Auto, featuring a Also, several limited production editions of other products will be released throughout the year. The first of these is the Diamond Anniversary Limited Edition 1911 pistol, which features an attractive, finely detailed, laser-engraved slot.

Ah Mart target pistol, featuring a fully adjustable rear sight and undercut Patrick front sight and heavy taper bearable.

A pair of 10 22 sport or wind fire carbine H.

Each featuring a stainless steel barrel silver finished receiver polished ball and a mat said it but that.

L C P. Max <unk> turn round pistol chambered through 380 auto.

Featuring a stainless steel slide and a silver anodize aluminum trigger.

Also several limited production additions of other products will be released throughout the year. The first of these is diamond anniversary limited edition 1911 pistol.

Which features an attractive finely detailed laser engraved slide.

Christopher John Killoy: We look forward to announcing more of these one-of-a-kind firearms throughout 2020. In addition to these 75th anniversary models, we recently introduced several new products that have met with strong demand and excitement at the wholesale and retail levels, and most importantly, with our customers at the gun kit. The Ruger American Rifle Generation 2, our first update to the American rifle, which has been tremendously popular since its introduction in 2012. The Gen 2 models offer an array of new standard features, which include a three-position tank safety, an eye-catching splatter-painted ergonomic stock with length of pull and comb height adjustability, and a Cerakote-finished spiral fluted barrel. 60th Anniversary 1022 Carbine. This sixth edition of the Ruger Collector Series features a stainless steel barrel and silver-finished receiver paired with a gray Magpul Hunter X-22 stock.

We look forward to announcing more of these one of a kind of firearms throughout 2024.

In addition to the 75th anniversary of models.

Suddenly introduced several new products that mednet withdraws demand and excitement at the wholesale or retail levels and most importantly, with our customers at the gun Keller.

The Ruger American rifle generation to our first update to the American rifle, which has been tremendously popular since its introduction in 2012.

The Gen. Two models offer an array of new standard features which include a three physician Tang safety and eye catching slatter painter ergonomic stock with Lanka pull a comb height adjustability.

And a surcoat finished spiral fluted barrel.

The 60th anniversary 10, 22 carbine, the sixth edition of the Ruger collector series features of stainless steel barrel and silver finished receiver paired with a gray magpul Hunter X 22 stock.

Christopher John Killoy: The Mini-14 with side-folding stock, reminiscent of the original side-folding Mini-14 rifles made popular in the 1980s. And the LC Carbine, now chambered in.45 Auto, featuring a threaded barrel, adjustable folding stock, Ruger Rapid-Deploy Folding Sights, and ambidextrous controls. Recently, there were some changes to the requirements for pistols to be sold in California. Consequently, five Ruger pistols were added to the California roster of certified handguns, including a Mark 4, a Mark 4 2245, an SR-22, an LCP, and a fully-featured Ruger Max 9.

A black and bolt laser engraved with a unique 60th anniversary markings and a red bolt handling trip.

Also have the mini 14 with Sighful stock reminiscent of your original side slowly. Many 14 rifles made popular in the 19 eighties.

And the LC Carvey now chamber get 45 auto featuring a threaded barrel adjustable falling stock rapid deploy all those sites and ambidextrous controls.

Recently, there was some changes to the requirements of the testicles to be sold in California.

Consequently, five Ruger pistols were added to the California roster of certified handguns.

Julio Mark for a mark for 22 45.

<unk> 22, and LCP and the fully featured Ruger Max nine pistol.

Christopher John Killoy: These models are the first that Ruger has been able to introduce to consumers in California in over 10 years, and we look forward to offering more quality Ruger pistols to the California roster in 2020. New product sales, which include only major new products that were introduced in the past two years, represented $122 million, or 23% of firearm sales in 2020. That's an increase from $78 million, or 14% of sales in 2020. This includes the MAX 9 pistol, the security.380 pistol, Super Wrangler Revolver, the LCP Max Tester, the Marlin Lever Action Rifle, The LC Carbine, Small Frame Auto Loading Rifle, and most recently the American Centerfire Rifle Gen 2.

These models of the first that rumor has been able to introduce to consumers in California in over 10 years, and we look forward to offer more quality Ruger pistols to the California roster in 2024.

New product sales, which include only major new products that were introduced in the past two years represented $122 million or 23 per cent of firearms sales in 2023, that's an increase from $78 million or 14% of sales in 2022.

This includes the Max nine pistol the security 380 pistol.

Super Wrangler revolver, the LCP Max pistol Marla.

Marlon lever-action rises.

<unk> small frame autoloader rifle.

And most recently the American Sapphire rifle Gentoo.

Christopher John Killoy: We remain hard at work and look forward to introducing additional innovative Ruger & Marlin firearms in 2020. All of our new products and many of our classic firearms were on display at last month's SHOT show in Las Vegas. It was an exciting show and a great way to catch up with a wide variety of retailers and other industry attendees. We co-hosted a 75th anniversary event, along with the folks from Hornady Ammunition, who are also celebrating their 75th anniversary this year. It was a memorable evening that honored the history and enduring achievements of two American leaders in our industry. We look forward to adding the next chapter of our proud legacy in 2024 and our diverse and growing catalog of products. We have a robust debt-free balance sheet, and commitment to a long-term strategy of generating and returning shareholder value make us well positioned to do so. Operator, may we have the first question?

We remain hard at work and look forward to introducing additional innovative Ruben amaro firearms in 2024.

All of our new products and many of our classic firearms were on display at last month's chat show in Las Vegas.

It was an exciting show and a great way to catch up with a wide variety of retailers and the other industry attendees we.

We co hosted a 75th anniversary event, along with the folks from horny ammunition, who were also celebrating the 75th anniversary this year.

It was a memorable evening that onto the <unk>.

The history and enduring achievements of two American leaders of our industry.

We look forward to adding the next chapter of our proud legacy in 2024.

And our diverse and growing catalog of products.

Robust debt free balance sheet commit.

Commitment to long term strategy of generating and returning shareholder value have as well positioned to do so.

Operator, where we have the first question.

Operator: Certainly, one moment for our first question, and our first question comes from the line of Mark Smith from Lake Street. Your question, please. Hi guys.

Certainly one moment for our first question.

And our first question comes from the line Mark Smith from Lake Street. Your question. Please.

Mark Eric Smith: First question for me is just looking at the quarter here. What was the mix impact during the quarter and maybe any impact that that had on ASB? Hi Mark. Chris here.

Hi.

Question for me, it's just looking at quarter here mix impact during the quarter and maybe any impact that had on E. S. P.

Hi, Mark Chris here, Yeah, I think when you look at our average selling price in the quarter.

Christopher John Killoy: Yeah, I think when you look at our average selling price in the quarter, kind of two things stand out. The backlog actually went up in Q4, largely based on some of the higher-priced models that were introduced, i.e., additional Marlin centerfire lever actions and additional orders for the SFAR rifle.

Two things stand out the backlog actually went up in Q4 largely.

Largely based on some of the higher price models that were introduced ie additional marlin setup.

Set a fire lever actions and additional orders for the SSA or a rifle.

Christopher John Killoy: However, the average sales price of orders received, when you look at that, went down slightly from, say, Q1 levels and Q2, up from Q3. And that's really because we're selling a lot of products like the repositioned LCP Max, the original LCP that we had repositioned at that price. And so all that combined resulted in good unit sales, but a lower average sales price of those guns going out. I thought the orders looked strong here during the quarter. Is there any risk, or should we be looking at? Do you feel like you pulled maybe some forward from Q1, which is typically a really strong order or quarter?

However, the average sales price borders received when you look at that went down slightly from Q1 level and Q2 up from Q3, and that's really because we're selling a lot of products like the the repossession LCP Max the original LCP we had.

Repossession that price and so all that combined result in in good unit sales, but the lower average sales price of those not going out.

Okay, and I I thought the orders it looks strong here during the quarter is there any risk or should we be looking at you feel like you're pulled maybe some forward from Q1, which is typically a really strong order a quarter.

Christopher John Killoy: Not really; we had a lot of new products launched in Q4, particularly the American Rifle Gen 2, and some additional Marlin SKUs that really impacted that order rate. So the order rate was strong, but it was all things that we expected to fulfill going forward as we go out into 2024, so I definitely don't think there was anything pulled forward. It really had to do with the new product launches that went out in Q4. And then inventory, you know, your own as well as distributor inventory went down, you know, one of the better quarters here in the last couple of years. You know, what's your comfort level?

Not really we have a lot a lot of new products launched into in queue for particularly the American rifle Gentoo at a dish some additional marlin sks's that they're really impacted that order right. So the order right with a strong there's all things that we expect to fulfill.

<unk> going forward you know as we go out go out into 2024, So I definitely don't think it was anything full forward. It was really had to do with new product launches went out in queue for them.

Okay.

And then inventory you know your own as well as a distributor inventory went down one of the better quarters here in the last couple of years, you know, what's kind of your comfort level, how do you feel about where the kind.

Christopher John Killoy: How do you feel about where the, you know, kind of channel inventory is today? I think we're feeling pretty good about that. Like you said, distributor inventory over the course of the year was down about 30,000. We were up about the same amount, but overall, pretty balanced.

Kind of channel inventory is today.

I think we're feeling pretty good about that like you said the sugar inventory.

Of course of the year was down about 30000, we were up about the same amount, but overall pretty Dallas and we'd like to target our distributors around six turns and so right now they're they're right about in that strike zone, and we feel pretty good about that we don't see any sore spots in their inventory some of the items that we read.

Christopher John Killoy: So we like to target our distributors around six terms. And right now, they're right about in that strike zone, and we feel pretty good about that. We don't see any sore spots in their inventory.

Christopher John Killoy: Some of the items that we repositioned through the course of 2023 were intended to help distributors move some of their problematic inventory where they're a little higher in certain categories than they'd like to be. And we think we were effective in doing that. And just looking at the expense side of things, you know, operating expenses were a little higher than we'd expected. Anything going on there?

Physician through the course of 2023 were intended to help distributors move some of their problematic inventory, where they're a little higher in certain categories and I'd like to be and we think we're up we were effective in doing that.

Okay, and that's just looking at the expense side of things you know operating expenses were a little higher than we'd expected and then going on there you know do you feel like you know there's places maybe they cut going forward or is this kind of a build up you know come in and to what could be a good year 24, you know any any any.

Christopher John Killoy: You know, do you feel like, you know, there's places maybe to cut going forward or is this kind of a build-up, you know, coming into what could be a good year in twenty-four? Any insight into kind of where your expenses were and maybe anything in the outlook for 2024 would be great. A good question.

<unk> kind of where your expenses were and and maybe anything in the outlook for 2024, it would be great.

Christopher John Killoy: I think we saw a slight uptick from 2022. We're about where we were in 2021, if I recall, on operating expenses. A lot of that has to do with 2022. We had, for example, still not gone to the SHOT Show. We had a couple of expenses that were not in there versus 2023.

A good question I think I think we saw a slight uptick from 2022 whereabouts, where we were in 2021, if I recall on the operating expenses a lot of that has to do with 2022, we it's still for example, I had not.

Gone to the shot show we had a couple of expenses that were not in there versus 2023, we have a full complement of trade shows but.

Christopher John Killoy: We have a full complement of trade shows. But there are certainly some areas we need to look at in terms of making sure we have our expenses under control, cut some of those expenses where we can, and try to boost our profitability. And the last one, Chris, just kind of the big picture, as we look at, you know, historically going into an election year, we would look for pretty solid demand. As you look into your crystal ball, any thoughts on kind of where the consumers are in demand for firearms this year? Well, that's a good question and one we grapple with when we look to plan the year out. At least right now, we're seeing things fairly stable, and we're not seeing any outsized demand in any particular product categories other than our new products. We're seeing things like, at recent shows, at the Great American Outdoor Show in Harrisburg, Pennsylvania, and the Western Hunting and Conservation Expo in Salt Lake City. Tremendous demand for some of our new products, so that's very positive. But given the election year coming up, I think if there's any impact there, it'll probably be in the back half of the year.

But there are certainly scenarios and we need to look at in terms of.

Making sure we have our expenses under control cut some of those expenses, where it can and try to boost our profitability. That's an active effort that's underway.

Underway as we speak.

Okay and the last one <unk> just got a big picture.

We look at historically going into an election year, we're looking for pretty solid demand you as you look into your crystal ball any thoughts on kind of where the consumers at in demand for for firearms. This year.

Well, that's a good question and the one we grapple with when we left the plan the year out at least right now we're seeing things fairly stable and we're not seeing any outside demand in any particular product categories. Other that our new products, we are seeing things like.

At the at the recent shows at the Great American outdoor show in Harrisburg, Pennsylvania, Western hunting and conservation Expo in Salt Lake City tremendous demand for silver or new products. So that's very positive, but given the election year come out I think if there's any impact there will probably be in the back half of the year, we're not seeing anything right now and I just don't know.

Mark Eric Smith: We're not seeing anything right now, and I just don't know beyond that what we may see this year. Historically, you know, some things, you know, whether it's saber-rattling about additional regulatory impact or gun control may drive sales, but I just don't know at this point. We're not seeing anything yet. That's perfect.

Beyond that what we may see this year historically sell things you know, whether the saber rattling about additional regulatory impact or a fire or gun control may may drive sales, but I just don't know at this point, we're not saying anything yet.

Operator: Thank you. Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11. One moment for our next question. And our next question comes from the line of Ryan Hamilton from Morgan Dempsey. Your question, please. Hey, good morning, everyone.

Okay. That's perfect. Thank you.

Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star 111 moment for our next question.

And our next question comes from the line, Brian Hamilton from Morgan Dempsey Your question. Please.

Ryan Hamilton: Thank you for taking my calls and my questions. Could you walk me through the cadence for 2023 regarding inflation, maybe, and what you're seeing in 2024? Thanks for the question. Is it picking up? Is it, you know, maybe where you're at, or is it picking up, slowing down, maybe where you're at?

Hey, good morning, everyone. Thank you for taking my calls all my questions could you walk me through the cadence for 2023 regarding inflation, maybe and what you're seeing in 2024.

Thanks, So like as soon as you pick.

Opposite you know, maybe where you're at or is it picking up slowing down maybe where you're at.

Ryan Hamilton: I think we're seeing persistent price increases; we didn't see things decrease in price in our commodities and things of that nature, but we're not seeing the same level of increases as we did at the beginning of the year. So I'd say it's certainly tapered off and probably stable where we are right now. All right. We're... are more sticky than others in certain categories, certain commodities, wages, and things of that nature. And where are you being pinched? I mean, you just brought up wages.

I think we're seeing persistent price increases we didn't see things decrease in price and our commodities and things of that nature, but we're not seeing the same level of increase as we did in the beginning of the year. So I'd say, it's fair to say it certainly tapered off and probably stable, where we are right now.

Now things that sorry, where.

Alright are more sticky than others in certain categories commodities wages and things of that nature.

And where are you being pinched I mean, you you just brought up wages as far as commodities go where you're still being pushed the most.

Christopher John Killoy: As far as commodities go, where are you still being pinched the most? Well, I think some of it's availability, some of it's in our, you know, when we look at steel, aluminum, even wood, for example, the quality of, the ability to get quality walnut for some of our rifles is one of those commodities that not many other manufacturers are concerned about, but that's one that trying to get quality walnut at a reasonable price is something that negatively impacts profitability or impacts the price of the firearm going out the door. So you're not having a hard time getting it; you're just having to pay more for it. There are a few things we're having a hard time getting. Like I said, the wood, in particular, getting good quality, highly configured walnut when you're looking for it for a number one rifle or an M-77 wood stock rifle.

Well I think some of his availability saw this and are you only look at steel aluminum even would for example, yeah. The quality of the ability to get quality walnut for some of our our rifles is one of those commodities that not many other manufacturers are concerned about that that's one that tried to get quality walnut.

At a reasonable price is something that that negatively impacts profitability or impacts the price of the of the fire on going out the door.

So you're you're you're not having a hard time getting it you're just having to pay more for it.

There there are a few things we're having a hard time like I said, what in particular are getting good quality highly configured walnut when you're looking for it for a number one rifle or an M. 77, Woodstock rifle those are things that are harder and harder to find and so our buyer buyers are always constantly looking for new sources and trying to make.

Christopher John Killoy: Those are things that are harder and harder to find, and so our buyers are always constantly looking for new sources and trying to make sure we're getting the best quality product we can because we have our own wood shop. So we're turning those wood blanks up in Newport, New Hampshire, and then putting them on our products at our factories, both in New Hampshire and North Carolina.

Sure we're getting the best quality products can cause we have our own woodshop. So we're we're trying those with blanks up a new <unk>, New Hampshire, and they're putting it on our products at at our factories Walton, New Hampshire, and North Carolina.

Christopher John Killoy: When looking at Marlin, it appears that you aren't fully meeting the demand that's out there. Could you kind of comment a little bit on that and what levers you guys can pull to maybe either get more rifles to market? Well, as you may know, this year we turned on the 1894 line, so the 1894 line really doubles our capacity in total Marlin production. We have one line we call a round bolt line that makes the 1895s and the.336s; the other line makes the 1894s.

Got it when looking at Marley appears would you are fully a meeting.

The man that's out there could you comment a little bit on that and what you. What you guys can pull to maybe either.

Get more rifles to market.

Well as you May know this year, we turned on the 18 94 lines. So the 18 94 line really doubles our capacity in total Marlin production. We have one line we call around bolt line that makes the 18 95 and the 336 is the other line. Thanks to 18 90 418 94 is either.

Christopher John Killoy: The 1894s are the.44 Magnum and.357 Magnum rifles, which are receiving tremendous demand just like the originals that we launched in the 4570. That's the good news, and it's been a continuing challenge to get those ramped up to try to meet demand. The team down at Maiden is doing an awesome job.

44, Magnums and 357 Magnum rifles, which.

Receiving tremendous demand just like the original that we launched it in 45 70.

That's good news and it's it's been a continuing challenge to get those ramped up to try to meet demand. The team down Amanda is doing an awesome job, we still have room to grow and we're chasing that demand hard we're trying to be conscious of the fact that we have to maintain quality first as we chase the demand I mean these are.

Christopher John Killoy: We still have room to grow, and we're chasing that demand hard. But we're trying to be conscious of the fact that we have to maintain quality first as we chase demand. I mean, these are quality rifles. Our customers expect them to be quality-made, and I think we're delivering on that commitment, but we've got to be careful to make sure we don't try to go too fast and deliver rifles that are not up to snuff for what our Ruger and Marlin customers are expecting. Right, no, that is great news.

These are quality rifles, our customers expect them to be quality made and I think we're delivering on that commitment, but we've gotta be careful to make sure. We don't try to go too fast and deliver rifles that are that are not up to snuff to what are our real great moral and customers are expected.

Ryan Hamilton: Thanks for the color on that. And then, as I usually ask on these calls, could you touch on a little bit about the accessories business and what you're seeing there? Well, the accessories business is a profitable segment for us, for sure, particularly in our Shop Ruger segment, particularly when it comes to things that we make, like our magazines, our BX-1 magazines, our BX-25 magazines, etc. And we ran a promotion at the beginning of Q4 that included Shop Ruger. It provided, if a consumer bought an American Rifle Generation 1, they were able to redeem it for a $100 Shop Ruger gift card. And that helped drive both sales of the Generation 1 American Rifles before the launch of the Gen 2s, and it also helped increase sales on our Shop Ruger segment and drive traffic there and, frankly, got us a lot of new customers in the Shop Ruger. So we're very pleased with the results of that promo. Excellent. Thanks for the time, guys, and congrats on the 75 years. Thank you. Thank you. Please take a moment for our next question. And our next question comes from the line of Rommel Dionisio from Aegis Capital. Your question, please. Good morning.

Right No. That's that is great news. Thanks for the color on that and then there's usually asking on these calls cause you touch a little bit on the accessories business and what you're seeing there.

Well, we the accessories businesses profitable segment for us for sure, particularly out of our shop Burger segment, particularly when it comes to things that we may cause like our magazines or B X, one magazines or B X 25 magazines et cetera.

And we ran a promotion in at the beginning of the queue for that included shop Rover. It provided if a consumer bought a amir.

American rifle generation, one they were able to redeem it for $100 shop, rude or a gift card.

And that helped a drive of all sales of the generation Gen. One American rifles before the launch of the Jan Twos and it also helped increase sales at on our shopper segment and drive traffic, there and and frankly got US a lot of new customers in the shop. So we're very pleased with the results of that promo.

Awesome. Thanks for the 10 days, you'll regret some 75 years.

Thank you.

Thank you one moment for our next question.

And our next question.

Comes from the line of <unk> from Ages capital Your question. Please.

Rommel Dionisio: Thank you. Yeah, I know in your prepared comments, you talked about the product mix shift in 2023 being somewhat adverse. I wonder if you could just maybe give us a feel for, you know, the strong orders you got in the fourth quarter and the new products that you've launched, how we should think about product mix going into 2024. And as a follow-up to that, I know you guys have done a great job over the years really engineering cost out of the product line. And I wonder if you could just talk about some of the initiatives there to better position your gross margins. Thanks. Thanks, Rommel. I wouldn't call it an adverse product mix as much as, you know, we had some lines that, like, if you take our original LCP, the 3701 was the model number.

Good morning. Thank you Yeah, I know near prepared comments he talks about a product mix shift in 2023 being someone adverse I wonder if you could just maybe give us a feel for you know the struggle does she got in fourth quarter and the new products that you've launched how we should think about product mix going into 2024 and as a follow up to that.

I know you guys have done a great job over the years really engineering costs out of the out of the product line and I Wonder if you could just talk about some of the initiatives there to.

Better positioned gross margins.

Thanks.

Thanks, Rommel I wouldn't call it a adverse product next as much as you know we had some lines that like you take our original L. C. P. 30, 701 was the model number.

Christopher John Killoy: When we started to look at where the market was, where the competition was, we looked at that and said we needed to reposition the price. We have a great gun, a market-leading position with that gun, but we know we can get our volume back up when we reposition that model. So that's part of the action we took on that original LCP. We also did it with the MAX 9 and the Security 9 pistol.

When we started to look at where the market was where the competition was we looked at that and so we need to reposition the price we have a great gun market, leading position with that gun, but we know we can get our volume back up more repositioned that model. So that's that's part of the actions. We took on the that original LCP will also did it with the Max nine and the secure.

Christopher John Killoy: So between that and doing some things like ramping up some of the lines that we neglected during COVID when we were pushing hard on certain other segments, things like the single action revolvers. Our team up in Newport has done a great job getting that back up and running to kind of our historical levels. And so those lines, while they're in a lot of demand, they're also hard to make, and they're not as high in margin as we'd like, but I would tell you that the folks are working every week. We've got new Kaizans going on in all the factories to take costs out, reduce manufacturing costs, and make the line safer for the folks working it. And so I'm optimistic that those Kaizans will continue to yield results.

Every night distance so between that and then doing some things like ramping up some of the lines that we neglected.

During COVID-19 when we were pushing hard on certain other segments things like the single action revolvers, our team up the Newport is that a great job getting that back back up and running to kind of our historical levels and so those lines. While they are in a lot of demand are also hard to make and they're not they're not as high end margin as we'd like.

But I would tell you that the the folks are working every week, we've got new <unk> going on and it's been all factories to take costs out we reduce our reduce manufacturing costs make the lines safer for the folks working yet and so I'm optimistic that those kinds of ads will will continue to yield results for.

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Rommel Dionisio: Great, that's very helpful. Thanks so much. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Chris Killoy, President and CEO, for any further remarks. Thank you. In closing, I'd like to start by thanking all of you for attending our call this morning and our shareholders for their continued investment in our company. And I would like to thank our loyal customers and the 1,800 hardworking members of the Ruger team who design, manufacture, and sell rugged, reliable firearms every day at our American factory. I hope you will be able to join us at our virtual 2024 Annual Meeting on Thursday, May 30th. Further details will become available in April.

Great. That's very helpful. Thanks, so much.

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This does conclude the question and answer session of today's program I'd like to have the program back to Chris Kilroy, President and CEO for any further remarks.

Thank you.

Yeah, I'd like to start by thank you all of you for attending our call. This morning and for our shareholders for their continued investment in our company.

And I would like to thank our loyal customers and 1800 hard working members of the routine who design manufacturers sell rubbing reliable firearms everyday in our American factories, I hope you'll be able to join us at our virtual 2024 annual meeting on Thursday may 30th further details will become available in April. Thank you.

Christopher John Killoy: Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Subs by www.zeoranger.co.uk, God's Plan

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

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