Q3 2024 Sturm Ruger & Co Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the Q3 2024 Storm Ruger earnings conference call. At this time, all participants are in a listen only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Coloy, President and CEO. Please go ahead.
Chris Coloy: Good morning and welcome to the Star River in Company third quarter 2024 Conference Call.
Chris Coloy: All that's Kevin Reid, our General Counsel, to read the caution on forward-looking statements.
Chris Coloy: Tom Dineen, our Chief Financial Officer, will then give an overview of the third quarter, 2024 financial results and then I will discuss our operations in the market.
Chris Coloy: After that, we'll get you to your questions. Kevin, thanks Chris. We just want to remind everyone that statements made in the course of this meeting that did the company's romantic intentions, hopes, beliefs, expectations, all predictions of the future are forward with these statements.
Chris Coloy: is important to note that the company's apps results could differ materially from those projected in such a more looking statement.
Chris Coloy: and the National Information and Attorney Factor that could cause actually results at different materialy from those before with these statements.
Chris Coloy: is contained from time to time in the company's SEC filings, including with a limited to the company's reports on FOM10K, for the year ended December 31st, 2023. And of course on the FOM10Q for the third quarter of 2024, Lucie Fowel last night.
Chris Coloy: [inaudible]
Chris Coloy: We do reference non-gap, EBITDA, please note that the reconciliation of Gap Net income to non-gap, EBITDA can be found in our form 10K, for your end is 731-2023 and our form 10K, for the third quarter of 2020, both the rich are all supposed to a website.
Chris Coloy: Furthermore, the company explains all responsibility updates for looking statements. Chris, thank you, Kevin. Now, Tom will discuss the company's third quarter to my 24 results.
Tom Dineen: Thanks Chris.
Tom Dineen: for the third quarter of 2024, Nestiles are $122.3 million and looted earnings for 28 cents per share.
Tom Dineen: for the corresponding period in 2023.
Tom Dineen: Net sales were $120.9 million and the looted earnings were $42 per share.
Tom Dineen: For the 9 months and is September 28, 2024, Net Sales were $389,9 million and the Lunar earnings were $1.15 per share.
Tom Dineen: So the corresponding period in 2023, Nancy L's were $113.2 million and the littered earnings were $2.13 per share.
Tom Dineen: As the 10 or 28th 2024, our cash and short-term investments total $96 million.
Tom Dineen: Our short-term investments are invested in United States Treasury bills and in a money market fund that invests exclusively in the United States Treasury instruments which mature within one year.
Tom Dineen: At the September 28th, 2024, our current ratio was 4.5 to 1 and we had no debt.
Tom Dineen: Stockholice Equity was $314.9 million, which equates to a book value of $18.76 per share of which $5.72 was cash and short term investments.
Tom Dineen: In the first nine months of 2024, regenerated 35.5 million dollars of cash from operations.
Tom Dineen: Our year-to-date Catholic Spanagers total $17.2 million.
Tom Dineen: We expect our 2024 capital expenditures will total approximately $20 million.
Tom Dineen: In the first five months of 2024, we return $39.3 million for our shareholders through the payment of $10 million, of course, in dividends.
Tom Dineen: and the repurchase of $699,000 shares of our common stock at an average price of $41.99 per share for a total of $29.3 million.
Tom Dineen: Our Board of Directors declared an 11th-cent per share, quarterly dividend for shareholders of records as of November 13th, 2024, payable on November 27th, 2024.
Tom Dineen: As a reminder, our quarterly dividend is approximately 40% of net income and therefore a very quarter to quarter.
Tom Dineen: are a very bold, different strategy coupled with our strong, debt-free balance sheet, allow us to continually and consistently provide returns to our shareholders without sacrificing our ability to capitalize on opportunities that emerge.
Tom Dineen: That's the financial update for the third quarter. Chris?
Chris Coloy: Thanks Tom, after a sluggish first half of the year, O'Hol Mark demand a future recover somewhat in third quarter. As Nick Spat Brown checks, as adjusted by the National Shooting Sports Foundation, increased by 4.5% from last year.
Chris Coloy: For the same period, the estimated unit self-true of our products from the independent distributors to retailers increased 9%. Twice the rate of the next increase.
Chris Coloy: For the first nine months of 2024, I just annexed decreased 3% while our estimated distributors sell through increased 4%. Again, outpacing, next.
Chris Coloy: These quarterly and year-to-date metrics indicate that we likely picked up some market share. That's not surprising giving the strong demand for several of our product families, including the American Rifle Generation II and Marlin Lever action rifles, coupled with increased production on these lines.
Chris Coloy: Furthermore, use gun sales appear to represent a larger percentage of overall retail fire at sales.
Chris Coloy: An increase in use gun sales is not unusual during tough economic times like we are currently experiencing. We decrease disposal income, high interest rates and rising consumer debt.
Chris Coloy: This would suggest that our gains are perhaps even greater than the next day to what indicate since Nick is not distinguish between use gun sales and new gun sales.
Speaker Change: The University of our products in the strong demand for several of our product families has allowed us to grow without sacrificing our water and focus for a pricing discipline.
Speaker Change: the Spine of the Current Promotion Regiment.
Speaker Change: Konsequen later, our finished good cemetery in our Dostipters' inventories, and decreased 125,000 units in the past year.
Speaker Change: We are well positioned to increase production entering the traditionally stronger fall and winter selling season, allowing us to capitalize on the pent-up demand for some of our more sought-after products.
Speaker Change: Developing innovative new products to drive growth, excitement and profitability is not new to the river.
Speaker Change: Rather is then the blueprint for a success since our inception in 1949.
Speaker Change: We are proud to have introduced so many new offerings to our 75th anniversary, including the American Gen 2 family of rifles, the Marlotte 1894, 1895 and 336-leber action rifles.
Speaker Change: The O.C. Carby in Chamberton 45 Auto and the recently launched 10-millimeter Auto.
Speaker Change: 75th Anniversary Miles of the Mark Fort Target Pistol, 1022 rifles, LCP Max pistol, double one rifle and the many 14th of the site pulling stock.
Speaker Change: and we will come along this milestone here with another exciting new product launch coming to a retailer near you.
Speaker Change: New Practice Fails told 113 million dollars or 31% of Firearm sales in the first nine months of 2024.
Speaker Change: New product sales includes only major new products that were introduced in the past two years.
Speaker Change: We remain focused on a long-term goal of creating a shareholder value.
Speaker Change: Our discipline pricing and promotion strategy may not always benefit current period sales and profitability.
Speaker Change: But instead of Hans' our long-term performance and promotes consistency throughout the distribution channel, allowing both distributors and retailers to confidently invest our inventory is essential to the Ruger's long-term success and leadership in the volatile firearms market.
Speaker Change: Two weeks ago, we were thrilled to be recognized by our wholesale customers with three industry awards that this year's NA-SDW show in Kansas City, Missouri.
Speaker Change: We were named fireman in the fact of the year for the second consecutive year in the 12th time in the last 15 years.
Speaker Change: Additionally, the Router American Gen 2 rifle earned the NASGW Poma Calver Awards for Best New Rifle and Best New Overall product.
Speaker Change: I would also like to thank the NASGW Board's directors for presenting me with their Chairman's Award, a recognition of my 35 years in the outdoor shooting sports industry.
Speaker Change: It was truly an honor. I have been blessed with the opportunity to work alongside due business with so many great people over the years. I can't think of another industry where I'm rather a step-by-career.
Speaker Change: It's been a great run.
Speaker Change: Those are the high-wet to the third quarter of 2024. Operator may be pleased to have the first question.
Speaker Change: Thank you. At this time we will conduct the question and answer session. As a reminder to ask the question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: The End
Speaker Change: and our first question is going to be from Mark Smith of Lake Street. You may go ahead.
Speaker Change: Hackers.
Mark Smith: First question for me and we've talked about this one before but just wanted to discuss that the big, kind of Delta between
Mark Smith: ASP orders versus order still in the backlog.
Mark Smith: You know, much higher price. Is this a function of just timing on maybe building some rifles and shipping them or anything you can discuss to the color on kind of the difference between those two numbers.
Speaker Change: Thanks Mark. The biggest thing we look at is the product and the backlog of biggest impact there that drives at ASP is the moral.
Speaker Change: Marlowe is our much higher selling price. There's also a good number of American Gen 2's. But the biggest thing that's used that number of North is the number of marlins that are in that backlog.
Speaker Change: And are those rifles that you feel like you get out here in this important fourth quarter and in time to get in in consumer hands, you know, for kind of key hunting seasons or this may be more delayed into 25 and building and shipping a lot of those rifles.
Speaker Change: A lot of them were going to 2025, we were going to maximize production in Q4 from Marlon in particular, we're building more Marlon right now than we've ever built.
Speaker Change: The team down in May and in North Carolina is doing a great job, maximize the production, but making sure we don't sacrifice quality. So I suspect that the backlog numbers will continue into at least Q1 and Q2.
Speaker Change: Okay. And then as we look at Gross Profit March and during the quarter, you know, that be down was that really a function of kind of mixing and pricing of items that were shipped during the quarter.
Speaker Change: The certainly some next, I mean, one thing was this year we didn't take an overall price increase.
Speaker Change: Based on the competition in the market, we also saw where the market was this year, we made some strategic decisions on our 75th anniversary guns.
Speaker Change: to implement fairly sharp prices on those and make sure you get the volume.
Speaker Change: and then the other thing of course is that these volume levels were at today versus some of a years ago, do you leverage in those fixed costs?
Speaker Change: is willing to biggest factor when we look at that. The other thing to remember in our third quarter, if you were to work days because we take the July shutdown, you know, fourth of July week, always have a negative impact on our Q3.
Speaker Change: Oop here.
Speaker Change: and I think the last one for me, Chris, any comments just on kind of consumer demand, how it fits. I know you talked about in your commentary, I think use gun sales being up and that kind of be in a function of where the consumers at. But any additional insights you can give us on that and then also the...
Speaker Change: Promotional Environment, you just discussed being an offer of aggressive, right word, but trying to price some of these anniversary items at the right level as we rotate through these other items, you feel like you need to...
Speaker Change: Move and be more promotional to compete or feel like you're not seeing that pressure in the industry.
Speaker Change: There's definitely pressure out there. We're seeing we just got back from the NSUW show where, you know, we're me with our whole sailors, we're looking at what's happening in the industry, we're seeing a lot of rebates.
Speaker Change: If you look at the gun store counter over the next month or so you'll see a lot of rebates from manufacturers. That's typically not where we're going to participate. Right now I think we'll get through Q4 without any aggressive promotional efforts.
Speaker Change: But we're keeping our powder dry. We made that made change as we get in the 2025. They said there's lots of capacity out there, particularly from players that are maybe only one category deep. If all you're making...
Speaker Change: is a R-R-Platform rifles MSR so to speak. Then you've got nowhere to turn, but to continue to discount.
Speaker Change: In Roogers case, the breadth of our product line and the variety of products we offer help us keep us someone insulated.
Speaker Change: from having to defend market share in one single category.
Speaker Change: So we're going to stay disciplined, keep the power to dry and continue to do our best to drive innovation with some really exciting new products. One of what you'll see in just a couple of weeks, we're very very excited about.
Speaker Change: Action, looking forward to it. Thank you.
Mark Smith: Thanks Mark.
Mark Smith: Thank you.
Speaker Change: and please hold one second while we compile our Q&A roster.
Speaker Change: Our next question comes from the email, Dineen Euthio of Ages Capital. You may go ahead, your line is now open.
Speaker Change: Good morning. Thanks for taking my question. Christopher, what are you excited about? We could just get your perspective on the competitive promotional environment a bit. I mean, I would say, you know, this is...
Speaker Change: is a typical industry over the years, but you know, while demand hasn't been particularly robust for several quarters, it's been somewhat stable.
Speaker Change: Is there a deep, do you think this is maybe more of a permanent thing in the industry that we're seeing? Just because, you know, again, there's been some stability in the industry.
Speaker Change: is the oversupply, I mean, just want to hear your general thoughts on why promotions are continuing for such a fairly extended period of time at this point.
Speaker Change: Thanks, Rahmal. Good question. We're just talking about this with our own team this week and you know one of the things I think we've seen is...
Speaker Change: One of the industry gunwriters turn the phrase crisis fatigue. You know, perhaps our customer base.
Speaker Change: is not going out in an election year, for example, and buying more fires like they might have improved his election cycles. We certainly didn't see it up taking demand there.
Speaker Change: We do think there's quite a bit of capacity out there. Some manufacturers have not slowed down. They probably over-inventory at their location. They've got their wholesales or retail, perhaps over-inventory.
Speaker Change: So that results in some of that discount. I think is the, you know, we look at 2025 and look at absent any artificial stimulation in demand. I think it's pretty stable. I think you're right. It's a stable environment. But we're going to see these optics, you know.
Speaker Change: from Quarter 4. I think right now we're looking at 2025, which my crystal ball was clear, but we're planning to be aggressive with our new products. We know for root and rooters case.
Speaker Change: We're far better off trying to gain market share and take business.
Speaker Change: Based on exciting new product launches.
Speaker Change: Rather than try to discount our way to success. In the in our case we've got...
the American set of fire Gen 2.
Speaker Change: Family of Rifles is also a great start. Marlins of course, continue to be a big drag or force, but the Gen 2 American Sinoffire Rifles in particular.
Speaker Change: and really hit a hall run. We heard that loud and clear from our distributors. We certainly saw the impact with some of our competitors.
that are scrambling to do rebates and things like that. But the Gen 2 American Family Rifles is going to continue to grow and we're very excited about that.
Speaker Change: and like I said, we got a very exciting fourth quarter launch coming up that I think is going to be very strong for the Ruber and we're going to try to do our best to take market share the old passion way by exciting new products in that discount our way.
Speaker Change: Great, okay, we'll look forward to hearing more about that. Just being a follow-up, the, you know, I'll say there were a lot of moving parts during the pandemic and all that. Woody, are there any sort of other big picture items that you...
Kind of see moving around whether that's participation or you know more first you know first time shooters women in the marketplace that that you know some of those sort of bigger picture I didn't sit you're seeing change around here these last few quarters. Thanks.
Speaker Change: and good question, we did get a lot of new customers, the entire industry did during the pandemic.
It's incumbent upon us to turn those first-time buyers into lifelong customers. And we've been trying to do that, particularly with some of our exciting offerings in things like the Mark Fortessals.
Speaker Change: 10.22, and things like to target some of the niches like you mentioned our female customers or frankly, somber.
Speaker Change: Older customers who may not have the hands strength they once did.
Product Life and Security 380, which have done extremely well, have a much, much easier to manipulate slide and easier to control in the fairly comfortable the 380 ACP Calmer.
Speaker Change: We're going to continue to go after those new customers, those niche customers, and try to grow that again.
Speaker Change: with our new products and some of our product variation.
We've been very successful this year with, like I said, particularly in Mark 4 and 10.22, using the 22-long rifle caliber. There are a lot of fun at the range and a great way to hang on to those new customers.
Speaker Change: that may have been at a one-time purchase where they thought when they bought a gun for a home or personal protection during the pandemic. But if we can get a Mark 4 pistol or a 10-22 rifle into their hands, they're going to be coming along on a lighter-long customer and a lifelong participant in the shooting sports.
Speaker Change: Great, thanks very much for the insight.
Speaker Change: Thanks for watching.
Thank you.
Speaker Change: and I'm showing no further questions at this time so I would like to turn it back to Chris Killoy, President and CEO for closing remarks.
Chris Killoy: I would like to thank all of you for attending this call, especially our shareholders.
I want to mention two important upcoming days. Next Tuesday is Election Day. As we head into an uncertain global political and economic future, your voice of the Pauls is of great importance.
Chris Killoy: Please educate yourself on the issues that are important to you, learn about the candidates and vote.
and the following one day, November 11th is Veterans Day.
Without the sacrifice of those who served our great country, we wouldn't have the ability to exercise our many freedoms, including the right to move.
Please take a moment to say a quick prayer of thanks to all the brave servicemen and service women who fought to attain and protect these rights for all of us.
We thank all veterans, especially the veteran members of the Ruger family for their service and sacrifice to our country.
and I would like to thank our law of customers and our 1800 hardworking members of the Rubber team who designed Bill the Cell Rugged Reliable Firearms.
We look forward to speaking with you at our next quarterly call in February. Thank you.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
The End
Chris Killoy: [inaudible]
Chris Killoy: The End