Q2 2025 Sturm, Ruger & Co Inc Earnings Call

And there will be a question and answer session.

To ask a question during the session you will need to press star one on your telephone to remove yourself from the queue. You May press star one again.

I would now like to turn the call over to Todd Siefert, President and CEO for opening comments.

Yeah.

Good morning, and welcome to Sturm Ruger <unk> company's second quarter 2025 earnings Conference call I'm, Todd Siefert, President and Chief Executive Officer before we get started I would like to turn it over to Sarah Colbert, Our senior Vice President and General counsel for the caution.

On forward looking statements.

I would like to remind everyone that some of the statements. We make today will be forward looking in nature.

These statements reflect our current expectations, but actual results could differ materially.

Due to a number of uncertainties and risks.

You can find more information about these factors and our most recent Form 10-K and other filings with the SEC.

We do not undertake any obligation to update these forward looking statements.

Thank you Sarah this call marks my first full quarter as president and CEO and we've moved quickly to position Ruger for long term success.

As part of this leadership transition, we evolved our structure and reorganized our operations to give our business units greater flexibility clear accountability and the resources to deliver results more effectively we also unified all elements of our product strategy under one comprehensive team to sharpen our focus and execution.

In connection with these moves we conducted a thorough inventory rationalization reassessing, our raw materials work in process and finished goods to identify and address excess obsolete or discontinued inventory.

This included legacy models that have run their lifecycle.

Products no longer aligned with our strategy and Marlin related items, not part of our roadmap for that brand.

In addition, we repositioned key elements of our product portfolio to ensure that our most desirable products reached consumers at the right price point.

These steps resulted in nonrecurring charges this quarter, specifically, we incurred an inventory and asset write off of $17 million.

Our product rationalization, and SKU reduction totaled $5 $7 million.

And our organizational realignment expense was $3 $7 million.

These moves cleared the way for us to deliver sustainable growth and show resilience through a cyclical market.

Tom Dineen will now take you through the financial results for the quarter.

Thanks Todd.

Net sales for the quarter were $132 $5 million.

And we incurred a diluted loss of $1 and <unk> <unk> per share.

On an adjusted basis, excluding the impact of the strategic initiatives.

Diluted earnings per share were <unk> 41.

For the corresponding period in 2024.

Net sales were $138 million and diluted earnings were <unk> 47 per share.

For the six months ended June 28 2025.

Net sales were $268 $2 million and the company lost 57 per share.

On an adjusted basis, excluding the items above.

Diluted earnings for the first half of 2025 were <unk> 87 per share.

For the corresponding period in 2024.

Net sales were $267 $6 million.

And diluted earnings were <unk> 87 per share.

On an adjusted basis.

Excluding the reduction in force expense of $1 $5 million incurred in the first quarter of 2024.

Diluted earnings per share for the first half of 2024.

<unk> 94.

On June 28, 2025, our cash and short term investments totaled $101 million.

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.

On June 28, 2025, our current ratio was 4.0 to one and we had no debt.

Stockholders' equity was $289 $3 million, which equates to a book value of $17 and 82 per share.

Of which $6 and 24.

Cash and short term investments.

In the first half of 2025.

We generated $25 $9 million of cash from operations and capital expenditures totaled $6 $7 million.

We expect capital expenditures in the second half of 2025 to increase from the first half of the year.

As we invest in new product introductions expand capacity.

Upgrade our manufacturing capabilities.

And strengthen our facility infrastructure.

This increase is exclusive of the <unk> purchase earlier this month that Todd will discuss shortly.

In the first half of 2025, we returned $23 million to our shareholders through the payment of $6 $9 million of quarterly dividends.

And the repurchase of 443000 shares of our common stock.

At an average price of $36 42 per share for.

For a total of $16 1 million.

Our board of directors declared a <unk> 16.

Per share quarterly dividend for shareholders of record as of August 15th 2025 payable on August 29th 2025.

Our long standing practice has been to pay a dividend of approximately 40% of our net income.

Given the significant impact of the noncash charges. This quarter's dividend is approximately 40% of the adjusted diluted earnings of 41 per share for the second quarter of 2025.

Our dividend strategy, coupled with our strong debt free balance sheet allows us to capitalize on opportunities that emerge like the Anderson acquisition that we completed earlier this month.

Now back to you Todd.

Thanks, Tom as.

As you can see we've been very busy in.

In addition to the inventory reduction product rationalization and reorganization.

We also had an exciting opportunity to acquire the assets of another historic well respected firearms manufacturer and Anderson manufacturing.

As I stated on July one the day, we closed on the purchase this acquisition is an incredible opportunity to advance our long term strategy and expand <unk> capacity at.

It reinforces <unk> position as the nation's leading firearms manufacturer for the consumer market and reiterate my focus on continued growth even as other scale back.

The $16 million investment, which was paid for from cash on hand will increase our capacity to strengthen our manufacturing capabilities and broaden our product offerings.

As I have stated before we do not plan for this to be our last acquisition.

Our strong balance sheet and disciplined financial approach allows us to continue to be proactive in looking for strategic opportunities to grow our portfolio.

Leverage our infrastructure and deliver consistent performance over time.

Nevertheless, we will continue to be deliberate in our evaluation of opportunities that arise.

Beyond the gains we will realize from expanded capabilities in Hebron, Kentucky, our greatest opportunity is new product innovation.

As I mentioned earlier, we recently reorganized our product strategy into a singular organization in doing so we better aligned new product ideation.

Voice of the customer insights and product lifecycle management, enabling us to deliver new relevant products to the market more efficiently and effectively.

With that said our pipeline is strong and our new product offerings are still in demand throughout the channel for the quarter, new product sales accounted for $42 million or 34% of net firearm sales, which was an increase over Q1 of this year and reinforces the popularity of our innovative products.

As always new product sales include only major new products that were introduced in the past two years.

These are high demand platforms that continue to resonate with customers across a variety of segments.

Including.

The ARX <unk> pistol.

The second generation Ruger American rifle.

Marlin lever action rifles, the Ruger 10, 22 with carbon fiber barrel in the fourth generation Ruger precision rifle.

With our reorganization renewed focus on product strategy and our expanded capabilities with the Anderson manufacturing purchase we are positioned to continue our new product success well into the future.

With that said, we understand that macroeconomic pressures such as continued tariff and interest rate uncertainty.

A weakening job market.

And inflationary pressures are impacting discretionary consumer spending.

Specific to the firearms industry, we see softening demand with nix checks falling below pre 2019 levels and broad impacts being felt across manufacturing distribution and retail channels.

Yet our focus remains clear.

Invest in our culture people and organizational efficiency.

Expand our production capabilities to meet product specific demand.

Deliver safe reliable and innovative products for our consumers operate with.

Financial discipline, transparency and thoughtful capital deployment and.

And maximize shareholder value continuing to prove that Ruger is a solid investment for the future.

We know that the market remains dynamic and we expect to see continued challenges and potential consolidation across the industry.

Our realignment and recent acquisition strengthens <unk> ability to respond adapt and grow for the long term.

We remain committed to our guiding principles, delivering rugged reliable and innovative products operating with financial discipline, and creating long term value for our shareholders.

Thank you for your time continued support and confidence in Ruger.

Operator can we please have the first question.

As a reminder to ask a question. Please press star one one on your telephone.

Our first question.

Comes from the line of Mark Smith of Lake Street. Please go ahead Marc.

Hi, guys.

I'd ask first about the.

The adjustment.

Sales just from product rationalization and SKU reduction if you can just give us more insight into.

The number of products lines.

Kind of all the impact from this on the topline.

Tomorrow, Mark Yes, absolutely I think if you look at from a rationalization standpoint, the biggest impact was the American Gen. One in terms of number of Skus.

We've got the <unk> consolidations, sorry consolidation as we look at Anderson and moving that production into the Hebron facility.

We haven't we did some product rationalization on the pistols for easy nine for example, those would be a majority of the individual skus that were addressed in the rationalization.

Okay.

Yes.

This.

I think you called it out as a $5 7 million reduction to sales.

Did you move more.

Volume go up maybe as we think about.

Doug unit ship or.

The increase in distributor inventory.

No.

How much how much product that you move out maybe fits in this category.

From a unit standpoint.

It was it was relatively in terms of the total scope market. It wasn't a huge percentage really what it allowed us to do was to look at our raw material inventory build out specific skus to utilize inventory versus writing it off.

And that's what we did and so.

I believe it was.

Yes.

I'm just looking here at <unk>.

If you go between the three about 20000 agents is going to be close to 70000 units that would fall into that specific category of rationalization.

Okay.

And then the impact on ASP.

As we look at.

The average sales price of the <unk>.

Units shipped 349.

Would that have been higher without some investments at that much of a discount to make an impact on that ASP.

It would have it would have brought it down about 16.

Okay across that totaled 70000 unit.

Rationalization.

Perfect and then just.

Looking at the organizational realignment.

Where are you at in that you feel like you've got the majority of that done and then maybe if you could talk about.

The long term savings coming out of this organizational realignment.

Yes.

In terms of the realignment, yes. It is it is I would tell you.

That happened about 45 days ago through that process.

So.

No other major plans.

In terms of changes.

But this really isn't wasn't a cost savings initiative, mark so really what it is is.

Valuing the organization that we need to carry the business forward realigning the needs of the organization in terms of expertise.

And so we moved out some some people and we plan to refill with people that are more focused on the strategy going forward. So I would tell you.

In terms of netting out hey is this going to be an ongoing savings over time really the way I look at this is it's a reallocation of of talent within the organization overtime and so I don't think Youll see a large ongoing savings.

In this specific example, because it wasn't a cost savings initiative. It was it was a realignment of the organization.

Perfect. That's helpful and last one for me I know you guys don't give guidance, but just and you've talked about in your commentary some of the macro headwinds that are out there.

But I'm, just curious kind of what youre seeing from <unk>.

Consumers as far as demand today, if theres been any shifts if it's still kind of quiet.

The next data.

Any insights you can give us into the consumer demand for firearms, so it would be great.

Sure. So I would tell you having been up and traveling pretty extensively.

<unk> dealers, if anything our distributors I think what <unk> CE Mark is.

Ruger is outpacing the market right now in terms of of demand and so if you anecdotally we look at the information that we have when we look at some of the earnings off anywhere from 15% to 20% I would say is what we're hearing.

Through our partners and our channels, we're not seeing that obviously in our results. So.

Our focus right now is being aggressive from a share perspective, making sure that we're producing the skus that our customers want in a timely basis and I think as we do that we continue because of the depth and the breadth of our product lines were slightly more insulated than maybe some others.

And it's all about market share right now.

In a down market innovation and share gain is what we're focused on it I think we'll continue to see that.

Great. Thank you guys. Thanks.

Thanks, Mark Thanks, Mark.

Thank you.

Our next question comes from the line of Rommel.

<unk> of <unk> capital. Please go ahead Rommel.

Good morning, Thank you.

Got it in your comments you talked about.

Inventory rationalization.

And then in your prepared or rather your press release, you talk about Marlin related items not included in that branch feature road map.

Could you just maybe give us a little more granularity on that.

Kind of what your thoughts are with regards to that Brent Wallace gotten centrally.

<unk> has been a home run for you.

Yes, so I wonder if you could just talk about your thoughts about that brand going forward.

Give us some insight as to what perhaps that brand's future roadmap roadmap might be thank you.

Absolutely Rommel, yes, thanks, Thanks really.

As we look through Marlin really coming in and evaluating where we are in our roadmaps. The model <unk> is a product that was purchased the assets and the machinery and a lot of raw material and so that is not we don't have a solution in a plan for that model 60 in the near term and so that is a majority of that.

Marlin.

Off.

Really focus there the rest of them are the main line has been very very popular.

As you know by our backlog and so we continue to increase production rates, we continue to increase the product mix and so we have a very robust pipeline of Marlin rifles.

Or a number of years to come.

But really it's if you think about marlin it hasnt been a homerun.

And it's focused on.

Center fire rifle right now and it's it's.

The 60 is not currently part of the product strategy Roadmaps and Thats why we made that distinction and the decision to write off that inventory.

Okay, but just to think about that then so your level of support enthusiasm for the brand in general and long term plans.

My reading this correctly that you are you still as enthusiastic about the prospects of that brand going forward.

<unk>.

100%.

It's.

Listen to feedback from the consumer and our customers has been phenomenal.

<unk> did a great job of guiding that product in that brand.

New levels in terms of quality.

And accuracy and so we absolutely are excited about where Marlon can continue to go keep in mind that the stuff that we're talking about writing off came with the purchased back in 2020, and so its raw materials and things that have been sitting there at some machines focused on some of those products Rommel that really have been in the in the warehouse for.

Over five years and are really not part of the current product roadmap, but we have an incredibly robust roadmap for Marlin that we're very excited about and we will continue to grow that line and the skus associated with that into the future.

Great. That's very helpful. Thank you.

Yes.

Thank you I would now like to turn the conference back to Todd Siefert for closing remarks, Sir.

Thank you again for joining us today and for your continued confidence and rigor we look forward to talking again next quarter.

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