Q3 2025 Sturm, Ruger & Co Inc Earnings Call

Speaker #2: Hello and welcome to the Q3 2025 Sturm Ruger & Company , Inc. Earnings Call . At this time , all participants are in a listen only mode .

Speaker #2: After the speaker presentation , there will be a question and answer session . To ask a question during the session , you will need to press star one one on your telephone .

Speaker #2: You will then hear an automated message advising your hand has been raised . To withdraw your question , please press star one one again .

Speaker #2: Please be advised that today's conference is being recorded . It is now my pleasure to introduce president and CEO Todd for opening remarks .

Speaker #3: Good morning and welcome to Sturm Ruger & Company . S Third Quarter 2020 Earnings conference call . I'm Todd Seyfert President and chief Executive Officer .

Speaker #3: 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 .

Speaker #3: 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 .

Speaker #3: You can find more information about these factors in our most recent form 10-K and other filings with the SEC . We do not undertake any obligation to update these forward looking statements .

Speaker #3: Thanks , Sarah . This quarter's results reflect both the realities of a challenging market and the early progress we're making as we continue to execute the strategic plan we began earlier this year .

Speaker #3: The broader market continues to face headwinds from tariff and interest rate uncertainty , inflationary pressures and a softening job market , all of which are affecting discretionary consumer spending and manufacturing costs .

Speaker #3: The firearms market is experiencing similar pressures . The overall market trending down 10 to 15% this year , while NICs checks often used as a proxy for the market down roughly 4% year to date versus 2020 for .

Speaker #3: Additionally , the market continues to be influenced by the availability of used firearms at retail . Despite these challenges , I am pleased with our top line performance for the quarter where we achieved year over year sales growth as we continued to make progress on our strategic plan .

Speaker #3: We are actively focused on key operational initiatives and innovation activities as top-line performance trends upward. These disciplined actions are critical to accelerating our return to sustained profitability and enhancing long-term success.

Speaker #3: Now Thomas Dineen , our chief Financial Officer , will take us through the financial results for the quarter . Thanks , Todd . Net sales for the quarter were $126.8 million , and diluted earnings were $0.10 per share for the corresponding period in 2020 .

Speaker #3: For . Net sales were $122.3 million and diluted earnings were $0.28 per share . On a pre-tax basis . The company lost $2.1 million in the third quarter of 2025 , driven by $1.9 million of acquisition and operating costs at the new Hebron , Kentucky , facility .

Speaker #3: That was acquired in July . Increased costs associated with material and technology and increased sales . Promotional expenses during the third quarter of 2025 , we revised our estimated annual effective rate for 2025 and recognize a $3 million increase to our year to date income tax benefit .

Speaker #3: This increased third quarter net income by $0.19 per share . Without this increase , our EPs would have been a loss of $0.09 per share .

Speaker #3: For the nine months ended September 27th , 2025 . Net sales were $395 million and the company lost $0.48 per share for the corresponding period in 2024 .

Speaker #3: Net sales were $389.9 million and diluted earnings were $1.15 per share . In the second quarter of 2025 . The company rationalized and priced , repositioned several product lines , reduced the number of models offered , and implemented an organizational realignment , which adversely impacted the results of operations .

Speaker #3: For the nine months ended September 27th , 2025 , on an adjusted basis , excluding the impact of these non-recurring expenses , diluted earnings for the nine months ended September 27th , 2025 were $0.65 per share .

Speaker #3: On an adjusted basis , excluding the reduction in forced expense of $1.5 million incurred in the first quarter of 2024 , diluted earnings per share for the nine months ended September 28th , 2024 , or $1.22 .

Speaker #3: On September 27th , 2025 . Our cash and short term investments totaled $81 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 .

Speaker #3: On September 27th , 2025 , our current ratio was 3.5 to 1 and we had no debt . In the third quarter , we generated $13 million of cash from operations in the first nine months , we generated $39 million of cash .

Speaker #3: Year to date . Capital expenditures totaled $28 million , including $15 million for the Anderson acquisition in Hebron , Kentucky . The company expects capital expenditures to total $35 million for the year .

Speaker #3: For continued investments in new product introductions , expanded capacity for product lines in greatest demand . Upgraded manufacturing capabilities , and strengthened facility infrastructure .

Speaker #3: For the third quarter , we returned $13 million to our shareholders through the payment of $3 million of quarterly dividends and $10 million through repurchase of 288,000 shares of our common stock at an average cost of $34.33 per share .

Speaker #3: In the first nine months of 2025 . We returned $36 million to our shareholders through the payment of $10 million of quarterly dividends and $26 million through repurchase of 731,000 shares of our common stock at an average cost of $35.60 per share .

Speaker #3: The company also announced that its board of directors declared a dividend of $0.04 per share for the third quarter . For stockholders of record as of November 17th , 2025 , payable on November 28th , 2025 , this dividend is approximately 40% of net income .

Speaker #3: Now back to you , Todd . Thanks , Tom . When I stepped into the CEO role earlier this year , we began a comprehensive assessment of our operations and a full review of our product portfolio .

Speaker #3: Those activities continued into the third quarter , where we realized top line growth from many of the actions taken in the second quarter .

Speaker #3: While identifying additional opportunities to strengthen our foundation , moving forward . Operationally , we are executing several key initiatives designed to improve efficiency and profitability across the organization .

Speaker #3: This quarter , we advanced into the next phase of that work with a rigorous evaluation of product line performance , conducting detailed line by line reviews of our portfolio , and assessing profitability .

Speaker #3: Facility by facility to ensure our resources are deployed where they create the greatest value . This includes realigning our manufacturing footprint to maximize efficiency and reduce costs by balancing production lines across facilities to improve delivery and resource utilization .

Speaker #3: At the same time , we continue our product line analysis and rationalization to ensure that every product earns its place in our lineup and every facility operates efficiently and accountably .

Speaker #3: A great example of this is our newest facility in Hebron , Kentucky , which we acquired in July of this year following our product line review .

Speaker #3: We identified the need for additional capacity to support our modern sporting rifle category . We purchased Anderson to provide that capacity , which in turn freed up capacity in maiden for one of our most in-demand products .

Speaker #3: The second generation Ruger American Rifle . With the additional resources in Hebron , we are actively working to insource components that were previously purchased , a move that will improve our cost structure , shorten lead times and give us greater control over quality and delivery .

Speaker #3: Additionally , product innovation continues to be the most important factor in remaining successful in a tough economic market . As I've said before , our greatest opportunities lie in delivering new , relevant products that resonate with consumers and position us for sustained growth .

Speaker #3: For the quarter , new product sales accounted for $41 million , or 34% of net firearm sales , which reinforces the popularity of our innovative products .

Speaker #3: 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 award winning ARX m pistol , a modular polymer frame striker fired pistol developed in collaboration with Magpul .

Speaker #3: The second generation Ruger American Rifle , an update to the American made rifle that has been the benchmark for accuracy , durability , and performance in bolt action rifles for over a decade .

Speaker #3: Marlin lever action rifles , which remain a staple for collectors , hunters , and traditional enthusiasts . The Ruger 1022 , with carbon fiber barrel , a lightweight model featuring a stainless steel tensioned barrel with a carbon fiber sleeve .

Speaker #3: And the fourth generation Ruger Precision Rifle , refined through years of feedback from competitive shooters . With that said , our pipeline remains strong and demand for new products continues throughout the channel .

Speaker #3: In Q3 , we made meaningful progress to position ourselves for success in the future . Already in October , we have reintroduced Glenfield Firearms , an iconic value brand that offers hunters of all experience levels with a no nonsense , American made rifle .

Speaker #3: Expanded the second generation Ruger American Rifle Line with the Prairie and patrol models . The first Ruger American featuring a heavy barrel . And broadened Marlin caliber offerings with the launch of the first ever ten millimeter lever action rifle in the market .

Speaker #3: These launches build on our most successful product families , and were just getting started . Looking ahead , the coming months will bring even greater opportunity , including building out the popular RCM pistol family with new grip frames , sizes , accessories and configurations .

Speaker #3: Launching a new line of modern sporting rifles manufactured in our Hebron facility and bringing back the classic Ruger Red label shotgun , making us once again a full line manufacturer of firearms .

Speaker #3: Launching a new line of modern sporting rifles manufactured in our Hebron facility and bringing back the Rifles , and creates long term shareholder value .

Speaker #3: As you can see , Ruger's well positioned for continued success . We remain focused on building a stronger , more agile company , one that consistently delivers value to our customers , employees and shareholders .

Speaker #3: Our priorities remain unchanged . Maintain a strong , debt free balance sheet . Invest in core product innovation and operational efficiency , and return capital to shareholders responsibly .

Speaker #3: This disciplined capital approach ensures the company has the flexibility to invest when opportunities arise . While continuing to reward shareholders over time . Ruger's future success will be measured by improved returns for our shareholders , and we are taking the right steps to get there .

Speaker #3: Building a company designed for long term strength rather than short term reactions . Thank you for your time . Continued support and confidence in Ruger .

Speaker #3: Operator can we please have the first question ?

Speaker #2: Certainly , as a reminder to ask a question , please press star one . One on your telephone and wait for your name to be announced .

Speaker #2: To withdraw your question , please press star one . One again . One moment please . And our first question comes from the line of Mark Smith with Lake Street .

Speaker #4: Hi , guys . I wanted to ask first , just about , you know , gross profit margin and what was kind of putting downward pressure on gross profit margin here in the quarter .

Speaker #4: If it was , you know , a mix issue or if there's still some . Some of the transformation things that are that are putting some pressure on gross profit margin this quarter .

Speaker #5: Hey , Mark . Good morning . Hey , before I answer that , just apologies . It sounds like we had some technical difficulties with the video this morning , which we encourage you to go to the website .

Speaker #5: It'll be posted after the call today . But there's a lot of good content there . So again , apologies for the for the issues .

Speaker #5: For those of you that couldn't access or see it this morning . So with that mark , in terms of in terms of margins , really , it's it's it's a combination of things .

Speaker #5: I would tell you it's it's not a lot of the , the things that we saw in Q2 , it's more about some of the volumes and really the biggest thing I would say is the Hebron , Kentucky , the work that we're doing there to get that facility up and ready for production .

Speaker #5: And so we had about $1.4 million of costs associated with that facility without any , any revenue coming out of it . And so that's really the driver , you know , we continue to go through our product line rationalization and our skew consolidation .

Speaker #5: But you're not seeing a lot of that in the quarter .

Speaker #4: Okay . And I did want to ask about Hebron on just kind of an update on , you know , where you're at .

Speaker #4: And getting that facility up and running and production in that facility.

Speaker #5: Absolutely . We're making great progress . Mark . Our goal was to be in production with firearms by year end , and we're on pace for that target .

Speaker #5: Still .

Speaker #4: Okay , perfect . And then can you just talk a little bit about mix and price as as we think about , you know , it looks like , you know , sales price on on orders received was down a decent amount as well as some of the items that were shipped .

Speaker #4: You know , but very good . You know , production and unit shipped , you know , but I'm curious just kind of where your mix came in .

Speaker #4: If RCM had maybe higher mix at a lower price item and then I'd love to hear your thoughts on , you know , as we think about , you know , the the new line coming out here of Glenfield and kind of your thoughts around mix and price and how that fits within the strategy .

Speaker #5: Absolutely . So I think really the way to think about it in the quarter mark was heavy . LCP orders and shipments . We did do a program .

Speaker #5: And so that was a thoughtful program in terms of of the , the quarter . And so that's really the driver within the quarter when we talk about the the Glenfield expansion , that's actually an opportunity for us in terms of the facility in Newport , what we did there , Mark , is , as you know , that the original American general generation , American Gen one rifle was produced in that facility .

Speaker #5: It's been produced for over a decade . Fantastic entrance for Ruger into the bolt action marketplace . Affordable quality value as we pivoted to the Gen two rifle , obviously there was some confusion in the market .

Speaker #5: Why are you still producing both ? So the decision was made . Listen , when we bought Marlin , we acquired the assets and the trademarks for Glenfield .

Speaker #5: So what we did is we said , listen , we've got this opportunity , we've got this capacity , let's go ahead and figure out how we how we enter at a new price point where Ruger hasn't played round out the product , offering good , better , best .

Speaker #5: And that's where we came out with the Glenfield . And so that will be produced on upgraded machinery and equipment on the Gen one line .

Speaker #5: We're in production as we speak , and I'll tell you that the acceptance in the marketplace has been fantastic .

Speaker #4: Perfect . And I think the last one for me , just curious about kind of Steel and other input prices , you know , where they're at and pressure on margins that we maybe have seen from , from rising input prices .

Speaker #5: Yeah , I would say fairly flat . You know , the good news is , is , is we had some we bought ahead in terms of supply , in terms of how much we had on hand .

Speaker #5: Mark , with some of the uncertainty . So that helped us a little bit . There is some noise around aluminum right now .

Speaker #5: Obviously with with the continued tariff uncertainty , you know , we're we're we're positioning ourselves to be reactive to whatever's whatever's happening . And as you know , following this , it seems to be either by day or by the week .

Speaker #5: We're seeing new information . And so we track it very closely , but not a significant amount of pressure on our costs to date .

Speaker #4: Perfect . Thank you .

Speaker #5: Absolutely .

Speaker #2: Thank you . And our next question comes from the line of Rommel Dionisio with Agus Capital .

Speaker #6: Good morning . Thanks for taking my question . Two questions . One , if I could just follow up on Mark's question on the on the Glenfield line , how do you guys think about the positioning of that brand and that product line going forward to not cannibalize existing sales of like , Marlin or other products that you have in place ?

Speaker #6: Is it more just a pricing issue or is there a different demographic ? You're targeting with that , with that new product line or revamped or rejuvenate product line to run ?

Speaker #6: It's got a heritage brand there , and the second would be on the patrol line , just announced . I wonder if is that tailored towards law enforcement ?

Speaker #6: I wonder if you could just give us some granularity on that type of consumer you're targeting with those new products ? Thank you .

Speaker #3: Sure , absolutely .

Speaker #5: Good morning . So back to Glenfield first , Rommel . Really the whole idea around Glenfield was , is we stratify our product line .

Speaker #5: We have the Marlin at the top of the pyramid . We have Ruger in the middle . And we didn't really have quote unquote that kind of the opening price point .

Speaker #5: And so that is where Glenfield will play . It'll be the kind of the first gun . It'll be the value to get into the Ruger brand and the Ruger company .

Speaker #5: And so our thought there was , again , we didnt have products at that price point . And so we created a variant of the Gen one with improved features and benefits at a price point that the Gen two does not play at .

Speaker #5: And so really focusing on attracting a new a new segment of the of the market , that's where we're focused on . So and in our , you know , we're not cannibalizing anything because we don't have anything else near that price point .

Speaker #5: And so to us this is kind of greenfield new opportunity white space in the market when it comes to the patrol rifle . That's really a name .

Speaker #5: It's really not law enforcement focused, Rommel. It's really a variant of the incredibly successful Gen 2. We've never had a heavy barrel version of the Gen 1 or Gen 2 to date.

Speaker #5: And so this really opens up that product line into categories in the marketplace that we have not gone to yet in terms of the Gen two rifles .

Speaker #5: So it's really a new variant , not focused on law enforcement . Really focused on , you know , kind of that that Western hunting , you know , general , all around consumer , if you will .

Speaker #6: Okay . Thanks . That's very helpful . Thank you .

Speaker #2: Thank you . Our next question comes from the line of James Costello with Cuyahoga Capital . James , your line is now open .

Speaker #2: James Castello , your hi .

Speaker #7: Sorry we haven't had a little technical problem there . Yeah . Two , two unrelated issues . Firstly , you know , 1976 was the 200th anniversary of the Declaration of Independence .

Speaker #7: Next year will be the 250th in 76 Ruger imprinted on the barrels made in the 200th year of liberty . And will you be doing something a similar promotion for for next year ?

Speaker #7: And it's my perception when I go to sporting goods stores that in the aftermarket firearms with with that imprint on them traded a premium .

Speaker #7: And do you agree with that ? Furthermore , it you're if you're going to be doing a promotion of this sort . And you compare it to what happened in 1976 versus 1975 .

Speaker #7: Can you give us an idea of what sort of increase in unit volume you saw back then , and , and perhaps make next year ?

Speaker #5: Good morning . Well , first of all , thanks for remembering what we did . And we're excited about it . So we're we're in the process right now of evaluating what is what is possible across the product families .

Speaker #5: As you know , technology has changed our volumes increased . And so we've got to be thoughtful about how we would imprint and what lines .

Speaker #5: And so we're going through that analysis . There will be something we're just not exactly sure which and how many . And then in terms of , you know , the premium that we see in the marketplace , we have seen when when Ruger does special makeups or special builds , that it does create a premium in the marketplace .

Speaker #5: And we believe that helps build the brand over time . And so we're very happy and very excited when we can do these things , because it does give that consumer that Ruger consumer that's used to these special types of firearms and other options to come in and buy another Ruger .

Speaker #5: So we're excited about that very much . In terms of kind of the the other the last question , it's a little bit more about , you know , we have to be a little bit careful about forward looking statements and what we can and can't say , but I will tell you again , we're very excited about next year .

Speaker #5: We're excited about the opportunity for the country and the brand and how we bring those two things together .

Speaker #7: Can you help me with with what unit volumes did in 1976 versus 75 ? And , and what happened there ?

Speaker #8: James , I can't off the top of my head to be honest with you . I wish I , I anticipated this question and I could have helped you out , but I don't have those numbers on my fingertips .

Speaker #7: Okay . Second , unrelated issue . You're going to reintroduce the red label . Do you ? I mean , is that somehow related to your new large shareholder , which is sort of the , the , the elephant in the room ?

Speaker #5: No , actually , it it really is for us . Upon my arrival , we have really talked about the , the product families and where Ruger is and where Ruger wants to go .

Speaker #5: And it was really important to all of us on the , on the , in the company to become once again a full line firearms manufacturer .

Speaker #5: And the one area that we were missing was the shotgun market . And so really it's our it's our way back to being the only full line manufacturer of firearms .

Speaker #5: And that was the impetus for the reintroduction as well as I'm a big shotgunner and I'm excited about it as well personally . So .

Speaker #7: Well , I mean , looking at it across the industry , SCB is an example and Mossberg both import their target guns . I think mostly from Turkey .

Speaker #7: I mean , do you would you have a problem with somebody else manufacturing a gun ? You're selling it under the Ruger name ?

Speaker #5: No , we wouldn't , you know , ours are ours are us made . So that's the I think the differentiator for us in what Ruger is trying to do is , you know , we we stand behind .

Speaker #5: We're very proud that we're a US manufacturer of firearms . And we'll continue to be that . Obviously , if an opportunity came up , it's something obviously , if it makes sense for the business and it makes sense for our shareholders , we would look at it .

Speaker #5: But you know , our focus right now is building guns here in the US .

Speaker #7: So you think the Beretta interest had nothing to do with the red label .

Speaker #5: Oh that was these things happen way , way before the the bread investment in Ruger . So this was on our roadmap . This is something that that the company had working toward .

Speaker #5: And we're at the point now where we're ready for it to , to launch and we're ready to have guns , which we are launching here shortly .

Speaker #5: So .

Speaker #7: Would you have any update on the Beretta situation that you'd like to share with us ?

Speaker #5: I mean , I think the answer is , listen , we appreciate their investment and confidence in our company . You know , we reported in our in our press release last month that we issued a shareholder rights plan to kind of preserve the status quo while we what will we try to engage ?

Speaker #5: And we're happy to engage with with anybody that wants to have a conversation . And so , you know , we're a public company .

Speaker #5: We're always for sale . And we look forward to engaging with them when they're ready .

Speaker #7: Okay . Thank you very much for taking my questions .

Speaker #5: Absolutely . Thanks for the questions .

Speaker #2: Thank you . I'm showing no further questions . So with that , I'll hand the call back over to president and CEO Todd Seyfert for any closing remarks .

Speaker #5: Thanks , everyone . We appreciate your attention . Again , apologies on the video . Please go to the website . The team did a great job putting that video together .

Speaker #5: A lot of good content . We we appreciate your investment in Ruger and your trust . And we look forward to speaking to you next quarter .