Sturm, Ruger & Company Reports Mixed Q3 Results Amid Changing Market Conditions

Sturm, Ruger & Company, Inc. reported its financial results for the third quarter and the nine months ended September 28, 2024, reflecting a mixed performance amid changing market conditions. Total net sales for the third quarter reached $122.3 million, a slight increase of 1.2% from $120.9 million in the same period of 2023. Net firearms sales also saw a modest rise, totaling $121.5 million compared to $120.4 million in the prior year. However, for the nine months ended September 28, 2024, total net sales decreased by 5.6% to $389.9 million, down from $413.2 million in the same period of 2023, primarily due to reduced consumer demand for firearms.

Gross profit for the third quarter was $22.7 million, down 8.3% from $24.7 million in the previous year, leading to a gross margin decline from 20.5% to 18.5%. For the nine-month period, gross profit decreased significantly by 19.9% to $81.2 million, with the gross margin dropping from 24.5% to 20.8%. The decline in profitability was attributed to unfavorable fixed cost deleveraging from decreased production and a shift towards lower-margin products, although increased pricing partially offset these effects.

Operating income for the third quarter fell to $3.7 million from $6.3 million in the prior year, while net income decreased by 36.2% to $4.7 million, down from $7.4 million. For the nine months, net income was $20.1 million, a 47.1% decline from $38.0 million in the same period of 2023. The effective income tax rate for the third quarter was 10.0%, compared to 8.1% in the previous year.

Strategically, the company implemented a reduction in force involving approximately 80 employees, which is expected to yield annualized cash savings of about $9 million. This decision was part of a broader strategy to reallocate resources and improve margins. Additionally, selling expenses increased due to higher advertising spending, while general and administrative expenses rose primarily due to increased professional service costs.

As of September 28, 2024, the company reported total current assets of $247.1 million and total assets of $373.5 million, down from $271.4 million and $398.8 million, respectively, at the end of 2023. Cash and cash equivalents decreased to $7.5 million from $15.2 million at year-end 2023. The company maintained a strong liquidity position with a current ratio of 4.5 to 1 and an unused $40 million revolving credit facility.

In terms of product performance, sales from new products accounted for $113.3 million, or 31.2% of firearm sales in the first nine months of 2024. The company continues to focus on its core business of firearms, which constitutes approximately 99% of its sales, while also managing a small segment of investment castings and metal injection molding parts.