Inside the call: Ruger CEO details path to 50% growth, price increases and Marlin rollout


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Sturm, Ruger & Co., Inc. President and CEO Chris Kiloy cited strong consumer demand for Ruger products, increased production for each of its last seven quarters, and the introduction of new products that have met strong consumer demand as reasons for the growth in net sales The company has exceeded 50 percent for the first half of the year — even the National Instant Criminal Background Check System (NICS) background checks, adjusted by the NSSF, were down 5% for the period.

On a conference call with analysts to discuss its second quarter financial results, Killoy, pictured at right, revealed that estimated unit sales of its products from independent distributors to retailers rose 13% in the first half of 2021 through compared to 2020. comparable period.

Killoy said sales of new products, excluding derivatives and product line extensions of mature product families, accounted for $ 78 million, or 22% of firearms sales, compared to $ 48 million. dollars, or 21% of firearms sales, in the first half of 2020.

For the second quarter ended June 30, net sales increased 53.6% to $ 200.1 million, compared to net sales of $ 130.3 million for the same period a year earlier. Diluted EPS increased nearly 2.5 times year-on-year. Net earnings were $ 2.50 per share in the second quarter compared to diluted EPS of $ 1.05 per share in the second quarter of 2020. First half sales increased 51.4% over the period comparable for the first half of 2020.

Company CFO Tom Dineen said the “substantial increase in profitability” for the second quarter was attributable to “increased sales and production resulting in favorable operating fixed costs, including depreciation, engineering and other indirect labor expenses, a significant reduction in sales promotion activities, and improved labor efficiency.

Killoy walked analysts through the company’s bi-weekly SIOP (Sales Inventory and Operations Planning) process, where he reviews all product lines including inventory at Ruger, inventory at his wholesalers. and sales from the company’s wholesalers to retailers. He said the company keeps track of every product line, monitoring product flow and inventory flow through its dispensers, whether it’s Ruger inventory or competitor inventory. He said the process would not change. “We are very flexible when it comes to our ability to moderate our production levels,” he said.

One area that continues to receive attention is the increase in womenparticipation in shooting sports. “We are seeing a lot more printers coming into the market,” Killoy admitted. “We’re seeing a much more diverse crowd at the gun retail counter, and we think that bodes well for us in the long run. It’s great to see more shooters in our ranks. We’re trying to make sure that we have gun products geared towards women who are going to pick them up and use them.

The CEO also said he looks forward to returning Marlin Lever Action Rifles, showed the main photo, which he plans to ship in the fourth quarter. Sturm, Ruger & Co. acquired the assets of Marlin from Remington Outdoor Company in a $ 30 million deal reached in November 2020 and approved in bankruptcy proceedings.

“It will be a limited offer,” Killoy explained. “Initially, we will start with the models 1895, 1894 and 336. Certainly not all the models and references that our customers are looking for. It will take some time for us to bring all of Marlin back to its full glory, but we are delighted. And, again, the focus is on those centerfire lever action SKUs at the start. The team did a great job on this. He said the company was “delighted with the tremendous interest and support received from Marlin fans.”

Killoy said he sees the Marlin business almost like a new product business because of the amount of work involved in restarting production.

“They’ve been there for a long time in their old lives, but they’re definitely brand new to Ruger, and the amount of effort involved is, frankly, a little staggering,” Killoy said. “The team did a fantastic job when you think of setting up the supply chain, going through part, making sure every machine is up to date – a lot of work had to be done. On a previous call, you may have heard me; we talked about over 100 truckloads of machinery equipment, work in progress and upcoming parts. It has been a great task and a great undertaking in Mayodan. “

Killoy said the brand is starting from scratch. “We have machines, work in progress, raw materials, parts, but we had to maintain this line at our plant in Mayodan, North Carolina,” he detailed. “We are working on this process. The guns we make in the Q4 Expedition will be parts and materials that we made in the line, not things that we inherited or salvaged from the sale. We are delighted with it. It went well. We have a great team in Mayodan. And, frankly, what has been exciting for me is seeing the level of effort put in by our other factories in Newport and Prescott, AZ, to help with the launch in Mayodan. We have teams of engineers in these facilities working on small parts, on lumber inventories, things like that, and it’s all going to combine for a big relaunch of Marlin in the fourth quarter.

Still, Killoy said he sees, “as most manufacturers in the United States see,” upward pressure on commodities and supply chain prices from his suppliers then. as they face COVID-19 and supply chain shortages. He said the company hiked prices three percent last October, and took one in mid-June as well. “Just a few weeks ago, we implemented a three percent general price increase that went into effect. And that applies, in Ruger’s case, to anything that starts going out the door. The only thing we are protecting on prices are prepaid orders and law enforcement orders that are already booked. “

The CEO said RGR’s workforce has been bolstered by around 400 employees since March 2020, an increase of 25%, while quarterly unit production has increased by more than 200,000 units or 58%. “This disproportionate growth in production is indicative of our labor efficiency gains,” he said. “And despite our production growth at the end of the second quarter of 2021, our finished goods inventory and our Ruger product distributor inventories were 160,000 units lower than they were at the end of the first quarter of 2020. La last time these stocks were at what we would consider normal or expected levels before COVID-19. ”

Killoy said the company estimates costs related to COVID-19 will total around $ 1.5 million in 2021. That estimate includes a $ 200 bonus for each employee who becomes fully vaccinated.

Photos courtesy of Ruger

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