Quote Of The Day

Smith and Wesson (SWHC) released their earnings report for the fiscal year ending April 30th yesterday. With the growth in gun sales over the past three years, you would expect that they did well and they did. Net sales figures for the 4th Quarter were up approximately 38% over the same quarter in the prior year. Fiscal year net sales for 2013 were up 43% over FY2012.

So who should they thank for their sales growth? John Nolte at Breitbart has this to say:

It is hard to judge who Smith & Wesson should thank most: Gun-grabber President Obama, murdered-child-exploiter Piers Morgan, or insufferable-sell-out Joe Scarborough. Or maybe the gun maker should just send a big fat bouquet to all of the media:

JournOlist HQ

Hollowed-Out Volcano Lane

Water Carrier, DC 66666

Actually, Smith & Wesson should be and likely is grateful to a nation of Americans who instinctually understand and appreciate their God-give right to not be bossed around, intimidated, or swayed by a bunch of hypocritical, bossie-pants, fascists who hide behind armed guards in secured high-rises.

 In what is generally a down day for Wall Street, S&W stock is up approximately 5% at midday.

Ruger Has Another Great Quarter

Ruger released their 2nd quarter 2012 financial results yesterday and held an earnings conference call with investment analysts and those interested this morning. Suffice to say, Ruger had another great quarter.

CEO Mike Fifer reported that Ruger’s earnings were up 63% for the quarter compared to the same quarter in 2011. Earnings growth was driven by a 50% growth in sales as well as some operational efficiencies. Breaking down sales, new products introduced in 2012 accounted for 38% of sales in the first half of 2012. Fifer attributed the following new products for driving this 38% increase:

  • Ruger American rifle
  • SR22 pistol
  • 10/22 Take-down rifle
  • 22/45 Lite pistol

In terms of dollars figures, Ruger reported the following for the 2nd quarter of 2012:

The Company reported net sales of $119.6 million and fully diluted earnings of 91¢ per share, compared with net sales of $79.6 million and fully diluted earnings of 56¢ per share in the second quarter of 2011.

For the six months ended June 30, 2012, net sales were $231.9 million and fully diluted earnings were $1.71 per share. For the corresponding period in 2011, net sales were $155.1 million and fully diluted earnings were 99¢ per share.

Ruger’s unit sales or the number of firearms sold to distributors rose by  55% for the quarter. If one uses the NSSF adjusted NICS checks as a proxy for the industry as a whole, it only rose 18% during the quarter.

During the conference call, one analyst asked if the growth in sales for the LC9 were as a result of cannibalizing the sales of the LCP. Fifer replied, “Not in the slightest.”

Fifer was asked about the $9 million in capital expenditures during the quarter. He replied:

Well, the important thing to know about the capital expenditures as I described is that we recognize them when they are placed in service. Which is — so it’s when I order it, not when I put a deposit on machinery, not when the machinery arrives, not even when I just get the tools up, but when I actually start producing parts. So the fact that I recognize $9 million in the quarter, it means I had a lot of equipment start producing parts in the quarter.

Finally, there was a question about the backlog and whether the orders submitted were firm orders or not. Fifer replied that Ruger had a policy of only accepting firm non-cancelable orders. Part of the rationale behind the suspension of taking new orders this Spring was the company’s desire to maintain this policy. Prior to lifting this suspension, their sales staff worked with distributors reminding them to only order what they could actually sell to gun shops.

Ruger had a great quarter and with all the talk of new gun control measure plus the elections I fully expect them to have a very good 3rd quarter.

Note: In the interest of full disclosure, I am a shareholder in Sturm, Ruger and Company and have been for a number of years.

Ruger Has Stellar Quarter

The gun prohibitionists are desperate to promote the meme that the growth in NICS checks do not accurately reflect the growth in firearm sales. Unfortunately, they just cannot ignore financial statement releases from public companies such as Sturm, Ruger & Co. Financial statement releases from public companies are not only released to the public but filed with the Securities and Exchange Commission. They must be accurate unlike any statement made by the likes of CSGV and other gun prohibitionists.

Yesterday, after the close of the stock market, Ruger released its first quarter results and they were impressive. Their net earnings per share – profit – nearly doubled as compared to the same quarter in 2011. Moreover, they have orders in hand for 1.2 million firearms which exceed the number shipped in 2011.

The highlights of the results as pointed out by Ruger CEO Michael Fifer:

  • Our earnings nearly doubled from the first quarter of 2011, driven by the 49% growth in sales and our ongoing focus on continuous improvement in our operations.
  • New product introductions were a significant component of our sales growth as new product sales represented $40.8 million or 37% of sales in the first quarter of 2012. New product introductions in the first quarter of 2012 included:
    • Ruger American Rifle
    • SR22 pistol
    • 10/22 Take Down rifle
  • The estimated sell-through of our products from independent distributors to retailers in 2012 increased 62% from the first quarter of 2011. During this period, National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 23%.
  • On March 21, 2012, the Company announced that it temporarily suspended the acceptance of new orders. In the first quarter of 2012, orders for 1.2 million units were received by the Company, which exceeded the total units shipped during 2011. The Company anticipates resuming the acceptance of orders at the end of May 2012.
  • Cash generated from operations during the first quarter of 2012 was $21.8 million. At March 31, 2012, our cash, cash equivalents, and short-term investments totaled $95.8 million, an increase of $14.7 million from December 2011. Our current ratio is 3.1 to 1 and we have no debt.
  • In the first quarter of 2012, capital expenditures totaled $3.0 million. We expect to invest approximately $20 million for capital expenditures during 2012.
  • At March 31, 2012, stockholders’ equity was $149.8 million, which equates to a book value of $7.82 per share, of which $5.01 per share was cash and equivalents.
  • On March 31, 2012, the Company completed the fourth and final quarter of its “1.2 Million Gun Challenge to Benefit the NRA.” During this year-long challenge, Ruger donated a total of $1,253,700 to the NRA. We believe that Ruger is the first firearms manufacturer to build and ship more than one million firearms in one year.

The financial tables that accompanied this release can be found here.

I am not an accountant but I generally can understand balance sheets, income statements, and statements of cash flows. Just looking at a few key items you see that their cash from operations increased by over $1 million dollars as compared to the same quarter in 2011, their net inventories are down, and their allowance for obsolete or slow moving inventory fell by almost 60%. The last two items tell me that not only are firearms flying out the door but Ruger is making mostly what people want.

If you have the time and the inclination, you can listen in on Ruger’s Annual Meeting which is today and starts at 9am. I’m sure you will hear lots of cheers from shareholders. If I could have been in New Hampshire today, I would have been one of those cheering the loudest as the stock is trading near its all time high and the quarterly dividend just tripled.

For instructions on how to view or listen to the annual meeting, go here.