WINSTON-SALEM JOURNAL July 30, 2020 – Sharp consumer demand for firearms amid the COVID-19 pandemic and national political tension enabled Sturm, Ruger & Co. to post Wednesday a threefold increase in second-quarter net income to $18.6 million.
Net income a year ago was $6.2 million. The second-quarter 2020 profit was offset somewhat by Ruger paying $6.1 million in income taxes, up from $2.2 million a year ago.
Sales jumped 35.2% year over year to $130.3 million.
Diluted earnings were $1.05 per share, up from 35 cents a year ago. There were no earnings forecasts from Zacks Investment Research.
“Consumer demand, which began to surge in the latter stages on the first quarter, continued to intensify in the second quarter,” Christopher Killoy, Ruger’s chief executive, said in a statement.
The key firearms industry measuring stick is the National Instant Criminal Background Check System background checks. The checks increased just 1% for all of fiscal 2019.
However, for the second quarter of 2020 checks soared by 65%, which was on top of a 42% surge during the first quarter.
Killoy cited three key firearms sales drivers: “concerns about personal protection and home defense stemming from the continuing COVID-19 pandemic; protests, demonstrations and civil unrest in many cities throughout the United States; and the call, by some, for the reduction in funding and authority of various law-enforcement organizations.”
“As a result of this oversized demand, inventories were significantly reduced at all levels in the channel during the second quarter.”
Ruger, as is its policy, released the report after the stock market closed Wednesday. The share price closed up 3.2%, or by $2.52, to $80.58. The share price reached a 52-week high of $82.43 during trading Wednesday.
Ruger’s board of directors declared a 42-cent second-quarter dividend and a separate special $5 a share dividend. Both dividends are payable Aug. 28 to shareholders registered as of Aug. 14.
Ruger has a major production plant in Mayodan, with 315 employees at last count. Its headquarters is in Southport, Conn., along with production operations in Earth City, Mo.; Newport, N.H.; and Prescott, Ariz.
There had been an industrywide sales slump since the Trump administration took office in January 2017 with a pro-gun policy that eased fears of heightened restrictions under a potential president Hillary Clinton.
By contrast, gun sales surged in the months after President Barack Obama’s 2008 and 2012 victories out of some gun owners’ fears that Obama might pursue tighter firearms restrictions.
However, over the past five months, Ruger said some individuals opted to buy their first firearm. Others are existing gun owners adding to their collection, or stocking up on ammunition after seeing grocery stores depleted, schools closed and big events canceled.
Ruger’s share price is up 32.3% from May 26 and 110% from its 52-week low of $38.44 on March 12. [full article]