Yesterday Ruger made public its required Annual Report on Form 10-K and its results showed a slam dunk for the publicly traded company for 2013. Total sales were more than $688 million overall, up from $491 million the previous year. This led the company to impressive earnings and a bumper year fueled by new products like the LC380 pistol, the SR45 pistol, the Ruger American Rimfire rifle, the SR-762 rifle, and the Red Label II shotgun.
Chief Executive Officer Michael O. Fifer made the following observations related to the Company's results in a release to the public:
However even with this news, Ruger's stock fell some 12 percent after the report . This is because of news in recent months that 2014 may not be as good of a year for guns as last year was.
- Our earnings increased 55% in 2013, driven by the 40% growth in sales and our ongoing focus on continuous improvement in our operations.
- Our EBITDA of $195.7 million increased 54% from our 2012 EBITDA of $127.1 million.
- New product introductions were a significant component of our sales growth as new product sales represented $195.8 million or 29% of firearm sales in 2013. New product introductions in 2013 included the LC380 pistol, the SR45 pistol, the Ruger American Rimfire rifle, the SR-762 rifle, and the Red Label II shotgun.
- Demand for our products outpaced the growth in industry demand as measured by the National Instant Criminal Background Check System ("NICS") background checks (as adjusted by the National Shooting Sports Foundation) for 2013.
- Cash generated from operations during 2013 was $120 million. At December 31, 2013, our cash totaled $55 million. Our current ratio is 1.8 to 1 and we have no debt.
- In 2013, capital expenditures totaled $54.6 million, much of it related to machinery and equipment for new products, the purchase and building improvements of the Mayodan, North Carolina facility, and the expansion of production capacity for products in greater demand. We expect to invest approximately $35 million on capital expenditures during 2014 as we continue to prioritize new product development.
- In 2013, the Company returned $41.1 million to its shareholders through the payment of dividends.
- At December 31, 2013, stockholders' equity was $179.1 million, which equates to a book value of $9.26 per share, of which $2.85 per share was cash and equivalents.
- During the fourth quarter of 2013, we began to manufacture a limited quantity of rifles at our 220,000 square foot facility in Mayodan, North Carolina that we acquired in September of 2013. Firearm production at the Mayodan facility is expected to increase during 2014.
The FBI reported that the number of NICS checks for January 2014 was down by half from the same time last year. The NICS check is the default for figuring out gun sales but is not totally accurate because some who get checks do not follow through and buy guns, while others who do can buy multiple guns on the same check.
This decline in gun sales background checks from 2013 should not be surprising. Following a sense of urgency with rumors and speculation about gun bans in early 2013, many gun owners stocked up and kept stocking all year. However, since the sense of urgency seems to have abated, it's natural that fewer guns are being bought now.
Further, Ruger, as has Smith and Wesson, the only other publicly traded firearms company in the US, has been forced out of the 39-million person California market due to the ludicrous microstamoping requirement on new semi-automatic handguns in the state.
Microstamping, a utopian concept to the gun control lobby, is more of a lead balloon when brought up to the people who would actually have to make it work-- the firearms industry. To someone not in the balloon business, making one out of lead seems like a great idea. Its durable, lasts forever, can't be popped. But when the balloon maker looks into it, it's beyond improbable.
Ruger's full 10K report can be found here (pdf)