Sturm, Ruger & Company, Inc. Reports Third Quarter Results
For the third quarter of 2008, the Sturm, Ruger & Company, Inc. reported net sales of $41.8 million and earnings per share of $0.02, compared with sales of $31.9 million and a loss per share of $(0.03) in the third quarter of 2007.
Chief Executive Officer Michael O. Fifer made the following comments related to the third quarter of 2008:
- Ruger sales grew 31% from the third quarter of 2007 and 8% from the second quarter of 2008, primarily on the strength of new product shipments.
- At the end of the quarter, Ruger cash, cash equivalents and short-term investments totaled $22.6 million. Our pre-LIFO working capital of $91.6 million, less the LIFO reserve of $47.5 million, resulted in working capital of $44.1 million and a current ratio of 2.8 to 1.
- To enhance and protect Ruger's strong liquidity in reaction to the recent turmoil in the financial markets, in late October the company drew down $1 million from our $25 million credit facility to ensure Ruger's access to it, and moved approximately $16 million from money market funds investing in Treasury Bills to direct investments in Treasury Bills.
- The company has completed its share repurchase announced in April 2008. Under a program that expired on October 17, the company repurchased a total of 1.5 million shares of its common stock for $9.9 million in the open market, representing 7.2% of the outstanding shares, at an average price per share of $6.59. At the completion of this program and before drawing on the credit line, cash and equivalents were approximately $20 million and there were 19.1 million shares outstanding.
- Recently, the company received a small number of reports from the field that its LCP pistols can discharge if dropped onto a hard surface. Although no injuries were reported, the company recalled all LCP pistols in October 2008 to offer free safety upgrades. The estimated cost of this retrofit program of approximately $2.3 million was recorded in the third quarter of 2008 and had the impact of reducing earnings per share by $0.07 in the quarter. This safety upgrade program is expected to be in effect for several years.