Sturm, Ruger & Company (RGR) Q2 Earnings & Revenues Miss

Leading publicly traded U.S. firearms maker, Sturm, Ruger & Company, Inc.’s (NYSE:RGR) second-quarter 2017 earnings of 57 cents per share missed the Zacks Consensus Estimate of $1.11 by 48.6%.

The bottom line was also down 53.3% from the year-ago figure of $1.22. The decline was primarily due to decrease in sales, the unfavorable de-leveraging of fixed manufacturing costs owing to the fall in production volumes, and $2.5 million expenses related to the recall of Mark IV pistols.

Revenues

The company reported revenues of $131.9 million in the reported quarter, down 21.4% from the prior-year figure of $167.9 million. The top line also missed the Zacks Consensus Estimate of $160 million by 17.6%.

The decline in year-over-year performance can be attributed to lower firearm and casting sales.

While firearm sales (comprising 99% of total sales) declined 21.5%, castings sales dropped 17.7%. Notably, new product sales accounted for 29% of total firearm sales in the second quarter.

Dividend

Sturm, Ruger declared a second-quarter dividend of 23 cents per share, payable on Aug 31 to shareholders of record as of Aug 15, 2017. The dividend represents about 40% of the company’s net income.

Per management, dividend payouts vary every quarter as they are based on a percentage of earnings rather than a fixed amount.

Operational Highlights

Gross profit plunged 38.4% to $34.9 million from $56.7 million in the year-ago quarter.

Total operating expenses fell 2.8% to $19.7 million in the quarter due to lower selling, general and administrative expenses. Operating income was also down 58% to $15.3 million from $36.5 million in the second quarter of 2016.

Sturm, Ruger’s earnings before interest, taxes, and depreciation and amortization in the reported quarter was $25 million, down 44.6%.

Financial Performance

Sturm, Ruger ended the second quarter with $44 million cash compared with $87.1 million at 2016 end.

Cash generated from operations was approximately $39.9 million in the first half of 2017 compared with $66.1 million a year ago. The current ratio is 2.7 to 1, with no outstanding debt.

Capital expenditure was $10.9 million at the end of the first six months of the year. The company expects capital expenditure of about $35 million in 2017.

Sturm, Ruger returned $16.3 million to its shareholders through dividend payments during the first half of 2017. Also, the company repurchased 1.1 million of its common stocks for $53.5 million.

Peer Releases

Brunswick Corporation’s (NYSE:BC) second-quarter earnings of $1.35 per share surpassed the Zacks Consensus Estimate of $1.33 by 1.5%. Also, the figure rose 13.4% on a year-over-year basis.

Pool Corporation’s (NASDAQ:POOL) second-quarter earnings of $2.21 per share missed the Zacks Consensus Estimate of $2.24 by 1.3%. However, the figure rose 12% on a year-over-year basis.

Escalade, Incorporated (NASDAQ:ESCA) reported second-quarter adjusted earnings of 15 cents per share, missing the Zacks Consensus Estimate of 23 cents by 34.8%. However, earnings were in line with the year-ago figure.

Zacks Rank

Sturm, Ruger currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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