Sturm, Ruger & Company, Inc.’s (NYSE:RGR) first-quarter 2018 earnings of 81 cents per share reflected an annual decline of 33.1% from the year-ago quarter’s figure of $1.21. The downside can be attributed to year-over-year decline in sales and operating income.
Sales
In the quarter under review, the company’s net sales came in at $131.2 million, down 21.6% from the prior-year figure of $167.4 million. However, the top line comfortably surpassed the Zacks Consensus Estimate of $117 million by 12.1%. Lower production volumes led to the year-over-year decline in sales.
Firearm sales (comprising 99% of total sales) decreased 21.9% on a year-over-year basis, while castings sales improved 28.9%. New product sales accounted for 29% of total firearm sales in the first quarter compared with 25% in the year-ago quarter.
Sturm, Ruger & Company, Inc. Price, Consensus and EPS Surprise
Sturm, Ruger & Company, Inc. Price, Consensus and EPS Surprise | Sturm, Ruger & Company, Inc. Quote
Dividend
Sturm, Ruger declared a first-quarter dividend of 32 cents per share, payable on Jun 1, 2018, to shareholders of record as of May 22. The dividend represents about 40% of net income. This reflects an improvement of 39.1% from dividend of 23 cents per share, which the company paid in the fourth quarter of 2017.
Per management, dividend payout varies every quarter as it is based on a percentage of earnings rather than a fixed amount.
Operational Highlights
Gross profit decreased 35.8% to $35.8 million in the reported quarter. Gross margin contracted 60 basis points (bps) to 27.3% at the end of first-quarter 2018 compared with 33.3% at the end of first-quarter 2017.
Total operating expenses dropped 21.3% year over year to $17.2 million in first quarter owing to lower selling expenses. Operating income also declined 45.1% to $18.6 million from $33.9 million at the end of first-quarter 2017.
Sturm, Ruger’s earnings before interest, taxes, and depreciation and amortization was $27.1 million, down 37.8%.
Financial Performance
The company ended first-quarter 2018 with cash of $103 million compared with $63.5 million at 2017-end.
Cash generated from operations was approximately $45.3 million compared with $18.9 million in the year-ago quarter. The current ratio is 3.0 to 1, with no outstanding debt.
Capital expenditures totaled $1 million at the end of first-quarter 2018, down from $7.5 million in the prior-year quarter. For 2018, the company continues to expect capital expenditures of about $15 million.
Sturm, Ruger returned $4 million to shareholders through dividend payments during the first quarter.
Zacks Rank
Sturm, Ruger 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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