One of the industry bellweathers, Sturm, Ruger & Company (NYSE: RGR) reported their third quarter results late yesterday afternoon. As expected, they’re down - like twenty-four percent (24%) for the first three quarters of 2019 compared with 2018.
As has become a longstanding occurrence, however, the company maintained their profitability, returning a dividend of eleven cents per share to investors. It’s not a big return, but it’s certainly better than a notice written in red ink.
Ruger CEO Chris Killoy attributed the Q3 results to continued soft demand - the same that will cause 2019 to be remembered as a slow year for the gun industry. He also made the case that rather than attempt to soften the results via the “aggressive discounting and extension of payment terms” being employed by others, Ruger took the “fiscally prudent measure of reducing production” (for the third consecutive quarter) to moderate inventory levels in the company’s warehouses and in the distribution channel.
Gaming, he noted, works only in the short-term. Ruger, he says “is in it for the long haul.”
Long-term health versus short-term expectations is one of those conundrums that makes me very glad I’m not in the manufacturing side of things. A continued focus on making quarters doesn’t do much toward assuring longevity.
He also noted something important to our discussions this week: one significant impact on Ruger’s numbers has been the loss of a “formerly significant distributor that ultimately filed for bankruptcy protection in June 2019 and the market disruption caused by the liquidation of its inventory of Ruger products.
While buyers are being “cautious” about purchases of new guns, Killoy did report that Ruger’s sales of new products represent $70.6 million - twenty-three percent - of firearms sales in the first nine months of 2019.
