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SR

STURM RUGER & CO INC (RGR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $145.8M and diluted EPS were $0.62, up from $122.3M and $0.28 in Q3; year-over-year Q4 revenue and EPS also improved versus $130.6M and $0.58 in Q4 2023 .
  • Management highlighted strong execution on new products (RXM pistol, American Rifle Gen II, Marlin lever-action rifles) and market-share gains despite lower industry demand (adjusted NICS -6% YoY for Q4; -4% for full year) .
  • Balance sheet remains a key asset: $105.5M cash and short-term investments, current ratio 4.2:1, and no debt; Board declared a $0.24 dividend (~40% of net income policy) .
  • Capital allocation continued: full-year 2024 repurchases of 835,060 shares for $34.4M and dividends of $11.8M; 2025 capex guided to ~$20M focused on product innovation and manufacturing upgrades .
  • Wall Street consensus (S&P Global) was unavailable due to data limits; we cannot opine on beat/miss vs estimates for Q4 2024 at this time.

What Went Well and What Went Wrong

What Went Well

  • Sequential improvement: Q4 sales +19% vs Q3 and profitability more than doubled as production rose 10%; net sales $145.8M, EPS $0.62 vs $122.3M and $0.28 in Q3 .
  • New product execution: RXM launch was the largest ever at time-of-launch; preorders and coordinated wholesale/retail placement enabled a smooth rollout and sustained demand .
  • Market share gains: full-year sell-through +5% despite adjusted NICS down 4%; new product sales reached $159.3M (32% of firearms sales), up from $119.0M (23%) in 2023 .

What Went Wrong

  • Gross margin pressure: full-year gross margin fell from 25% to 21% YoY due to fixed-cost deleveraging, inflation, and mix shift toward lower-margin products (e.g., competitively priced 75th anniversary models) .
  • Industry demand softness: adjusted NICS checks decreased 6% in Q4 year-over-year, pointing to a tougher retail backdrop and higher share of used-gun sales .
  • No formal top-line/margin guidance: while capital expenditure targets were provided, revenue and margin outlook remain qualitative, limiting visibility for models .

Financial Results

Revenue and EPS (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$130.8 $122.3 $145.8
Diluted EPS ($)$0.47 $0.28 $0.62

YoY Comparison (Q4 2024 vs Q4 2023)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$130.6 $145.8
Diluted EPS ($)$0.58 $0.62

Margins (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
EBITDA Margin %11.1% 8.1% N/A (not disclosed quarterly; annual 10.3%)
Net Income Margin %6.3% 3.9% N/A (not disclosed quarterly; annual 5.7%)

Segment Breakdown (Net Sales)

SegmentQ2 2024Q3 2024Q4 2024
Firearms ($USD Millions)$129.8 $121.5 N/A (not disclosed)
Castings ($USD Millions)$0.9 $0.8 N/A (not disclosed)
Total Net Sales ($USD Millions)$130.8 $122.3 $145.8

KPIs and Balance Sheet

KPIQ2 2024Q3 2024Q4 2024
Sell-through vs PY+1% H1 +4% 9M +5% FY
Adjusted NICS vs PY-8% Q2 -3% 9M -6% Q4; -4% FY
New Product Sales$79.7M (31% of firearms, H1) $113.3M (31.2%, 9M) $159.3M (32%, FY)
Finished Goods Inventory Change-13,300 units vs Q2’23 -26,500 units vs Q3’23 -28,300 units (FY)
Distributor Inventory Change-88,700 units vs Q2’23 -98,600 units vs Q3’23 -63,500 units (FY)
Cash + Short-term Investments$105.6M (6/29) $96.0M (9/28) $105.5M (12/31)
Current Ratio4.8:1 4.5:1 4.2:1
Capex$10.4M (H1) $17.2M (9M) $20.8M (FY)
Share Repurchases477,917 shares; $20.3M (H1) 699,000 shares; $29.3M (9M) 835,060 shares; $34.4M (FY)
Dividend per Share$0.19 (Q2) $0.11 (Q3) $0.24 (Q4)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital ExpendituresFY 2025None disclosedApprox. $20M New
Dividend PolicyOngoingVariable (~40% of net income)Variable (~40% of net income) Maintained
LeverageOngoingNo debtNo debt Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
New Products & InnovationStrong demand for American Rifle Gen II, Marlin lever-action; awards for LC Carbine and Gen II Ranch; H2 launches planned RXM launch highly successful and scalable platform; continued collaboration with Magpul; accessory and frame-size pipeline Improving momentum
Demand/Macro (NICS)NICS declines (-8% Q2; -3% 9M); sell-through up NICS down 6% in Q4; FY down 4%; used guns likely higher share; Ruger sell-through up Market soft; share gains
Pricing/PromotionsMaintained pricing discipline in promotion-rich environment Competitive pricing on anniversary models pressured margins; discipline maintained (no heavy discounting) Mixed: strong demand but margin headwind
Inventory & Supply ChainFinished goods and distributor inventories notably reduced; positioned to replenish Further reductions by year-end; cleaner channel entering 2025 Improving
Capital AllocationBuybacks and dividends; strong cash; current ratio ~4.5–4.8x; no debt Q4 dividend $0.24; FY buybacks $34.4M; current ratio 4.2x; no debt; special dividends possible Stable, opportunistic
Leadership—CEO transition to Todd Seyfert effective March 1; Killoy to retire in May and remain on Board Transition underway
Regulatory/Banking—Banking caution (prior account terminations); monitoring FIND Act; conservative cash stance Heightened awareness

Management Commentary

  • “We were pleased with our sales growth and improved profitability in the fourth quarter, despite the apparent reduction in consumer demand, as adjusted NICS checks decreased 6% from the prior year.”
  • On RXM launch: “It was a significant launch, the most we’ve ever had out in the marketplace at time of launch… we didn’t see a dip at all. We just continued right through filling orders.”
  • On margins: “Gross margin decreased from 25% to 21%… driven by deleveraging, inflationary pressures, and product mix shift… competitively priced 75th anniversary models were a mix-related contributor.”
  • On capital allocation: “We’ll probably have both share repurchases and certainly our quarterly dividends… if we get to a certain balance, we’ll look at special dividends as well… acquisitions remain an option.”

Q&A Highlights

  • RXM impact and pipeline: Management emphasized RXM as a platform with planned expansions (frame sizes, colors) and ongoing collaboration with Magpul to accelerate derivative launches .
  • Uses of cash: Prioritized funding capex/new products, selective M&A (Marlin-like), continued quarterly dividends and potential special dividends/buybacks depending on cash levels .
  • Gross margin dynamics: Mix was the primary headwind in 2024 (aggressively priced anniversary models); despite this, strategy avoided channel disruption and supported demand .
  • Sequential operating improvements: Q4 saw production +10%, sales +19%, and profitability more than doubled vs Q3, reflecting execution and throughput gains .
  • Banking/regulatory context: Cautious stance given prior bank account terminations; monitoring FIND Act; reinforces preference to maintain robust cash/liquidity .

Estimates Context

  • S&P Global consensus estimates for RGR in Q4 2024 were unavailable due to data access limits at this time. As a result, we cannot provide beat/miss assessments versus Wall Street consensus for revenue, EPS, or EBITDA for Q4 2024.

Key Takeaways for Investors

  • Sequential acceleration in Q4 with stronger production and demand; clean channel inventories position Ruger well entering 2025 .
  • New product momentum is the core driver; RXM platform, American Rifle Gen II, and Marlin lever-action lines should sustain mix and sell-through, though margin mix warrants monitoring .
  • Balance sheet optionality: debt-free, high liquidity, flexible return-of-capital strategy (quarterly dividends, opportunistic buybacks; special dividends possible) .
  • Macro softness persists (adjusted NICS declines), but Ruger’s share gains and disciplined channel strategy mitigate pressure; watch used gun share and consumer demand trends .
  • 2025 capex guided at ~$20M supports continued product development and manufacturing upgrades—key for sustaining the innovation cadence .
  • Leadership transition near-term: Todd Seyfert becomes CEO on March 1; continuity with Killoy remaining on Board lowers execution risk .
  • Near-term trading implication: positive narrative on execution and product momentum versus a soft backdrop; lacking formal revenue/margin guidance may keep focus on sequential delivery and margin mix in upcoming quarters .