Ruger's Spectacular Year
If you're like me, you get weary of hearing of gun companies that continually stuff things up. Whether it is Colt, Remington, or others, it is puzzling why some firearms and firearms related industries just can't seem to run their businesses well. Ruger sure can, and their 2020 results show it vividly.
It isn't that Ruger hasn't had challenges and Covid-related expenses like everyone else: they sure have. Ruger had approximately $3.6 million in Covid-related expenditures. As Ruger has stated, “providing all hourly employees with an additional two weeks of paid time-off in 2020 and providing an additional week in 2021, encouraging employees to continue to work remotely wherever possible and maintaining social distancing throughout each manufacturing facility, including in every manufacturing cell. Confidentially communicating with and assisting employees with potential health issues through our dedicated facility nurses. Restricting visitor access to minimize the introduction of new people to the factory environment, implementing additional cleaning, sanitizing, and other health and safety processes, including improved ventilation to maintain a clean and safe workplace.” These and other expenditures by Ruger to pro-actively minimize the Covid effect on their business cost them the $3.6 million, but paid off.
Since the middle of 2020, the Ruger workforce was increased by 250 people. Ruger gained a 30% increase in production last half of the 2020, and Ruger is still hiring. As far as the Ruger acquisition of Marlin, last November, Christopher J. Killoy, President and CEO, gave an update.
“Marlin is a phenomenal opportunity, but it's also a phenomenal undertaking for us. We've got -- we had over 100 tractor-trailer loads from three of -- three of their former locations, from the Remington folks, that we moved, primarily into our Mayodan facility and an adjacent warehouse. We moved the woodworking equipment up to our facility in New Hampshire. And we will be trading, from a new product categorization standpoint, we'll be treating that as new products for Ruger.
And the team is doing a phenomenal job as we outlined. Going through part by part, making sure we understand how it was made, and looking at what's the best way to make it going forward. So, it's been a phenomenal effort by the team with the extraction of the equipment out of the former facilities and moving it into the Ruger facilities and the lines are taking shape nicely. But there's still a lot of work ahead. To make sure we produce quality rifles, the focus will be on the centerfire lever-action rifles, initially. The models 1894, 1895, and the 336. And then, second -- following that will be things like -- for example, the model 60's semi-automatic rimfire.22. But right now our focus is on the centerfire lever-action rifles, down at Mayodan.”
Ruger's new product sales accounted for 22% of total sales. Different companies look at it differently, but Ruger gives a new product a two year window. After two years, they age out, and are no longer considered new products. New products are the life-blood of firearms, as they are in other industries. A company with no new products has the kiss of death all around them.
Spending $3.6 million on Covid-related issues may seem like a lot of money to some, to me it surely is. It is far from over, as Ruger estimate that its Covid-related costs will be between $1.5 million and $3 million in 2021. Included in that estimate is a $200 bonus for every employee who receives a Covid vaccination. However, Ruger was able to reduce expenditures in travel, trade show participation, advertising, and other areas by about $2.9 million.
It was a banner year for Ruger and its 1800 employees, as net sales were $568.9 million and diluted earnings were $5.09 per share for 2020. That's up from $410.5 million with diluted earnings of $1.82 per share in 2019. Sturm Ruger and Company, Inc., serves as a flagship example of how an American company with no debt can not just survive, but thrive, in today's environment.
Copyright 2021 by Randy Wakeman. All Rights Reserved.