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Sturm, Ruger & Co. Inc. (NYSE: RGR)


One Lacey Place
Southport, CT 06490

Chairman and CEO: William B. Ruger

President, COO, Vice Chairman, Senior Executive Officer: William B. Ruger Jr.

Revenues (FY 1997): $209.4 million

Earnings (FY 1997): $27.8 million

Employees: 2,094

 

Business New Haven
9/7/1998
By: BNH

Celebrating a 50th anniversary is a special event, especially in this day and age when many companies don't make it through the first decade.

Sturm Ruger & Co. Inc. is looking toward its 50th year in business to be marked in 1999. Founded by its current chairman, William B. Ruger, in 1949, the company today has manufacturing operations in New Hampshire and Arizona with corporate offices in Southport. The company went public in 1969 and has traded on the NYSE since 1990.

Sturm Ruger's main line of business has been the manufacture of high-quality firearms including pistols, revolvers, shotguns and rifles for sportsman and law-enforcement use. Secondary operations include the manufacture of investment castings for commercial uses, military purposes and sporting goods such as titanium heads for Big Bertha golf clubs.

The company has been profitable since 1950, has a strong balance sheet and no long-term debt. Its current ratio at June 30, 1998 was 4.30 and profit margin for the first six months of 1998 was 13 percent. This margin is consistent with previous years: Sturm Ruger's profit margin for 1997 was an identical 13 percent of sales compared to 15 percent for 1996 and 14 percent for 1996.

Although profitability has been maintained at stable levels over the past three years, sales of Sturm Ruger firearms have in fact been falling. In 1997, firearms sales dropped 4.7 percent to $141.9 million, compared to $148.8 million for 1996. The year was a down one for the industry as a whole.

Sturm Ruger's casting business was likewise down 9.3 percent to $67.5 million, compared to $74.5 million for 1996. Total consolidated sales were down 6.2 percent to $209.0 million, compared to $223.3 million for the prior year, a result of slower sales in the firearms sector and sluggish first half 1997 sales for the company's casting business.

Sales of firearms have also been decreasing as a percentage of total sales. Compared to 1995, where firearm sales accounted for 81 percent of total sales for the company, total sales for firearms in 1997 were 68 percent. By the first half of 1998 firearms sales accounted for just 66 percent of total sales.

Sturm Ruger's product mix has evolved in recent years, with sales in the castings segment increasing as a percentage of total sales. Casting sales in 1997 comprised 32 percent of total sales, and for the first six months of 1998, 34 percent. This compares to casting sales accounting for 19 percent of total sales in 1995.

Assisting the castings business was Sturm Ruger's 1997 buyout of Callaway Clubs' 50-percent interest in a joint venture between the two firms. As a result of this transaction, the company now has total interest in a casting facility that doubles the company's previous capacity. The company is also free to manufacture titanium golf heads for other golf-equipment companies. In 1997, sales to Callaway Golf accounted for 76 percent of the company's casting revenues, which may not continue in the future.

In March Gerald W. Bersett resigned from the company. He had been Sturm Ruger's president and chief operating officer since 1995 and a director since 1996. William B. Ruger Jr., the founder's son, replaced Bersett as president and COO, adding those functions to his existing titles of vice chairman and senior executive officer. Stephen L. Sanetti, Sturm Ruger's vice president and general counsel, is now a director in place of Bersett.

For the first six months ending June 30, the company reported an eight-percent increase in sales to $118.5 million, compared to $109.6 million for the first six months of 1997. Also, net income rose slightly to $15.6 million (58 cents a share) for the first six month vs. $15.4 million (57 cents) for the comparable 1997 period.

Although these latest results may look promising, caution is necessary since the growth in the titanium golf business may not continue through the second half of 1998 due to current market conditions. Also, an announced July 1 price increase in the company's firearm segment may have had a positive effect on second-quarter sales but may not carry over into the third and fourth quarters. The stock price has not performed at levels in the $20 range since the spring. It closed at 14 3/8, down 1, on August 21.

Looking toward the future, the company has been working to position itself with the development of new firearms products and increased capacity for its castings business, along with the ability to broaden its markets. Success in these endeavors would mark a happy 50th birthday in 1999.

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