Sturm, Ruger & Company, Inc. · NYSE:RGR
Sturm, Ruger & — Shareholder Meeting (April 2010)
52 slides from Sturm, Ruger &'s shareholder meeting presentation, Apr 28, 2010
Slide 1: Sturm, Ruger & Co., Inc. 2010 Annual Meeting
® STURM, RUGER & CO., INC. 2010 Annual Meeting APRIL 28, 2010
Slide 2: Caution: Forward Looking Statements
Caution: Forward Looking Statements Statements made in the course of this meeting that state the Company’s or Management's intentions, hopes, belief’, expectations or predictions of the future are forward-looking statements. It is important to note that the Company’s actual results could differ mate
Slide 3: Investment Highlights
Investment Highlights * 61-years as one of the world’s leading firearms brands. + Experienced and engaged Board of Directors. + Strong management team. + Strong market position in rifles, revolvers and pistols. + Recent, exciting new product launches. + We believe we are gaining marketshare. + Stron
Slide 4: Company Profile
Company Profile + Trailing 12-month sales of $276 million, EPS of $1.58 (ending 4/3/10). + Manufacturing facilities in Newport, NH and Prescott, AZ. + Engineering satellite office in Enfield, CT. * Corporate office in Southport, CT. * 1,200 non-union employees, plus 150-200 temporary employees. + In
Slide 5: Executive Team
Executive Team ” cal Tom Deen ciel ese te, et Franca! Oey Brea a = Tom Suan Steve Mayra Ve Pratot Vie Peete Newt pean Lown Baten Development \ Wark Lang Group Vee Present W Kevin Rela Vice President and ‘General Counsel hes Kalo Vice Present of Sales Marketing Lesie Gasper Corporate Secretary @ RUGE
Slide 6: Financial and Operational Highlights
Financial and Operational Highlights @
Slide 7: Consolidated Operating Results
Consolidated Operating Results (inmitions, except EPS) 2010 2009 qi a4 a3 a2 qi Revenues $68.3 $63.9 $71.2 $72.4 $63.5 Gross Margin $23.1 $21.2 $21.8 $25.0 $19.5 Operating Profit $12.9 $9.1 $11.3 $13.9 $9.4 18.9% 14.3% 15.9% 19.3% 14.9% EPS $0.44 $0.30 $0.37 $0.45 $0.30 RUGER
Slide 8: Comparison of Underlying Performance
Comparison of Underlying Performance én Thousands) 2010 2009 ai a4 a3 a2 Qt Reported $12,900 $9,119 $11,331 $13,976 $9,434 Operating Profit ‘Adjustments, Fo (122) (1,536) (1,502) (929) (249) OM Rate (G94) (1,408) 972 1071 639, DA Rate 69) (623) 302 288 169 E80 reserve (61) 495 46 210) (2) Frozen og
Slide 9: Comparison of Underlying Performance
Comparison of Underlying Performance én Thousands) 2010 2009 ai a4 a3 a2 Qt Reported $12,900 $9,119 $11,331 $13,976 $9,434 Operating Profit ‘Adjustments, Fo (122) (1,536) (1,502) (929) (249) OM Rate (G94) (1,408) 972 1071 639, DA Rate 69) (623) 302 288 169 E80 reserve (61) 495 46 210) (2) Frozen og
Slide 10: Return on Shareholders' Equity
Return on Shareholders’ Equity 40% 35% 34% 30% 25% 20% 15% 10% 5% 0% 2006 2007 2008 2009
Slide 11: Market Conditions
Market Conditions
Slide 12: Bookings
Bookings Bookings 2007 2008 2009 2010
Slide 13: Bookings & Distributor Sell-Through
Bookings & Distributor Sell-Through 500,000 400,000 Bookii 2 300,000 ens = 5 Sell = 200,000 Through 100,000 0
Slide 14: Finished Goods Inventory
Finished Goods Inventory 120,000 100,000 80,000 60,000 40,000 20,000 Month End in Units 2006 2007 2008 2009 2010 RUGER
Slide 15: Trends in Retail Demand
Trends in Retail Demand |CS Background Checks (in Millions) = Ss 10 2006 NICS Checks 2007 2008 2009 RUGER
Slide 16: Trends in Retail Demand
Trends in Retail Demand |CS Background Checks (in Millions) = Ss 10 2006 Distributor Sell-Through NICS Checks 2007 2008 2009 $300 $250 $200 $150 (suorw wi) saqeg sa6ny je,0) © RUGER
Slide 17: Market Share Movement
Market Share Movement Product Category Single-Action Revolvers Double-Action Revolvers Rimfire Pistols Centerfire Full-Size (SR9) Centerfire Compact (LCP) Mini-14 Rifles Hunting Rifles Rimfire Rifles Modern Sporting Rifles 2008 Maintained Lost Maintained Lost Gained Maintained Maintained Gained Lost
Slide 18: Market Share Movement
Market Share Movement Product Category Single-Action Revolvers Double-Action Revolvers (LCR) Rimfire Pistols Centerfire Full-Size (SR9) Centerfire Compact (LCP & SR9c) Mini-14 Rifles Hunting Rifles Rimfire Rifles Modern Sporting Rifles (SR-556) 2008 Maintained Lost Maintained Lost Gained Maintained
Slide 19: Ruger Business System: New Product Development
Ruger Business System New Product Development 2009 Sales New Products 31% Mature Products 69% RUGER
Slide 20: Ruger Business System: New Product Development
Ruger Business System New Product Development 2009 Sales New Products 31% Mature Products 69% 2010 Q1 Sales New Products Mature 39% Products 61% RUGER
Slide 21: Highlighted new products: 2009 & 2010 Q1
Ruger Business System Highlighted new products: 2009 & 2010 QI. 2 New Platform Products + LCR & SR-556, 31 New Product Derivatives + Including the SR9c, SR-22 & 22/45 RP. 75 Distributor Specials
Slide 22: The AR Platform Redefined: The Ruger SR-556
THE AR PLATFORM @ REDEFINED. THE RUGER SR-SS6 @ RUGER
Slide 23: Ruger SR-556 features
Chrome-Plated Bolt, Troy Industries Two-Stage Bolt Carrier and Extractor Folding BattleSights™ Piston Driven ore Gas Regulator Putte Troy Industries elaid Guad Ral Cold Hammer-Forged, Handguard Chrome-Lined Position Telescoping ‘mit-Spec 41V45 Barrel Troy industries ail Covers Chambered in 5.56mm NA
Slide 24: The Ruger LCR: The Evolution of the Revolver
THE RUGER L CLA Po . THE EVOLUTION OF THE REUOGLUER @ RUGER
Slide 25: New Product Derivatives
New Product Derivatives ~‘ = —* or New Model Blackhawk” in 327 Federal Magnum 22/45” Pistol with Replaceable Grip Panels GP100°in 327 Federal Magnum SR-22"*Rifle =
Slide 26: Distributor Specials
Distributor Specials = > = — 7..- A /B\ New moder ‘Super Blackhawk” Revolver
Slide 27: Editorial Coverage
Editorial Coverage
Slide 28: Voice of the Customer
Voice of the Customer Ruger Business System
Slide 29: Slide 29
Slide 30: Handgun Retailer Survey
Handgun Retailer Survey + 380 handgun retailers were surveyed by a major national distributor in February 2010. + Each was asked to rate each manufacturer on a scale of 1 — 10 for: — Handgun Profit Margins — Handgun Sales — Consumer Demand — Availability for Replenishment + Manufacturers that were r
Slide 31: Handgun Retailer Survey
Handgun Retailer Survey * Ruger ranked #1 overall: — Ruger Rated 752 — Average Manufacturer Rating: 5.64 + Ruger category rankings were: — #1 in Handgun Profit Margins — #2 in Handgun Sales — #2 in Consumer Demand — #3 in Availability for Replenishment
Slide 32: Manufacturing
Manufacturing
Slide 33: Ruger Business System: Lean Manufacturing
Ruger Business System Applying Lean to our manufacturing processes: Newport Manufacturing Facilit + Eighty percent of all product is produced in cells + Setting up a pull system for suppliers, and have implemented standard work for material replenishment for several product families + Inventory turn
Slide 34: Prescott Operations
Prescott Operations
Slide 35: Slide 35
Slide 36: Manufacturing Cost Reductions
Ruger Business System Manufacturing Cost Reductions: 25% 20% i ee 15% Total Labor/SvP 10% 2007 2008 2009 SVP is the sales value of units produced in the period. a
Slide 37: Manufacturing Cost Reductions
Ruger Business System Manufacturing Cost Reductions: 25% 20% a ts i Total Labor/SVP Non-Personnel 10% Overhead/SUP 2007 2008 2009 SVP is the sales value of units produced in the period. a
Slide 38: Freeing-Up Assets: Inventory Turns
Ruger Business System Freeing-Up Assets to Invest in Top-Line Growth: INVENTORY TURNS 3.5 3.0 25 2.0 15 1.0 2006 2007 2008 2009
Slide 39: Liquidity
Liquidity
Slide 40: Freeing-Up Assets: Inventory Reduction
Ruger Business System Freeing-Up Assets to Invest in Top-Line Growth: INVENTORY REDUCTION $70 $60 Ex ‘Million Saucon $50 [is 008 $40 $31 $2t $1 12108 03/09 06/09 09/09 12/09 03/10 lm Raw Material & WIP lm Finished Goods S$ In Millions 6 8
Slide 41: Freeing-Up Assets: Inventory Reduction
Ruger Business System Freeing-Up Assets to Invest in Top-Line Growth: INVENTORY REDUCTION $70 a0 may $5 S30 Mion $40 $31 $2 $1 12/08 03/09 06/09 09/09 12/09 03/10 lm Raw Material & WIP lili Finished Goods Ss 5 6 8 3S
Slide 42: Investment in Top-Line Growth: CAPEX
Ruger Business System Investment in Top-Line Growth: approximately two-thirds of 2009 CAPEX was related to new product introductions and expansion of capacity. $16 $14 $12 $10 $8 $6 $4 “aE 2006 2007 2008 2009 2010 (Estimated) 8
Slide 43: Net Income vs. Dividends
Net Income vs. Dividends Dividends are calculated as a percentage of adjusted operating profit. $10 $9 $8 $7 Sé $5 $4 $3 $2 - fe Ol i qi a2 a3 ‘= ME Net Income mill Dividends
Slide 44: Net Income vs. Dividends
Net Income vs. Dividends Dividends are calculated as a percentage of adjusted operating profit. $10 $9 $8 Dividends related to 2009 results equaled 25% of net income. $7 $6 $5 $4 $3 $2 * fe Hl ie oe a a2 a3 aa ME Netincome Mi Dividends
Slide 45: Shares Outstanding: Stock Buy Back
Shares Outstanding 29 27 25 STOCK BUY BACK: We repurchased 8 million shares 2 as since July 2006 at an average = share price of $6.90. 24a = 19 a 7 15 2006 2007 2008 2009 2010
Slide 46: $58.9 Million
$58.9 Million ‘Since January 2009, major cash outflows included: ~ Capital Expenditures: $20 million ~ Dividends: $7 million RUGER
Slide 47: Major cash outflows since January 2009
Since January 2009, major cash outflows included: ~ Capital Expenditures: $20 million - Dividends: $7 milion During that time, we increased our $20 ‘cash holdings by $31 million through operating profits and inventory reduction. $10 0 2009 2010
Slide 48: Investor Communications
Investor Communications We anticipate releasing 2010 quarterly earnings and holding investor conference calls on the following dates: Period: Earnings Release Conference Call. Q2 2010: July 28, 2010 July 29, 2010 Q3 2010: October 27, 2010 October 28, 2010 Q4 2010: February 23, 2011 February 24, 2011
Slide 49: Investment Highlights
Investment Highlights * 61-years as one of the world’s leading firearms brands. + Experienced and engaged Board of Directors. + Strong management team. + Strong market position in rifles, revolvers and pistols. + Recent, exciting new product launches. + We believe we are gaining marketshare. + Stron
Slide 50: Questions
Questions
Slide 51: Caution: Forward Looking Statements
Caution: Forward Looking Statements Statements made in the course of this meeting that state the Company’s or Management's intentions, hopes, belief’, expectations or predictions of the future are forward-looking statements. It is important to note that the Company’s actual results could differ mate
Slide 52: Sturm, Ruger & Co., Inc. Thank You
® STURM, RUGER & CO., INC. Thank You