Sturm, Ruger & Company, Inc. · NYSE:RGR
Sturm, Ruger & — Investor Presentation (May 2016)
82 slides from Sturm, Ruger &'s investor presentation, May 3, 2016
Slide 1: Ruger Meeting
RUGER MEETING
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, beliefs, expectations or predictions of the future are forward - looking statements. It is important to note that the Company’s actual results could differ ma
Slide 3: Overview
OVERVIEW
Slide 4: High Value Proposition
HIGH VALUE PROPOSITION FOR CONSUMERS SALES DRIVEN THROUGH INNOVATION BOTTOM-LINE DRIVEN THROUGH LEAN METHODOLOGIES CAPITAL ALLOCATION DISCIPLINE CONSERVATIVE BALANCE SHEET Ok ence
Slide 5: 100th Anniversary of Bill Ruger's Birthday
THIS YEAR WILL BE THE 100114 ANNIVERSARY OF BILL RUGER. SR’s BIRTHDAY AND THE 671 YEAR FOR THE COMPANY HE FOUNDED IN 1949 ON A SIMPLE PREMISE.
Slide 6: We Make Rugged, Reliable Firearms
WE MAKE RUGGED, RELIABLE FIREARMS FOR RESPONSIBLE CITIZENS. INNOVATIVE FIREARMS THAT THE AVERAGE PERSON CAN AFFORD.
Slide 7: That Value Proposition Continues Today
‘THAT VALUE PROPOSITION CONTINUES TODAY.
Slide 8: Firearm Models in Product Categories
OVER 500 FIREARM. { MODELS IN 10 PRODUCT CATEGORIES. SOLD TO 18 INDEPENDENT. WHOLESALE DISTRIBUTORS.
Slide 9: American Manufacturing Facilities in Four States
IN AMERICAN, FAC 1 MANUFACTURING FACILITIES IN FOUR STATES: N RT.NH P MAYODAN, NC
Slide 10: 1,950 Non-Union Employees
WITH 1,950 NON-UNION EMPLOYEES AND 290 TEMPORARY EMPLOYEES
Slide 11: Financial & Operating Highlights
FINANCIAL & OPERATING HIGHLIGHTS
Slide 12: Quarterly Sell-Through (Thousands of Units)
- 100 200 300 400 500 600 700 2012 2011 2010 2009 2008 2007 2013 Q1 2016 2014 2015 Quarterly Sell - Through (in Thousands of Units)
Slide 13: Quarterly Financial Results
Quarterly Financial Results (in Millions, Except EPS) 2016 2015 Q1 Q4 Q3 Q2 Q1 Revenues $173.1 $152.4 $120.9 $140.9 $137.0 Gross Margin $59.1 $48.2 $34.0 $48.5 $41.4 Operating Profit $36.2 $26.0 $18.0 $26.7 $23.8 21% 17% 15% 19% 17% EPS $1.21 $0.88 $0.62 $0.91 $0.81 EBITDA $44.8 $36.0 $27.1 $36.2 $3
Slide 14: Direct Labor as % of Sales Value of Production
Direct Labor as % of Sales Value of Production * $- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 5% 6% 7% 8% 9% 10% 11% 2010 2011 2012 2013 2014 2015 2016 * Sales Value of Production (SVP) in Millions.
Slide 15: Non-Personnel Overhead as a % of SVP
Non - Personnel Overhead as a % of SVP * $- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 0% 5% 10% 15% 20% 25% 2010 2011 2012 2013 2014 2015 2016 * Sales Value of Production (SVP) in Millions.
Slide 16: Market Conditions
MARKET CONDITIONS
Slide 17: The Changing Face of Today's Target Shooter
Target shooting participation in the US. is on the rise -- up 25% from 40.8 million Americans in 2012 THE CHANGING Established New Target FACE OF TODAY'S Tissier: gums sree TARGET SHOOTER Ot experiencel eecicl 3 5 43 <4 Averagease > 32 Sa 3 26% < Femie > 50% 19% < Stsawioue » 73% 37% < Sivurmanares
Slide 18: U.S. Firearm Availability
U.S. Firearm Availability (In Millions of Units) 0 2 4 6 8 10 12 14 16 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Interim
Slide 19: Monthly Adjusted NICS
Monthly Adjusted NICS (In Thousands) - 500 1,000 1,500 2,000 2,500 December 2011 December 2010 December 2012 December 2013 December 2014 December 2015
Slide 20: Trends in Retail Demand
Trends in Retail Demand The adjusted National Instant Criminal Background Check System data presented above was adjusted by the National Shooting Sports Foundation to eliminate background checks associated with permit checks rather than firearm sales. 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,20
Slide 21: New Product Development
NEW PRODUCT DEVELOPMENT
Slide 22: Voice of the Customer Research
VOICE OF THE CUSTOMER RESEARCH
Slide 23: New Product Engineering & Development
Slide 24: Rapid Prototyping & Testing
RAPID PROTOTYPING & TESTING
Slide 25: Product Testing in Field Conditions
Slide 26: Two-Step Distribution
Slide 27: Distributor Sales
Slide 28: Product
PRODUCT
Slide 29: Editorial Coverage
Slide 30: Ammunition Reloading Journal / Survival Rifle
‘Ammeition Reloading Journal | VIVAL RIFLE ETTER
Slide 31: Editorial Coverage
Slide 32: Editorial Coverage
Slide 33: Editorial Coverage
Slide 34: Best-in-Class Customer Service
Slide 35: New Product Platforms
3 NEW PRODUCT PLATFORMS MORE THAN 20 NEW PRODUCT LINE EXTENSIONS OVER 100 DISTRIBUTOR EXCLUSIVES
Slide 36: New Product Platforms
3 NEW PRODUCT PLATFORMS RUGER PRECISION RIFLE” RUGER AMERICAN PISTOL SILENT-SR® 22 LR SOUND SUPPRESSOR
Slide 37: Precision Rifle
PRECISION E> RIFLE f @,')) ey) it 2016 RIFLE OF THE YEAR
Slide 38: Ruger American Pistol
HIGHLIGHTED NEW PRODUCTS » 2015 AND YTD 20 RUGER AMERICAN PISTOL
Slide 39: Silent-SR .22 LR Sound Suppressor
SILENT-SR .22 LR SOUND SUPPRESSOR
Slide 40: More Than New Line Extensions
j AORE THAN 20 NEW LINE EXTENSIONS V4 INCLUDING: YA SR-SS6® TAKEDOWN / MINI-14° TACTICAL RIFLE IN 300 BLK EXTENSIONS TO OUR77-SERIES, RUGER AMERICAN RIELE®, RUGER AMERICAN RIMFIRE® & 10/22 RIFLE LINES. NEW 22 CHARGER® PISTOLS AND NEW PISTOL & REVOLVER EXTENSIONS.
Slide 41: SR-556 Takedown
Slide 42: Mini-14 Tactical Rifle in 300 BLK
1IGHLIGHTED NEW PRODUCTS ° 2015 AND YTD 2016 Sate = MINI-14 TACTICAL RIFLE IN 300 BLK
Slide 43: Highlighted New Products
HIGHLIGHTED NEW PRODUCTS » 2015 AND YTD 2016 TI/AV{ IN 17 WSM
Slide 44: Ruger American Rifle
_—— RUGERAMERICAN RIFLE MAGNUM. RUGERAMERICAN RIFLE WITH VORTEX® CROSSFIRE II® RIFLESCOPE
Slide 45: Ruger American Rimfire Wood Stock
RUGER AMERICAN RIMFIRE - WOOD STOCK ( ey it 2015 RIFLE OF THE YEAR
Slide 46: 10/22 Collector's Series
10/22’ COLLECTOR'S SERIES SECOND EDITION
Slide 47: 10/22 Takedown with Target Barrel
( | 10/22 TAKEDOWN’ WITH TARGET BARREL
Slide 48: Charger with Polymer Stock
22 CHARGER WITH POLYMER STOCK (IN BOTH STANDARD & TAKEDOWN MODELS)
Slide 49: Ruger 22/45 Lite
RUGER 22/45 LITE’ WITH OD GREEN ANODIZED VENTILATED BARREL P 2012 2013 pe 2014 iP Gc
Slide 50: SR22 with 4.50" Barrel
Slide 51: In .327 Fed Mag
J LN =P aS IN .327 FED MAG (6 SHOT)
Slide 52: In .327 Fed Mag
Se CC j — IN .327 FED MAG (6 SHOT)
Slide 53: Highlighted New Products in .22 LR
HIGHLIGHTED NEW PRODUCTS » 2015 AND YTD 2016 IN .22 LR (10 SHOT) Gc
Slide 54: Highlighted New Products
HIGHLIGHTED NEW PRODUCTS © 2015 AND YTD 2016
Slide 55: New Model Super Blackhawk
~NEW MODEL SUPER BLACKHAWK: IN .454 CASULL OR .480 RUGER
Slide 56: Distributor Exclusives Including
INCLUDING: NRA RUGER 22/45 LITE® RUGER AMERICAN RIMFIRE® WITH, MUDDY GIRL CAMO STOCK ~ RUGER AMERICAN RIMFIRE® FARMER EDITION NEW MODEL BLACKHAWK® CONVERTIBLE IN .357 MAG
Slide 57: Ruger 22/45 Lite
RUGER fy 22/45 LITE yi DAVIDSON'S i
Slide 58: Ruger American Rimfire Muddy Girl Camo
RUGER AMERICAN RIMFIRE’ WITH MUDDY GIRL CAMO STOCK - TALO
Slide 59: Ruger American Rimfire Farmer Edition
R AMERICAN RIMFIRE’ FARMER EDITION - TALO
Slide 60: New Model Blackhawk Convertible
HIGHLIGHTED NEW PRODUCTS « 2015 AND YTD 2016 ©. NEW MODEL Rad BLACKHAWK: eo” CONVERTIBLE IN .357 MAG/9mm LUGER - LIPSEY'S
Slide 61: Financial Management
FINANCIAL MANAGEMENT CONSERVATIVE BALANCE SHEET DISCIPLINED CAPITAL ALLOCATION
Slide 62: Accounts Receivable 99.5% Current
COUNTS IVABLE 99.5% CURRENT
Slide 63: Raw & WIP Inventory Turns
Raw & WIP Inventory Turns (Based on Cost of SVP) - 1 2 3 4 5 6 7 8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 I mprovement in i nventory t urns has a llowed us to avoid the growth in Raw & WIP inventory. Over the past 5 years, we avoided growth in $19 m illion in Raw & WIP inventory. Ove
Slide 64: Quarterly Sell-Through (Thousands of Units)
- 100 200 300 400 500 600 700 2012 2011 2010 2009 2008 2007 2013 Q1 2016 2014 2015 Quarterly Sell - Through (in Thousands of Units) Q1 2014 Q3 2014 Q3 2015 Sell - Through 9,100/day
Slide 65: Quarterly Finished Goods Unit Inventory
Quarterly Finished Goods Unit Inventory (in Thousands) 0 50 100 150 200 250 300 350 400 Ruger 72,800 2014 2013 2012 2011 2010 2015 Q1 2016
Slide 66: Quarterly Finished Goods Unit Inventory
Quarterly Finished Goods Unit Inventory (in Thousands) 0 50 100 150 200 250 300 350 400 Ruger 72,800 Distributors 216,700 2014 2013 2012 2011 2010 2015 Q1 2016
Slide 67: Quarterly Finished Goods Unit Inventory
Quarterly Finished Goods Unit Inventory (in Thousands) 0 50 100 150 200 250 300 350 400 Ruger 72,800 Target Distributor Inventory At 6 turns = 315,000 Distributors 216,700 2014 2013 2012 2011 2010 2015 Q1 2016
Slide 68: Capital Allocation: Cash Position
CAPITAL ALLOCATION GashPosition March 31, 2007 Cash Balance $544 milion Possible Uses of Cash -Acnuistons *Stock Buyback +Special Dividend +Regular Quarterly Dividend Gc
Slide 69: Invested $238 Million in Capital Expenditures
SINCE EARLY 2007, WE INVESTED, $238 MILLION IN CAPITAL. EXPENDITURES TO GROW THE BUSINESS
Slide 70: Capital Allocation: Disciplined Stock Repurchases
Slide 71: Disciplined Stock Repurchases
Disciplined Stock Repurchases Total Dollars Total Shares Price Per Share Q3 2006 $25.2 4,272,000 $5.90 Q4 2007 $20.0 2,216,000 $8.99 Q3 & Q4 2008 $10.2 1,535,000 $6.57 Q3 2010 to Q1 2011 $7.7 545,400 $14.10 Q4 2015 & Q1 2015 $26.7 762,100 $35.15 Total $89.8 9,330,500 $9.62
Slide 72: Disciplined Stock Repurchases
Disciplined Stock Repurchases $- $10 $20 $30 $40 $50 $60 $70 $80 - 2 4 6 8 10 12 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Stock Price TTM EBITDA Multiple $26.7 Million 762,100 Shares $ 35.15/Share $7.7 Million 545,4
Slide 73: Cash (in Millions)
Cash (in Millions) -$15 $5 $25 $45 $65 $85 $105 $125 Special Dividend - $87 Million Stock Repurchase - $25 Million Stock Repurchase - $20 Million Stock Repurchase - $27 M illion 2012 2011 2010 2009 2008 2007 2013 Q1 2016 2014 2015 2006
Slide 74: Capital Allocation: Dividends Returned
CAPIT: ALLOCATION WE HAVE RETURNED $151 MILLION IN REGULAR QUARTERLY DIVIDENDS AND $87 MILLION IN A SPECIAL DIVIDEND
Slide 75: Variable Quarterly Dividends
Variable Quarterly Dividends (in Millions) $- $2 $4 $6 $8 $10 $12 $14
Slide 76: Since Early 2007 We Have Returned $302 Million
SINCE EARLY 2007 WE HAVE RETURNED $302 MILLION TO OUR SHAREHOLDERS OUR MARKET CAPITALIZATION INCREASED FROM $220 MILLION TO $1.3 BILLION OUR APRIL 2, 2016 CASH BALANCE WAS $80.5 MILLION AND WE HAVE NO DEBT
Slide 77: Recent-Year Returns: Ruger vs. Russell 2000
Recent 5 - Year Returns: Ruger vs. Russell 2000 0% 200% 400% 600% 800% 1000% 1200% 1400% 2010 2011 2012 2013 2014 2015
Slide 78: Investor Communications
Investor Communications We anticipate releasing 2016 quarterly earnings and holding investor conference calls on the following dates: Earnings Release Conference Call Q2 2016 August 2, 2016 August 3, 2016 Q3 2016 November 1, 2016 November 2, 2016 Q4 2016 February 21, 2017 February 22, 2017
Slide 79: High Value Proposition
HIGH VALUE PROPOSITION FOR CONSUMERS SALES DRIVEN THROUGH INNOVATION BOTTOM-LINE DRIVEN THROUGH LEAN METHODOLOGIES CAPITAL ALLOCATION DISCIPLINE CONSERVATIVE BALANCE SHEET Ok ence
Slide 80: Shares Outstanding and Price
SHARES OUTSTANDING: | RG R 19.0 MILLION PRICE: LISTED Bye aenreon 2 NYSE si3itiion | 2a
Slide 81: Questions
QUESTIONS
Slide 82: 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, beliefs, expectations or predictions of the future are forward - looking statements. It is important to note that the Company’s actual results could differ ma