Ruger stock fluctuates after weak third quarter earnings

Ruger CEO Chris Killoy at a gun shop talking shop with Ruger fans. Photograph taken May 13, 2017. (Photo: Ruger/Facebook)

Ruger CEO Chris Killoy at a gun shop talking shop with Ruger fans. Photograph taken May 13, 2017. (Photo: Ruger/Facebook)

Share prices for Sturm, Ruger and Co. fluctuated in the hours after the gun maker reported weak third quarter earnings — an expected result as the industry recalibrates under a new gun-friendly presidential administration.

Stocks fell as much as 9 percent in after hours trading Tuesday, but appeared on the mend again by Wednesday afternoon, rising nearly 4 percent to $51.25 per share.

Ruger raked in $9.3 million in profits in its third quarter — a 53 percent decline over 2016, the biggest on record for gun sales as consumer fears of impending regulations stoked demand. It’s the second double digit loss for Ruger this year.

Chief Executive Officer Christopher Killoy acknowledged the earnings slide in the company’s financial filings Tuesday. The dismal results come after a strong first quarter for the company, which reported $167.4 million in sales — a 3 percent decline over first quarter 2016. Sales fell more than 35 percent to $104.8 million in the third quarter, according to the company’s earnings reports. Overall, Ruger’s gun sales trail last year by nearly 20 percent.

Killoy told shareholders in May the company “has a consistent game plan” in good times and bad and expressed certainty the market would fluctuate again this year.

“The seasonality of our industry is very well defined, very well predicted and pretty much understood by those of us in the business,” he said. “Frankly, from a percentage standpoint, people have talked about the change in the firearms market since the November election, I think it would fair in saying the demise of the firearms industry was likely greatly exaggerated.”

“That first quarter, however, was not without it’s struggles. It was a very promotionally charged environment,” he added.

He cited “aggressive price discounting and lucrative consumer rebates offered by many of our competitors” as a continuing factor in Ruger’s second quarter decline.

“But our strategy is I think you know anticipate this type of downturn in the market and it’s a volatile inventory,” he told investors Thursday. “It’s not all gloom and doom. To their credit, retailers are healthier than they were a few months ago. Many had increased inventories in anticipation of a surge in demand following the elections last November. When that surge didn’t materialize, it’s understandable they took a deep breath and let their inventories decrease.”

Unit sell-through from independent distributors decreased by 16 percent in quarter three, Killoy said, mimicking a 10 percent decline in National Instant Criminal Background Check System applications during the same time frame. The industry uses NICS as a barometer for sales and the gun market’s overall health, although the measurement isn’t exact.

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