Ruger(US:RGR)2023-02-22 22:06PART I Business Overview Sturm, Ruger & Company, Inc. designs, manufactures, and sells firearms, accounting for 99% of 2022 revenue, through wholesale distributors, with a focus on innovation - Sturm, Ruger & Company, Inc. is primarily engaged in the design, manufacture, and sale of firearms to domestic customers, with firearms sales representing virtually all (99%) of total sales in 2022. Export sales accounted for approximately 6% of firearms sales13104 Product Category Net Sales | Product Category | 2022 Net Sales ($ millions) | 2021 Net Sales ($ millions) | 2020 Net Sales ($ millions) | | :--------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Rifles | 305.4 | 317.5 | 234.3 | | Pistols | 184.7 | 278.4 | 198.1 | | Revolvers | 70.0 | 84.4 | 79.1 | | Accessories | 33.2 | 47.8 | 54.1 | | Castings | 2.6 | 2.6 | 3.0 | - The Company acquired substantially all of the Marlin Firearms assets on November 23, 2020, for approximately $28.3 million, with shipments of Ruger-made Marlin lever-action rifles beginning in late Q4 202116172 - The Company's firearms are sold through independent wholesale distributors to the commercial sporting market, law enforcement, and governmental organizations. Top distributors in 2022 were Lipsey's (23%), Davidson's (23%), and Sports South (21%)14343536 Research and Development Expenses | Metric | 2022 ($ millions) | 2021 ($ millions) | 2020 ($ millions) | | :----------------------------------- | :---------------- | :---------------- | :---------------- | | Research and Development Expenses | 9.6 | 11.7 | 8.0 | - As of February 1, 2023, the Company employed approximately 1,880 full-time employees, with about 28% having at least ten years of service. The company focuses on competitive compensation, employee development through 'Ruger University,' and maintaining a safe workplace4546 Risk Factors The Company faces significant risks from government policies, firearms legislation, litigation, operational challenges, and supply chain disruptions - Changes in government policies and firearms legislation, including potential restrictions or bans on certain firearms, new technology requirements (e.g., microstamping, 'smart gun' technology), and diverse state/federal laws, could materially adversely affect the Company's financial results and operations64676869 - The COVID-19 pandemic continues to pose significant uncertainty, potentially impacting operations, financial results, cash flow, and financial condition, despite the Company's proactive mitigation efforts in 202270106108 - The Company is exposed to various litigation matters, including product liability, municipal lawsuits (e.g., City of Gary, Estados Unidos Mexicanos, City of Buffalo, City of Rochester), and negligence claims (e.g., data breach related to ShopRuger.com). Adverse outcomes could materially affect financial results7292939495318321336 - Operational risks include decreased demand for products, financial distress of independent distributors (who account for over 90% of sales), reliance on third-party raw material suppliers and transportation, and potential business disruptions at manufacturing facilities7576818485 - The successful integration of Marlin branded firearms and the availability and retention of a skilled labor force, particularly senior management, are critical to the Company's success and present ongoing risks8687 Unresolved Staff Comments The Company reported no unresolved staff comments from the SEC - There are no unresolved staff comments88 Properties The Company operates four manufacturing facilities for firearms and castings in Newport, Prescott, Mayodan, and Earth City, with executive offices in Southport, Connecticut Facility Locations | Facility Location | Approximate Usable Square Feet | Status | Segment | | :----------------------- | :----------------------------- | :----- | :--------------- | | Newport, New Hampshire | 350,000 | Owned | Firearms/Castings| | Prescott, Arizona | 230,000 | Leased | Firearms | | Mayodan, North Carolina | 220,000 | Owned | Firearms | | Earth City, Missouri | 35,000 | Leased | Castings | - The Company's principal executive offices are located in Southport, Connecticut91 Legal Proceedings The Company was instituted in five new lawsuits during Q4 2022, including municipal litigation, a negligence claim, and two data breach class actions - Five lawsuits were formally instituted against the Company during the three months ending December 31, 202293 - The City of Buffalo v. Smith & Wesson Brands, Inc., et al. (filed in New York State Supreme Court, Erie County, on December 20, 2022)939495 - The City of Rochester v. Smith & Wesson Brands, Inc., et al. (filed in New York State Supreme Court, Monroe County, on December 21, 2022)939495 - Rossiter v. Sturm, Ruger & Co., Inc., et al. (filed in Sullivan County Superior Court, New Hampshire, on December 13, 2022)939495 - Jones v. Sturm, Ruger & Co. (filed in U.S. District Court, District of Connecticut, on October 4, 2022)939495 - Copeland v. Sturm, Ruger & Company, et al. (filed in U.S. District Court, District of New Jersey, on October 27, 2022)939495 Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to Sturm, Ruger & Company, Inc96 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock trades on the NYSE under 'RGR', with 1,826 stockholders as of February 2023, repurchasing $0.2 million in shares in 2022, and $86.5 million authorized for future repurchases - The Company's common stock is traded on the New York Stock Exchange under the symbol 'RGR'. As of February 10, 2023, there were 1,826 stockholders of record97 Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Program | | :------------------------- | :------------------------------- | :------------------------------- | :------------------------------------------------------------------- | | August 28 to October 1, 2022 | 2,136 | 49.97 | 2,136 | | October 30 to November 26, 2022 | 2,304 | 49.77 | 2,304 | | Total 2022 | 4,440 | 49.87 | 4,440 | - At December 31, 2022, approximately $86.5 million remained authorized for share repurchases. No shares were