Q3 2011 Earnings Call Transcript

Transcript Call Date 11/03/2011

Operator: Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 Sturm Ruger and Company Earnings Conference Call. My name is Cathy and I'll be your conference operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes. I will now like to turn the conference over to your host for today's call to Mr. Mike Fifer, Chief Executive Officer of Sturm Ruger. Please proceed.

Michael O. Fifer - CEO: Good morning, and welcome to our third quarter conference call at Sturm Ruger and Company. We would like to start with a reading of the caution on forward-looking statements by (Sarah Depamphilis), our Assistant General Counsel. And then we will give you a quick overview of the third quarter and we'll get right into your questions. Sarah?

Sarah Depamphilis - Assistant General Counsel: Good morning, everyone. Statements made in the course of this presentation 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 materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained from time-to-time in the Company's SEC filings, including but not limited to the Company's reports on Form 10-K for the year ended December 31, 2010, and Form 10-Q for the first, second and third quarters of 2011. Copies of these documents may be obtained through the Company through our website at www.ruger.com or from the SEC. Furthermore, management disclaims all responsibility to update forward-looking statements.

Michael O. Fifer - CEO: Thank you, Sarah. For the third quarter of 2011, net sales were $80.5 million and earnings were $0.57 per share. Comparing year-over-year this represents a net sales increase of 38% and an earnings increase of 78% from the corresponding period in 2010, when net sales were $58.4 million and earnings were $0.32 per share.

Comparing consecutive quarters, sales and earnings in the third quarter were comparable with the second quarter. This is significant because the historical pattern of our business is for the third quarter to be slower than the second quarter. We are very pleased with the strength of our third quarter.

One of the factors that helped us achieve a strong third quarter was the shipment of new products. In the third quarter of 2011, 33% of our sales were from new products compared to 21% of sales for the third quarter of 2010. As a reminder, the definition we use for new products includes only the first two years of sales on major product introductions.

Thus far in 2011, we have launched the LC9 pistol, the SR1911 pistol, the Single-Ten Single-Action Revolver, the SR40C compact striker fire pistol, and the SP101 double-action revolver chambered in .22 Long Rifle.

One of the fundamentals of our strategy is to drive demand with new products.

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