Item 1. Business
ITEM 1—BUSINESS
Company Overview
Sturm, Ruger & Company, Inc. and Subsidiaries
(the “Company”) is principally engaged in the design, manufacture, and sale of firearms to domestic customers. Virtually all
of the Company’s sales for the year ended December 31, 2024 were from the firearms segment, with less than 1% from the castings
segment. Export sales represent approximately 5% of firearms sales. The Company’s design and manufacturing operations are located
in the United States and almost all product content is domestic.
The Company has been in business since 1949 and
was incorporated in its present form under the laws of Delaware in 1969. The Company primarily offers products in three industry product
categories – rifles, pistols, and revolvers. The Company’s firearms are sold through independent wholesale distributors, principally
to the commercial sporting market.
The Company manufactures and sells investment
castings made from steel alloys and metal injection molding (“MIM”) parts for internal use in the firearms segment and has
minimal sales to outside customers. The castings and MIM parts are sold to outside customers, either directly or through manufacturers’
representatives.
For the years ended December 31, 2024, 2023, and
2022, net sales attributable to the Company's firearms operations were $533.6 million, $540.7 million and $593.3 million. The balance
of the Company's net sales for the aforementioned periods was attributable to its castings operations.
Firearms Products
The Company presently manufactures firearm products,
under the “Ruger” name and trademark, in the following industry categories:
Rifles
Revolvers
●
Single-shot
●
Single-action
●
Autoloading
●
Double-action
●
Bolt-action
●
Modern sporting
Pistols
●
Rimfire autoloading
●
Centerfire autoloading
In addition, the Company manufactures lever-action
rifles under the “Marlin” name and trademark.
Most firearms are available in several models
based upon caliber, finish, barrel length, and other features.
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Rifles
A rifle is a long gun with spiral grooves cut
into the interior of the barrel to give the bullet a stabilizing spin after it leaves the barrel. Net sales of rifles by the Company accounted
for $310.2 million, $306.8 million, and $305.4 million of total net sales for the years 2024, 2023, and 2022, respectively.
Pistols
A pistol is a handgun in which the ammunition
chamber is an integral part of the barrel and which typically is fed ammunition from a magazine contained in the grip. Net sales of pistols
by the Company accounted for $135.3 million, $131.4 million, and $184.7 million of revenues for the years 2024, 2023, and 2022, respectively.
Revolvers
A revolver is a handgun that has a cylinder that
holds the ammunition in a series of chambers which are successively aligned with the barrel of the gun during each firing cycle. There
are two general types of revolvers, single-action and double-action. To fire a single-action revolver, the hammer is pulled back to cock
the gun and align the cylinder before the trigger is pulled. To fire a double-action revolver, a single trigger pull advances the cylinder
and cocks and releases the hammer. Net sales of revolvers by the Company accounted for $54.8 million, $72.5 million, and $70.0 million
of revenues for the years 2024, 2023, and 2022, respectively.
Accessories
The Company also manufactures and sells accessories
and replacement parts for its firearms. These sales accounted for $33.3 million, $30.0 million, and $33.2 million of total net sales for
the years 2024, 2023, and 2022, respectively.
Castings Products
Net sales attributable to the Company’s
casting operations (excluding intercompany transactions) accounted for $3.0 million, $3.0 million, and $2.6 million, for 2024, 2023, and
2022, respectively. These sales represented less than 1% of total net sales in each year.
Manufacturing
Firearms
The Company produces some of its pistol models,
most of its revolvers, and some of its rifle models at the Newport, New Hampshire facility. One model of revolver, one model of rifle,
and most of the Company’s pistols are produced at the Prescott, Arizona facility. Some rifle models and pistol models are produced
at the Mayodan, North Carolina facility.
Many of the basic metal component parts of the
firearms manufactured by the Company are produced by the Company's castings segment through precision investment casting and metal injection
molding. See "Manufacturing- Investment Castings and Metal Injected Moldings" below for a description of these processes. The
Company believes that investment castings and MIM parts provide greater design flexibility and result in component parts which are generally
close to their ultimate shape and, therefore, require less machining than processes requiring machining a
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solid billet of metal to obtain
a part. Through the use of investment castings and MIM parts, the Company endeavors to produce durable and less costly component parts
for its firearms.
All assembly, inspection, and testing of firearms
manufactured by the Company are performed at the Company's manufacturing facilities. Every firearm, including every chamber of every revolver
manufactured by the Company, is test-fired prior to shipment.
Investment Castings and Metal Injection Moldings
To produce a product by the investment casting
method, a wax model of the part is created and coated (“invested”) with several layers of ceramic material. The shell is then
heated to melt the interior wax, which is poured off, leaving a hollow mold. To cast the desired part, molten metal is poured into the
mold and allowed to cool and solidify. The mold is then broken off to reveal a near net shape cast metal part.
Metal injection molding is a three part powder
metallurgy process by which a feedstock consisting of finely powdered metal and binders is processed through injection molding, debinding,
and sintering equipment to produce steel, stainless steel, and alloy parts of complex shape and geometry. This process allows for
high volume production while eliminating many of the wastes of traditional metal working methods, yielding net shape and near net shape
parts.
Marketing and Distribution
Firearms
The Company's firearms are primarily marketed
through a network of federally licensed, independent wholesale distributors who purchase the products directly from the Company. They
resell to federally licensed, independent retail firearms dealers who in turn resell to legally authorized end users. All retail purchasers
are subject to a point-of-sale background check by law enforcement. These end users include sportsmen, hunters, people interested in self-defense,
law enforcement and other governmental organizations, and gun collectors. Each domestic distributor carries the entire line of firearms
manufactured by the Company for the commercial market. Currently, 14 distributors service the domestic commercial market, with an additional
26 distributors servicing the domestic law enforcement market and 44 distributors servicing the export market.
In 2024, the Company’s largest customers
and the percent of firearms sales they represented were as follows: Lipsey’s – 28%; Sports South - 18%; and Davidson’s
- 16%.
In 2023, the Company’s largest customers
and the percent of firearms sales they represented were as follows: Lipsey’s – 24%; Davidson’s - 19%; and Sports South
- 15%.
In 2022, the Company’s largest customers
and the percent of firearms sales they represented were as follows: Lipsey’s - 23%; Davidson’s - 23%; and Sports South - 21%.
The Company employs 18 employees who service these
distributors and call on retailers and law enforcement agencies. Because the ultimate demand for the Company's firearms comes from end
users rather than from the independent wholesale distributors, the Company believes that the loss
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of any distributor would not have a
material, long-term adverse effect on the Company, but may have a material adverse effect on the Company’s financial results for
a particular period. The Company considers its relationships with its distributors to be satisfactory.
The Company also exports its firearms through
a network of selected commercial distributors and directly to certain foreign customers, consisting primarily of law enforcement agencies
and foreign governments. Foreign sales were 5%, 6%, and 6% of the Company’s consolidated net sales for 2024, 2023, and 2022, respectively.
Investment Castings and Metal Injection Moldings
The castings segment provides castings and MIM
parts for the Company’s firearms segment. In addition, the castings segment produces some products for a number of customers in
a variety of industries.
Competition
Firearms
Competition in the firearms industry is intense
and comes from both foreign and domestic manufacturers. While some of these competitors concentrate on a single industry product category
such as rifles or pistols, many competitors manufacture products in two or three of the four categories (rifles, shotguns, pistols, and
revolvers) and a few competitors manufacture products in all four categories. The principal methods of competition in the industry are
product innovation, quality, availability, brand, and price. The Company believes that it can compete effectively with all of its present
competitors.
Investment Castings and Metal Injection Moldings
There are a large number of investment castings
and MIM manufacturers, both domestic and foreign, with which the Company competes. Competition varies based on the type of investment
castings products and the end use of the product. Companies offering alternative methods of manufacturing such as wire electric discharge
machining (EDM) and advancements in computer numeric controlled (CNC) machining also compete with the Company’s castings segment.
Many of these competitors are larger corporations than the Company with substantially greater financial resources than the Company, which
could affect the Company’s ability to compete with these competitors. The principal methods of competition in the industry are quality,
price, and production lead time.
Human Capital
The Company
is an equal opportunity employer dedicated to the attraction, development, and retention of our employees by providing a preferred work
environment that promotes and celebrates our core values of Integrity, Respect, Innovation and Teamwork. Our goal is to develop, motivate,
retain and reward passionate and dedicated employees.
As of February 1, 2025, the Company employed approximately
1,780 full-time employees, approximately 33% of whom had at least ten years of service with the Company.
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The Company attracts candidates and retains employees
by offering competitive compensation packages, which include:
● Base wages,
● Profit sharing,
● Medical and welfare benefits,
● Holidays and other paid time off, and
● 401(k) plan participation and matching program.
The Company believes its compensation
packages:
● Provide a base level of compensation to reflect an individual’s role and responsibilities,
● Recognize and reward employees for the Company’s success, and
● Provide for the safety, security and well-being of employees.
Our primary vehicle for human capital development
is Ruger University, which has a mission to:
● Enhance the understanding of our industry, Company
and culture,
● Strengthen the technical, interpersonal and leadership
skills of each employee, and
● Allow employees to positively change their own
lives while creating value for all Ruger stakeholders.
In addition to providing a competitive compensation
package and emphasizing the development of employees, the Company retains its employees by maintaining a safe, responsible, and preferred
workplace. The Company is committed to conducting business in conformance with the highest ethical standards and in compliance with all
applicable legal and regulatory requirements. The “Code of Business Conduct and Ethics” and the “Corporate Compliance
Program” are two active programs that guide the Company’s practices to achieve these goals.
To assess and improve employee retention and engagement,
the Company surveys employees on an annual basis with the assistance of a third-party consultant, and takes actions to address areas of
employee concern and build on the competencies that are important for our future success.
Research and Development
In 2024, 2023, and 2022, the Company spent approximately
$8.2 million, $9.8 million, and $9.6 million, respectively, on research and development activities relating to new products and the improvement
of existing products. Research and development expenses are included in costs of products sold. As of February 1, 2025, the Company had
approximately 60 employees whose primary responsibilities were research and development activities.
Patents and Trademarks
The Company owns various United States and foreign
patents and trademarks which have been secured over a period of years and which expire at various times. It is the policy of the Company
to apply for patents and trademarks whenever new products or processes deemed commercially
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valuable are developed or marketed by the Company.
The Company deems its patents and trademarks to be valuable and therefore works to police and protect them.
Environmental Matters
The Company is committed to achieving high standards
of environmental quality and product safety, and strives to provide a safe and healthy workplace for its employees and others in the communities
in which it operates. The Company has programs in place that monitor compliance with various environmental regulations. However, in the
normal course of its manufacturing operations the Company is subject to governmental proceedings and orders pertaining to waste disposal,
air emissions, and water discharges into the environment. These regulations are integrated into the Company’s manufacturing, assembly,
and testing processes. The Company believes that it is generally in compliance with applicable environmental regulations and that the
outcome of any environmental proceedings and orders will not have a material adverse effect on the financial position of the Company,
but could have a material adverse effect on the financial results for a particular period.
Information about our Executive Officers
Set forth below are the names, ages, and positions
of the executive officers of the Company. Officers serve at the discretion of the Board of Directors of the Company.
Name
Age
Position With Company
Christopher J. Killoy
66
President and Chief Executive Officer
(until March 1, 2025)
Todd W. Seyfert
55
President and Chief Executive Officer
(effective March 1, 2025)
Thomas A. Dineen
56
Senior Vice President, Treasurer, and Chief Financial Officer
Kevin B. Reid, Sr.
64
Vice President, General Counsel, and Corporate Secretary
Shawn C. Leska
53
Vice President, Sales
Sarah F. Colbert
44
Vice President, Administration
Timothy M. Lowney
61
Vice President of Manufacturing Operations
Michael W. Wilson
48
Vice President of New Product Development
Robert J. Werkmeister, Jr.
50
Vice President of Marketing
Christopher J. Killoy became President & Chief
Executive Officer on May 9, 2017. Previously he served as President and Chief Operating Officer since January 1, 2014. Prior to that he
served as Vice President of Sales and Marketing since November 27, 2006. Mr. Killoy originally joined the Company in 2003 as Executive
Director of Sales and Marketing, and subsequently served as Vice
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President of Sales and Marketing from
November 1, 2004 to January 25, 2005. Mr. Killoy will step down as President & Chief Executive Officer on March 1, 2025 and then
serve as a Special Advisor through his planned retirement from the Company in May 2025.
Todd W. Seyfert will become President & Chief
Executive Officer on March 1, 2025. Previously, Mr. Seyfert served as the President of Segment Land Vehicles Americas at Dometic Group
AB since January 2024. Prior to that Mr. Seyfert served as the Chief Executive Officer of FeraDyne Outdoors, LLC, a leading manufacturer
of premium archery and hunting products from February 2016 through May 2023.
Thomas A. Dineen became Senior Vice President
on July 10, 2017. Previously he served as Vice President since May 24, 2006. Prior to that he served as Treasurer and Chief Financial
Officer since May 6, 2003 and had been Assistant Controller since 2001. Mr. Dineen joined the Company as Manager, Corporate Accounting
in 1997.
Kevin B. Reid, Sr. became Vice President and General
Counsel on April 23, 2008. Previously he served as the Company’s Director of Marketing from June 4, 2007. Mr. Reid joined the Company
in July 2001 as an Assistant General Counsel.
Shawn C. Leska became Vice President, Sales on
November 6, 2015. Mr. Leska joined the Company in 1989 and has served in a variety of positions in the sales department. Most recently,
Mr. Leska served as Director of Sales since 2011.
Sarah F. Colbert became Vice President of Administration
on June 1, 2017. Ms. Colbert has served the Company in various human resource and legal capacities since joining the Company in 2011.
Timothy M. Lowney became Vice President of Manufacturing
Operations on June 15, 2023. Previously, he served as the Company’s Vice President of Operations for Newport, Prescott and RPM Manufacturing
since June 15, 2023. Mr. Lowney joined the Company in January 2007.
Michael W. Wilson became Vice President of New
Product Development on April 1, 2024. Previously, he served as the Company’s Vice President of Operations for New Product Development,
Product Engineering and Mayodan Manufacturing since June 15, 2023. Mr. Wilson joined the Company in July 2007.
Robert J. Werkmeister, Jr. became Vice President
of Marketing upon joining the Company on June 1, 2017. Mr. Werkmeister has served as the Company’s Director of Marketing since January
2013 as President and founder of Symbolic, Inc., a full-service marketing agency. While with Symbolic, Rob began working with Ruger as
a client in 2002 and has been the primary strategic marketing driver for the Ruger account since 2007.
Where You Can Find More Information
The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and accordingly, files its Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Definitive Proxy Statements, Current Reports on Form 8-K, and
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other information with the Securities
and Exchange Commission (the “SEC”). As an electronic filer, the Company's public filings are maintained on the SEC's Internet
site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC. The address of that website is http://www.sec.gov.
The Company makes its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Definitive Proxy Statements, Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act accessible free of charge through the Company's Internet site after the Company
has electronically filed such material with, or furnished it to, the SEC. The address of that website is http://www.ruger.com. However,
such reports may not be accessible through the Company's website as promptly as they are accessible on the SEC’s website.
Additionally, the Company’s corporate governance
materials, including its Corporate Governance Guidelines, the charters of the Audit, Compensation, Nominating and Corporate Governance,
Risk Oversight and Capital Policy committees, and the Code of Business Conduct and Ethics may also be found under the “Investor
Relations” subsection of the “Corporate” section of the Company’s Internet site at http://www.ruger.com/corporate.
A copy of the foregoing corporate governance materials is available upon written request to the Corporate Secretary at Sturm, Ruger &
Company, Inc., 1 Lacey Place, Southport, Connecticut 06890.