What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-30 · 154 added, 74 removed, 189 unchanged (55% of the section changed)

5 unchanged sentences

99% of sales are from firearms.

Export sales accounted for approximately 5% of total sales for each of the three month periods ended March

29, 2025 and March 30, 2024.

Export sales accounted for approximately 5% of total sales for each of the six month periods ended June

28, 2025 and June 29, 2024.

The Company’s design and manufacturing operations are located in the United States and almost all product

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Results of Operations

During the six months ended

June 28, 2025 the Company has undertaken several strategic initiatives to enhance its operational and market positioning.

These initiatives

● A leadership transition to welcome a new CEO and evolve its leadership structure, along with an organizational

realignment designed to improve efficiency and effectiveness,

● An inventory rationalization, in which the Company revised its product strategy for 2025 and beyond and

reassessed its raw material, work-in-process and finished goods inventories to identify and reserve for inventory that is now excess,

obsolete or ready to be discontinued due to the revised product roadmaps, including legacy models that have run their lifecycle, products

that are no longer part of the long-term strategy, and Marlin-related items that are not part of the product roadmap for that brand, and

● A product repositioning to address its product strategy for the future and take a hard look at current

market conditions, consumer demand and overall economics to identify areas where it has desirable products, with strong features that

need to reach its customers at a better price point.

These initiatives impacted

the results of operations for the three month period ending June 28, 2025 as follows, which reduced diluted earnings per share $1.46:

● Sales reduction of $5.7 million related to the sale of 67,000 units of discontinued models

● Increased cost of sales of $17.0 million, reflecting the write-off of inventory and other assets related

to the revised product strategy and product roadmap

● Increased general and administrative expenses of $3.7 million related to the leadership transition and

organizational realignment

The estimated unit sell-through

of the Company’s products from the independent distributors to retailers decreased 8% in the first quarter of 2025 compared to the

of the Company’s products from the independent distributors to retailers decreased 4% in the first half of 2025 compared to the

prior year period.

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Estimated sell-through from the independent distributors

to retailers and total adjusted NICS background checks for the trailing five quarters follow:

to retailers and total adjusted NICS background checks for the trailing six quarters follow:

Estimated Units Sold from Distributors to Retailers (1)

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● Do not consider potential timing issues within the distribution channel, including goods-in-transit, and

not consider fluctuations in inventory at retail.

Do not consider fluctuations in inventory at retail.

(2) NICS background checks are performed when the ownership of most firearms, either new or used, is transferred

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The units ordered, value of

orders received, average sales price of units ordered, and ending backlog for the trailing five quarters are as follows (dollars in millions,

orders received, average sales price of units ordered, and ending backlog for the trailing six quarters are as follows (dollars in millions,

except average sales price):

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to plan production levels.

The Company’s overall production in the first quarter of 2025 increased 2% from the fourth quarter of

The Company’s overall production in the second quarter of 2025 increased 3% from the first quarter of

Summary Unit Data

Firearms unit data for the

trailing five quarters are as follows (dollar amounts shown are net of Federal Excise Tax of 10% for handguns and 11% for long guns):

trailing six quarters are as follows (dollar amounts shown are net of Federal Excise Tax of 10% for handguns and 11% for long guns):

Units Ordered

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Ending Unit Backlog

During the first quarter of

2025, the Company’s finished goods inventory increased by 15,300 units and distributor inventories of the Company’s products

decreased by 7,900 units.

Inventory unit data for the trailing five quarters

During the first half of 2025,

the Company’s finished goods inventory increased by 35,500 units and distributor inventories of the Company’s products increased

by 24,900 units.

Inventory unit data for the trailing six quarters

Company Inventory

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sold, and gross profit data for the three months ended (dollars in millions):

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

Net firearms sales

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Total consolidated net sales

and net firearms sales decreased slightly for the three months ended March 29, 2025.

Sales of new products, including the RXM pistol,

Super Wrangler revolver, Marlin lever-action rifles, and American Centerfire Rifle Generation II represented $40.7 million or 31.6% of

firearm sales in the three months ended March 29, 2025.

New product sales include only major new products that were introduced in the

past two years.

The increased gross profit for

the three months ended March 29, 2025 is attributable to favorable leveraging of fixed costs resulting from increased production, despite

the $0.8 million of deferred revenue related to sales promotions.

The increase in gross margin

for the three months ended March 29, 2025 is attributable to the aforementioned factors.

and net firearms sales increased slightly for the three months ended June 28, 2025, despite the $5.7 million reduction related to the

close out of 67,000 units of discontinued models.

Sales of new products, including the RXM pistol, Super Wrangler revolver, Marlin lever-action

rifles, and American Centerfire Rifle Generation II represented $42.2 million or 33.5% of firearm sales in the three months ended June

New product sales include only major new products that were introduced in the past two years.

The decreased gross profit

for the three months ended June 28, 2025 is attributable to inventory rationalization write-offs taken during the quarter and the aforementioned

sales reductions, partially off-set by favorable leveraging of fixed costs resulting from increased production.

The decrease in gross margin

for the three months ended June 28, 2025 is attributable to the aforementioned factors.

Net sales, cost of products

sold, and gross profit data for the six months ended (dollars in millions):

June 28, 2025

June 29, 2024

Net firearms sales

Net castings sales

Total net sales

Cost of products sold

Total consolidated net sales

and net firearms sales increased slightly for the six months ended June 28, 2025, despite the $5.7 million reduction related to the close

out of 67,000 units of discontinued models.

Sales of new products, including the RXM pistol, Super Wrangler revolver, Marlin lever-action

rifles, and American Centerfire Rifle Generation II, represented $82.6 million or 32.5% of firearm sales in the first half of 2025.

product sales include only major new products that were introduced in the past two years.

The decreased gross profit

for the six months ended June 28, 2025 is attributable to inventory rationalization write-offs and the aforementioned sales reductions,

partially off-set by favorable deleveraging of fixed costs resulting from increased production.

The decrease in gross margin

for the six months ended June 28, 2025 is attributable to the aforementioned factors.

Selling and General and Administrative Expenses

1 unchanged sentence

expenses data for the three months ended (dollars in millions):

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

Selling expenses

1 unchanged sentence

Total operating expenses

The decrease in selling expenses

for the three months ended March 29, 2025 was attributable to decreased spending on industry shows, personnel costs, and shipping expenses,

partially offset by increases in travel costs and several promotional and marketing initiatives.

The slight decrease in general

and administrative expenses for the three months ended March 29, 2025 was primarily attributable to the initial expense of the prior year’s

reduction in force, partially offset by increased professional service costs.

The increase in selling expenses

for the three months ended June 28, 2025 was attributable to increases in advertising and several promotional and marketing initiatives,

partially offset by decreases in spending on travel costs, industry shows, personnel costs, and shipping expenses.

The increase in general and

administrative expenses for the three months ended June 28, 2025 was primarily attributable to expenses incurred due to the Company’s

leadership transition and organizational realignment.

Selling and general and administrative

expenses data for the six months ended (dollars in millions):

June 28, 2025

June 29, 2024

Selling expenses

General and administrative expenses

Total operating expenses

The increase in selling expenses

for the six months ended June 28, 2025 was attributable to increases in advertising and several promotional and marketing initiatives,

partially offset by decreases in spending on industry shows, personnel costs, and shipping expenses.

The increase in general and

administrative expenses for the six months ended June 28, 2025 was primarily attributable to expenses incurred due to the Company’s

leadership transition and organizational realignment.

This action is part of the Company’s initiatives to reallocate its resources

and cost structure into prioritized areas that will drive long-term growth and improve margins.

As the Company focuses on these goals,

it will continue to pursue opportunities to reduce or eliminate investment in areas of lower focus.

Other income data for the

three months ended (dollars in millions):

March 29, 2025

March 30, 2024

June 28, 2025

June 29, 2024

The decrease in other income

for the three months ended March 29, 2025 was attributable to decreased interest income.

for the three months ended June 28, 2025 was attributable to decreased interest income.

Other income data for the

six months ended (dollars in millions):

June 28, 2025

June 29, 2024

The decrease in other income

for the six months ended June 28, 2025 was attributable to decreased interest income.

Income Taxes and Net Income

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and the nondeductibility of certain executive compensation.

The Company’s effective income tax rate was 20.3% and 21.7% for the

three months ended March 29, 2025 and March 30, 2024, respectively

The reduction in 2025 earnings increased the impact of these items, which

resulted in effective income tax rates of 11.2% and 1.9% for the three and six months ended June 28, 2025, respectively.

The Company’s

effective income tax rate was 21.0% and 21.3% for the three and six months ended June 29, 2024, respectively.

As a result of the foregoing

factors, consolidated net income was $7.8 million for the three months ended March 29, 2025, an increase of 9.7% from $7.1 million in

the comparable prior year period.

factors, consolidated net loss was $(17.2) million for the three months ended June 28, 2025, a change of (308.4%) from $8.3 million consolidated

net income in the comparable prior year period.

Consolidated net loss was

$(9.5) million for the six months ended June 28, 2025, a change of (161.6%) from $15.3 million consolidated net income in the comparable

prior year period.

Non-GAAP Financial Measures

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the amount of interest income that was included in net income from net income to arrive at EBITDA.

The Company calculates EBITDA margin

by dividing EBITDA by total net sales.

The Company’s EBITDA calculation

also excludes any one-time non-cash, non-operating expense.

The Company calculates EBITDA margin by dividing EBITDA by total net sales.

EBITDA was $2.3 million for

the three months ended March 29, 2025, an increase of 5.6% from $13.5 million in the comparable prior year period.

the three months ended June 28, 2025, a decrease of 84.4% from $14.5 million in the comparable prior year period.

For the six months ended June

28, 2025 EBITDA was $16.6 million, a decrease of 40.9% from $28.0 million in the comparable prior year period.

Non-GAAP Reconciliation – EBITDA

1 unchanged sentence

Three Months Ended

March 29, 2025

March 30, 2024

Six Months Ended

June 28, 2025

June 29, 2024

June 28, 2025

June 29, 2024

Inventory rationalization

Income tax expense

6 unchanged sentences

Liquidity and Capital Resources

At the end of the first quarter

At the end of the second quarter

of 2025, the Company’s cash and short-term investments totaled $101.4 million.

1 unchanged sentence

the LIFO reserve of $68.2 million, resulted in working capital of $165.5 million and a current ratio of 4.0 to 1.

Cash provided by operating activities

was $11.1 million for the three months ended March 29, 2025, compared to $7.3 million for the comparable prior year period.

in cash provided in the three months ended March 29, 2025 is primarily attributable to the increase in net income and the lesser increase

in deferred income taxes and lower net payouts of accrued employee compensation and benefits in the three months ended March 29, 2025,

partially offset by the lesser reductions in inventory and prepaid expenses and other current assets in the three months ended March 29,

Cash provided by operating

activities was $25.9 million for the six months ended June 28, 2025, compared to $26.1 million for the comparable prior year period.

slight decrease in cash provided in the six months ended June 28, 2025 is primarily attributable to the decrease in net income and the

lesser reductions in prepaid expenses and other current assets in the six months ended June 28, 2025, partially offset by the impact of

the write-off of inventory related to the Company’s inventory rationalization and the lower net payouts of accrued employee compensation

and benefits in the six months ended June 28, 2025.

Third parties supply the Company

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Investing and Financing

Capital expenditures for the three

months ended March 29, 2025 totaled $1.1 million, a decrease from $1.8 million in the comparable prior year period.

In 2025, the Company

expects capital expenditures related to new product introductions and upgrades to our manufacturing equipment and facilities could range

from $20 million to $30 million.

Actual capital expenditures could vary significantly from the projected amounts due to the timing of

capital projects.

The Company finances, and intends to continue to finance, all of these activities with funds provided by operations

and current cash and cash equivalents.

Capital expenditures for the

six months ended June 28, 2025 totaled $6.7 million, a decrease from $10.4 million in the comparable prior year period.

The Company expects

capital expenditures in the latter half of 2025 to increase from the first half of the year, exclusive of the Anderson purchase, as we

invest in new product introductions, expand capacity, upgrade our manufacturing capabilities and strengthen our facility infrastructure.

Actual capital expenditures could vary significantly from the projected amounts due to the timing of capital projects.

The Company finances,

and intends to continue to finance, all of these activities with funds provided by operations and current cash and cash equivalents.

On July 1, 2025 the

Company announced the asset purchase of Anderson Manufacturing, a manufacturer of firearms and firearm accessories based in Hebron, Kentucky

for $16.4 million.

This strategic purchase includes Anderson’s manufacturing facility and machinery and will provide Ruger the

opportunity to work with a skilled and experienced workforce, strengthening its production capabilities and expanding its product offerings.

Dividends of $6.9 million

were paid during the three months ended March 29, 2025.

were paid during the six months ended June 28, 2025.

The Company has financed its dividends with cash provided by operations and current

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The Company’s practice is to pay a dividend of approximately 40% of net income.

On April 25, 2025, the Company’s

Board of Directors authorized a dividend of 18¢ per share to shareholders of record on May 16, 2025, payable on May 30, 2025.

payment of future dividends depends on many factors, including internal estimates of future performance, then-current cash and short-term

investments, and the Company’s need for funds.

As of March 29, 2025, the

Company had $63.3 million of United States Treasury instruments which mature within one year.

The Company also invests available cash

in a bank-managed money market fund that invests exclusively in United States Treasury instruments which mature within one year.

29, 2025, the Company’s investment in this money market fund totaled $28.9 million.

During the three months ended

March 29, 2025 the Company purchased 79,200 shares of its common stock for $3.0 million in the open market.

On July 25, 2025, the Company’s

Board of Directors authorized a dividend of 16¢ per share to shareholders of record on August 15, 2025, payable on August 29, 2025.

This dividend is approximately 40% of adjusted diluted earnings of 41¢ per share for the second quarter of 2025.

The payment of future

dividends depends on many factors, including internal estimates of future performance, then-current cash and short-term investments, and

the Company’s need for funds.

As of June 28, 2025, the Company

had $55.2 million of United States Treasury instruments which mature within one year.

The Company also invests available cash in a bank-managed

money market fund that invests exclusively in United States Treasury instruments which mature within one year.

At June 28, 2025, the Company’s

investment in this money market fund totaled $22.9 million.

During the six months ended

June 28, 2025 the Company purchased 443,084 shares of its common stock for $16.1 million in the open market.

The average price per share

1 unchanged sentence

These purchases were funded with cash on hand.

As of March 29, 2025, $37.3 million remained authorized for future

As of June 28, 2025, $24.1 million remained authorized for future

stock repurchases.

2 unchanged sentences

The Company’s

unsecured $40 million credit facility, which expires on January 7, 2028, was unused at March 29, 2025.

unsecured $40 million credit facility, which expires on January 7, 2028, was unused at June 28, 2025.

Other Operational Matters

37 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis