STURM RUGER & CO INC 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands) September 27, 2025 December 31, 2024 (Note) Assets Current Assets Cash $ 16,078 $ 10,028 Short-term investments 64,760 95,453 Trade receivables, net 59,888 67,145 Gross inventories (Note 5) 126,467 149,417 Less LIFO reserve ( 68,165 ) ( 66,398 ) Less excess and obsolescence reserve ( 3,658 ) ( 6,533 ) Net inventories 54,644 76,486 Prepaid expenses and other current assets 12,937 9,245 Total Current Assets 208,307 258,357 Property, plant and equipment 504,256 477,622 Less allowances for depreciation ( 421,365 ) ( 406,373 ) Net property, plant and equipment 82,891 71,249 Deferred income taxes 20,057 16,681 Other assets 31,065 37,747 Total Assets $ 342,320 $ 384,034 Note : The Condensed Consolidated Balance Sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See notes to condensed consolidated financial statements. 3 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued) (Dollars in thousands, except per share data ) September 27, 2025 December 31, 2024 (Note) Liabilities and Stockholders’ Equity Current Liabilities Trade accounts payable and accrued expenses $ 33,811 $ 35,750 Contract liabilities with customers (Note 4) 986 — Product liability 1,052 431 Employee compensation and benefits 17,320 18,824 Workers’ compensation 5,741 5,804 Total Current Liabilities 58,910 60,809 Employee compensation 2,449 1,835 Product liability accrual 61 61 Lease liabilities (Note 6) 1,269 1,747 Contingent liabilities (Note 14) — — Stockholders’ Equity Common Stock, non-voting, par value $ 1 : Authorized shares 50,000 ; none issued — — Common Stock, par value $ 1 : Authorized shares – 40,000,000 2025 – 24,490,478 issued, 15,944,253 outstanding 2024 – 24,467,983 issued, 16,654,523 outstanding 24,490 24,468 Additional paid-in capital 54,054 50,536 Retained earnings 419,218 436,609 Less: Treasury stock – at cost 2025 – 8,546,225 shares 2024 – 7,813,460 shares ( 218,131 ) ( 192,031 ) Total Stockholders’ Equity 279,631 319,582 Total Liabilities and Stockholders’ Equity $ 342,320 $ 384,034 Note : The Condensed Consolidated Balance Sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. See notes to condensed consolidated financial statements. 4 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net firearms sales $ 126,130 $ 121,512 $ 392,892 $ 387,349 Net castings sales 636 775 2,103 2,519 Total net sales 126,766 122,287 394,995 389,868 Cost of products sold 107,611 99,615 340,799 308,639 Gross profit 19,155 22,672 54,196 81,229 Operating expenses: Selling 9,098 8,998 28,788 28,188 General and administrative 13,541 9,932 41,136 32,796 Total operating expenses 22,639 18,930 69,924 60,984 Operating (loss) income ( 3,484 ) 3,742 ( 15,728 ) 20,245 Other income: Interest income 629 1,155 2,621 3,839 Interest expense ( 17 ) ( 24 ) ( 55 ) ( 66 ) Other income, net 758 392 1,407 749 Total other income, net 1,370 1,523 3,973 4,522 (Loss) income before income taxes ( 2,114 ) 5,265 ( 11,755 ) 24,767 Income taxes ( 3,696 ) 527 ( 3,879 ) 4,681 Net (loss) income and comprehensive (loss) income $ 1,582 $ 4,738 $ ( 7,876 ) $ 20,086 Basic earnings per share $ 0.10 $ 0.28 $ ( 0.48 ) $ 1.17 Diluted earnings per share $ 0.10 $ 0.28 $ ( 0.48 ) $ 1.15 Weighted average number of common shares outstanding - Basic 16,031,340 16,847,866 16,338,644 17,207,632 Weighted average number of common shares outstanding - Diluted 16,368,310 17,137,065 16,338,644 17,455,265 Cash dividends per share $ 0.16 $ 0.19 $ 0.58 $ 0.58 See notes to condensed consolidated financial statements. 5 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Dollars in thousands) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Balance at December 31, 2024 $ 24,468 $ 50,536 $ 436,609 $ ( 192,031 ) $ 319,582 Net income and comprehensive income 7,768 7,768 Common stock issued – compensation plans 5 ( 5 ) — Vesting of RSUs ( 178 ) ( 178 ) Dividends paid ( 3,992 ) ( 3,992 ) Unpaid dividends accrued 146 146 Recognition of stock-based compensation expense 1,146 1,146 Repurchase of 79,200 shares of common stock ( 2,991 ) ( 2,991 ) Balance at March 29, 2025 $ 24,473 $ 51,499 $ 440,531 $ ( 195,022 ) $ 321,481 Net (loss) and comprehensive (loss) ( 17,226 ) ( 17,226 ) Common stock issued – compensation plans 17 ( 17 ) — Vesting of RSUs — Dividends paid ( 2,941 ) ( 2,941 ) Unpaid dividends accrued ( 93 ) ( 93 ) Recognition of stock-based compensation expense 1,269 1,269 Repurchase of 363,884 shares of common stock ( 13,157 ) ( 13,157 ) Balance at June 28, 2025 $ 24,490 $ 52,751 $ 420,271 $ ( 208,179 ) $ 289,333 Net income and comprehensive income 1,582 1,582 Dividends paid ( 2,551 ) ( 2,551 ) Unpaid dividends accrued ( 84 ) ( 84 ) Recognition of stock-based compensation expense 1,303 1,303 Repurchase of 289,681 shares of common stock ( 9,952 ) ( 9,952 ) Balance at September 27, 2025 $ 24,490 $ 54,054 $ 419,218 $ ( 218,131 ) $ 279,631 See notes to condensed consolidated financial statements. 6 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Continued) (Dollars in thousands) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Balance at December 31, 2023 $ 24,437 $ 46,849 $ 418,058 $ ( 157,623 ) $ 331,721 Net income and comprehensive income 7,084 7,084 Common stock issued – compensation plans 18 ( 18 ) — Vesting of RSUs ( 624 ) ( 624 ) Dividends paid ( 4,080 ) ( 4,080 ) Unpaid dividends accrued ( 8 ) ( 8 ) Recognition of stock-based compensation expense 1,082 1,082 Repurchase of 75,024 shares of common stock ( 3,219 ) ( 3,219 ) Balance at March 30, 2024 $ 24,455 $ 47,289 $ 421,054 $ ( 160,842 ) $ 331,956 Net income and comprehensive income 8,264 8,264 Common stock issued – compensation plans 13 ( 13 ) — Vesting of RSUs — Dividends paid ( 2,707 ) ( 2,707 ) Unpaid dividends accrued ( 60 ) ( 60 ) Recognition of stock-based compensation expense 1,070 1,070 Repurchase of 402,893 shares of common stock ( 17,057 ) ( 17,057 ) Balance at June 29, 2024 $ 24,468 $ 48,346 $ 426,551 $ ( 177,899 ) $ 321,466 Net income and comprehensive income 4,738 4,738 Dividends paid ( 3,202 ) ( 3,202 ) Unpaid dividends accrued ( 73 ) ( 73 ) Recognition of stock-based compensation expense 1,095 1,095 Repurchase of 220,842 shares of common stock ( 9,079 ) ( 9,079 ) Balance at September 28, 2024 $ 24,468 $ 49,441 $ 428,014 $ ( 186,978 ) $ 314,945 See notes to condensed consolidated financial statements. 7 STURM, RUGER & COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ( Dollars in thousands) Nine Months Ended September 27, 2025 September 28, 2024 Operating Activities Net (loss) income $ ( 7,876 ) $ 20,086 Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization 16,720 16,941 Stock-based compensation 3,718 3,247 Excess and obsolescence inventory reserve ( 336 ) 39 Inventory and other asset write-off 17,002 — Loss on disposal of assets 185 — Deferred income taxes ( 3,376 ) ( 2,942 ) Changes in operating assets and liabilities: Trade receivables 7,257 ( 293 ) Inventories 8,997 3,735 Trade accounts payable and accrued expenses ( 1,963 ) ( 514 ) Contract liabilities with customers 986 ( 149 ) Employee compensation and benefits ( 921 ) ( 7,360 ) Product liability 621 ( 349 ) Prepaid expenses, other assets and other liabilities ( 2,249 ) 3,042 Cash provided by operating activities 38,765 35,483 Investing Activities Property, plant and equipment additions ( 12,636 ) ( 17,196 ) Purchase of Anderson Manufacturing assets ( 15,010 ) — Purchases of short-term investments ( 80,683 ) ( 100,993 ) Proceeds from maturities of short-term investments 111,376 115,023 Cash provided by (used for) investing activities 3,047 ( 3,166 ) Financing Activities Remittance of taxes withheld from employees related to share-based compensation ( 178 ) ( 624 ) Repurchase of common stock ( 26,100 ) ( 29,355 ) Dividends paid ( 9,484 ) ( 9,990 ) Cash used for financing activities ( 35,762 ) ( 39,969 ) Increase (decrease) in cash and cash equivalents 6,050 ( 7,652 ) Cash and cash equivalents at beginning of period 10,028 15,174 Cash and cash equivalents at end of period $ 16,078 $ 7,522 See notes to condensed consolidated financial statements. 8 STURM, RUGER & COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the results of the interim periods. Operating results for the three and nine months ended September 27, 2025 may not be indicative of the results to be expected for the full year ending December 31, 2025. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Organization: Sturm, Ruger & Company, Inc. (the “Company”) is principally engaged in the design, manufacture, and sale of firearms to domestic customers. Approximately 99 % of sales are from firearms. Export sales accounted for approximately 5 % of total sales for each of the nine month periods ended September 27, 2025 and September 28, 2024, respectively. The Company’s design and manufacturing operations are located in the United States and almost all product content is domestic. The Company’s firearms are sold through a select number of independent wholesale distributors, principally to the commercial sporting market. The Company also manufactures investment castings made from steel alloys and metal injection molding (“MIM”) parts for internal use in its firearms and for sale to unaffiliated, third-party customers. Approximately 1 % of sales are from the castings segment. Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Revenue Recognition: The Company recognizes revenue in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”). Substantially all product sales are sold FOB (free on board) shipping point. Customary payment terms are 2% 30 days, net 40 days. Generally, all performance obligations are satisfied when product is shipped and the customer takes ownership and assumes the risk of loss. In some instances, sales include multiple performance obligations. The most common of these instances relates to sales promotion programs under which downstream customers are entitled to receive no charge products based on their purchases of certain of the Company’s products from the independent distributors. The fulfillment of these no charge products is the Company’s responsibility. In such instances, the Company allocates the revenue of the promotional sales based on the estimated level of participation in the sales promotional program and the timing of the shipment of all of the firearms included in the promotional program, including the no charge firearms. Revenue is recognized proportionally as each performance obligation is satisfied, based on the relative customary price of each product. Customary prices are generally determined based on the prices charged to the independent distributors. The net change in contract liabilities for a given period is reported as an increase or decrease to sales. 9 Fair Value Measurements: The carrying amounts of financial instruments, including cash, short-term investments, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the short-term maturity of these items. The Company’s short-term investments consist of United States Treasury instruments, which mature within one year, and investments in a bank-managed money market fund that invests exclusively in United States Treasury obligations and is valued at the net asset value ("NAV") daily closing price, as reported by the fund, based on the amortized cost of the fund’s securities. The NAV is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. The fair value of inventory acquired as part of a business combination is based on a third-party valuation utilizing the comparable sales method which is based on Level 2 and Level 3 inputs. The fair value of property, plant and equipment acquired as part of a business combination is based on a third-party valuation utilizing the indirect method of cost approach, which is based on Level 2 and Level 3 inputs. The fair value of patents acquired as part of a business combination is based on a third-party valuation utilizing the replacement cost method, which is based on Level 2 and Level 3 inputs. The fair value of the remaining intangible assets as part of a business combination are based on a third-party valuation utilizing discounted cash flow methods that involves inputs, which are not observable in the market (Level 3). Business Combination: On July 1, 2025, the Company acquired substantially all of the assets of Anderson Manufacturing (“Anderson”) for a total purchase price of $ 15.8 million in cash, with $ 15 million having been paid in cash at the closing of the transaction and $ 0.8 million having been held back from the purchase price for the purposes described in Note 3 below (the “Anderson Acquisition”). The transaction was funded by the Company with cash on hand and has been accounted for in accordance with ASC 805 - Business Combinations, which requires, among other things, an assignment of the acquisition consideration transferred to the sellers for the tangible and intangible assets acquired, using the bottom up approach, to estimate their fair value at acquisition date. Any excess of the fair value of the purchase consideration over these identified net assets was recorded as goodwill. Our estimates of fair value are based upon assumptions believed to be reasonable, yet are inherently uncertain and, as a result, may differ from actual performance. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the estimated fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill in the period in which such revised estimates are identified. No such adjustments were recorded in the three months ended September 27, 2025. 10 Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements: In March 2024, the Securities and Exchange Commission (“SEC”) issued the final rule under SEC Release No. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, requiring public companies to provide certain climate-related information in their registration statements and annual reports. The final rules will require information about a company’s climate-related risks that have materially impacted or are reasonably likely to have a material impact on its business strategy, results of operations, or financial condition, and the actual and potential material impacts of any identified climate-related risks on the company’s strategy, business model and outlook, as well as relating to assessment, management, oversight and mitigation of such material risks, material climate-related targets and goals, and material greenhouse gas emissions. Additionally, certain disclosures related to severe weather events and other natural conditions will be required in the audited financial statements. The first phase of the final rule is effective for fiscal years beginning in 2025. Disclosure for prior periods is only required if it was previously disclosed in an SEC filing. On April 4, 2024, the SEC voluntarily stayed implementation of the final rule to facilitate the orderly judicial resolution of pending legal challenges to the rule. On March 27, 2025, the SEC voted to end its defense of these rules, and sent a letter to the court before which the rules are being challenged withdrawing its defense of the rules and stating that SEC counsel is no longer authorized to advance the arguments made in the brief that the SEC had filed. We are currently evaluating the impact on our disclosures of adopting this new pronouncement. In December of 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024. Prospective application is required, with retrospective application permitted. The Company is currently evaluating the effect the updated guidance will have on its financial statement disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”).” This guidance requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the statement of earnings. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. Adoption may be applied either prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of this guidance on the Company’s related disclosures. 11 NOTE 3 - ACQUISITION OF ANDERSON MANUFACTURING ASSETS As described in Note 2, the Company closed on the Anderson Acquisition on July 1, 2025. The Company paid $ 15.0 million dollars in cash for Anderson assets to Anderson at the closing of the transaction, with an additional $ 0.8 million held back for the purposes described below. The Anderson Acquisition included, among other things, property, equipment, inventory, and all intellectual property related to Anderson, including the Anderson trademarks and tradenames, and all derivatives thereof. The primary purpose of the Anderson Acquisition was to increase the Company’s production capabilities. The Anderson Acquisition was accounted for in accordance with ASC Topic 805, Business Combinations. Accordingly, the total purchase price has been allocated to tangible assets based on their fair value and the intangibles and goodwill have been allocated on a provisional basis at the date of acquisition. The Company assumed no debt or long-term liabilities in this transaction. These allocations reflect various provisional estimates that were based on the information available at the time and are subject to change during the purchase price allocation period until the valuations are finalized. The following table summarizes the Company's preliminary fair value of the assets acquired, as of July 1, 2025, for the Company’s Anderson Acquisition. Purchase Price Cash paid to sellers $ 15,010 Holdback 750 Total Purchase Price $ 15,760 Purchase Price Allocation Assets Acquired Land and building $ 5,900 Machinery and equipment 5,800 Inventory 2,045 Other assets 1,625 Goodwill 390 Net Assets Acquired $ 15,760 Identifiable assets acquired were recorded at their estimated fair values based on the methodology described under “Fair Value Measurements” in Note 2 - Significant Accounting Policies. The Fair Value of any intangible assets acquired in the Anderson Acquisition were considered negligible. The Company held back $ 0.8 million from their purchase payment for potential repair mediation costs, which will either be applied to repair costs or paid to Anderson. This holdback was included in trade accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheet at September 27, 2025. The excess purchase price over the fair value of the assets acquired was recorded as goodwill in the amount of $ 0.4 million, primarily related to assembled workforce and increased manufacturing capacity. The Company incurred acquisition related costs of approximately $ 0.5 million, which are included in selling, general and administrative expenses in the Company’s Consolidated Statements of Income and Comprehensive Income for the three and nine month periods ended September 27, 2025. 12 The pro forma impact of the acquisition and the results of operations attributable to Anderson in 2024 and 2025 have not been presented, as they are not material to the Company’s consolidated results of operations. NOTE 4 - REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS The impact of ASC 606 on revenue recognized during the three and nine months ended September 27, 2025 and September 28, 2024 is as follows: Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Contract liabilities with customers at beginning of period $ 91 $ — $ — $ 149 Revenue deferred 1,206 — 1,669 — Revenue recognized ( 311 ) — ( 683 ) ( 149 ) Contract liabilities with customers at end of period $ 986 $ — $ 986 $ — As more fully described in the Revenue Recognition section of Note 2, the deferral of revenue and subsequent recognition thereof relates to certain of the Company’s sales promotion programs that include the future shipment of free products. The Company expects the remaining deferred revenue from the contract liabilities with customers to be recognized in the fourth quarter of 2025. Practical Expedients and Exemptions The Company has elected to account for shipping and handling activities that occur after control of the related product transfers to the customer as fulfillment activities that are recognized upon shipment of the goods. NOTE 5 - INVENTORIES Inventories are valued using the last-in, first-out (LIFO) method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs existing at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management's control, interim results are subject to the final year-end LIFO inventory valuation. 13 Inventories consist of the following: September 27, 2025 December 31, 2024 Inventory at FIFO Finished products $ 22,104 $ 26,022 Materials and work in process 104,363 123,395 Gross inventories 126,467 149,417 Less: LIFO reserve ( 68,165 ) ( 66,398 ) Less: excess and obsolescence reserve ( 3,658 ) ( 6,533 ) Net inventories $ 54,644 $ 76,486 NOTE 6 - LEASED ASSETS The Company leases certain of its real estate and equipment. The Company has evaluated all its leases and determined that all are operating leases under the definitions of the guidance of ASU 2016-02, Leases (Topic 842) . The Company’s lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants. Under the provisions of ASU 2016-02, the Company records right-of-use assets equal to the present value of the contractual liability for future lease payments. The table below presents the right-of-use assets and related lease liabilities recognized on the Condensed Consolidated Balance Sheet as of September 27, 2025: Balance Sheet Line Item September 27, 2025 Right-of-use assets Other assets $ 1,906 Operating lease liabilities Current portion Trade accounts payable and accrued expenses $ 637 Noncurrent portion Lease liabilities 1,269 Total operating lease liabilities $ 1,906 The depreciable lives of right-of-use assets are limited by the lease term and are amortized on a straight line basis over the life of the lease. The Company’s leases generally do not provide an implicit interest rate, and therefore the Company calculates an incremental borrowing rate to determine the present value of its operating lease liabilities. Certain of the Company’s lease agreements contain renewal options at the Company’s discretion. The Company does not recognize right-of-use assets or lease liabilities for leases of one year or less or for renewal periods unless it is reasonably certain that the Company will exercise the renewal option at the inception of the lease or when a triggering event occurs. 14 The table below includes cash paid for our operating lease liabilities, other non-cash information, our weighted average remaining lease term and weighted average discount rate: Nine Months Ended September 27, 2025 September 28, 2024 Cash paid for amounts included in the measurement of lease liabilities $ 439 $ 432 Cash amounts paid for short-term leases $ 369 $ 507 Right-of-use assets obtained in exchange for lease liabilities $ — $ — Weighted average remaining lease term (years) 6.9 7.6 Weighted average discount rate 8.0 % 8.0 % The following table reconciles the undiscounted future minimum lease payments to the total operating lease liabilities recognized on the Condensed Consolidated Balance Sheet as of September 27, 2025: Remainder of 2025 $ 192 2026 771 2027 295 2028 160 2029 160 Thereafter 800 Total undiscounted future minimum lease payments 2,378 Less: Difference between undiscounted lease payments & the present value of future lease payments ( 472 ) Total operating lease liabilities $ 1,906 NOTE 7 - LINE OF CREDIT On June 6, 2024, the Company amended its existing $ 40 million unsecured revolving line of credit agreement with a bank, which now expires January 7, 2028 . Borrowings under this new facility bear interest at the applicable Secured Overnight Financing Rate (SOFR), plus 150 basis points, plus an additional adjustment of eight basis points. The Company is also charged one-quarter of a percent ( 0.25 %) per year on the unused portion. At September 27, 2025, the Company was in compliance with the terms and covenants of the credit facility and the line of credit was unused. NOTE 8 - EMPLOYEE BENEFIT PLANS The Company sponsors a 401(k) plan that covers substantially all employees. The Company matches a certain portion of employee contributions using the safe harbor guidelines contained in the Internal Revenue Code. Expenses related to these matching contributions totaled $ 1.0 million and $ 3.2 million for the three and nine months ended September 27, 2025, respectively, and $ 0.9 million and $ 3.1 million for the three and nine months ended September 28, 2024, respectively. The Company plans to contribute approximately $ 1.0 million to the plan in matching employee contributions during the remainder of 2025. 15 In addition, the Company provided supplemental discretionary contributions to the 401(k) plan totaling $ 1.8 million and $ 5.3 million for the three and nine months ended September 27, 2025, respectively, and $ 1.5 million and $ 5.3 million for the three and nine months ended September 28, 2024, respectively. The Company plans to contribute approximately $ 1.8 million in supplemental contributions to the plan during the remainder of 2025. NOTE 9 - INCOME TAXES The Company’s 2025 and 2024 effective tax rates differ from the statutory federal tax rate due principally to the availability of research and development tax credits, state income taxes, and the nondeductibility of certain executive compensation. The Company’s effective income tax rate was 174.8 % and 33.0 % for the three and nine months ended September 27, 2025, respectively. The Company’s effective income tax rate was 10.0 % and 18.9 % for the three and nine months ended September 28, 2024, respectively. The Company did not make any income tax payments during the three months ended September 27, 2025. Income tax payments totaled $ 3.1 million for the nine months ended September 27, 2025. Income tax payments totaled $ 1.1 and $ 10.6 million for the three and nine month periods ended September 28, 2024, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2021. The Company does not believe it has included any “uncertain tax positions” in its federal income tax return or any of the state income tax returns it is currently filing. The Company has made an evaluation of the potential impact of additional state taxes being assessed by jurisdictions in which the Company does not currently consider itself liable. The Company does not anticipate that such additional taxes, if any, would result in a material change to its financial position. 16 NOTE 10 - EARNINGS PER SHARE Set forth below is a reconciliation of the numerator and denominator for basic and diluted earnings per share calculations for the periods indicated: Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Numerator: Net (loss) income $ 1,582 $ 4,738 $ ( 7,876 ) $ 20,086 Denominator: Weighted average number of common shares outstanding – Basic 16,031,340 16,847,866 16,338,644 17,207,632 Dilutive effect of options and restricted stock units outstanding under the Company’s employee compensation plans 336,970 289,199 — 247,633 Weighted average number of common shares outstanding – Diluted 16,368,310 17,137,065 16,338,644 17,455,265 The dilutive effect of outstanding options and restricted stock units is calculated using the treasury stock method. There were no stock options that were anti-dilutive and therefore not included in the diluted earnings per share calculation. NOTE 11 - COMPENSATION PLANS In May 2017, the Company’s shareholders approved the 2017 Stock Incentive Plan (the “2017 SIP”) under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require the satisfaction of performance objectives. Vesting requirements are determined by the Compensation Committee of the Board of Directors . The Company reserved 750,000 shares for issuance under the 2017 SIP. In June 2023, the Company’s shareholders approved the 2023 Stock Incentive Plan (the “2023 SIP”) under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require the satisfaction of performance objectives. Vesting requirements are determined by the Compensation Committee of the Board of Directors . The Company reserved 1,000,000 shares for issuance under the 2023 SIP, of which 418,000 shares remain available for future grants as of September 27, 2025. Any shares remaining from the 2017 SIP will be available for future grants under the terms of the 2023 SIP. As of September 27, 2025, approximately 120,000 shares remained unawarded from the 2017 SIP. Since the shareholder approval of the 2023 SIP, no additional awards have been or will be granted under the 2017 SIP. Previously granted and outstanding awards under the 2017 SIP will remain subject to the terms of the 2017 SIP. 17 Restricted Stock Units The Company grants performance-based and retention-based restricted stock units to senior employees. The vesting of the performance-based awards is dependent on the achievement of corporate objectives established by the Compensation Committee of the Board of Directors and a three-year vesting period. The retention-based awards are subject only to a three-year vesting period. Additionally, the Company awarded its new CEO a one-time award of 40,000 RSUs, which shall convert into shares of the Company’s Common Stock on a one-to-one basis when vested, a portion of which shall be subject to time-based vesting and a portion of which shall be subject to performance-based vesting. There were 275,873 restricted stock units issued during the nine months ended September 27, 2025. Total compensation costs related to these restricted stock units are $ 10.6 million. Compensation costs related to all outstanding restricted stock units recognized in the statements of income aggregated $ 1.9 million and $ 5.7 million for the three and nine months ended September 27, 2025, respectively, and $ 1.7 million and $ 4.6 million for the three and nine months ended September 28, 2024, respectively. NOTE 12 - OPERATING SEGMENT INFORMATION The Company has two reportable segments: firearms and castings. The firearms segment manufactures and sells rifles, pistols, and revolvers principally to a select number of independent wholesale distributors primarily located in the United States. The castings segment manufactures and sells steel investment castings and metal injection molding parts. Selected operating segment financial information follows: (in thousands) Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net Sales Firearms $ 126,130 $ 121,512 $ 392,892 $ 387,349 Castings Unaffiliated 636 775 2,103 2,519 Intersegment 5,210 7,376 18,819 24,022 5,846 8,151 20,922 26,541 Eliminations ( 5,210 ) ( 7,376 ) ( 18,819 ) ( 24,022 ) $ 126,766 $ 122,287 $ 394,995 $ 389,868 Costs of Goods Sold Firearms $ 106,926 $ 98,691 $ 337,907 $ 305,736 Castings Unaffiliated 685 924 2,892 2,903 Intersegment 5,210 7,376 18,819 24,022 5,895 8,300 21,711 26,925 Eliminations ( 5,210 ) ( 7,376 ) ( 18,819 ) ( 24,022 ) $ 107,611 $ 99,615 $ 340,799 $ 308,639 18 Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Gross Profit (Loss) Firearms $ 19,204 $ 22,821 $ 54,985 $ 81,614 Castings ( 49 ) ( 149 ) ( 789 ) ( 385 ) $ 19,155 $ 22,672 $ 54,196 $ 81,229 Operating Income (Loss) Firearms $ ( 3,252 ) $ 4,040 $ ( 14,435 ) $ 21,132 Castings ( 232 ) ( 298 ) ( 1,293 ) ( 887 ) $ ( 3,484 ) $ 3,742 $ ( 15,728 ) $ 20,245 Income (Loss) Before Income Taxes Firearms $ ( 3,027 ) $ 4,237 $ ( 13,959 ) $ 21,718 Castings ( 232 ) ( 295 ) ( 1,252 ) ( 884 ) Corporate 1,145 1,323 3,456 3,933 $ ( 2,114 ) $ 5,265 $ ( 11,755 ) $ 24,767 Depreciation Firearms $ 4,988 $ 5,074 $ 14,963 $ 14,818 Castings 347 473 1,041 1,363 $ 5,335 $ 5,547 $ 16,004 $ 16,181 Capital Expenditures Firearms $ 20,826 $ 6,704 $ 27,375 $ 16,829 Castings 73 78 271 367 $ 20,899 $ 6,782 $ 27,646 $ 17,196 September 27, 2025 December 31, 2024 Identifiable Assets Firearms $ 213,486 $ 230,024 Castings 7,808 9,303 Corporate 121,026 144,707 $ 342,320 $ 384,034 Goodwill Firearms $ 3,445 $ 3,055 Castings 209 209 $ 3,654 $ 3,264 NOTE 13 - RELATED PARTY TRANSACTIONS The Company contracts with the National Rifle Association (“NRA”) for some of its promotional and advertising activities. Payments made to the NRA in the three and nine months ended September 27, 2025 totaled $ 0.1 million and $ 0.5 million, respectively. Payments made to the NRA in the three and nine months ended September 28, 2024 totaled $ 0.1 million and $ 0.5 million, respectively. One of the Company’s Directors also serves as a Director on the Board of the NRA. 19 The Company is a member of the National Shooting Sports Foundation (“NSSF”), the firearm industry trade association. Payments made to the NSSF in the three and nine months ended September 27, 2025 totaled $ 0.1 million and $ 0.3 million, respectively. Payments made to the NSSF in the three and nine months ended September 28, 2024 totaled $ 0.1 million and $ 0.3 million, respectively. Two of the Company’s Directors also serve on the Board of the NSSF. NOTE 14 - CONTINGENT LIABILITIES As of September 27, 2025, the Company was a defendant in ten (10) lawsuits and is aware of certain other claims. The lawsuits generally fall into the categories of municipal litigation, breach of contract, unfair trade practices, product liability, employment, and trademark litigation. One (1) municipal litigation matter was fully and finally resolved during the quarter. Material matters and developments are discussed in turn below. Municipal Litigation Municipal litigation generally includes those cases brought by cities or other governmental entities against firearms manufacturers, distributors and retailers seeking to recover damages allegedly arising out of the misuse of firearms by third parties. There are three pending lawsuits of this type: the City of Gary , filed in Indiana State Court in 1999; The City of Buffalo , filed in the Supreme Court of the State of New York for Erie County on December 20, 2022; and The City of Rochester , filed in the Supreme Court for the State of New York for Monroe County on December 21, 2022, each of which is described in more detail below. The City of Gary seeks damages, among other things, for the costs of medical care, police and emergency services, public health services, and other services as well as punitive damages as well as nuisance abatement and/or injunctive relief to change the design, manufacture, marketing and distribution practices of the various Defendants. The Complaint alleges, among other claims, negligence in the design of products, public nuisance, negligent distribution and marketing, negligence per se and deceptive advertising. The case does not allege a specific injury to a specific individual as a result of the misuse or use of any of the Company's products. After a long procedural history, this matter is back before the Indiana Court of Appeals, where briefing was recently completed and oral argument has been scheduled. The City of Buffalo v. Smith & Wesson Brands, Inc., et al. and The City of Rochester v. Smith & Wesson Brands, Inc., et al were filed on consecutive days in New York State Court, naming a number of firearm manufacturers, distributors, and retailers as Defendants, including the Company. The complaints are virtually identical and, relying primarily on New York’s General Business Law §898-b, generally allege that the criminal misuse of firearms in their cities is the result of the manufacturing, sales, marketing, and distribution practices of the Defendants. These matters seek unspecified compensatory damages, creation of an abatement fund, punitive damages and other relief. Both matters were timely removed to federal court and were consolidated for pretrial purposes only. Those matters were stayed pending the outcome of a different matter that challenges New York’s law, which was decided earlier this year. The Defendants have moved to dismiss the cases and are vigorously defending these matters. Estados Unidos Mexicanos v. Smith & Wesson Brands, Inc., et al. was filed by the Country of Mexico and named seven Defendants, mostly U.S.-based firearms manufacturers, including the Company. After the United States Supreme Court’s decision on June 5, 2025 that the Plaintiff’s complaint does not plausibly allege that the defendant gun manufacturers aided and abetted gun dealers’ unlawful sales of firearms to Mexican traffickers and the Protection of Lawful Commerce in Arms Act bars the lawsuit, the matter was remanded to the trial court where an order of dismissal was entered on August 19, 2025. 20 Breach of Contract As reported in prior periods, the Company is a defendant in Jones v. Sturm, Ruger & Co., a purported class action lawsuit arising out of a data breach at Freestyle Solutions, Inc., the vendor who was hosting the Company’s eCommerce website at the time of the breach. The matter was mediated and the parties agreed to a settlement in principle, which is being finalized. Unfair Trade Practices Estate of Suzanne Fountain v. Sturm, Ruger & Co., Inc., and Estate of Nevin Stanisic v. Sturm, Ruger & Co., Inc. are pending in Connecticut state court and arise out of the criminal shootings at the King Soopers supermarket in Boulder, Colorado on March 22, 2021. The Complaints allege that the Company’s advertising and marketing of the Ruger AR-556 pistol violate the Connecticut Unfair Trade Practices Act and seek damages for the alleged wrongful death of the victims. The Fountain and Stanisic cases were consolidated for discovery purposes only and transferred by the court to the Complex Litigation Docket. Oral argument on the Company’s pending Motion to Strike was held on July 21, 2025 and the court stayed discovery pending the outcome of that motion, which has not yet been issued. Product Liability The Company is a defendant in two unrelated traditional product liability matters, both of which were filed during the quarter. Fortenberry v. Sturm, Ruger & Company, Inc. was served on July 11, 2025 and is pending in the Circuit Court of Arkansas County, Arkansas Northern District, Civil Division. This complaint alleges a product design defect in an “old model” Ruger Single-Six revolver and seeks damages for the death of the plaintiff’s decedent. Willeford v. Sturm, Ruger & Company, Inc. was filed on July 25, 2025 in the United States District Court for the Eastern District of Texas, Texarkana Division. This matter alleges personal injuries arising out of an alleged product defect of the plaintiff’s Ruger Vaquero revolver. The Company believes the matters lack merit and is defending itself accordingly. Employment The Company was also named in Thompson v. Sturm, Ruger & Company, Inc. , an employment matter that was filed in the Superior Court for the State of Arizona, in and for the County of Yavapai, which was filed on August 21, 2025. The plaintiff seeks damages for alleged employment discrimination. The Company disputes the allegations of the complaint and has responded accordingly. Trademark Litigation T he Company is a defendant in FN Herstal, et al. v. Sturm, Ruger & Company, Inc. , which is pending in North Carolina. T he Complaint alleges that the Company’s use of the initialism “SFAR” in connection with the marketing of its Small Frame Autoloading Rifle infringes the Plaintiffs’ SCAR trademark. The Complaint alleges violations of the Lanham Act and the North Carolina Unfair and Deceptive Trade Practices Act, as well as trademark infringement under North Carolina common law. The parties are awaiting decision on dispositive motions. 21 Summary of Claimed Damages and Explanation of Product Liability Accruals Punitive damages, as well as compensatory damages, are demanded in certain of the lawsuits and claims. In many instances, the plaintiff does not seek a specified amount of money, though aggregate amounts ultimately sought may exceed product liability accruals and applicable insurance coverage. For product liability claims made between July 10, 2000 and August 31, 2024, insurance coverage was provided on an annual basis for losses exceeding $ 5 million per claim, or an aggregate maximum loss of $ 10 million annually, except for certain claims brought by governments or municipalities, which are excluded from coverage. Insurance coverage was not renewed with incumbent carriers effective September 1, 2024. Rather, the Company established a wholly-owned captive insurance company for claims made on or after September 1, 2024. The Company management monitors the status of known claims and the product liability accrual, which includes amounts for asserted and unasserted claims. While it is not possible to forecast the outcome of litigation or the timing of costs, in the opinion of management, after consultation with special and corporate counsel, it is not probable and is unlikely that litigation, including punitive damage claims, will have a material adverse effect on the financial position of the Company, but may have a material impact on the Company's financial results for a particular period. Product liability claim payments are made when appropriate if, as, and when claimants and the Company reach agreement upon an amount to finally resolve all claims. Legal costs are paid as the lawsuits and claims develop, the timing of which may vary greatly from case to case. A time schedule cannot be determined in advance with any reliability concerning when payments will be made in any given case. Provision is made for product liability claims based upon many factors related to the severity of the alleged injury and potential liability exposure, based upon prior claim experience. Because the Company's experience in defending these lawsuits and claims is that unfavorable outcomes are typically not probable or estimable, only in rare cases is an accrual established for such costs. In most cases, an accrual is established only for estimated legal defense costs. Product liability accruals are periodically reviewed to reflect then-current estimates of possible liabilities and expenses incurred to date and reasonably anticipated in the future. Threatened product liability claims are reflected in the Company's product liability accrual on the same basis as actual claims; i.e. , an accrual is made for reasonably anticipated possible liability and claims handling expenses on an ongoing basis. Often, a Complaint does not specify the amount of damages being sought and a range of reasonably possible losses relating to unfavorable outcomes cannot be made. The dollar amount of damages claimed at December 31, 2024, December 31, 2023 and December 31, 2022 was de minimis . The amount claimed is set forth as an indication of possible maximum liability the Company might be required to incur in these cases (regardless of the likelihood or reasonable probability of any or all of this amount being awarded to claimants) as a result of adverse judgments that are sustained on appeal. NOTE 15 - SUBSEQUENT EVENTS On October 31, 2025, the Company’s Board of Directors authorized a dividend of 4 ¢ per share to shareholders of record on November 17, 2025 , payable on November 28, 2025 . 22 On October 14, 2025, the Company announced that its Board of Directors (the “Board”) had approved the adoption of a limited-duration stockholder rights plan (the “Rights Plan”). The Rights Plan is effective October 14, 2025 (“Effective Date”) and will expire on October 13, 2026. The Board, in consultation with its advisors, adopted the Rights Plan in response to the public announcement by Beretta Holding S.A. (“Beretta”) that it had accumulated a significant economic interest in Ruger’s common stock and intends to engage in discussions with the Company regarding “potential areas of operational and strategic collaborations”. The Rights Plan is intended to ensure that the Board remains in the best position to perform its fiduciary duties and to enable all stockholders to receive fair and equal treatment. It is also designed to allow all stockholders to realize the long-term value of their investment by reducing the likelihood that Beretta would gain control through open market accumulation or other coercive tactics without appropriately compensating the Company’s stockholders or allowing the Board sufficient time to make informed judgments. The Rights Plan is a temporary measure to give the Board time to understand Beretta’s intentions and evaluate options. Pursuant to the Rights Plan, the Company has authorized and declared a dividend of one common share purchase right (a “Right”) for each share of Common Stock that is outstanding at the close of business on October 24, 2025 and that may become outstanding between such date and the Distribution Date (as defined below) or the earlier Expiration Date (as defined in the Rights Plan). The Rights are not exercisable until after the Distribution Date. After the Distribution Date, each Right will be exercisable to purchase from the Company one share of Common Stock at a purchase price of $ 200 per share of Common Stock, subject to adjustment. The “ Distribution Date ” means the close of business on the business day immediately following the earlier of (i) the Flip-In Date (as defined in the Rights Plan) or (ii) 10 business days after the date (prior to such time as any person becomes an Acquiring Person), if any, as may be determined by action of the Board, in its sole discretion, following the commencement of, or public announcement of an intention to commence, a tender or exchange offer the consummation of which would result in any person or group of affiliated or associated persons becoming an Acquiring Person. An “ Acquiring Person ” means any person who becomes the beneficial owner of 10% or more of the outstanding shares of Common Stock of the Company, subject to certain specified exceptions set forth in the Rights Plan, including passive institutional investors. The Rights Plan also provides that any person who would otherwise be deemed an Acquiring Person as of the date of the adoption of the Rights Plan will not be deemed to be an Acquiring Person for so long as such person does not acquire, subject to certain specified exceptions, beneficial ownership of any additional shares of Common Stock following adoption of the Rights Plan. If the Rights become exercisable, all holders of Rights (other than the person or group triggering the Rights Plan, whose Rights would become void) will be entitled to acquire shares of Common Stock at a 50 % discount to the then-current market price or the Company may exchange each Right held by such holders for one share of Common Stock. The Rights will expire at the close of business on the day before the first anniversary of the date of the Rights Plan, unless the Rights Plan is amended to change the Final Expiration Date (as defined in the Rights Plan) or the Rights are earlier redeemed or exchanged by the Company. The foregoing summary of the Rights Plan is qualified in its entirety by the Rights Plan, which is attached as Exhibit 4.1 to this Form 10-Q. 23 The Company has evaluated events and transactions occurring subsequent to September 27, 2025 and determined that there were no other unreported events or transactions that would have a material impact on the Company’s results of operations or financial position. 24