What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-29 compared with 2026-05-06 · 164 added, 280 removed, 61 unchanged (88% of the section changed)

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Company Overview

Sturm, Ruger & Company,

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 three month periods ended March

28, 2026 and March 29, 2025.

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 99% of sales are from firearms.

Export sales accounted for approximately 6% of total sales for the six month period ended June 27, 2026 and approximately 5% of total sales for the six month period ended June 28, 2025.

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.

Less than 1% of sales are from the castings segment.

Orders for many models of firearms

from the independent distributors tend to be stronger in the first quarter of the year and weaker in the third quarter of the year.

is due in part to the timing of the distributor show season, which occurs during the first quarter.

Orders for many models of firearms from the independent distributors tend to be stronger in the first quarter of the year and weaker in the third quarter of the year.

This is due in part to the timing of the distributor show season, which occurs during the first quarter.

Results of Operations

During the three months ended

March 28, 2026, the Company executed on its Ruger 2030 plan – strengthening operational responsiveness, enhancing the product portfolio

and positioning the Company for sustainable long-term growth.

During the six months ended June 27, 2026, the Company executed on its Ruger 2030 plan – strengthening operational responsiveness, enhancing the product portfolio and positioning the Company for sustainable long-term growth.

Activity in the quarter included:

· The Company’s Board of Directors advancing a deliberate and independent refreshment process, which

saw the retirement of three existing directors and the addition of three new directors with relevant operational, industrial and strategic

expertise while maintaining continuity during a period of leadership transition.

· The appointment of a new CFO in April of 2026, along with other ongoing organizational realignment designed

to improve efficiency and effectiveness.

· The generation of $18.8 million in cash from operations, versus $11.1 million over the same period last

· New product sales reaching $51.6 million, or 41%, of total firearm sales for the quarter.

sales include only major new products that were introduced in the past two years and include the RXM pistol, Marlin 1894 lever-action

rifles, American Centerfire Rifle Generation II, Glenfield rifles, Harrier rifles and the Ruger Red Label III Shotgun.

· The increase of estimated sell-through of the Company’s products from the independent distributors

to retailers by 3.2% from Q1 2025, exceeding a 1.6% increase in adjusted NICS during the same period.

At the same time, compared to the

first quarter of 2025, the Company’s finished goods inventories decreased 95,800 units while distributors’ inventories decreased

26,400 units, reflecting strong retail pull through of the Company’s new products.

· The Hebron Facility is operating at target capacity, as of March 28, 2026.

As announced on May 4, 2026,

Ruger and Beretta Holding entered an Agreement that reflects a shared commitment to long-term value creation, constructive engagement,

and stability for Ruger’s shareholders, employees, customers and industry partners.

Throughout that process, the Company took actions

to protect the interests of all shareholders and to maintain focus on executing its long-term strategy.

These efforts resulted in professional

fees and advisory costs totaling $3.2 million during the quarter.

These costs are largely non-recurring in nature and do not reflect the

underlying performance of the core business.

With the Agreement now in place, the Company expects these costs to be limited in duration,

though some additional expenses may be incurred in the near term.

Additionally, in February,

the Company executed a reduction-in-force as part of broader efforts to structurally align the organization to strategic priorities and

the future operating model.

These actions are consistent with the changes outlined in the 2026 Plan and, more broadly, the Ruger 2030

· The appointment of a new CFO in April of 2026, along with other ongoing organizational realignment designed to improve efficiency and effectiveness.

· The Company entered into an agreement with Beretta Holding S.A.

(“Beretta”), resolving the potential proxy fight and eliminating distractions.

· The generation of $36.1 million in cash from operations, versus $25.9 million over the same period last year.

· New product sales reaching $80.9 million, or 29%, of total firearm sales for the six months ended June 27, 2026.

New product sales include only major new products that were introduced in the past two years and include the RXM pistol, Marlin 1894 lever-action rifles, Glenfield rifles, Harrier rifles, Ruger Red Label III Shotgun, and (during the first quarter only) the American Centerfire Rifle Generation II.

· The increase of estimated sell-through of the Company’s products from the independent distributors to retailers by 10.6% from the same period last year, exceeding a 3.3% increase in adjusted NICS during the same period.

At the same time, compared to the first half of 2025, the Company’s finished goods inventories increased 15,900 units while distributors’ inventories increased 13,400 units, reflecting strong retail pull through of the Company’s new products while maintaining inventory levels in the distribution channel.

· The Hebron Facility is operating at target capacity, as of June 27, 2026.

As announced on May 4, 2026, Ruger and Beretta entered into an Agreement (the “Beretta Agreement”), which reflects a shared commitment to long-term value creation, constructive engagement, and stability for Ruger’s shareholders, employees, customers and industry partners.

Throughout that process, the Company took actions to protect the interests of all shareholders and to maintain focus on executing its long-term strategy.

These efforts resulted in professional fees and advisory costs totaling $1.2 million during the quarter and $4.4 million for the six month period ended June 27, 2026.

These costs are largely non-recurring in nature and do not reflect the underlying performance of the core business.

With the Beretta Agreement now in place, the Company expects these costs to be limited in duration, though some additional expenses may be incurred in the near term.

Additionally, in February 2026, the Company executed a reduction-in-force as part of broader efforts to structurally align the organization to strategic priorities and the future operating model.

These actions are consistent with the changes outlined in the 2026 Plan and, more broadly, the Ruger 2030 framework.

The moves improve efficiency, enhance accountability and position the Company for long-term profitable growth.

The associated

severance and related cost of $2.5 million were recognized in the quarter and are not indicative of ongoing operations.

As a result of the factors listed

above, the results of operations for the three month period ending March 28, 2026 were negatively impacted, on a non-GAAP basis, by $0.26

per share (see the Non-GAAP Financial Performance Measures below.) The impact was as follows:

· Additional general and administrative expenses of $3.2 million, or $0.15 per share, related to the proxy

contest with Beretta.

· Increased general and administrative expenses of $2.5 million, or $0.11 per share, related to the leadership/governance

transition and organizational realignment

The estimated unit sell-through

of the Company’s products from the independent distributors to retailers increased 3% in the first three months of 2026 compared

to the prior year period.

For the same period, National Instant Criminal Background Check System (“NICS”) background checks

(as adjusted by the National Shooting Sports Foundation (“NSSF”)) increased 2%.

Estimated sell-through from the independent

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

The associated severance and related costs of $0.7 million during the quarter and $3.2 million for the six month period ended June 27, 2026 and are not indicative of ongoing operations.

As a result of the factors listed above, the results of operations for the six month period ending June 27, 2026 were negatively impacted, on a non-GAAP basis, by $0.35 per share (see the Non-GAAP Financial Performance Measures below.) The impact was as follows:

· Additional general and administrative expenses of $4.4 million, or $0.20 per share, related to the proxy contest with Beretta.

· Increased general and administrative expenses of $3.2 million, or $0.15 per share, related to the leadership/governance transition and organizational realignment

The estimated unit sell-through of the Company’s products from the independent distributors to retailers increased 11% in the first half of 2026 compared to the prior year period.

For the same period, National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation (“NSSF”)) increased 3%.

Estimated sell-through from the independent distributors to retailers and total adjusted NICS background checks for the trailing six quarters follow:

Q2 Q1 Q4 Q3 Q2 Q1

Estimated Units Sold from Distributors to Retailers (1) 390,100 376,400 473,800 370,600 328,500 364,700

Total adjusted NICS Background Checks (thousands) (2) 3,422 3,877 4,295 3,249 3,251 3,817

(1) The estimates for each period were calculated by taking the beginning inventory at the distributors, plus

shipments from the Company to distributors during the period, less the ending inventory at distributors.

These estimates are only a proxy

for actual market demand as they:

(1) The estimates for each period were calculated by taking the beginning inventory at the distributors, plus shipments from the Company to distributors during the period, less the ending inventory at distributors.

These estimates are only a proxy for actual market demand as they:

· Rely on data provided by independent distributors that are not verified by the Company,

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· 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

by a Federal Firearms Licensee.

NICS background checks are also performed for permit applications, permit renewals, and other administrative

The adjusted NICS

data presented above was derived by the NSSF by subtracting out NICS checks that are not directly related to the sale of a firearm, including

checks used for concealed carry (“CCW”) permit application checks, as well as checks on active CCW permit databases.

NICS checks represent less than half of the total NICS checks.

Adjusted NICS data can be impacted by changes

in state laws and regulations and any directives and interpretations issued by governmental agencies.

(2) NICS background checks are performed when the ownership of most firearms, either new or used, is transferred by a Federal Firearms Licensee.

NICS background checks are also performed for permit applications, permit renewals, and other administrative reasons.

The adjusted NICS data presented above was derived by the NSSF by subtracting out NICS checks that are not directly related to the sale of a firearm, including checks used for concealed carry (“CCW”) permit application checks, as well as checks on active CCW permit databases.

The adjusted NICS checks represent less than half of the total NICS checks.

Adjusted NICS data can be impacted by changes in state laws and regulations and any directives and interpretations issued by governmental agencies.

Orders Received and Ending Backlog

The Company uses the estimated

unit sell-through of its products from the independent distributors to retailers, along with inventory levels at the independent distributors

and at the Company, as the key metrics for planning production levels.

The Company generally does not use the orders received or ending

backlog for planning production levels.

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,

except average sales price):

(All amounts shown are net of Federal Excise Tax of 10% for handguns and

11% for long guns.)

The Company uses the estimated unit sell-through of its products from the independent distributors to retailers, along with inventory levels at the independent distributors and at the Company, as the key metrics for planning production levels.

The Company generally does not use the orders received or ending backlog for planning production levels.

The units ordered, value of 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):

(All amounts shown are net of Federal Excise Tax of 10% for handguns and 11% for long guns.)

Q2 Q1 Q4 Q3 Q2 Q1

Units Ordered 422,500 525,300 550,300 286,500 355,900 410,000

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Average Sales Price of Ending Unit Backlog $ 465 $ 475 $ 524 $ 543 $ 534 $ 552

The Company reviews the estimated

sell-through from the independent distributors to retailers, as well as inventory levels at the independent distributors and at the Company

to plan production levels.

The Company’s overall production in the first quarter of 2026 decreased 4% from the fourth quarter of

The Company reviews the estimated sell-through from the independent distributors to retailers, as well as inventory levels at the independent distributors and at the Company to plan production levels.

The Company’s overall production in the second quarter of 2026 increased 22% from the first quarter of 2026 .

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):

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

Q2 Q1 Q4 Q3 Q2 Q1

Units Ordered 422,600 525,300 550,300 286,500 355,900 410,000

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Ending Unit Backlog 712,700 693,600 543,900 418,000 493,100 498,600

During the first three months

of 2026, the Company’s finished goods inventory decreased by 32,800 units and distributor inventories of the Company’s products

decreased by 800 units.

Inventory unit data for the trailing five quarters

During the first half of 2026, the Company’s finished goods inventory decreased by 16,900 units and distributor inventories of the Company’s products increased by 12,600 units.

Inventory unit data for the trailing six quarters follows:

Q2 Q1 Q4 Q3 Q2 Q1

Company Inventory 50,600 34,700 67,500 134,100 150,700 130,500

2 unchanged sentences

(1) Distributor ending inventory is provided by the Company’s independent distributors.

These numbers

do not include goods-in-transit inventory that has been shipped from the Company but not yet received by the distributors.

These numbers do not include goods-in-transit inventory that has been shipped from the Company but not yet received by the distributors.

(2) This total does not include inventory at retailers.

The Company does not

have access to data on retailer inventories of the Company’s products.

The Company does not have access to data on retailer inventories of the Company’s products.

Net Sales, Cost of Products Sold, and Gross Profit

Net sales, cost of products sold,

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

March 28, 2026

March 29, 2025

Net sales, cost of products sold, and gross profit data for the three months ended (dollars in millions):

June 27, 2026 June 28, 2025 Change % Change

Net firearms sales $ 157.7 $ 131.6 $ 26.1 19.8%

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Cost of products sold 124.4 127.4 (3.0 ) (2.4% )

Total consolidated net sales

and net firearms sales increased slightly for the three months ended March 28, 2026.

Sales of new products, including the RXM pistol,

Marlin 1894 lever-action rifles, American Centerfire Rifle Generation II, Glenfield rifles, Harrier rifles, and the Ruger Red Label III

Shotgun represented $51.6 million or 41% of firearm sales in the three months ended March 28, 2026.

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 March 28, 2026 is attributable to unfavorable leveraging of fixed costs resulting from decreased production,

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

The decrease in gross margin for

the three months ended March 28, 2026 is attributable to the aforementioned factors.

Gross profit $ 33.7 $ 5.1 $ 28.6 555.7%

Gross margin 21.3% 3.9% 17.4% 446.2%

The increase in total consolidated net sales and net firearms sales for the three months ended June 27, 2026 is attributable to increased demand, augmented by an increased average selling price.

Sales of new products, including the RXM pistol, Marlin 1894 lever-action rifles, Glenfield rifles, Harrier rifles, and the Ruger Red Label III Shotgun represented $29.3 million or 19.8% of firearm sales in the three months ended June 27, 2026.

New product sales include only major new products that were introduced in the past two years, so the American Centerfire Rifle Generation II ceased to be a new product in the current quarter.

The increased gross profit for the three months ended June 27, 2026 is attributable to the aforementioned sales increases, the absence of inventory rationalization write-offs that were undertaken in the prior year, and the favorable leveraging of fixed costs resulting from increased production, augmented by the $0.2 million of deferred revenue related to sales promotions.

The increase in gross margin for the three months ended June 27, 2026 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 27, 2026 June 28, 2025 Change % Change

Net firearms sales $ 298.6 $ 266.7 $ 31.9 11.9%

Net castings sales 0.8 1.5 (0.7 ) (42.8% )

Total net sales 299.4 268.2 31.2 11.6%

Cost of products sold 237.6 233.2 4.4 1.9%

Gross profit $ 61.8 $ 35.0 $ 26.8 76.40%

Gross margin 20.6% 13.1% 7.5% 57.3%

The increase in total consolidated net sales and net firearms sales for the six months ended June 27, 2026 is attributable to increased demand, augmented by an increased average selling price.

Sales of new products, including the RXM pistol, Super Wrangler revolver, Marlin lever-action rifles, and (for the first three months of the year) American Centerfire Rifle Generation II, represented $80.9 million or 28.9% of firearm sales in the first half of 2026.

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

The increased gross profit for the six months ended June 27, 2026 is attributable to the aforementioned sales increases, the absence of inventory rationalization write-offs that were undertaken in the prior year, and the favorable leveraging of fixed costs resulting from increased production, partially offset by the $0.4 million of deferred revenue related to sales promotions.

The increase in gross margin for the six months ended June 27, 2026 is attributable to the aforementioned factors.

Selling and General and Administrative Expenses

Selling and general and administrative

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

March 28, 2026

March 29, 2025

Selling and general and administrative expenses data for the three months ended (dollars in millions):

June 27, 2026 June 28, 2025 Change % Change

Selling expenses $ 10.3 $ 10.3 $ — 0.3%

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Total operating expenses $ 26.1 $ 25.9 $ 0.2 1.0%

Selling expenses for the three

months ended March 28, 2026 were substantially comparable to the corresponding period in the prior year.

The increase in general and

administrative expenses for the three months ended March 28, 2026 was primarily attributable to $3.2 million in legal fees incurred

related to the Beretta Strategic Cooperation Agreement, $2.5 million in severance costs, increased to share based compensation,

which included a one-time non-recurring expense of $1.7 million, and increased professional service costs.

Other income data for the three

months ended (dollars in millions):

March 28, 2026

March 29, 2025

The increase in other income for

the three months ended March 28, 2026 was attributable to increased royalty income.

Selling expenses for the three months ended June 27, 2026 were substantially comparable to the corresponding period in the prior year, with the increases in spending on industry shows and personnel costs offset by decreases in advertising, promotional and marketing initiatives, and shipping expenses.

The increase in general and administrative expenses for the three months ended June 27, 2026 was primarily attributable to increased personnel and share based compensation costs, partially offset by decreased severance costs.

Selling and general and administrative expenses data for the six months ended (dollars in millions):

June 27, 2026 June 28, 2025 Change % Change

Selling expenses $ 19.7 $ 19.7 $ — (0.2% )

General and administrative expenses 36.4 27.6 8.8 32.2%

Total operating expenses $ 56.1 $ 47.3 $ 8.8 18.7%

Selling expenses for the six months ended June 27, 2026 were substantially comparable to the corresponding period in the prior year, with the increases in spending on industry shows and personnel costs offset by decreases in advertising, promotional and marketing initiatives, and shipping expenses.

The increase in general and administrative expenses for the six months ended June 27, 2026 was primarily attributable to $4.4 million in legal fees incurred related to the Beretta Agreement, $3.2 million in severance costs, and increased share based compensation costs, which included a one-time non-recurring expense of $1.7 million, partially offset by decreased professional service costs.

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

June 27, 2026 June 28, 2025 Change % Change

Other income $ 1.3 $ 1.3 $ — (4.3% )

Other income for the three months ended June 27, 2026 was substantially comparable to the corresponding period in the prior year.

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

June 27, 2026 June 28, 2025 Change % Change

Other income $ 3.1 $ 2.6 $ 0.5 20.9%

The increase in other income for the six months ended June 27, 2026 was attributable to increased royalty income and miscellaneous income, partially offset by decreased interest income.

Income Taxes and Net Income

The Company's 2026 and 2025 effective tax rates differ from the statutory

federal tax rate due principally to research and development tax credits, state income taxes and the nondeductibility of certain executive

compensation.

The reduction in 2026 earnings increased the impact of these items.

The Company’s effective income tax rate was 271.6%

and 20.3% for the three months ended March 28, 2026 and March 29, 2025, respectively.

The discrete nature of these tax credits yields

an effective tax rate for the period that is not meaningful at low earnings levels.

As a result of the foregoing

factors, consolidated net income was $0.1 million for the three months ended March 28, 2026, a decrease of 98.4% from $7.8 million in

the comparable prior year period.

The Company's 2026 and 2025 effective tax rates differ from the statutory federal tax rate due principally to research and development tax credits, state income taxes and the nondeductibility of certain executive compensation.

The reduction in 2026 earnings increased the impact of these items, which resulted in effective income tax rates of 21.6% and 19.5% for the three and six months ended June 27, 2026, respectively.

The Company’s effective income tax rate was 11.2% and 1.9% for the three and six months ended June 28, 2025, respectively.

As a result of the foregoing factors, consolidated net income was $7.0 million for the three months ended June 27, 2026, a change of (140.5%) from a net loss of $(17.2) million in the comparable prior year period.

Consolidated net income was $7.1 million for the six months ended June 27, 2026, a change of (175.2%), from a net loss of $(9.5) million in the comparable prior year period.

Non-GAAP Financial Performance Measures

In an effort to provide investors

with additional information regarding its financial results, the Company refers to various United States generally accepted accounting

principles (“GAAP”) financial measures and two supplemental non-GAAP financial performance measures, Adjusted EBITDA and Adjusted

EBITDA margin, which management believes provides useful information to investors.

These non-GAAP financial performance measures may not

be comparable to similarly titled financial performance measures being disclosed by other companies.

In addition, the Company believes

that these non-GAAP financial performance measures have limitations as analytical tools, and, accordingly, should be considered in addition

to, and not in lieu of, GAAP financial measures.

The presentation of Adjusted EBITDA should not be construed to imply that the Company’s

future results will not be affected by unusual or non-recurring items.

The Company believes that

Adjusted EBITDA and Adjusted EBITDA margin are useful to understanding its operating results and the ongoing performance of its underlying

business, as Adjusted EBITDA assists investors in comparing the Company’s performance across reporting periods on a consistent basis

by excluding items that the Company does not believe are indicative of its operating performance.

The Company believes that this reporting

provides better transparency and comparability to its operating results.

The Company uses both GAAP and non-GAAP financial measures to

evaluate the Company’s financial performance.

The Company defines Adjusted

EBITDA as earnings before interest, taxes, and depreciation and amortization (EBITDA), as further adjusted to eliminate the impact of

certain items that the Company does not consider indicative of its ongoing operating performance, as itemized below.

Specifically, the

Company calculates Adjusted EBITDA by (i) adding the amount of interest expense, income tax expense, and depreciation and amortization

expenses that have been deducted from net income back into net income, (ii) subtracting the amount of interest income that was included

in net income from net income, (iii) subtracting income tax benefits, (iv) adding the amount of extraordinary cash and non-cash, non-operating

expenses, and (v) subtracting non-recurring income or non-recurring gains that do not contribute directly to management’s evaluation

of its operating results.

In an effort to provide investors with additional information regarding its financial results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and two supplemental non-GAAP financial performance measures, Adjusted EBITDA and Adjusted EBITDA margin, which management believes provides useful information to investors.

These non-GAAP financial performance measures may not be comparable to similarly titled financial performance measures being disclosed by other companies.

In addition, the Company believes that these non-GAAP financial performance measures have limitations as analytical tools, and, accordingly, should be considered in addition to, and not in lieu of, GAAP financial measures.

The presentation of Adjusted EBITDA should not be construed to imply that the Company’s future results will not be affected by unusual or non-recurring items.

The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful to understanding its operating results and the ongoing performance of its underlying business, as Adjusted EBITDA assists investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its operating performance.

The Company believes that this reporting provides better transparency and comparability to its operating results.

The Company uses both GAAP and non-GAAP financial measures to evaluate the Company’s financial performance.

The Company defines Adjusted EBITDA as earnings before interest, taxes, and depreciation and amortization (EBITDA), as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing operating performance, as itemized below.

Specifically, the Company calculates Adjusted EBITDA by (i) adding the amount of interest expense, income tax expense, and depreciation and amortization expenses that have been deducted from net income back into net income, (ii) subtracting the amount of interest income that was included in net income from net income, (iii) subtracting income tax benefits, (iv) adding the amount of extraordinary cash and non-cash, non-operating expenses, and (v) subtracting non-recurring income or non-recurring gains that do not contribute directly to management’s evaluation of its operating results.

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

Adjusted EBITDA was $10.9

million for the three months ended March 28, 2026, a decrease of 23.9% from $14.3 million in the comparable prior year period.

Non-GAAP Reconciliation – Adjusted

Adjusted EBITDA was $16.6 million for the three months ended June 27, 2026, an increase of 205.0% from $5.4 million in the comparable prior year period.

Adjusted EBITDA was $27.5 million for the six months ended June 27, 2026, an increase of 39.1% from $19.7 million in the comparable prior year period.

Non-GAAP Reconciliation – Adjusted EBITDA

Adjusted EBITDA

(Unaudited, dollars in thousands)

Three Months Ended

March 28, 2026

March 29, 2025

Income tax (benefit) expense

Three Months Ended Six Months Ended

June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025

Net income (loss) $ 6,981 $ (17,226 ) $ 7,109 $ (9,458 )

Inventory and other asset write-off — 17,002 — 17,002

Income tax expense (benefit) 1,919 (2,162 ) 1,717 (183 )

Depreciation and amortization expense 6,385 5,572 12,393 11,143

5 unchanged sentences

Adjusted EBITDA margin 10.5% 4.1% 9.2% 7.4%

Net income margin

(a) Costs incurred in engaging with Beretta Holding S.A.

(“Beretta”) on, amongst other things,

Beretta’s ownership of Company Common Stock, the Rights Plan, negotiations concerning potential strategic cooperation between the

Company and Beretta, and in engaging a proxy solicitation firm and preparing a preliminary proxy statement associated with the 2026 Annual

(b) Costs incurred associated severance and related costs as part of an executed reduction-in-force as part

of broader efforts to structurally align the organization to strategic priorities and the future operating model and are not indicative

of ongoing operations

Net income (loss) margin 4.4% (13.0% ) 2.6% (3.5% )

(a) Costs incurred in engaging with Beretta on, amongst other things, Beretta’s ownership of Company Common Stock, the Rights Plan, negotiations concerning potential strategic cooperation between the Company and Beretta, and in engaging a proxy solicitation firm and preparing a preliminary proxy statement associated with the 2026 Annual Meeting.

(b) Costs incurred associated severance and related costs as part of an executed reduction-in-force as part of broader efforts to structurally align the organization to strategic priorities and the future operating model.

Financial Condition

Liquidity and Capital Resources

At the end of the first quarter

of 2026, the Company’s cash and short-term investments totaled $105.2 million.

Pre-LIFO working capital of $225.4 million, less

the LIFO reserve of $67.9 million, resulted in working capital of $157.5 million and a current ratio of 3.5 to 1.

Cash provided by operating activities

was $18.8 million for the three months ended March 28, 2026, compared to $11.1 million for the comparable prior year period.

in cash provided in the three months ended March 28, 2026 is primarily attributable to decreased inventory, lower net payouts of accrued

employee compensation and benefits, and the lesser reduction in accounts payable and accrued expenses, and increases to prepaid expenses

and other current assets in the three months ended March 28, 2026, partially offset by the decrease in net income and decreased collections

of trade receivables in the three months ended March 28, 2026.

Third parties supply the Company

with various raw materials for its firearms and castings, such as steel, fabricated steel components, walnut, birch, beech, maple and

laminated lumber for rifle stocks, wax, ceramic material, metal alloys, various synthetic products and other component parts.

supply of these materials in the marketplace can result in increases to purchase prices and adversely affect production levels.

conditions result in a significant prolonged inflation of certain prices or if adequate quantities of raw materials cannot be obtained,

the Company’s manufacturing processes could be interrupted and the Company’s financial condition or results of operations

could be materially adversely affected.

At the end of the second quarter of 2026, the Company’s cash and short-term investments totaled $117.5 million.

Pre-LIFO working capital of $236.7 million, less the LIFO reserve of $68.4 million, resulted in working capital of $168.3 million and a current ratio of 3.3 to 1.

Cash provided by operating activities was $36.1 million for the six months ended June 27, 2026, compared to $25.9 million for the comparable prior year period.

The increase in cash provided in the six months ended June 27, 2026 is primarily attributable to the increase in net income, lower net payouts of accrued employee compensation and benefits, the lesser reduction in accounts payable and accrued expenses, and decreases to deferred income tax assets in the six months ended June 27, 2026, partially offset by a lesser decrease in inventory levels and decreased net collections of trade receivables in the six months ended June 27, 2026.

Third parties supply the Company with various raw materials for its firearms and castings, such as steel, fabricated steel components, walnut, birch, beech, maple and laminated lumber for rifle stocks, wax, ceramic material, metal alloys, various synthetic products and other component parts.

A limited supply of these materials in the marketplace can result in increases to purchase prices and adversely affect production levels.

If market conditions result in a significant prolonged inflation of certain prices or if adequate quantities of raw materials cannot be obtained, the Company’s manufacturing processes could be interrupted and the Company’s financial condition or results of operations could be materially adversely affected.

Investing and Financing

Capital expenditures for the

three months ended March 28, 2026 totaled $4.8 million, an increase from $1.1 million in the comparable prior year period.

Company expects capital expenditures related to new product introductions and upgrades to its 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.

Dividends of $1.3 million

were paid during the three months ended March 28, 2026.

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

Capital expenditures for the six months ended June 27, 2026 totaled $8.1 million, an increase from $6.7 million in the comparable prior year period.

In 2026, the Company expects capital expenditures related to new product introductions and upgrades to its 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.

Dividends of $3.0 million were paid during the six months ended June 27, 2026.

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

The quarterly dividend varies every quarter because the Company pays a percentage of earnings rather than a fixed amount per share.

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

On April 30, 2026, the Company’s

Board of Directors authorized a dividend of 11¢ per share to stockholders of record on May 14, 2026, payable on May 29, 2026.

dividend is approximately 40% of adjusted diluted earnings of 27¢ per share for the first quarter of 2026.

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 March 28, 2026, the Company

had $39.6 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 March 28, 2026, the

Company’s investment in this money market fund totaled $41.8 million.

During the three months ended

March 28, 2026 the Company did not purchase any shares of its common stock for in the open market.

As of March 28, 2026, $14.3 million

remained authorized for future stock repurchases.

Based on its unencumbered assets,

the Company believes it has the ability to raise cash through the issuance of short-term or long-term debt.

The Company’s unsecured

$40 million credit facility, which expires on January 7, 2028, was unused at March 28, 2026.

On July 24, 2026, the Company’s Board of Directors authorized a dividend of 21¢ per share to stockholders of record on August 14, 2026, payable on August 28, 2026.

This dividend is approximately 40% of adjusted diluted earnings of 52¢ per share for the second quarter of 2026.

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 27, 2026, the Company had $40.1 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 27, 2026, the Company’s investment in this money market fund totaled $46.7 million.

During the six months ended June 27, 2026 the Company did not purchase any shares of its common stock for in the open market.

As of June 27, 2026, $14.3 million remained authorized for future stock repurchases.

Based on its unencumbered assets, the Company believes it has the ability to raise cash through the issuance of short-term or long-term debt.

The Company’s unsecured $40 million credit facility, which expires on January 7, 2028, was unused at June 27, 2026.

Other Operational Matters

In the normal course of its manufacturing

operations, the Company is subject to occasional governmental proceedings and orders pertaining to workplace safety, firearms serial number

tracking and control, waste disposal, air emissions and water discharges into the environment.

The Company believes that it is generally

in compliance with applicable Bureau of Alcohol, Tobacco, Firearms & Explosives, environmental, and safety regulations and the outcome

of any proceedings or orders will not have a material adverse effect on the financial position or results of operations of the Company.

If these regulations become more stringent in the future and the Company is not able to comply with them, such noncompliance could have

a material adverse impact on the Company.

The Company has 13 independent

distributors that service the domestic commercial market.

Additionally, the Company has 39 and 26 distributors servicing the export and

law enforcement markets, respectively.

The Company self-insures a significant

amount of its product liability, workers’ compensation, medical, and other insurance.

It also carries significant deductible amounts

on various insurance policies.

In September 2024, the Company did not renew its product liability coverage with its incumbent carriers

and established a wholly-owned captive insurance company for claims made on or after September 1, 2024.

The Company expects to realize

its deferred tax assets through tax deductions against future taxable income.

On March 27, 2026,

the Company announced that Thomas A.

Dineen would step down from his role as Chief Financial Officer of Sturm, Ruger & Company, Inc.

on March 31, 2026.

In the normal course of its manufacturing operations, the Company is subject to occasional governmental proceedings and orders pertaining to workplace safety, firearms serial number tracking and control, waste disposal, air emissions and water discharges into the environment.

The Company believes that it is generally in compliance with applicable Bureau of Alcohol, Tobacco, Firearms & Explosives, environmental, and safety regulations and the outcome of any proceedings or orders will not have a material adverse effect on the financial position or results of operations of the Company.

If these regulations become more stringent in the future and the Company is not able to comply with them, such noncompliance could have a material adverse impact on the Company.

The Company has 13 independent distributors that service the domestic commercial market.

Additionally, the Company has 39 and 28 distributors servicing the export and law enforcement markets, respectively.

The Company self-insures a significant amount of its product liability, workers’ compensation, medical, and other insurance.

It also carries significant deductible amounts on various insurance policies.

In September 2024, the Company did not renew its product liability coverage with its incumbent carriers and established a wholly-owned captive insurance company for claims made on or after September 1, 2024.

The Company expects to realize its deferred tax assets through tax deductions against future taxable income.

On March 31, 2026, Thomas A.

Dineen stepped down from his role as Chief Financial Officer of Sturm, Ruger & Company, Inc.

On April 1, 2026, Andrew T.

Wieland succeeded Mr.

Dineen as Chief Financial Officer of the Company and also became

a Senior Vice President of the Company.

Dineen as Chief Financial Officer of the Company and also became a Senior Vice President of the Company.

On May 27, 2026, the Company’s stockholders approved an amendment (the “Charter Amendment”) to the Company’s Certificate of Incorporation, as amended, to increase the number of authorized shares of the Company’s common stock, par value $1.00 per share (the “Common Stock”) to 60 million shares.

The Charter Amendment became effective upon its filing with the Secretary of State of the State of Delaware on May 28, 2026.

Adjustments to Critical Accounting Policies

The Company has not made any adjustments

to its critical accounting estimates and assumptions described in the Company’s 2025 Annual Report on Form 10-K filed on March 2,

2026, or the judgments affecting the application of those estimates and assumptions.

The Company has not made any adjustments to its critical accounting estimates and assumptions described in the Company’s 2025 Annual Report on Form 10-K filed on March 2, 2026, or the judgments affecting the application of those estimates and assumptions.

Forward-Looking Statements and Projections

The Company may, from time to

time, make forward-looking statements and projections concerning future expectations.

Such statements are based on current expectations

and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales

and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company,

the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual

results to differ materially from those projected.

Readers are cautioned not to place undue reliance on these forward-looking statements,

which speak only as of the date made.

The Company undertakes no obligation to publish revised forward-looking statements to reflect events

or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

The Company may, from time to time, make forward-looking statements and projections concerning future expectations.

Such statements are based on current expectations and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company, the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual results to differ materially from those projected.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made.

The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The interest rate market risk

implicit to the Company at any given time is typically low, as the Company does not have significant exposure to changing interest rates

on invested cash.

There has been no material change in the Company’s exposure to interest rate risks during the three months ended

March 28, 2026.

The interest rate market risk implicit to the Company at any given time is typically low, as the Company does not have significant exposure to changing interest rates on invested cash.

There has been no material change in the Company’s exposure to interest rate risks during the three months ended June 27, 2026.

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