KNOWLEDGE BASE

Sturm, Ruger and Company’s top executive said this week a lean year forced workforce reductions across the company.

Chief Executive Officer Chris Killoy told investors Wednesday the gun maker’s headcount decreased by 28 percent over the 13-month period ending Jan. 31. The cutbacks include 700 positions, including all temporary work positions and 60 indirect labor positions.

“While we reduced production in 2017, we were mindful of the impact that would have on our people, operations and profitability,” Killoy said. “However, we had to make some difficult decisions. We developed a strategic plan focusing on not selling positions vacated through attrition and the reduction of overtime while carefully monitoring our headcount.”

“As a result, Ruger is better positioned to succeed in 2018,” he added.

Ruger reported annual net sales of $522.3 million last year, down 21 percent over 2016 — the biggest on record for federal background checks and by proxy, estimated gun sales. Fourth quarter sales dipped 27 percent to $118.2 million, according to regulatory filings published Wednesday.

Maksim Netrebov, financial analyst and contributing writer at Seeking Alpha, said his calculations show Ruger just closed on the worst year its had since 2012 — a common trend across publicly-traded gun manufacturers.

“After looking at these numbers, I cannot say that I am surprised one bit,” he said. “Overall, Ruger is weathering the storm, but there is still a lot more to go through.”

Netrebov said “no one really has a clue” how 2018 will shake out, either.

“Short of realistic gun control legislation, the demand left over from 2016 is rapidly declining, and I believe with the record high inventory numbers, 2018 will see continued pressure on prices and more sales wars,” he said.

While looming gun control has historically spurred sales, it still remains unclear how last week’s shooting in Parkland, Florida and the president’s response to it — including directing a bump stock ban and calling for improved background checks — will affect the industry.

Congressional lawmakers on both sides of the aisle have also suggested raising the legal age of owning a rifle to 21, despite protests from the National Rifle Association.

“The NRA supports efforts to prevent those who are a danger to themselves or others from getting access to firearms,” the organization said Wednesday. “At the same time, we will continue to oppose gun control measures that only serve to punish law-abiding citizens. These are not mutually exclusive or unachievable goals.”

Vista Outdoor said ammo prices will increase for a second time this year as the industry adopts a “rational and disciplined approach” to generating sales.

Chief Executive Officer Christopher Metz told investors Thursday the company will raise prices in the low to mid single digits on certain product lines in April. Vista took a similar step in January — one Metz believes competitors will soon follow.

“I think some are a little bit slower to it than we’d like to see,” he said. “It’s impossible for me to see how competitors are not going to take price increases. They’re going to have to.”

Vista owns more than three dozen companies in firearms, ammunition and shooting accessories, including Savage Arms, Stevens, Federal Premium, Speer and American Eagle. It also holds brands in the outdoor lifestyle market.

Officials with the Commonwealth reached out to Massachusetts gun owners to caution them the clock is ticking to hand over any bump stocks or trigger cranks.

According to a statement by the Gun Owners’ Action League, the state’s National Rifle Association affiliate, letters have been going out from state regulators to licensed gun owners warning that the controversial devices are illegal after Feb. 1. The letter adds that those who have them will have a short time period to arrange for their surrender.

“Retention of such a prohibited item beyond the 90 day grace period will expose the owner to criminal prosecution,” says Daniel Bennett, secretary of the Massachusetts Executive Office of Public Safety.

Gemini Technologies accused Smith & Wesson of squashing an international sales deal to avoid paying the suppressor manufacturer a cut worth millions, according to a lawsuit filed last week in Idaho federal court.

The gun maker closed a $10 million deal in August to acquire Gemtech, promising a two-part escrow payment and a portion of any product sales proceeds over the next three years, not to exceed $17.1 million.

Gemtech said in court documents filed Jan. 24, however, the gun maker faulted on both ends of the agreement by shorting the escrow payment $1.5 million and scuttling a potential $207 million sales opportunity with buyers in the United Arab Emirates and Bahrain.

The gun industry took a few blows in 2017 as manufacturers and retailers alike endured slumping demand post-election. Share prices bounced, company leaders stepped down and legacy brands closed up shop – divesting fear-based advertising tactics in favor of promotions.

With the new way forward for gun makers uncertain, Guns.com takes a look back at the year that was for publicly traded companies across the industry.

Smith & Wesson/American Outdoor Brands

Legacy handgun manufacturer Smith & Wesson started off its most recent fiscal year standing in one pretty tall shadow.

After reporting record-breaking sales just shy of $1 billion last year – the industry’s biggest on record for background checks and, by proxy, gun sales – Smith & Wesson’s holding company, American Outdoor Brands, anticipated a post-election slow down would decrease annual earnings by as much as 17 percent.

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