Sturm, Ruger & Company (NYSE: RGR) is one of the nation's biggest gun makers and produces pistols, revolvers, rifles, and shotguns. RGR primarily sells in the U.S. through its top four distributors. Foreign sales, primarily to law enforcement and government, comprise of less than 5% of RGR's total sales. RGR has benefited from an increased consumer desire for self defense but faces significant risk from increasing steel prices, an essential raw material for the company.
RGR sells its products through federally-licensed, independent wholesale distributors, and its four major customers in 2010 were Jerry’s/Ellett Brothers, Davidson’s, Lipsey’s, and Sports South. The major source of growth from 2009 to 2010 was an increase in retail demand. Sales of handguns, especially those purchased for self defense, showed strong growth.
One of the main drivers of sales for Sturm, Ruger & Company is the increased consumer desire for self defense. In response, RGR has introduced new firearms related to self defense, including the LVP pistol. Although RGR has ramped up production over the past few years, the company still has a large backlog of orders.
As the companies that buy and process steel are raising steel prices, the raw material costs for RGR have gone up. Despite the fluctuating steel prices, RGR does have enough materials in its inventory to provide enough time to locate and obtain additional materials at the current market cost without interrupting its its manufacturing operations
Sturm, Ruger & Company competes with companies that manufacture firearms for the consumer and government markets.