Legal expenses, severance payments send Rugers first-quarter profit tumbling; company has moved HQ to Mayodan
The legal cost of temporarily opposing its largest investor, Beretta Holding SA, from taking a bigger stake contributed to Sturm, Ruger & Co. reporting a massive decline in first-quarter net income Wednesday.
Ruger had $128,000 in net income, compared with $7.77 million a year ago.
Meanwhile, the manufacturer confirmed Wednesday quietly and discretely moving its corporate headquarters from Southport, Conn., to 700 S. Ayersville Road in Mayodan, presenting the Triad with another local publicly traded corporation.
"Mayodan is officially the location of our corporate headquarters as of the first of the year," Ruger spokesman Ron Werkmeister said Wednesday to the News & Record.
About 650 of Ruger's 1,800 employees are located in Mayodan, which contains by far its biggest manufacturing footprint at 445,000 square feet.
There has been no formal announcement by the company or on its website of the move. The regulatory filing accompanying the recent Beretta announcement listed One Lacey Place in Southport, Conn., as the address of its principal executive offices.
However, the address for the Mayodan plant was listed as the dateline for its fourth-quarter 2025 and first-quarter 2026 earnings reports.
Ruger, along with other firearms manufacturers once based in Connecticut, have cited their frustrations with expanding gun control restrictions in the state.
Ruger had vowed to not move its headquarters as part of fighting for gun rights in Connecticut.
"There were a variety of factors that led us to the move to name Mayodan as our corporate headquarters, to include the positive political environment for firearms in North Carolina," Werkmeister said.
The firearm manufacturer spent $3.2 million in legal, professional and advisory expenses from both negotiating with Beretta, and on fending off Beretta's multiple appeals to shareholders ahead of its 2026 annual meeting.
On Monday, Ruger said it has reached an agreement with Beretta that allows it to raise its stake in Ruger from 10% to 25%.
In exchange, Beretta agreed to a three-year standstill on increasing its ownership beyond 25%, as well as withdrawing its nominees to the Ruger board of directors for the 2026 shareholder meeting.
Ruger also spent $2.5 million in severance expenses related to eliminating 90 jobs at its Newport, N.H., plant in February.
The job cuts represented about 5% of its workforce of about 1,800.
"Taken together, these two discrete items reflect actions to ensure the company's independence and strengthen its operational foundation, both of which are in the best long-term interest of shareholders," the company said.
Beretta's interest in buying Ruger surfaced in September when the family owned Luxembourg manufacturer disclosed in a regulatory filing that it had acquired a 7.75% stake in Ruger.
That stake grew to 9% in October. In February, Beretta became the largest individual shareholder of Ruger, with a 9.95% stake.
Beretta's bid intensified into hostile territory in March. Beretta reported in a March 31 regulatory filing that Ruger has declined to grant Beretta a waiver under Ruger's poison pill declaration, set in October 2026.
Net sales rose 4.2% in the first quarter to $140.9 million, while cost of sales was up 7% to $113.3 million.
New firearms products represented 41% of sales during the quarter.
Diluted earnings were 1 cent per share, compared with 46 cents a year ago. Adjusted earnings were 27 cents.
"Our first-quarter results reflect both the strength of our underlying business and the actions we have taken to position Ruger for the future," chief executive Todd Seyfert said in the news release.
Seyfert warned in June that a companywide restructuring would affect management, its overall workforce, as well as the elimination of certain firearms products.
Ruger took $26.4 million in restructuring expenses in the second quarter. Seyfert previously said the manufacturer would have $3 million in expenses during fiscal 2025 related to executive management severance packages.
"We continue to focus on innovation, have great demand across our offerings, and see encouraging signs in the market," Seyfert said.
The board of directors declared Wednesday a quarterly dividend of 11 cents a share, payable May 29 to shareholders registered as of May 14. As typical, the dividend equates to 40% of adjusted net income for the quarter.
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