Steel tariffs have indirectly impacted Sturm, Ruger & Co., the company said during an earnings call on Thursday. The gunmaker’s experience is indicative of a larger potential issue for the industry, as American steel becomes more desirable to manufacturers.
“We’ve been sourcing our steel domestically for decades,” Sturm Ruger chief executive officer Christopher J. Killoy said during the call. “The tariffs have made domestic steel more attractive, so demand has risen tremendously recently as manufacturers who had been getting their steel from overseas look to find domestic sources. This has led to some price increases and some shortages of raw materials.”
As a result, Sturm Ruger’s purchasing staff have been working more closely with steel suppliers to maintain the inventory necessary for firearms production. Killoy warned that inventory is “tighter” than the company would like.
Regardless of the challenges presented by tariffs, the company’s earnings were well received by traders. Sturm Ruger stock was up over 11 percent as of noon on Thursday. It reported second quarter net sales of $128.4 million on Wednesday evening, compared with $131.9 million in net sales in the second quarter of 2017. Earnings per share exceeded analyst expectations.
The tariff issue described by Killoy could reverberate through the firearms industry. “Sturm Ruger is certainly not alone in facing rising input costs as a result of the recently implemented new tariffs on imported steel,” Rommel Dionisio, a gun industry analyst at Aegis Capital Corp., told Bloomberg News. “With distributor and retailer inventories of firearms now largely having normalized, the industry could very well see rising prices in upcoming months to help offset the increasing raw material prices.”