Civil Unrest in America - An Unintended Consequence

Updated January 2021

Sometimes fear does result in unintended consequences.  Recent press releases from two of America's largest gun manufacturers show us what the recent civil unrest and the 2020 election have created in the most heavily armed civilian population in the world.

 

Sturm, Ruger and Company is the largest gun manufacturing company in the United States.  Here is the first page of the company's press release showing their results for the second quarter of 2020:

Net firearms sales rose from $94.999 million in the third quarter of 2019 to $145.705 million in the second quarter of 2020, an increase of 53.4 percent.  Over the first three-quarters of the year, net firearms sales rose by 30.9 percent on a year-over-year basis, hitting $399.608 million.  The company's strong operational and financial performance allowed them to award a one-time special dividend of $5.00 per share in the second quarter.

 

Sturm's Chief Executive Officer Christopher J. Killoy made the following comments about the second quarter results:

“Consumer demand showed no signs of letting up during the quarter as concerns about personal protection and home defense were stoked by civil unrest in some cities around the United States, the call, by some, for the reduction in funding and authority of law enforcement organizations, and the continuing COVID-19 pandemic. As a result of this unprecedented demand, inventories remained significantly reduced at all levels in the channel during the third quarter.”

 

The sell-through of the company's products from their independent distributors to retailers increased by 50 percent in the first three-quarters of 2020 on a year-over-year basis.  Demand was so high that Ruger's finished goods inventory and distributors' inventories of their products declined by 31 percent during the most recent quarter.

 

Now let's look at the financial results of America's second largest gun manufacturing company, Smith & Wesson.  Here is the first page of the company's press release showing their results for the first quarter of fiscal 2021:

 

Net sales rose from $123.665 million in the first quarter of fiscal 2020 to $277.965 million in the first quarter of fiscal 2021, an increase of 124.8 percent.  Firearms sales rose a remarkable 140.9 percent during the first quarter of fiscal 2021, hitting $229.9 million.

 

Smith & Wesson's President and Chief Executive Officer Mark Smith had this to say about the company's second quarter results:

 

 "Today, I am pleased to report record-breaking first quarter financial results for Smith & Wesson Brands, Inc. These results could not have been possible without our dedicated employees, who not only worked diligently to manufacture and fulfill the strong flow of customer orders with a broad assortment of our highly sought-after firearms, but did so with a heightened commitment to the health and safety protocols that our operations management team put in place at the start of the pandemic. Our record revenue and unit sales during the quarter demonstrates our ability to rapidly respond to increased demand through our flexible manufacturing model and our state-of-the-art distribution facility, delivering outstanding products that resonate with the firearms consumer."

 

He also stated that:

 

"Our record revenue and unit sales during the quarter demonstrates our ability to rapidly respond to increased demand through our flexible manufacturing model and our state-of-the-art distribution facility, delivering outstanding products that resonate with the firearms consumer."

 

The company's performance has allowed them to pay down their debt and reduce their net debt to zero as well as paying its first quarterly dividend of $0.05 per share to its shareholders.

 

Just in case you were curious, here is the number of background firearms checks that have been done by the FBI's National Instant Criminal Background Check System or NICS on a monthly basis since 1998: 

As you can see, the months of March, May, June, July and August through to December of 2020 have seen background checks in excess of 3 million for the first time since records were kept and 2020's total of 39,695,315 sets a new record by a very, very wide margin.

 

While one can never prove that the current social unrest in some of America's largest cities and the winning of the Presidency by Joe Biden who has pledged to control firearms has created higher demand for personal firearms, the coincidence of higher sales by two of the United States' would suggest that there is at least some connection between civilians wanting to protect themselves and the current violence plaguing American streets.