季報
季度報告
10-Q
2026-07-29
斯特姆-魯格第二季淨銷售升19% 毛利率大幅改善至21.4% 每股盈利0.43美元
AI 繁中摘要
Sturm, Ruger & Company, Inc.（RGR）提交截至2026年6月27日第二季度嘅10-Q報告。📊
**業績重點（Q2 FY2026 vs Q2 FY2025）：**
- 總淨銷售額：1.581億美元（去年同期1.325億），升約19%。
- 毛利率大幅改善：21.4%（去年同期僅3.9%），主要受惠於成本控制及產品組合。
- 經營利潤：763萬美元（去年同期虧損2,072萬）。
- 淨利潤：698萬美元（去年同期虧損1,723萬）。
- 每股盈利（攤薄）：0.43美元（去年同期-1.05美元）。
- 上半年累計：淨利潤711萬美元，每股0.44美元（去年同期虧損946萬美元，每股-0.57美元）。
**營運亮點：**
- 新產品銷售佔上半年總槍械銷售29%，包括RXM手槍、Marlin 1894等。
- 公司與Beretta Holding達成協議，結束潛在代理權爭奪，相關專業費用約440萬美元（一次性），影響每股約0.20美元。
- 第二季度實施裁員重組，產生遣散費約320萬美元（一次性），影響每股約0.15美元。
- 經營現金流強勁：上半年3,607萬美元（去年同期2,588萬美元）。
- 截至季度末，手持現金及短期投資共1.175億美元，無銀行借款。
**訴訟與風險：**
- 公司仍面對多宗訴訟，包括紐約州市政訴訟（水牛城、羅徹斯特）及康涅狄格州不公平貿易行為案（涉及2021年科羅拉多槍擊事件），原告要求賠償9,000萬美元。
- 管理層認為訴訟「不太可能」對整體財務狀況構成重大不利影響，但可能影響個別季度業績。
- 產品責任保險自2024年9月起轉為自保公司，風險自留額度提升。
**投資者關注：**
- 業績明顯復甦，毛利率恢復至正常水平，反映營運改善及新產品貢獻。
- 一次性重組及法律費用短期壓低每股盈利約0.35美元，但長期有望提升效率。
- 股息：季度每股0.21美元（已授權8月28日派發）。
- 2026年7月24日董事會授權新股息；公司亦保留回購能力。
整體而言，Ruger第二季度盈利顯著反彈，新產品訂單強勁，但需留意訴訟進展及一次性成本消退後嘅核心盈利能力。🔍
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 2026
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________ to _______________
Commission file number 1-10435
STURM, RUGER & COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0633559
(State or other jurisdiction of
(I.R.S. employer
incorporation or organization)
identification no.)
700 S Ayersville Road, Mayodan, North Carolina 27027
(Address of principal executive offices)
(Zip code)
(203) 259-7843
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $1 par value RGR New York Stock Exchange
Common Stock Purchase Rights N/A New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the issuer's common stock as of July 15, 2026: 15,978,256
1
INDEX
STURM, RUGER & COMPANY, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets – June 27, 2026 and December 31, 2025 3
Condensed consolidated statements of income (loss) and comprehensive income (loss) – Three and six months ended June 27, 2026 and June 28, 2025 5
Condensed consolidated statements of stockholders’ equity – Six months ended June 27, 2026 and June 28, 2025 6
Condensed consolidated statements of cash flows – Six months ended June 27, 2026 and June 28, 2025 8
Notes to condensed consolidated financial statements 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures About Market Risk 34
Item 4. Controls and Procedures 34
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 35
Item 1A. Risk Factors 35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
Item 3. Defaults Upon Senior Securities 35
Item 4. Mine Safety Disclosures 35
Item 5. Other Information 36
Item 6. Exhibits 37
SIGNATURES 38
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
June 27, 2026
December 31, 2025
(Note)
Assets
Current Assets
Cash and cash equivalents $ 30,651 $ 18,451
Short-term investments 86,810 74,082
Trade receivables, net 77,112 64,510
Gross inventories (Note 4) 106,606 113,166
Less LIFO reserve (68,402 ) (67,058 )
Less excess and obsolescence reserve (3,929 ) (3,227 )
Net inventories 34,275 42,881
Assets held for sale 372 —
Prepaid expenses and other current assets 9,751 11,680
Total Current Assets 238,971 211,604
Property, plant and equipment 509,797 506,799
Less allowances for depreciation (433,601 ) (426,702 )
Net property, plant and equipment 76,196 80,097
Deferred income taxes 17,107 19,720
Other assets 32,013 30,576
Total Assets $ 364,287 $ 341,997
Note:
The Condensed Consolidated Balance Sheet at December 31, 2025 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.
See notes to condensed consolidated financial statements.
3
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)
(Dollars in thousands, except per share data)
June 27, 2026
December 31, 2025
(Note)
Liabilities and Stockholders’ Equity
Current Liabilities
Trade accounts payable and accrued expenses $ 39,061 $ 34,122
Contract liabilities with customers (Note 3) 465 —
Product liability 777 964
Employee compensation and benefits 26,727 15,023
Workers’ compensation 4,399 4,638
Total Current Liabilities 71,429 54,747
Lease liabilities (Note 5) 1,009 1,158
Employee compensation 1,995 2,271
Product liability accrual 61 61
Contingent liabilities (Note 13) — —
Stockholders’ Equity
Common Stock, non-voting, par value $1:
Authorized shares 50,000; none issued — —
Common Stock, par value $1:
2026 – 60,000,000 shares authorized
24,524,481 issued,
15,978,256 outstanding
2025 – 40,000,000 shares authorized
24,490,478 issued,
15,944,253 outstanding 24,524 24,490
Additional paid-in capital 57,293 55,356
Retained earnings 426,107 422,045
Less: Treasury stock – at cost
2026 – 8,546,225 shares
2025 – 8,546,225 shares (218,131 ) (218,131 )
Total Stockholders’ Equity 289,793 283,760
Total Liabilities and Stockholders’ Equity $ 364,287 $ 341,997
Note:
The Condensed Consolidated Balance Sheet at December 31, 2025 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.
See notes to condensed consolidated financial statements.
4
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(Dollars in thousands, except per share data)
Three Months Ended
Six Months Ended
June 27, 2026
June 28, 2025
June 27, 2026
June 28, 2025
Net firearms sales $ 157,679 $ 131,567 $ 298,575 $ 266,762
Net castings sales 379 924 839 1,467
Total net sales 158,058 132,491 299,414 268,229
Cost of products sold 124,316 127,345 237,594 233,188
Gross profit 33,742 5,146 61,820 35,041
Operating expenses:
Selling 10,303 10,277 19,659 19,690
General and administrative 15,810 15,585 36,481 27,595
Total operating expenses 26,113 25,862 56,140 47,285
Operating income (loss) 7,629 (20,716 ) 5,680 (12,244 )
Other income:
Interest income 702 954 1,503 1,992
Interest expense (23 ) (22 ) (45 ) (38 )
Other income, net 592 396 1,688 649
Total other income, net 1,271 1,328 3,146 2,603
Income (loss) before income taxes 8,900 (19,388 ) 8,826 (9,641 )
Income taxes 1,919 (2,162 ) 1,717 (183 )
Net income (loss) and comprehensive income (loss) $ 6,981 $ (17,226 ) $ 7,109 $ (9,458 )
Basic earnings (loss) per share $ 0.44 $ (1.05 ) $ 0.45 $ (0.57 )
Diluted earnings (loss) per share $ 0.43 $ (1.05 ) $ 0.44 $ (0.57 )
Weighted average number of common shares outstanding - Basic 15,957,073 16,370,674 15,951,342 16,494,828
Weighted average number of common shares outstanding - Diluted 16,272,905 16,370,674 16,231,621 16,494,828
Cash dividends per share $ 0.11 $ 0.18 $ 0.19 $ 0.42
See notes to condensed consolidated financial statements.
5
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(Dollars in thousands)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Total
Balance at December 31, 2025 $ 24,490 $ 55,356 $ 422,045 $ (218,131 ) $ 283,760
Net income and comprehensive income 128 128
Common stock issued – compensation plans 4 (4 ) —
Vesting of RSUs (49 ) (49 )
Dividends paid (1,276 ) (1,276 )
Recognition of stock-based compensation expense 737 737
Balance at March 28, 2026 $ 24,494 $ 56,040 $ 420,897 $ (218,131 ) $ 283,300
Net income and comprehensive income 6,981 6,981
Common stock issued – compensation plans 30 (30 ) —
Vesting of RSUs (11 ) (11 )
Dividends paid (1,754 ) (1,754 )
Unpaid dividends accrued (17 ) (17 )
Recognition of stock-based compensation expense 1,294 1,294
Balance at June 27, 2026 $ 24,524 $ 57,293 $ 426,107 $ (218,131 ) $ 289,793
6
STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(Continued)
(Dollars in thousands)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Total
Balance at December 31, 2024 $ 24,468 $ 50,536 $ 436,609 $ (192,031 ) $ 319,582
Net income and comprehensive income 7,768 7,768
Common stock issued – compensation plans 5 (5 ) —
Vesting of RSUs (178 ) (178 )
Dividends paid (3,992 ) (3,992 )
Unpaid dividends accrued 146 146
Recognition of stock-based compensation expense 1,146 1,146
Repurchase of 79,200 shares of common stock (2,991 ) (2,991 )
Balance at March 29, 2025 $ 24,473 $ 51,499 $ 440,531 $ (195,022 ) $ 321,481
Net loss and comprehensive loss (17,226 ) (17,226 )
Common stock issued – compensation plans 17 (17 ) —
Vesting of RSUs —
Dividends paid (2,941 ) (2,941 )
Unpaid dividends accrued (93 ) (93 )
Recognition of stock-based compensation expense 1,269 1,269
Repurchase of 363,884 shares of common stock (13,157 ) (13,157 )
Balance at June 28, 2025 $ 24,490 $ 52,751 $ 420,271 $ (208,179 ) $ 289,333
See notes to condensed consolidated financial statements.
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STURM, RUGER & COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Six Months Ended
June 27, 2026
June 28, 2025
Operating Activities
Net income (loss) $ 7,109 $ (9,458 )
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization 12,393 11,143
Stock-based compensation 2,031 2,415
Excess and obsolescence inventory reserve 702 40
Inventory and other asset write-off — 17,002
Loss on disposal of assets 1 185
Deferred income taxes 2,613 (2,440 )
Changes in operating assets and liabilities:
Trade receivables (12,602 ) 5,340
Inventories 7,904 10,247
Assets held for sale (372 ) —
Trade accounts payable and accrued expenses 4,534 (3,194 )
Contract liabilities with customers 465 91
Employee compensation and benefits 11,411 (1,123 )
Product liability (187 ) 355
Prepaid expenses, other assets and other liabilities 72 (4,726 )
Cash provided by operating activities 36,074 25,877
Investing Activities
Property, plant and equipment additions (8,059 ) (6,746 )
Net proceeds from the sale of assets 3 —
Purchases of short-term investments (40,112 ) (63,793 )
Proceeds from maturities of short-term investments 27,384 81,165
Cash (used for) provided by investing activities (20,784 ) 10,626
Financing Activities
Remittance of taxes withheld from employees related to share-based compensation (60 ) (178 )
Repurchase of common stock — (16,148 )
Dividends paid (3,030 ) (6,933 )
Cash used for financing activities (3,090 ) (23,259 )
Increase in cash and cash equivalents 12,200 13,244
Cash and cash equivalents at beginning of period 18,451 10,028
Cash and cash equivalents at end of period $ 30,651 $ 23,272
See notes to condensed consolidated financial statements.
8
STURM, RUGER & COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands, except per share)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the results of the interim periods. Operating results for the three and six months ended June 27, 2026 may not be indicative of the results to be expected for the full year ending December 31, 2026. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Organization:
Sturm, Ruger & Company, Inc. (the “Company”) is principally engaged in the design, manufacture, and sale of firearms to domestic customers. Approximately 99% of sales are from firearms. Export sales accounted for approximately 6% of total sales for the six month period ended June 27, 2026 and approximately 5% of total sales for the six month period ended June 28, 2025, respectively. The Company’s design and manufacturing operations are located in the United States and almost all product content is domestic. The Company’s firearms are sold through a select number of independent wholesale distributors, principally to the commercial sporting market.
The Company also manufactures investment castings made from steel alloys and metal injection molding (“MIM”) parts for internal use in its firearms and for sale to unaffiliated, third-party customers. Approximately 1% of sales are from the castings segment.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Revenue Recognition:
The Company recognizes revenue in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”). Substantially all product sales are sold FOB (free on board) shipping point. Customary payment terms are 2% 30 days, net 40 days. Generally, all performance obligations are satisfied when product is shipped and the customer takes ownership and assumes the risk of loss. In some instances, sales include multiple performance obligations. The most common of these instances relates to sales promotion programs under which downstream customers are entitled to receive no charge products based on their purchases of certain of the Company’s products from the independent distributors. The fulfillment of these no charge products is the Company’s responsibility. In such instances, the Company allocates the revenue of the promotional sales based on the estimated level of participation in the sales promotional program and the timing of the shipment of all of the firearms included in the promotional program, including the no charge firearms. Revenue is recognized proportionally as each performance obligation is satisfied, based on the relative customary price of each product. Customary prices are generally determined based on the prices charged to the independent distributors. The net change in contract liabilities for a given period is reported as an increase or decrease to sales.
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Fair Value Measurements:
The carrying amounts of financial instruments, including cash, short-term investments, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the short-term maturity of these items.
The Company’s short-term investments consist of United States Treasury instruments, which mature within one year, and investments in a bank-managed money market fund that invests exclusively in United States Treasury obligations and is valued at the net asset value ("NAV") daily closing price, as reported by the fund, based on the amortized cost of the fund’s securities. The NAV is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.
The fair value of inventory acquired as part of a business combination is based on a third-party valuation utilizing the comparable sales method which is based on Level 2 and Level 3 inputs. The fair value of property, plant and equipment acquired as part of a business combination is based on a third-party valuation utilizing the indirect method of cost approach, which is based on Level 2 and Level 3 inputs. The fair value of patents acquired as part of a business combination is based on a third-party valuation utilizing the replacement cost method, which is based on Level 2 and Level 3 inputs. The fair value of the remaining intangible assets as part of a business combination are based on a third-party valuation utilizing discounted cash flow methods that involves inputs, which are not observable in the market (Level 3).
Business Combination:
On July 1, 2025, the Company acquired substantially all of the assets of Anderson Manufacturing (“Anderson”) for a total purchase price of $15.8 million in cash, with $15 million having been paid in cash at the closing of the transaction and $0.8 million having been held back from the purchase price for potential repair remediation costs, which will either be applied to repair costs or paid to Anderson. This holdback was included in trade accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheet at June 27, 2026.
The transaction was funded by the Company with cash on hand and has been accounted for in accordance with ASC 805 - Business Combinations, which requires, among other things, an assignment of the acquisition consideration transferred to the sellers for the tangible and intangible assets acquired, using the bottom up approach, to estimate their fair value at acquisition date. Any excess of the fair value of the purchase consideration over these identified net assets was recorded as goodwill. The estimates of fair value are based upon assumptions believed to be reasonable, yet are inherently uncertain and, as a result, may differ from actual performance. During the measurement period, which expired on June 30, 2026, one year from the date of acquisition, the Company would have been able to record adjustments to the estimated fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill in the period in which such revised estimates were identified. No such adjustments were recorded in the six months ended June 27, 2026.
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Assets Held for Sale:
The Company classifies a property as held for sale when all of the criteria set forth in the Accounting Standards Codification (ASC) Topic 360: Property, Plant and Equipment (ASC 360) have been met. The criteria are as follows: (i) management, having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets; (iii) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. At the time the Company classifies a property as held for sale, the Company ceases recording depreciation and amortization. A property classified as held for sale is measured and reported at the lower of: (i) its carrying amount or (ii) its estimated fair value, less estimated costs to sell. Properties classified as held for sale are presented separately in the consolidated balance sheet.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Recent Accounting Pronouncements:
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”).” This guidance requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the statement of earnings. It is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. Adoption may be applied either prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of this guidance on the Company’s related disclosures.
In December 2025, the FASB issued its final ASU which makes improvements to the Accounting Standards Codification in response to feedback from stakeholders. This standard, issued as ASU 2025-12, specifically updates the Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. This update is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting ASU 2025-12. In September 2025, the FASB issued ASU No. 2025-06, “Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software.” The standard modernizes and simplifies guidance for internal-use software costs. This guidance is effective for annual reporting periods beginning after December 15, 2027 including interim reporting periods within those annual reporting periods. The Company is evaluating the impact of this guidance on its Consolidated Financial Statements.
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NOTE 3 - REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS
The impact of ASC 606 on revenue recognized during the three and six months ended June 27, 2026 and June 28, 2025 is as follows:
Three Months Ended Six Months Ended
June 27,
2026 June 28,
2025 June 27,
2026 June 28,
2025
Contract liabilities with customers at beginning of period $ 714 $ 789 $ — $ —
Revenue deferred — (325 ) 714 464
Revenue recognized (249 ) (373 ) (249 ) (373 )
Contract liabilities with customers at end of period $ 465 $ 91 $ 465 $ 91
As more fully described in the Revenue Recognition section of Note 2, the deferral of revenue and subsequent recognition thereof relates to certain of the Company’s sales promotion programs that include the future shipment of free products. The Company expects the remaining deferred revenue from the contract liabilities with customers to be recognized in the third quarter of 2026.
Practical Expedients and Exemptions
The Company has elected to account for shipping and handling activities that occur after control of the related product transfers to the customer as fulfillment activities that are recognized upon shipment of the goods.
NOTE 4 - INVENTORIES
Inventories are valued using the last-in, first-out (LIFO) method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs existing at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management's control, interim results are subject to the final year-end LIFO inventory valuation.
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Inventories consist of the following:
June 27, 2026 December 31, 2025
Inventory at FIFO
Finished products $ 7,812 $ 10,993
Materials and work in process 98,794 102,173
Gross inventories 106,606 113,166
Less: LIFO reserve (68,402 ) (67,058 )
Less: excess and obsolescence reserve (3,929 ) (3,227 )
Net inventories $ 34,275 $ 42,881
NOTE 5 - LEASED ASSETS
The Company leases certain of its real estate and equipment. The Company has evaluated all its leases and determined that all are operating leases under the definitions of the guidance of ASU 2016-02, Leases (Topic 842). The Company’s lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.
Under the provisions of ASU 2016-02, the Company records right-of-use assets equal to the present value of the contractual liability for future lease payments. The table below presents the right-of-use assets and related lease liabilities recognized on the Condensed Consolidated Balance Sheet as of June 27, 2026:
Balance Sheet Line Item June 27, 2026
Right-of-use assets Other assets $ 1,490
Operating lease liabilities
Current portion Trade accounts payable and
accrued expenses $ 481
Noncurrent portion Lease liabilities 1,009
Total operating lease liabilities $ 1,490
The depreciable lives of right-of-use assets are limited by the lease term and are amortized on a straight line basis over the life of the lease.
The Company’s leases generally do not provide an implicit interest rate, and therefore the Company calculates an incremental borrowing rate to determine the present value of its operating lease liabilities.
Certain of the Company’s lease agreements contain renewal options at the Company’s discretion. The Company does not recognize right-of-use assets or lease liabilities for leases of one year or less or for renewal periods unless it is reasonably certain that the Company will exercise the renewal option at the inception of the lease or when a triggering event occurs.
The table below includes cash paid for the Company’s operating lease liabilities, other non-cash information, weighted average remaining lease term and weighted average discount rate:
13
Six Months Ended
June 27, 2026 June 28, 2025
Cash paid for amounts included in the measurement of lease liabilities $ 314 $ 288
Cash amounts paid for short-term leases $ 246 $ 273
Right-of-use assets obtained in exchange for lease liabilities $ — $ —
Weighted average remaining lease term (years) 5.0 6.9
Weighted average discount rate 8.0% 8.0%
The following table reconciles the undiscounted future minimum lease payments to the total operating lease liabilities recognized on the Condensed Consolidated Balance Sheet as of June 27, 2026:
Remainder of 2026 $ 386
2027 324
2028 230
2029 160
2030 160
Thereafter 640
Total undiscounted future minimum lease payments 1,900
Less: Difference between undiscounted lease payments & the present value of future lease payments (410 )
Total operating lease liabilities $ 1,490
NOTE 6 - LINE OF CREDIT
On June 6, 2024, the Company amended its existing $40 million unsecured revolving line of credit agreement with a bank, which now expires January 7, 2028. Borrowings under this new facility bear interest at the applicable Secured Overnight Financing Rate (SOFR), plus 150 basis points, plus an additional adjustment of eight basis points. The Company is also charged one-quarter of a percent (0.25%) per year on the unused portion. At June 27, 2026, the Company was in compliance with the terms and covenants of the credit facility and the line of credit was unused.
NOTE 7 - EMPLOYEE BENEFIT PLANS
The Company sponsors a 401(k) plan that covers substantially all employees. The Company matches a certain portion of employee contributions using the safe harbor guidelines contained in the Internal Revenue Code. Expenses related to these matching contributions totaled $1.1 million and $2.2 million for the three and six months ended June 27, 2026, respectively, and $1.0 million and $2.2 million for the three and six months ended June 28, 2025, respectively. The Company plans to contribute approximately $2.2 million to the plan in matching employee contributions during the remainder of 2026.
In addition, the Company provided supplemental discretionary contributions to the 401(k) plan totaling $1.8 million and $3.4 million for the three and six months ended June 27, 2026, respectively, and $1.6 million and $3.6 million for the three and six months ended June 28, 2025, respectively. The Company plans to contribute approximately $3.0 million in supplemental contributions to the plan during the remainder of 2026.
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NOTE 8 - INCOME TAXES
The Company's 2026 and 2025 effective tax rates differ from the statutory federal tax rate due principally to the availability of research and development tax credits, state income taxes, and the nondeductibility of certain executive compensation. The Company’s effective income tax rate was 21.6% and 19.5% for the three and six months ended June 27, 2026, respectively. The Company’s effective income tax rate was 11.2% and 1.9% for the three and six months ended June 28, 2025, respectively.
Income tax payments were de minimis for the three and six months ended June 27, 2026. Income tax payments totaled $1.1 million and $3.1 million for the three and six months ended June 28, 2025, respectively.
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2021.
The Company does not believe it has included any “uncertain tax positions” in its federal income tax return or any of the state income tax returns it is currently filing. The Company has made an evaluation of the potential impact of additional state taxes being assessed by jurisdictions in which the Company does not currently consider itself liable. The Company does not anticipate that such additional taxes, if any, would result in a material change to its financial position.
NOTE 9 - EARNINGS PER SHARE
Set forth below is a reconciliation of the numerator and denominator for basic and diluted earnings per share calculations for the periods indicated:
Three Months Ended Six Months Ended
June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025
Numerator:
Net income (loss) $ 6,981 $ (17,226 ) $ 7,109 $ (9,458 )
Denominator:
Weighted average number of common shares outstanding – Basic 15,957,073 16,370,674 15,951,342 16,494,828
Dilutive effect of options and restricted stock units outstanding under the Company’s employee compensation plans 315,832 — 280,279 —
Weighted average number of common shares outstanding – Diluted 16,272,905 16,370,674 16,231,621 16,494,828
15
The dilutive effect of outstanding options and restricted stock units is calculated using the treasury stock method. There were no stock options that were anti-dilutive and therefore not included in the diluted earnings per share calculation.
NOTE 10 - COMPENSATION PLANS
In May 2017, the Company’s stockholders approved the 2017 Stock Incentive Plan (the “2017 SIP”) under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require the satisfaction of performance objectives. Vesting requirements are determined by the Compensation Committee of the Board of Directors. The Company reserved 750,000 shares for issuance under the 2017 SIP.
In June 2023, the Company’s stockholders approved the 2023 Stock Incentive Plan (the “2023 SIP”) under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require the satisfaction of performance objectives. Vesting requirements are determined by the Compensation Committee of the Board of Directors. The Company reserved 1,000,000 shares for issuance under the 2023 SIP, of which 339,000 shares remain available for future grants as of June 27, 2026. Any shares remaining from the 2017 SIP will be available for future grants under the terms of the 2023 SIP. As of June 27, 2026, approximately 144,000 shares remained unawarded from the 2017 SIP. Since the stockholde