Financial Analysis

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.

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NOTE 10 - COMPENSATION PLANS In May 2017, the Companys 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 Companys 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 stockholder approval of the 2023 SIP, no additional awards have been or will be granted under the 2017 SIP. Previously granted and outstanding awards under …

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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 Companys effective income tax rate was 21.6% and 19.5% for the three and six months ended June 27, 2026, respectively. The Companys 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. …

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NOTE 13 - CONTINGENT LIABILITIES As of June 27, 2026, the Company was a defendant in six (6) lawsuits and is aware of certain other claims. The lawsuits generally fall into the categories of municipal litigation, unfair trade practices, product liability, and trademark litigation. One (1) municipal litigation matter was fully and finally resolved during the quarter. Material matters and developments are discussed in turn below. Municipal Litigation Municipal litigation generally includes those cases brought by cities or other governmental entities against firearms manufacturers, distributors and retailers seeking to recover damages allegedly arising out of the misuse of firearms by third parties. There are two pending lawsuits of this type: The City of Buffalo , filed in the Supreme Court of the State of New York for Erie County on December 20, 2022; and The City of Rochester , filed in the Supreme Court for the State of New York for Monroe County on December 21, 2022, each of which is described in more detail below. The City of Buffalo v. Smith & Wesson Brands, Inc., et al. and The City of Rochester v. Smith & Wesson Brands, Inc., et al were filed on consecutive days in New York State Court, naming a number of firearm manufacturers, distributors, and retailers as Defendants, including the Company. The complaints are virtually identical and, relying primarily on New Yorks General Business Law 898-b, generally allege that the criminal misuse of firearms in their cities …

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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 Companys 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 Companys 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 Companys lease agreements contain renewal options at the Companys discretion. The Company does not recognize right-of-use assets or lease liabilities for leases of one year o …

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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 Companys 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 tho …

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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 12 - RELATED PARTY TRANSACTIONS The Company contracts with the National Rifle Association (NRA) for some of its promotional and advertising activities. One of the Companys former Directors also served as a Director on the Board of the NRA through October 2025. In 2026, the NRA is no longer considered a related party. Payments made to the NRA in the three and six months ended June 28, 2025 totaled $0.2 million and $0.4 million, respectively. The Company is a member of the National Shooting Sports Foundation (NSSF), the firearm industry trade association. Payments made to the NSSF in the three and six months ended June 27, 2026 totaled $0.1 million and $0.1 million, respectively. Payments made to the NSSF in the three and six months ended June 28, 2025 totaled $0.1 million and $0.2 million, respectively. Two of the Companys Directors also serve on the Board of the NSSF. …

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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 Companys 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. …

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NOTE 11 - OPERATING SEGMENT INFORMATION The Company has two reportable segments: firearms and castings. The firearms segment manufactures and sells rifles, shotguns, pistols, and revolvers principally to a select number of independent wholesale distributors primarily located in the United States. The castings segment manufactures and sells steel investment castings and metal injection molding parts. Selected operating segment financial information follows: (in thousands) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net Sales Firearms $ 157,679 $ 131,567 $ 298,575 $ 266,762 Castings Unaffiliated 379 924 839 1,467 Intersegment 6,530 6,387 11,393 13,609 6,909 7,311 12,232 15,076 Eliminations (6,530 ) (6,387 ) (11,393 ) (13,609 ) $ 158,058 $ 132,491 $ 299,414 $ 268,229 Costs of Goods Sold Firearms $ 123,722 $ 125,727 $ 236,385 $ 230,981 Castings Unaffiliated 594 1,618 1,209 2,207 Intersegment 6,530 6,387 11,393 13,609 7,124 8,005 12,602 15,816 Eliminations (6,530 ) (6,387 ) (11,393 ) (13,609 ) $ 124,316 $ 127,345 $ 237,594 $ 233,188 Gross Profit (Loss) Firearms $ 33,957 $ 5,840 $ 62,190 $ 35,781 Castings (215 ) (694 ) (370 ) (740 ) $ 33,742 $ 5,146 $ 61,820 $ 35,041 Operating Income (Loss) Firearms $ 8,037 $ (19,838 ) $ 6,455 $ (11,183 ) Castings (408 ) (878 ) (775 ) (1,061 ) $ 7,629 $ (20,716 ) $ 5,680 $ (12,244 ) Income (Loss) Before Income Taxes Firearms $ 8,357 $ (19,690 ) $ 7,042 $ (10,932 ) Castings (408 ) (875 ) (775 ) (1,020 …

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"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 Companys design and manufacturing operations are located in the United States and almost all product content is domestic. The Companys 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. Gener …

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NOTE 16 - SUBSEQUENT EVENTS On July 24, 2026, the Board of Directors authorized a dividend of 21 per share, for stockholders of record as of August 14, 2026, payable on August 28, 2026. The Company has evaluated events and transactions occurring subsequent to June 27, 2026 and determined that there were no other unreported events or transactions that would have a material impact on the Companys results of operations or financial position. …

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