Sturm, Ruger & Company, Inc. (RGR) Q4 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the Sturm Ruger Fourth Quarter 2016 Earnings Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference, Mr. Michael Fifer, Chief Executive Officer. Please go ahead, sir.

Good morning. And welcome to the Sturm, Ruger & Company year-end 2016 conference call. To get started, I’d like to ask Kevin Reid our General Counsel to read the caution on forward-looking statements. Then Chris Killoy our President and Chief Operating Officer will give an overview of the 2016 results. And then Chris and I will answer your questions. Kevin?

Thanks, Mike. We want to remind everyone that statements made in the course of this call that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time-to-time in the Company’s SEC filings including, but not limited to, the Company’s reports on Form 10-K for the year ended December 31, 2016 and of course forms 10-Q for the first, second and third quarters of 2016. Copies of these documents may be obtained by contacting the Company or the SEC or on the Company website at www.ruger.com or the SEC website at www.sec.gov. We do reference non-GAAP EBITDA. Please note that the reconciliation of GAAP net income to non-GAAP EBITDA can be found in our Form 10-K for the year ended December 31, 2016 and our forms 10-Q for the first three quarters of 2016, which also are posted to our website. Furthermore, the Company disclaims all responsibility to update the forward-looking statements. Mike? Mike, you there?

Yes. Hi, having trouble with the mute button their folks. Kevin, thank you very much. Chris, would you please now cover the 2016 results?

Sure. Thanks, Mike. Financial results: For 2016, net sales were $664.3 million, and diluted earnings were $4.59 per share. For 2015, net sales were $551.1 million and diluted earnings were $3.21 per share. For the fourth quarter of 2016, net sales were $161.8 million and diluted earnings were $1.10 per share. For the corresponding period in 2015, net sales were $152.4 million and diluted earnings were $0.88 per share. Our 2016 EBITDA was $171.4 million, or 26% of sales; and our 2015 EBITDA was $132.5 million, or 24% of sales. For the fourth quarter of 2016, our EBITDA was $42.5 million, or 26% of sales. These results compared favorably to our fourth quarter 2015 EBITDA of $36 million, or 24% of sales. Demand: For 2016, the estimated sell-through of our products from the independent wholesale distributors to retailers increased 12% from 2015. During this period, the National Instant Criminal Background Check System background checks, as adjusted by the National Shooting Sports Foundation and commonly referred to as NICS checks, increased 10%. For the fourth quarter of 2016, the estimated sell-through of our products from the independent wholesale distributors to retailers decreased 4% from the comparable prior year period. During this period, the NICS checks were flat. For the month of December, adjusted NICS checks decreased 17% compared to December 2015. Not unexpectedly, in January 2017, NICS decreased from the comparable prior year period by 24%, indicating the consumer demand for certain firearms has softened since last year. As we discussed during our last call on November 2nd, just prior to the election, we observed many customers spending discretionary income on concealed carry products and modern sporting rifles in the recent months, leading up to the election. At the same time, we also observed retailers committing inventory dollars to certain product categories such as modern sporting rifles, which likely would have been in stronger demand if the election had turned out differently, given their relative vulnerability to legislative actions. The combination of increased inventory in the channel and the likely decrease in consumer demand for the near-term has made for a more challenging sell-through environment. New product development: We believe that new products are key driver of demand. New products represented $192.6 million or 29% of firearm sales in 2016, compared to $115.4 million or 21% of firearm sales in 2015. New product sales include only major new products that were introduced in the past two years. In 2016, new products included the Precision Rifle, the AR-556 modern sporting rifle, the LC9s pistol, the Mark IV pistols, the LCP II pistol, and the American pistol. Our major new product launches in 2016 included the Ruger Mark IV pistols, the LCP II pistol and compact models of the American pistol. Production and inventory: We review the estimated sell-through from the independent distributors to retailers as well inventory levels at the independent distributors and in our warehouses, semi-monthly to plan production levels and manage inventory levels. These reviews and increased production capacity of products and strong demand resulted in an increase in total unit production of 23.5% in 2016 compared to 2015. The Company’s finished goods inventory increased by 70,000 units and distributor inventories of the Company’s products increased by 48,300 units during 2016. Again, this is somewhat the result of all levels of the distribution channel stocking up to higher than normal levels of certain products in anticipation of the November 2016 elections. We expect to manage our production to moderate inventory growth and capitalize on opportunities that present themselves in 2017. Balance sheet: At December 31, 2016, our cash and cash equivalents totaled $87 million, an increase of $18 million from December 31, 2015. Our current ratio was 2.8 to 1 and we have no debt. At December 31, 2016, stockholders’ equity was $265.9 million which equates to a book value of $14.23 per share. Cash flows: In 2016, we generated $104.8 million of cash from operations. We reinvested $35.2 million of that back into the Company in the form of capital expenditures. We estimate that capital expenditures in 2017 will be approximately $40 million. Our primary focus for investment will be new product development as well as increased capacity for products and strong demand. Cash returned to shareholders: In 2016, the Company returned $47 million to its shareholders through the payment of $33 million of dividends and the repurchase of 283,300 shares of our common stock at an average price of $49.43 per share for a total of $14 million. At December 31, 2016, $59 million remained authorized for future stock repurchases. Our share repurchases have continued in 2017. From January 1 through February 17, 2017, we’ve repurchased 633,600 shares of our common stock in the open market at an average price of $49.67 per share for a total of $31.5 million. Since November 2016, we have repurchased 917,000 shares or 4.8% of the outstanding shares. Given our practice of paying 40% of our net income as dividends, the reduction in outstanding shares will not only benefit our earnings per share, it will also directly benefit our dividends per share. Our Board of directors declared a $0.44 per share quarterly dividend for shareholders of record as of March 17, 2017, payable on March 31, 2017. As a reminder, our quarterly dividend is approximately 40% of net income and therefore varies quarter-to-quarter.

Thank you, Chris. As many of you know, in August 2016, we formally announced our CEO succession plan that had been in the works for a few years. At our next annual meeting of shareholders, I will retire and Chris Killoy will succeed me as CEO. I look forward to supporting Chris and the rest of the management team in my new role is Vice Chairman of the Board of Directors. Those were the highlights of 2016. Operator, may we please have the first question?

[Operator Instructions] Our first question is from the line of Brian Rafn of Morgan Dempsey Capital Management. Your line is open.

Given the -- obviously with the elections, I’ll just kind of start off. Did you see, what was kind of the pace of business from the wholesale dealers relative to the cadence of orders and shipments, say pre-election, October, early November versus later toward the holidays?

Brian, this is Chris. Through the fourth quarter, it was very strong as we began October through the election and actually stayed fairly strong through, I’ll say, almost mid-December, before we started to see indications of a slowdown. And that’s we described in there; you saw that with the mix levels, as well as we did see that slowdown at both retail store traffic as people adapted to their existing inventory and looked at open to buy and in some cases moderated some of their behavior.

Okay. Just give a sense, the last five, six, seven years been pretty strong for Black Friday sales in November as kind of a Christmas holiday. Your sense of your maybe sell-through, any special advertising things that you might have done for the holiday?

Yes, Brian, Chris again. Yes. We were very pleased with the Black Friday results. We had good ad placement, our national accounts team did a good job working with the big box stores in particular, as well as the big independents, and we were pleased with those Black Friday sales. And it takes a lot of work, a lot of planning on both parties’ parts. And even though we don’t sell those accounts directly, it’s very important part of our business in the annual cycle.

Yes, sure. Let me ask from the standpoint of if we see a more moderation in pace, we’ve gotten past the whole Obama, Clinton the seizure, confiscation, bans and all that. If we see this kind of more of a normalized moderation, does that for you guys any benefit in product pipeline design or building margin, the safety stock or shifting sales around floors or maybe maintenance of the foundry, something that you might have not because of the sheer pace of business in the last few years, you might have avoided?

That is a good question, Brian. And one of the things that that might do, depending on if there is a slowdown in certain lines, it would help us with our movement plans as we migrate certain product lines between factories, particularly as we add different lines to there. [Ph] So, that could indeed be a positive as we go forward.

Okay. And then just some of your wholesale dealer conversations kind of your level of enthusiasm from the SHOT Show, what might be your observations?

Well, I would say there was -- the phrase cautious optimism is often overused but that’s we heard and we heard most folks looking to what might be a different year than we’ve experienced in the past. But right now, given where we are in the marketplace with our new product pipeline, our engineering team, I like our chances better than the competition.

Okay. I’ll ask one more and get back in line. Anything, Chris, relative to the inflation of horizon, raw material, feedstock, steels, alloys, woods, waxes, resins, anything?

Nothing in terms of the raw material side of it. We’re always watching obviously interest rates as it might impact the ability of our wholesalers to extend credit to our retailers. As you know, we only sell two step distribution. So that’s primarily an issue of the ability of our wholesalers to extend credit to those retailers. So, we’re always keeping an eye on that but nothing we see as a big issue in our business right now.

Thank you. Our next question is from the line of Bill Ledley of Cowen & Company. Your line is open.

Hey, thanks guys for taking my question. I want to get a sense of how you view demand and do you think we’re now at a permanently lower level of demand, given the Republican sweep on election day?

This is Mike. I think we’ve kind of seen this story before where ever [ph] you get a big politically driven spike, they tend to be fairly short, and they’re followed by an offsetting decline in demand for a while. And then everything returns to what I would call, normal. You’ve got the same factors driving interest; you’ve got more concealed carry in more states; you’ve got more new shooters coming along; you’ve got generally, it’s more socially acceptable to admit to your friends that you actually like guns and enjoy having them and oh, by the way, come look at the newest one I just bought, let me show it to you. All that stuff drives demand. And some municipalities, you have the cops backing off. They’re being seen by the media too often as the enemy. And so, they’re backing off and crime rates in those cities are soaring to the roof. Those people could care less [ph] who’s president, they want to defend themselves. So, all those drivers come back. So, every time you have a little tiny spike for some political reason, it’s usually offset. I think we could be observing that now; and then it returns to normal. And I don’t think any of the other regions have changed. So, I doubt that the new normal will be materially lower than where we were going before. It appears to me to look over multiple years that there is wider acceptance of guns; wider availability; there is more exciting new products from all the competitors, not just Ruger; there is more reasons to have guns now than ever before. And so, I’m not going to read too much into the current situation.

Sure. So, again, your view that this might be sort of short lived, what’s your best guess for say firearm sales in 2017?

We don’t make estimates. And as we all learned back in November, apparently no one can forecast the future.

Correct, okay. And then, just on your inventory levels, if you could talk about sort of where they came in relative to your expectations and sort of where do you think the inventory retailers is right now? Yours is up a lot. Do you think theirs is of sort at a corresponding or correlating rate?

We don’t have any way of measuring that, other than anecdotal points. Chris, go ahead.

Yes. I was just going to say, we finished the year at the inventory levels, both at Ruger and at distributors while they had increase over prior year. They stayed pretty constant through the quarter and actually, we’re still -- we like to see our distributors around the six turns per year. And remember, with Ruger selling only through two-step distribution and not selling any of those big box stores direct, 100% of the inventory we need in the channel has to come through our distributors.

Thank you. Our next question is from Rommel Dionisio of Wunderlich. Your line is open.

Good morning. I have two questions. First question is, the SHOT Show, we definitely got the sense of competitive promotions were elevated in certain categories, specifically modern sporting rifles. I just wondered if you’ve seen any moderation of those trends since the SHOT Show, granted it’s only been a little over a month, but if you’ve seen any sort of moderation from some of those unusually high competitive promotions? And second, if there is any fallout, sorry if I missed this during the prepared comments, but was there any fallout from MC Sports liquidation and potentially the acquisition of Cabela’s with regard to inventory situation and the channel? Thanks.

Rommel, Chris here. First, with regards to the MSR discounting and promotions. We’ve seen a steady increase in -- I don’t know if you call it promotional efforts on the part of some folks, just fewer discounting on the part of others. We’ve seen ARs down as low as 30% discount to where they were pre-election; in some cases, they’re down as low as, when you get to the net-net number, down to about $320 going to the retailers. So, some very aggressive discounting we’re seen by some of the manufacturers who are potentially maybe more variable to that swing in demand, just because that’s the only product line they make. The other question I believe was on MC Sports. I mean, MC Sports is about 68 stores in the Midwest, they did file Chapter 11 I believe, and they’ve joined the list of other -- some other retailers that have recently struggled and filed bankruptcy. They’re relatively small customer of Ruger’s, but remember, we don’t sell them direct; they’re sold through our distribution. So, again, no receivables issued for us. However, it is always something that we watch as far as if one of our distributors is owed money by one of those accounts.

Thank you. Our next question is from [indiscernible]. Your line is open.

Hi. Thanks for taking the question. I have two questions. I guess firstly, it sounds like the industry is going through destocking cycle, given the buildup into the elections. And on that front, I wanted to ask, how were the orders through the quarter, how did they sort of trend through the quarter and how have they been in January?

Well, as Mike mentioned, we don’t give any forward-looking guidance that would include January. Orders through Q4, I believe were about 432,000 units, which are relatively strong, remembering we’ve got orders on the books there. So, we also had -- our incoming order rate tends to fluctuate significantly with new product launches. So, when we have a new product launches, we’ll have those orders come in. And again, we pay very little attention to the incoming order rate. We pay much more attention to what’s happening with our distributor sell-through and ultimately what’s going on at the retail counter. So, we don’t really run our business on orders, we just -- we report it, but that’s not the metric we worry about.

And so, how do you expect the destocking cycle to sort of fold out over the next couple of quarters as it relates to your production and shipments into the channel?

We don’t speculate on the future. I would invite you to go back and look at the very detailed quarterly numbers on sell-through and shipments from the cycles that we observed in 2009, 2010 and in 2014, 2015. I think you’ll probably learn a lot from looking at those. And there is great detail in those numbers.

Thank you. Our next question is from Gary Blood, [ph] shareholder. Your line is open.

Good morning, everyone. Thank you for taking my call. My question is the future of Ruger, is there the vision of expanding the product availability beyond firearms to optics [ph] and ammo like some of your competitors have done?

Again, that sort of falls into the forward-looking. But, I will tell you that we’ve observed one of our major competitors going to a wide diversification program. And I applaud them for their efforts. I think our belief is that our investors can actually diversify for themselves better than we can diversify for them. They sort of big conglomerates are behind us, I think. And so, at least for the very, very short foreseeable future, I don’t anticipate us doing anything rash.

Thank you. Our next question is from Bob Evans of Pennington Capital. Your line is open.

Hi. Good morning. Thanks for taking my questions. First, can you comment on, there has been, whatever, public, the media reports as it relates to potentially Gander Mountain filing for bankruptcy, obviously a much larger distribution channel for you and others. What are your thoughts there in terms of just the distribution shrinking for the industry and potential impact?

Let me take this one, Chris. First off, Gander is a value partner, even though we don’t sell them directly. They’ve made a significant commitment to firearms. And I think it’s our sort of channel checks would indicate that they did well with firearms in the fourth quarter that perhaps it was other product lines that have slowed them down a bit. And we certainly wish them very best. David Pratt and his team are really good one and we hope they pull through this well. That being said, I doubt there are too many towns where Gander is the only gun store in the whole town. And I think if one retailer slows down a little bit, the others pick up the flag in that community.

Well, I guess, a lot times they are actually. And then, if you take away 8 million square feet from the industry, that’s not a small matter. I guess part of my concern is as always [ph] as well as things are going normalize and be okay, I think the industry, the big box retailers are coming under stress, not so much for the firearms business, but for everything else they sell in Amazon and so forth, and then firearms clearly slow down and you’ve never had a better administration for the gun industry than Obama and now never a worse one for the gun industry than Trump. So, the new normal with shrinking distribution, I guess, how do you view that kind long-term in terms of -- I don’t think -- I think normal might be where we were before Obama started there somewhere in between, not where it was two quarters ago. How do you think about cost structure and where your business is at?

Well, I think that’s kind of pretty harsh one to say that the levels will revert [ph] back to 2008; you might be right. My personal belief would be different, because for the reasons I enumerated earlier. The firearms ownership is much more socially acceptable; it’s much wider than it was before; there are more states that have adopted laws enabling concealed carry. There’s just a whole raft of reasons including many, many, many new shooters have come on in the last eight years that are now buying a second or third or their tenth gun. And I think that the market really is substantially different than it was pre-Obama.

I agree with that, I totally agree. I think the question is where is it between -- it’s somewhere between where it was in 2008 and where it was in 2016 and that’s what we’re all trying to figure out, and then, you have that with trucking distribution. So I guess, I know you don’t like to make estimates, but we’re looking for some guidance there, because I don’t know that you can look at 2016 as normal, probably not 2008 as normal, but that’s what we’re trying to figure out. Thank you for taking my questions.

Thank you. [Operator Instructions] Our next question is from Brian Rafn of Morgan Dempsey Capital Management. Your line is open.

Yes, a quick question, Chris or Mike. One of the ways of dealing with demand, I mean we’ve gone from some 260 million guns by our estimate, 64 million gun orders to 445 million with some 90 million gun order, so, very hugely broadened market. But new product development, you guys I think did 29% for the year, fabulous number. How do you look at your level without mentioning obviously designs and then how do you look at going in the 2017, the development of your product pipeline? How robust is it, does perhaps the moderation in demand give you guys the ability to bring more designs to the markets, shipping more design versus production, just sense of where you see your pipeline?

Brian, Chris here. As you know, one of the primary focuses for our entire Company is a new product development coupled with the focus on lean manufacturing, continuous improvement. But when it comes to new product development, I mean there is absolutely no let up. As you saw from the prepared remarks and our release, our CapEx estimate for this year is about $40 million, a bulk of that is focused on new product development. And we’ve got some great teams of engineers working, and we’ve got some great new products teed up. So, we know that that’s going to be our future, and that’s the strength of our Company. So, there is no let up there. As things -- you asked before, as things, if there is a softening of demand, it also allows us in addition of potentially moving product lines, unless repurpose some of that CapEx. Some of the capital dollars we spend are specific to a product line, hard fixtures, tools and gauges. But then other things are relatively generic fancy [ph] equipment that can be redeployed. And so that gives us some flexibility there on the shop floor. And one of the things, as you’ve been to some of our facilities, is constant reorganization as we’re moving machines from sale to sale; we try to capitalize on where an uptake of demand might be and where we might free up some machines as certain product lines slows down. And that’s one of the strengths being a full line producer of products, covering so many categories; that’s really one of the strengths we can leverage regardless of the market going forward.

Yes. I appreciate the color there. Relative to [indiscernible] since we were down there, the last visit I think there earlier last year, have you guys added any cell [ph] lines, have you shifted any product down there or is it about the same?

I think since the last time you were down there Brian, obviously we ramped up some of those product lines. We’ve got a couple of more that are coming in, coming on line later this year, not prepared to talk about yet. But, they’re doing a great job for us getting those new products up and running, both brand new product lines as well as things that we move in from either Prescott or Newport.

Okay. Without make any specific models, can you give me any color? Are there any new products that are still kind of lagging backlog relative to production, bottlenecks or is there anything you’re kind of catching up on either building inventory or delivering to the wholesale distributors?

Well, we’ve got great demand, as you likely know on the Ruger precision rifle. We added another SKU in January that was a 6 millimeter Creedmoor, so very strong demand there; still trying to keep up there. The other one was the LCP II made out in Prescott. So, we still have the LCP I at a lower price point; the LCP II has been -- really done extremely well. And then the whole line of Mark IV pistols is still unfolding. We’re still adding, every couple of months we’re adding to that mix of product and heavily back order there as well.

Okay. Let me ask more of a strategic question. Mike, you launched the lean manufacture back in 2006, you’ve gone from a batch process to the single piece flow, you have more of a pull demand. How would you evaluate your progress, lean manufacture to date? Now, there is always things that you can do an upgrade. How would you say you are, percentage wise maybe with that whole process from where it was when Bill Ruger running Bass Shops? [Ph]

Brian, it’s significantly changed since then that most items are being made in single piece flow; there are more super cells than before. But you don’t see the huge amount of -- with inventory throughout the plant. But having said that, we actually think we’ve got a long way to go, a lot of opportunity ahead of us. And should there be any lessening of demand, got working two shifts instead of three that gives a real opportunity to double down on lean efforts…

Yes. Okay. [Multiple speakers] Right. I got to ask you to record the integrated mill up at Newport; you had I think two mini foundries going; have you added any or expectation?

Both are up and running; we’re not planning to add the third one right now, but we’ve incorporated the lessons learned from those two mini foundries into our legacy foundry. And that’s paying dividends throughout the country right now, but right now, not a plan to open the third one.

Okay. And then, you guys have been, I think, very judicious with cash. You guys have looked at Greenfield development of guns; you’ve done some joint ventures like the Columbia River Knife. You haven’t done the big serial rollups; one of your competitors has taken a nice big fat impairment charge; and hats off to you guys for not doing it. How do you see maybe beyond your gun business, you added certainly ammunition, how do you see some of those maybe joint ventures? It doesn’t sound like you’re going to be doing any -- I think you might call that needle moving acquisitions? How do you see the next few years kind of the joint venture business, alliances, co-developing that type of thing like you did in the ammunition?

Well, Brian, that’s a tough one to answer because we don’t have any idea who is going to come up for sale or how the environment will change in the future. We’re always paying attention because of our strong balance sheet and growth, I think anybody who’s selling or looking for partner, we get a look at it. We just haven’t chosen to bite on any of these and have managed to avoid destroying any shareholder value in the process. But, we always keep our eyes and ears open and are paying attention. And should the right thing come along, even though it hasn’t in the last 10 years, should the right thing come along, I’m sure we’ll pay a lot of attention to it.

Okay, that’s fair enough. How many wholesale dealers do you guys have right now and are you adding or changing any?

Brian, Chris here. We’ve got 18, and of course some of those are multiple location operations. So, again, we don’t plan. Things could change, but right now no new additions on the horizon.

Okay. And then, Chris, anything on the police or military side, specifically maybe the modern sporting rifles, certainly the precision rifle with some of the steel [ph] operators and that the guys that so calm and that there was demand there, anything on that front?

We’ve got good interest, as you know on Ruger product line for off-duty carry and backup guns remains extremely high within law enforcement community, LCP, LCR, LC9 et cetera. We’re also seeing a very good interest in the precision rifle and we do have a small LE effort, law enforcement effort that’s focused on that. So, we see some opportunity with both the AR556 precision rifle. And now as the American pistol line is flushed out with the compact models, we see that as an opportunity as well for the possible duty weapon business. But again, that’s a very small part of our business and not a real large focus. As you know, our focus is on the commercial sporting side of the business. So, I don’t see a big push on the LE and military side.

Okay. And then, just given that you guys have a precision rifle, you’ve got the SR556, the SR762, is there any police demand from a SWAT side?

We have absolutely sold some of those products into law enforcement and tackle teams. So, again, small part of our business but we have several folks in our innovation that are dedicated to that effort. And again, while not a needle mover for us, we’ve got some of those products in some of those, higher end tackle organizations.

Okay. And then with the kind of the merger, the Cabela’s, Bass Pro Shops, was that at all disruptive to your wholesale dealers?

Well, it hasn’t gone through yet to our knowledge. Both Bass Pro and Cabela’s are fantastic customers of our. We work very closely with their buying teams and their merchandising teams. So, we’re optimistic that regardless of the outcome that we’re going to continue to have great success in those stores. Because as consumers, we know we like visiting them; they do a great job for us and they really represent the entire firearms category in a positive way.

I’ll ask one more, Chris. As you look -- is the retailer shows that are tend to be in the summer, prior to the hunting season versus the wholesale SHOT Show?

Well, there is -- the shows that our distributors host for retailers are typically in January and February; there are one or two that do them in the summer. There are buying group shows that are done twice a year, typically in February and August, September. We don’t participate in those as we don’t sell to those buying groups; we sell only to the wholesalers. So, most of the retailers attending the show are in the January, February time period, just finishing up now.

Yes. But I thought you guys were in the last couple of years a little more focused on some of those summer shows. I could be wrong, I thought versus say the SHOT Show…

We did, it wasn’t as much as the show; there were one or two distributors that had summer shows. But we did have a round of summer programs. So, we had the retailer programs that we typically do in January and February. We have done those in the summer as well, and that started a few years ago. So, those, maybe what you’re thinking about. We did have those promotional programs offered to retailers outside of shows, but we do those typically in a May, June, July time period.

Okay. Was that the 11 guns for or 10 or -- yes, 11 rifles for 10 or whatever that those…

Yes. Buy X, get one free, those type of packages and programs.

Is that something you might continue in 2017 or is that to be laid out competitively?

We’re still looking at that. And obviously little forward-looking, and we don’t want to tip our hands from a competitive standpoint. But, we’re always looking at the tools we have in our arsenal to make sure we grow our market share, so.

Okay, sounds good. Hey, thanks guys. Great year, fabulous.

Thanks Brian.

Thank you. And that does conclude our Q&A session for today. I’d like to turn the call back over to Michael Fifer for any further remarks.

In closing, I’d like to thank you for your continued interest in Ruger. And I’d like to thank our loyal customers and the 2,400 plus hardworking members of the Ruger team who design and manufacture wonderful firearm products every day in our American factories. I look forward to seeing many of you at our 2017 annual meeting on Tuesday, May 9th in Norwalk, Connecticut. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone, have a great day.