The Loadout Blog

Commentary|Retrospective

This year for the firearm industry and community has seen tremendous growth. While having to deal with struggle as well. In 2020, we experienced record sales and growth of companies. We faced the challenges of canceled trade shows. All the while dealing with the tyranny of government and it’s agencies. (Talking to you ATF) Throughout, all those obstacles due to Covid-19 lockdowns, mass civil unrest, and tyranny from the government the industry continued to flourish. As, Americans have sought firearms for self defense in these chaotic times we reside in. The value of gun ownership has been made very clear during the unprecedented times we live in.

Gun Sales in 2020

Gun sales this year have reached historic levels due to Covid-19 lockdowns and mass civil unrest sweeping throughout the nation. While Americans witnessed night after night of protests. Police unable to respond due to lack of manpower. Americans took their safety into their own hands. Americans from across the U.S. exercised their constitutional rights to keep and bear arms. Due to the concerns by average Americans gun sales have reached recorded highs in 2020.

According to background checks conducted by the FBI, through the first 11months of this year, Americans have purchased 35.75 million guns. Crushing the pervious record of 2019, which seen the sell of 28.36 million firearms in the U.S. In the month of November alone we seen 3.6 million background checks conducted. Up 41 percent from November 2019.

In 2020, there has been no less than 2.7 million background checks conducted in a single month. When looking at the FBI statistics we see a substantial jump from Feb to March at the beginning of the lockdowns. Background checks jump from 2.8 million to 3.7 from Feb to March. Further investigation of the numbers shows that during the height of the lockdowns, riots, and civil unrest we see an explosion in purchases. In the months of May-August over 3 million background checks a month were conducted by the FBI. The highest month of background checks being June, with 3.9 million background checks conducted.

December isn’t over yet so I expect to see a number comparable to last years totals. Last, December 2.9 million background checks where conducted. I project 3-3.2+million background checks being conducted due to the fear of a new gun ban by the potential Biden Administration.

All in all gun sales have been at record highs for the industry this year due to the chaotic nature of 2020.

Record Company Financials

During the pandemic and lockdowns business has been strong for the firearm industry. Firearm manufacturers and ammo makers are having a hard time keeping product stocked in order to fulfill supply requests. Everywhere you look for a firearm or firearm related part it is either sold out, on back order, or hard to find in stock. For most of the year the demand for firearms has outpaced what can be produced. Yet, companies are trying their best to fulfill orders as best they can.

Let’s move beyond the anecdotal evidence and to present some facts.

First, let’s take a look at Ruger. During Ruger’s latest earnings report, the company made $146 million dollars worth of sales in the third quarter. Which is up 53% from $95 million dollars made in third quarter of 2019. The company has also tallied up to $400 million dollars in sales in the last 9 months. During the same time period last year the company had made only $305 million in sales. Ruger was doing so well financially they placed a bid on and won Marlin Arms from Remington during the selling of its assets. Ruger bought Marlin Arms for $30 million dollars. Growing Ruger’s brand portfolio.

Next, we have SIG Sauer. SIG has been thriving as well in the midst of the pandemic. Back in October of this year SIG announced the expansion of its manufacturing facilities to meet increase demands on their products. While also adding 35+ acres to the SIG Sauer Academy. SIG doesn’t disclose the price of the additions but one can surmise that millions will go into these expansions. Letting you know that SIG is healthy, profitable, and ready to grow as a company.

Finally, we have Vista Outdoors who is backlogged on $1 billion dollars worth of ammunition. The demand of ammunition is far outstripping supply and inventory levels. The supply chain has also been strained due to on and off lockdowns throughout the U.S. Vista also acquired Remington Arms ammunition and accessory assets during Remington’s selling of assets.

These three companies are examples of prosperity and growth within the industry. The industry financial reports have been strong all year due to the chaotic time we currently reside in.

Cancellation Of Trade Shows

This year has had a damper on industry trade shows and shooting events due to Covid restrictions. Only Shot Show was conducted in January of this year. All other major trade shows where cancelled this year. Triggrcon. Canceled. NRA Expo. Canceled. National Association Of Sporting Goods Wholesalers (NASGW). Canceled. Great American Outdoors Show. Canceled. Along with shoots like Big Sandy that happens every year like clock work. The absence of these venues have hurt the trade show industry significantly in the states those events are held. While also making firearm companies hold on to product releases to next year. Which leads to a stagnation of growth and innovation in the industry. So, hopefully in 2021, we can see the return of trade shows and it’s industry events. We are already starting off to a rocky start with the cancellation of Shot Show.

ATF Vs. Firearms Industry

The last few months have been interesting between the firearm industry and ATF. The industry has been facing a concerted and coordinated effort from the ATF on firearm manufacturers.

In October, the ATF served a cease and desist letter to Q,LLC in regards to the Q Honey Badger pistol. The ATF states that Q never received a determination letter that classified Q’s brace as a stabilizing brace. In turn making the Q Honey Badger an SBR to be regulated by the ATF under the NFA. Once news of this broke within the industry Q received the support of the community. Firearm advocate groups such as: The Firearm Policy Coalition, FRAC, Gun Owners Of America, and Q lawyers when to bat for the company. After the initial letter, the ATF sent out a 60-day cease and desist letter to Q. In the letter they advised Q to wait on further guidance after the presidential election. As, of right now that fight rages on.

Next, in December the ATF raided Polymer80. The ATF conducted a year long investigation into P80 and their Buy, Build, Shoot kits. The ATF made the determination that these kits were firearms and violated the law. During the raid of P80 facilities the ATF agents seized records and other evidence pertaining to its investigation. The ATF went one step further and began to visit end users of the Buy, Build, Shoot kits to confiscate them. During the analysis of sale records by the ATF, they found out that at least 50,000 of the kits have been sold. The investigation and news is still evolving and ongoing.

Also, this month the ATF put out the draft of a document called, ‘Objective Factors for Classifying Weapons with Stabilizing Braces’. What this new determination sought to do was to reclassify what is consider a “stabilizing brace” by the ATF. Making the pistol an SBR would mean it would be regulated under the ATF and require a tax of $200.

The new potential guidance is completely subjective to the ATF agent making the independent ruling on the AR pistol and it’s brace. Criteria to be used was caliber, weight, length, proper use of stabilizing brace, optic mounted on pistol, and accessories. In the draft of the potential determination the ATF would wave the tax if a person registered the pistol as an SBR under the NFA.

When posting the information to the Federal Register for review the ATF allowed comments on the proposed rule changes. Americans would be able to comment for 14 days, which is against the Gun Control Act that allots a 90-day comment time frame. A few days after being published to the Federal Register it had over 48,000 comments. That removal of that potential determination was key. Yet, we have to be vigilant it could be submitted to the Federal Register again.

Conclusion

Overall, 2020 has been a success for the industry and community. We are witnessing record sales of firearms and ammunition due to lockdowns, riots, and civil unrest. Americans seeking to defend themselves in uncertain times. We have the introduction of about 7 million new first time gun buyers. Hopefully, we can guide these new shooters deeper into our community through outreach and informative content.

The industry has also had its struggles with the cancellation of trade shows and shoots like Big Sandy. These events where a place to showcase new products and build business relationships to strengthen the industry. The industry has had to evolve and adapt to handle the pandemic and its restrictions. While dealing with the ATF overreaching their power and authority over firearms manufacturers.

In the midst of Covid, riots, and civil unrest the firearm industry has thrived. People have taken their own safety and defense into their own hands. Exercising their constitutional rights to keep and bear an arms. This momentum can be pushed forward to 2021 for another successful and profitable year.