What's the future of the Remington Outdoor Company?

[Aragon]

I was thinking about the size of the Remington Outdoor Company (formerly The Freedom Group) and the huge impact it has on the firearms industry in the USA, actually the entire world. It made me wonder why its parent Cerebus is having so much trouble selling Remington? The following come to mind. I would love to hear your ideas:

* Remington is a non-synergistic agglomeration of companies that don't compliment one another as well as they should.

* Fear of increased future regulation of firearms.

* A general, industry-wide slowing down of gun sales.

* Tougher and ever growing competition.

* Difficulty in financing a gun company deal.

* Investment firms (like Cerebus) and existing companies hesitant to invest in gun makers due to image issues.

* Debt load of company.

* Very limited handgun offerings which is a huge/lucrative market.

* The abject failure of the R51 handgun.

* Remington Model 700 trigger/safety liability and associated costs.

* Terribly tainted Bushmaster brand.

* Damage done to the Marlin brand in terms of product quality.

* Loss of H&R and Para brands.

* Potential pension liability issues.

* Potential clean-up costs at Remington's ancient plant in Ilion, NY.

* Potential clean-up costs of Remington's former ammunition plant in Bridgeport, CT -- if Remington is still responsible for the facility?

I wonder how many other things impact this company and prevent it from being sold? I wonder what Remington's future holds? It's such a huge player in the firearms industry... Thanks for any input.

 

[alsaqr]

Yeah, all that stuff matters some. However, very few investors or corporations want a firearms manufacturer: It's bad for business.

Additionally, the big banks are very reluctant to loan money for the acquisition of a firearms manufacturer.

Remington will become a separate entity and Cerebus will buy back Remington stock. .

In its decision to cash out investors, Cerberus has all but acknowledged that it must hold on to its investment for a while longer. In the letter, which was reviewed by The New York Times, the private equity firm said that it would take Remington out of its main private equity funds and put it into a separate financial entity.

Cerberus will then let its investors sell their individual stakes in the gun maker back to the company.

“We are disappointed that we were unable to effect an outright sale of the company or other comparable transaction,” the private equity firm wrote in the letter.

http://www.nytimes.com/2015/05/16/b...-buy-back-its-shares-from-investors.html?_r=0

BTW: Marlin quality tanked years before that company was bought by Remington.

 

[Lord Teapot]

* A general, industry-wide slowing down of gun sales. <-----------------False

 

[1stmarine]

I don't follow their numbers closely but I do follow their projects and based on their general philosophy one might think that they are trying hard to destroy themselves.
Remember that they belong to a huge group of executive hot shots that includes Remington, Bushmaster and DPMS.
I think their people are awesome and can come up with very nice ideas but their executives are so disconnected from reality that it seems insane.
They use the spaghetti approach (throw it and see if it sticks) and fail to commit and follow through, sometimes abandoning their most loyal followers and clear opportunities.
Instead of fighting the people and even their own clients they should be embracing their ideas and follow though with them.
For example: Some popular bolt rifles have been having huge QC problems. They dropped the ball on the 6.8 but other smart people saw the opportunity and took it to the next level and now it has been demonstrated a superior round in so many levels. The DPMS gen2 is great but all it was needed is for the G1 to go on a diet and keep the established standard pushing forward. Now that is what others are doing very successfully. The Marlin situation better not to even talk about it.
They release the 30 RAR and then they let it die due to the lack of commitment, support and development working with the community.
Extrange bolt faces, no brass available, etc... all big mistakes.
The 770 has been a source of problems, poor performance and embarrassment for a company that is known for other top rifles. They should be the leaders in the out of the box budget department buy in this area they cannot even begin to compete with Savage out of the box value.

I have been a hardcore Remington enthusiast all my life and a huge Remington 700 fan that is an amazing rifle but I have never seen such disarray in a business. I think the Remington and DPMS people are a great family (I know a few) but this "big group" firearms executives and marketing gurus should all be sent packing. They are a disaster.

What you see happening at the lowest level is just a reflection of the lack of vision and direction from the top.

It is really sad because in those plants we have very good engineers and workers but these executive "gurus" are screwing everything up big time.

These days never loose touch with your most loyal customers and enthusiasts. One cannot afford that as a company no matter what you make because while you are sleeping there are 100 other companies ready to take your customers to another place, possibly a better place.

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[Aragon]

Yeah, all that stuff matters some. However, very few investors or corporations want a firearms manufacturer: It's bad for business.

Additionally, the big banks are very reluctant to loan money for the acquisition of a firearms manufacturer.

Remington will become a separate entity and Cerebus will buy back Remington stock. .

BTW: Marlin quality tanked years before that company was bought by Remington.

I agree except that Cerebus won't own any of Remington unless it absolutely has to so as not to upset the fund managers that own huge chunks of Cerebus.

 

[Aragon]

* A general, industry-wide slowing down of gun sales. <-----------------False

Bunch of deleted graphs...

Interesting your data stops at 2011 or 2012.

 

[Snyper]

Interesting your data stops at 2011 or 2012.

It's not unusual for data compilation to be a couple of years behind.
We all know sales have remained high the last couple of years, even if some have dropped slightly from the all -time highs

 

[Aragon]

It's not unusual for data compilation to be a couple of years behind.
We all know sales have remained high the last couple of years, even if some have dropped slightly from the all -time highs

No, actually we don't. Sales have definitely dropped from historically high levels. The difference from 2011 to 2015 is material.

 

[JSH1]

We all know sales have remained high the last couple of years, even if some have dropped slightly from the all -time highs

I've seen things go from people standing 3 deep at the gun counter hoping to be allowed to buy a gun above MSRP to one to two people. Ammo shelves bare and people lining up hoping to be allowed to buy a couple boxes of ammo to full shelves (except standard 22 LR)

Sales have definitely slowed down the past 2 years. Any manufacturer that spent money to expand their capacity could be hurting today as that equipment sits idle.

 

[Aragon]

I've seen things go from people standing 3 deep at the gun counter hoping to be allowed to buy a gun above MSRP to one to two people. Ammo shelves bare and people lining up hoping to be allowed to buy a couple boxes of ammo to full shelves (except standard 22 LR)

Sales have definitely slowed down the past 2 years. Any manufacturer that spent money to expand their capacity could be hurting today as that equipment sits idle.

Sales have definitely dropped over the past couple of years. Keep in mind though that companies served that historically heavy demand by working a huge amount of overtime, by jobbing out the parts they could and by expanding.

Now that things are getting back to "normal", sales are still good, but they're not historically crazy like they were. I'm sure Ruger is benefiting from opening their Mayodan factory and Remington its Huntsville plant.

 

[Snyper]

Sales have definitely slowed down the past 2 years. Any manufacturer that spent money to expand their capacity could be hurting today as that equipment sits idle.

That's what I said, down from all time highs, but still higher than 5 years ago

It made me wonder why its parent Cerebus is having so much trouble selling Remington?

Remington is for sale due to a settlement of a lawsuit stemming from Sandy Hook, and not due to lack of business

http://www.bloomberg.com/bw/article...-will-misfire-in-bushmaster-ar-15-gun-lawsuit

 

[JSH1]

That's what I said, down from all time highs, but still higher than 5 years ago

Maybe

Remington is for sale due to a settlement of a lawsuit stemming from Sandy Hook, and not due to lack of business

http://www.bloomberg.com/bw/article...-will-misfire-in-bushmaster-ar-15-gun-lawsuit

How is an article saying that the Sandy Hook plaintiffs have no case proof of anything?

 

[RPRNY]

Increasingly thin margins in the volume gun market.

 

[JSH1]

Borrowing money to pay shareholders a dividend didn't help either. That pushed their debt over the billion dollar threshold.

 

[Aragon]

That's what I said, down from all time highs, but still higher than 5 years ago

No, you posted this: "We all know sales have remained high the last couple of years, even if some have dropped slightly from the all -time highs."

Sales have dropped far more than "slightly."

Remington is for sale due to a settlement of a lawsuit stemming from Sandy Hook, and not due to lack of business

I didn't ask if Remington was for sale. I asked why Cerebus hasn't been able to sell it?

FWIW, Remington is for sale because Cerebus' huge institutional investors no longer want to own it.

FWIW2: Remington is losing $$$

 

[Aragon]

Increasingly thin margins in the volume gun market.

Yep. As the market contracts, all gunmakers are going to feel the pain.

 

[Aragon]

Borrowing money to pay shareholders a dividend didn't help either. That pushed their debt over the billion dollar threshold.

Very true...

 

[Bigdog57]

Wait til election time nears. Sales will ramp up sharply.....

 

[JSH1]

Wait til election time nears. Sales will ramp up sharply.....

Maybe but I tend to doubt it. Are people really going to pay inflated prices again, just to see prices fall back to normal in a year? As long as Republicans hold one branch of government no gun restrictions will pass. The makeup of Congressional Districts almost guarantees that they will retain control of the House until at least 2022.

What matters to Remington is the mix of guns that are currently selling, whether their guns are selling well in the popular categories, and their margins on those guns. It doesn't look promising considering Remington's earnings drops almost 50% from 2013 to 2014. That points to the not having the right mix for today's market.

 

[Lord Teapot]

Interesting your data stops at 2011 or 2012.

i'm sorry reality simply contradicts you. background checks for guns in 2014 were
20,968,547, up by 1.5 million from 2012, and only about 200 thousand lower than in 2013, 2013s surge probably being due to the sandy hook gun ban attempts.

http://www.fbi.gov/about-us/cjis/nics/reports/2014-operations-report


i apologize for obliterating one of the main supporting elements of your thread, but i don't want people to be misled by your authoritative looking, yet patently false, bullet point in the original post.

 

[Lord Teapot]

Yep. As the market contracts, all gunmakers are going to feel the pain.

again, the firearms market is not contracting, as all evidence shows. it is steadily expanding, and each time a gun control initiative is launched, it expands further and faster.

 

[JSH1]

i'm sorry reality simply contradicts you. background checks for guns in 2014 were
20,968,547, up by 1.5 million from 2012, and only about 200 thousand lower than in 2013, 2013s surge probably being due to the sandy hook gun ban attempts.

Your statistic 20,968,547 number is for total number number of background checks. The NICS system is also used for explosives as well as concealed carry permits. Per the NRA, 2014 sales are about the same as 2012:


https://www.nraila.org/articles/20140822/nics-data-suggest-gun-sales-still-strong-in-2014

Background check numbers also don't separate sales of new guns from used guns. For manufacturers the only number that matters is new sales.

Until the actual numbers on gun sales are published everyone is only speculating.

 

[Aragon]

i'm sorry reality simply contradicts you. background checks for guns in 2014 were
20,968,547, up by 1.5 million from 2012, and only about 200 thousand lower than in 2013, 2013s surge probably being due to the sandy hook gun ban attempts.

http://www.fbi.gov/about-us/cjis/nics/reports/2014-operations-report

i apologize for obliterating one of the main supporting elements of your thread, but i don't want people to be misled by your authoritative looking, yet patently false, bullet point in the original post.

NICS checks don't equate to sales. Anyone with your arrogant tone should be aware of that.

For future reference you need to use the BATFE's Annual Firearms Manufacturing and Exportation Report. That's the true indicator of gun sales and not gun sales+gun resales+explosives sales + concealed carry permits.

Perhaps in time you can update your cutesie charts rather than try to pass-off old data as being current?

 

[Aragon]

Your statistic 20,968,547 number is for total number number of background checks. The NICS system is also used for explosives as well as concealed carry permits. Per the NRA, 2014 sales are about the same as 2012:


https://www.nraila.org/articles/20140822/nics-data-suggest-gun-sales-still-strong-in-2014

Background check numbers also don't separate sales of new guns from used guns. For manufacturers the only number that matters is new sales.

Until the actual numbers on gun sales are published everyone is only speculating.

That's quite true. The best indicators right now of a fundamentally changed market are dropping prices and vast availability. But you're right, until the BATFE reports, it's only a guess.

 

[Aragon]

I wonder if this will help? Probably too expensive to really gain much share:

Remington Defense Releases 7 New Rifles to Civilian Market

http://www.tactical-life.com/firear...rifles-civilian-market/#remington-defense-rgp