Quantcast

Remington Faces Default

Discussion in 'General Gun Discussions' started by <*(((><, Nov 24, 2017.

Thread Status:
Not open for further replies.
  1. <*(((><
    • Contributing Member

    <*(((>< Luke

    Joined:
    Feb 1, 2013
    Messages:
    1,987

    Remington Outdoor, the second-largest U.S. gunmaker has suffered a “rapid” and “sharp” deterioration in sales and a similar drop in profits since January, and faces “continued softness in consumer demand for firearms,” credit analysts at Standard & Poor’s Global Ratings said in a report Friday.

    S&P as a result has cut the company’s corporate credit rating — already at a junk-bond-level CCC+ — two full notches, to CCC-, a move likely to make the company’s high-yield debt less attractive to investors and lenders, and force Remington to pay more in interest. The company could face a change in control, bankruptcy, or default on its debt by next year.

    A backlog of unsold, unwanted firearms will force Remington to operate at a loss and “pressure the company’s sales and profitability at least through early 2018, resulting in insufficient cash flow for debt service and fixed charges,” unless Remington gives up cash to pay for ongoing operations, S&P adds.


    S&P expects “a heightened risk of a restructuring” of Remington’s $575 million senior secured loan and asset-based lending facility, which it is supposed to pay back in 2019.

    If Remington defaults on its payments, based on the company’s current value, S&P expects first-lien creditors may receive around 35 cents back from every dollar they have lent or invested. Lower-rated creditors would get back less, or nothing.


    Default is not yet “a virtual certainty,” the report added.

    Not a huge surprise, their offerings of new and old products have suffered greatly in quality the past 8-10 years. The underlined portion of the quoted text above is the key, they were producing firearms that no one wanted and/or had any faith in being of good quality and reliability. I was sad to see Marlin get absorbed into the Freedom Group with Remington. Hopefully someone with vision and good business sense buys them out of the Freedom Group and turns them around.
     
    papaairbear, everydefense and Milt1 like this.
  2. C5rider

    C5rider Member

    Joined:
    Mar 1, 2011
    Messages:
    606
    Location:
    'Tween swamp and sun!
    Three things went through my mind when I read this.

    1. How can a company come off of record sales from the banic we had recently and almost instantly, be in default? (this would be a direct reflection on bad management).

    2. How much of this is ACTUALLY true? (Mis-information, or slighting the numbers to make your point, has become so inter-woven with news outlets, social media and even at the water fountain that the only way to ensure that you're getting the REAL story, is by checking, and cross-checking with numerous other sources. THAT then opens you up for yet more slight of words/numbers.

    3. What motive does the news outlet have? I've heard a quote attributed to Mark Twain that I think fits here. "If you don't read the newspapers, you're uninformed. If you DO, you're mis-informed. )
    (There is a LOT of money in Philly. And, as the OP stated, if someone with "good business sense" has the option to buy them at their defaulted state, they could save a bunch of dough. Anyone with Philly connections interested in any portion of Freedom Group?) Not tin-foil hatting anything here, as I've simply taken more of a, "what do I care?" attitude to the schemes of ambitious folks.

    Time has a way of bringing all things into light. Perhaps there's even a fourth option?
     
  3. Tommygunn

    Tommygunn Member

    Joined:
    Jun 14, 2006
    Messages:
    6,136
    Location:
    Morgan County, Alabama
    Sad...one of our oldest gun makers in financial kimshe.
    I know some of their products have been less than stellar..I have a 700 in .30 '06 with the wonky trigger....I went through the R51 debacle.....OTOH I have the basic R1 1911 that most consider a nice solid gun and mine seems to run very well.
    But they made their own bed ........
     
    horsey300 likes this.
  4. entropy

    entropy Member

    Joined:
    Feb 9, 2004
    Messages:
    8,218
    Location:
    G_d's Country, WI
    I can answer 1. and 3. :

    Because people actually went out and tried to shoot all those new Remingtons, and found out they aren't the Remingtons of old, and new gun owners were disgusted at the poor quality.

    Love the Mark Twain quote. The news media's agenda is pretty obvious to most of us here, except perhaps rocketmedic. ;)
     
  5. NIGHTLORD40K

    NIGHTLORD40K Member

    Joined:
    Mar 17, 2015
    Messages:
    4,229
    Location:
    Nostramo (in absentia), Segmentum Ultima
    I believe it. All manufacturers have seen a dramatic sales downturn since the election after several years of record-breaking panic buying.
    I would posit they blew that cash on two things- CEO bonuses and tooling for the Army Pistol trial gun (RP9, Beretta ARX, Ruger American Pistol, etc.) Which we know SIG ran away with since they were the only ones willing to sell the design itself to the DOD.
    This leaves all the gunmakers in a bind- but Remington is the most exposed due to their horrible quality reputation of late. And don't forget the huge $$$ they are still paying out for the Walker-trigger class action litigation......
     
    <*(((>< likes this.
  6. <*(((><
    • Contributing Member

    <*(((>< Luke

    Joined:
    Feb 1, 2013
    Messages:
    1,987
    @C5rider It doesn't surprise me in the least that Remington is having troubles. Just look at the issues they've had in the hand gun arena. Even with massive discounts such as $189 subcompact and a $250 full frame and they still can't get buyers to buy. Gun owners know that if Remington puts out a new model let everyone else try it out before even considering it. There are plenty of sources out there talking about the Remington woes recently, I'm not trying to spread mis-information or slighting any numbers but the last few years of decision making (manufacturing cuts, designs, etc) for Remington (apart from 2016's profit increase, which was felt throughout the firearms industry) has been abysmal. Add in their legal fees and settlements for the Walker trigger, it doesn't bode well for Remington.

    2014 (Aug.): Remington Layoff - Ilion, New York

    "According to the Utica Observer Dispatch, the layoffs are a result of Remington's decision this spring to consolidate some of its operations to a new manufacturing plant in Huntsville, Alabama. In May, the company announced 80 jobs would be moved to Huntsville from the Ilion plant, but the workers would not move with them."

    "Today's reduction in force is a result of this strategic business decision and a softening market," Teddy Novin, Remington Outdoor Company’s director of public affairs, told the Observer Dispatch."

    2015: $135.2 Million Loss
    "Remington’s loss in 2015 was made up of an additional $72.7 million in operating costs, and $68.4 million in federal excise taxes, according to the filing. In 2014, the company reported a $68.2 million loss, which is just shy of half the total loss in 2015.

    Annual net sales totaled $808.9 million, down $130.4 million in 2014. Of the total, firearms contributed $375.2 million, ammo $355.7 million, and other consumer goods $78 million.

    Remington said the $46.3 million decrease in gun sales was caused by a soft hunting season, decline in the 1911 handgun market, discontinued products, and “a delayed response to changes in the market and a trend toward value price point products.”

    Ammo sales were also down last year as the company saw a $49.2 million decrease in sales. Consumers spent $33.2 million less in centerfire ammo and $21.8 million less in shotgun shells. Other ammo products decreased by $6.1 million.

    Consumer goods decreased by $34.9 million. The company explains it was the result of lower sales of parts, clothes, and airguns and accessories.

    However, gun sales were high overall in 2015. Figures for the National Instant Criminal Background Check System — used as a barometer for gun sales — were at a record high with more than 23.1 million for the year."

    2016: 7% Profit Increase
    "Remington Outdoor Company Inc. reported sales increased 7.0 percent in 2016 to $865.1 million from $808.9 million in 2015.

    Firearms sales for the year ended December 31, 2016 were $437.8 million, an increase of 16.7 percent, as compared to the year ended December 31, 2015. MSR sales increased $34.2 million and shotgun sales increased $16.5 million. Sales of handguns and centerfire rifles increased by $14.0 million and $1.7 million, respectively, and accrued discounts were lower by $0.2 million. These increases were partially offset by lower sales of rimfire rifles of $4.0 million. These increases were primarily due both to increased MSR sales prior to the presidential election and its new handgun product launches."


    2017 (Mar.): Remington Layoff - Ilion, New York

    2017 (Apr.): Remington Layoff

    2017 (Aug.): $9.5 Million Loss for Quarter 2, 2017
    "The company reported a $9.5 million loss for the quarter ending July 2 due to high inventory levels coupled with low demand. That brings the total loss this year to $44.5 million, which is largely due to impairment costs."
    "Six months into the calendar year, gun sales have only declined 7.6 percent nationwide and sales for long guns — rifles and shotguns, which Remington mainly produces — also declined by 7.6 percent, federal data shows. For Remington, that translates as a 29 percent drop in firearm sales and 20 percent drop in ammo sales."

    2017 (Sept.): Remington Layoff - Ilion, New York

    2017 (Sept): Remington Arms Reduces Workforce
     
    Last edited: Nov 24, 2017
    bannockburn and C5rider like this.
  7. <*(((><
    • Contributing Member

    <*(((>< Luke

    Joined:
    Feb 1, 2013
    Messages:
    1,987
    I'm not trying to bash Remington, but quite the opposite. The Board Members and upper management need to take stock in how well other gun companies have done in the past few years and start to make changes to their efforts. Their 2015 $135 million loss was quite a telling point as to their problems as the NCIS were very high in 2015, meaning gun purchasers were spending their money elsewhere.

    I hope that Remington can reinvent themselves and have a focus on quality firearms again, but a lot of their layoffs were directed at manufacturing jobs and it's no surprise to see the lower quality being reported coming out of Remington. And I'll be transparent here I haven't bought a Remington firearm in 15 years or so; so I'm operating on what I've been witness to in person with friends and families purchases as well as internet chatter (which one has to take lightly). But I've been around several family and friend purchase to know the quality of Remington isn't what it used to be (and I think that's the case with other manufacturers as well, but I don't think to the same extent).
     
    bannockburn likes this.
  8. AZAndy
    • Contributing Member

    AZAndy Contributing Member

    Joined:
    May 20, 2007
    Messages:
    1,747
    Location:
    Prescott, AZ, USA
    Well... hmm... I like their primers okay, I guess. Probably not a lot of money to be made in primers.
     
    horsey300, chicharrones and <*(((>< like this.
  9. <*(((><
    • Contributing Member

    <*(((>< Luke

    Joined:
    Feb 1, 2013
    Messages:
    1,987
    Yes, I have bought a lot of Remington 7-1/2's the past 8 years.
     
  10. natman

    natman Member

    Joined:
    Feb 11, 2007
    Messages:
    3,666
    Easy. Borrow a bunch of money to tool up to meet the high demand generated by the panic. Get committed to spend it in new plants and production equipment. Then when the bubble bursts, you're stuck with all the debt and no more demand.

    Lots of companies have gotten into trouble mistaking a demand bubble for long term demand.
     
  11. JohnBiltz

    JohnBiltz Member

    Joined:
    Aug 17, 2010
    Messages:
    1,788
    Location:
    Phoenix, AZ
    Sales are down for guns compared to last year an election year but they are not bad compared to 2015 and 2014.

    The simple truth is they cut quality one year after another in the name of short term profits and its all caught up to them. Then they came out with a high profile pistol that was highly touted by the gun media and it was a disaster. That cost them with the gun public and the embarrassed media. They have no good will left and bad products combined with debt. In short they did everything they could to run the company into the ground.
     
  12. Mike OTDP

    Mike OTDP Member

    Joined:
    Oct 31, 2007
    Messages:
    1,930
    Location:
    Somewhere in Maryland
    The other factor is that we're in a transition from Gun Culture 2.0 to Gun Culture 3.0. The market is flooded with ARs, 1911s, and Glock clones. Everybody is making some variation on the same thing...and people have bought all they want.

    It's a good time to cut against the conventional wisdom and offer something outside the box.
     
    GAF, JR24 and NIGHTLORD40K like this.
  13. herrwalther

    herrwalther Member

    Joined:
    May 1, 2013
    Messages:
    4,800
    JUST Remington? Doesn't being part of Freedom Group and higher up a part of Cerberus Capital offer a level of protection against default?

    I would hate to see any gun company go under. But after the lack luster record of big R the last few years, I am not surprised they are facing financial difficulty.
     
  14. VVelox

    VVelox Member

    Joined:
    Dec 17, 2011
    Messages:
    323
    Location:
    Chicago
    Lack of anything interesting coming out from them...

    For example to make a Model 700 similar to either the Ruger GSR or Mossberg MVP Scout, you end up paying significantly more once you factor in the cost of rifle and parts.
     
  15. NIGHTLORD40K

    NIGHTLORD40K Member

    Joined:
    Mar 17, 2015
    Messages:
    4,229
    Location:
    Nostramo (in absentia), Segmentum Ultima
    Which is why the R51 could have been such a success! It was different, it had historical pedigree combined with modern whiz-bang, it would have landed at just the right time.....
    Kel Tec is another manufacturer that continues to introduce new, different, exciting product- and it appears they are investing the rewards back into the product, with better QC and customer service.
    I hope the other brands learn from Remington's downward spiral and pursue high quality, unique products that will keep us interested and buying.
     
  16. jmr40

    jmr40 Member

    Joined:
    May 26, 2007
    Messages:
    12,437
    Location:
    Georgia
    Remington has been circling the drain since the 1970's. The only thing that has kept them afloat was a string of panic buys. It won't hurt my feelings a bit if there are no more Remingtons. But I hate to see them take Marlin down with them.
     
    psyopspec likes this.
  17. Sam1911

    Sam1911 Moderator Emeritus

    Joined:
    Oct 22, 2007
    Messages:
    34,964
    Location:
    Central PA
    Most likely they'll end up the same place as Gibson guitars. The name is too valuable to simply die. It will be bought and resurrected by some capital firm which will set out to make the name good again.
     
  18. sequins

    sequins Member

    Joined:
    Oct 14, 2014
    Messages:
    687
    After the r51 fiasco it's no surprise noone will buy. I think most gun buyers have no interest in unreliable guns and that's the defining characteristicof their offerings unfortunately.
     
  19. 2ifbyC

    2ifbyC Member

    Joined:
    Jul 26, 2010
    Messages:
    355
    Location:
    Arizona
    I owned a Remington Model 700 with the faulty trigger; it discharged while attempting to unload a round in the chamber. I sold the rifle years ago and I was not aware of the problem until it became national news. I always practice good gun safety. The rifle was pointed to the ground so no one was injured. I am sympathy to Remington since the weapons industry carry a high level of risk. However, when you sell a faulty product, litigation can be quite costly.

    There are a number of factors that can lead to a company’s insolvency; chief among them is management practices. Case in point: Kodak invented the digital camera. Management shelved the concept since their margins on film were much higher than what they projected for digital. Kodak never fully recovered.

    Kodak is but one example. The long term health of the company gives way to short term profits and executive bonuses. It takes years for Goodwill to build on the balance sheet. I don’t have much faith that the Remington brand will survive.
     
  20. Mike OTDP

    Mike OTDP Member

    Joined:
    Oct 31, 2007
    Messages:
    1,930
    Location:
    Somewhere in Maryland
    I think the name will survive. The Remington 700 and 870 are icons. The RM 380 has the potential to be good (it's a licensed Rohrbaugh) if they watch the build quality. Nevertheless, they need to be thinking outside the AR/1911/Tupperware box.
     
  21. BigBore44

    BigBore44 Member

    Joined:
    Feb 11, 2013
    Messages:
    3,122
    Location:
    Oklahoma
    “Profit above Product” will get you every time. They simply rode the name too long. For goodness sake, was it the 710 or 770 that had plastic bolt handles? To borrow a phrase from ESPN “C’mon man!!”
     
    <*(((>< likes this.
  22. JSH1

    JSH1 Member

    Joined:
    Jun 12, 2013
    Messages:
    1,739
    Location:
    PDX
    Last edited: Nov 25, 2017
    <*(((>< likes this.
  23. Jackal

    Jackal Member

    Joined:
    Mar 9, 2006
    Messages:
    4,889
    Location:
    Northwest Washington
    Remington needs to simply get out of the handgun market and focus on making good rifles. Remington, much like Colt, has been utterly deaf to consumer interests for too long.
     
  24. JONWILL

    JONWILL Member

    Joined:
    Apr 21, 2017
    Messages:
    880
    I just hope I get my $100 rebate on the 6 handguns I bought
     
  25. VoodooMountain

    VoodooMountain Member

    Joined:
    Sep 19, 2014
    Messages:
    806
    Location:
    Kansas
    I knew this was right around the corner. I think we all did. I’m not a huge Remington fan but this is pretty sad.
     
Thread Status:
Not open for further replies.
  1. This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
    By continuing to use this site, you are consenting to our use of cookies.
    Dismiss Notice