Company Quick10K Filing
Chicago Rivet & Machine
Price25.94 EPS1
Shares1 P/E30
MCap25 P/FCF13
Net Debt-1 EBIT1
TEV24 TEV/EBIT22
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-06
10-Q 2020-06-30 Filed 2020-08-07
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-20
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-20
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-03-20
10-Q 2017-09-30 Filed 2017-11-06
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-05
10-K 2016-12-31 Filed 2017-03-20
10-Q 2016-09-30 Filed 2016-11-04
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-03-21
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-06
10-K 2014-12-31 Filed 2015-03-20
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-05-09
10-K 2013-12-31 Filed 2014-03-21
10-Q 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-10
10-K 2012-12-31 Filed 2013-03-28
10-Q 2012-09-30 Filed 2012-11-06
10-Q 2012-06-30 Filed 2012-08-10
10-Q 2012-03-31 Filed 2012-05-04
10-K 2011-12-31 Filed 2012-03-28
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-03-28
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-23
8-K 2020-05-12
8-K 2020-04-20
8-K 2020-02-17
8-K 2019-05-14
8-K 2018-05-08

CVR 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 4. Controls and Procedures.
Part II - Other Information
Item 6. Exhibits
EX-31.1 d76144dex311.htm
EX-31.2 d76144dex312.htm
EX-32.1 d76144dex321.htm
EX-32.2 d76144dex322.htm

Chicago Rivet & Machine Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
35282114702012201420172020
Assets, Equity
151296302012201420172020
Rev, G Profit, Net Income
1.70.90.1-0.6-1.4-2.22012201420172020
Ops, Inv, Fin

10-Q 1 d76144d10q.htm 10-Q 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 000-01227

 

 

Chicago Rivet & Machine Co.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Illinois   36-0904920

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

901 Frontenac Road, Naperville, Illinois   60563
(Address of Principal Executive Offices)   (Zip Code)

(630) 357-8500

Registrant’s Telephone Number, Including Area Code

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $1.00 per share   CVR   NYSE American (Trading privileges only, not registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

As of November 2, 2020, there were 966,132 shares of the registrant’s common stock outstanding.

 

 

 


Table of Contents

CHICAGO RIVET & MACHINE CO.

INDEX

 

     Page  

PART I. FINANCIAL INFORMATION (Unaudited)

  

Condensed Consolidated Balance Sheets at September  30, 2020 and December 31, 2019

     2-3  

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2020 and 2019

     4  

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019

     5  

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019

     6  

Notes to the Condensed Consolidated Financial Statements

     7-11  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     12-13  

Controls and Procedures

     14  

PART II. OTHER INFORMATION

     15  

 

1


Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Balance Sheets

September 30, 2020 and December 31, 2019

 

     September 30,
2020
     December 31,
2019
 
 
     (Unaudited)         

Assets

     

Current Assets:

     

Cash and cash equivalents

   $ 997,831      $ 1,429,454  

Certificates of deposit

     6,476,000        6,574,000  

Accounts receivable—Less allowances of $160,000 and $140,000, respectively

     5,346,916        4,609,314  

Inventories, net

     4,944,806        4,951,177  

Prepaid income taxes

     188,186        58,186  

Other current assets

     446,554        427,192  
  

 

 

    

 

 

 

Total current assets

     18,400,293        18,049,323  
  

 

 

    

 

 

 

Property, Plant and Equipment:

     

Land and improvements

     1,636,749        1,636,749  

Buildings and improvements

     8,341,461        8,331,804  

Production equipment and other

     36,685,324        36,408,746  
  

 

 

    

 

 

 
     46,663,534        46,377,299  

Less accumulated depreciation

     33,628,740        32,703,246  
  

 

 

    

 

 

 

Net property, plant and equipment

     13,034,794        13,674,053  
  

 

 

    

 

 

 

Total assets

   $ 31,435,087      $ 31,723,376  
  

 

 

    

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

2


Table of Contents

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Balance Sheets

September 30, 2020 and December 31, 2019

 

     September 30,
2020
    December 31,
2019
 
 

Liabilities and Shareholders’ Equity

     (Unaudited)    

Current Liabilities:

    

Accounts payable

   $ 898,714     $ 490,580  

Accrued wages and salaries

     945,133       629,972  

Other accrued expenses

     264,424       349,069  

Unearned revenue and customer deposits

     117,293       152,644  
  

 

 

   

 

 

 

Total current liabilities

     2,225,564       1,622,265  

Deferred income taxes

     871,084       943,084  
  

 

 

   

 

 

 

Total liabilities

     3,096,648       2,565,349  
  

 

 

   

 

 

 

Commitments and contingencies (Note 3)

    

Shareholders’ Equity:

    

Preferred stock, no par value, 500,000 shares authorized: none outstanding

     —         —    

Common stock, $1.00 par value, 4,000,000 shares authorized:

1,138,096 shares issued; 966,132 shares outstanding

     1,138,096       1,138,096  

Additional paid-in capital

     447,134       447,134  

Retained earnings

     30,675,307       31,494,895  

Treasury stock, 171,964 shares at cost

     (3,922,098     (3,922,098
  

 

 

   

 

 

 

Total shareholders’ equity

     28,338,439       29,158,027  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 31,435,087     $ 31,723,376  
  

 

 

   

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

3


Table of Contents

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Income

For the Three and Nine Months Ended September 30, 2020 and 2019

(Unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2020      2019      2020     2019  

Net sales

   $ 7,645,259      $ 8,188,905      $ 19,325,234     $ 25,686,034  

Cost of goods sold

     6,004,766        6,539,138        16,304,164       20,826,534  
  

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

     1,640,493        1,649,767        3,021,070       4,859,500  

Selling and administrative expenses

     1,258,995        1,282,149        3,758,752       3,931,510  
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     381,498        367,618        (737,682     927,990  

Other income

     32,637        47,179        122,869       145,208  
  

 

 

    

 

 

    

 

 

   

 

 

 

Income (loss) before income taxes

     414,135        414,797        (614,813     1,073,198  

Provision (benefit) for income taxes

     105,000        99,000        (201,000     241,000  
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income (loss)

   $ 309,135      $ 315,797      $ (413,813   $ 832,198  
  

 

 

    

 

 

    

 

 

   

 

 

 

Per share data, basic and diluted:

          

Net income (loss) per share

   $ 0.32      $ 0.32      $ (0.43   $ 0.86  
  

 

 

    

 

 

    

 

 

   

 

 

 

Average common shares outstanding

     966,132        966,132        966,132       966,132  
  

 

 

    

 

 

    

 

 

   

 

 

 

Cash dividends declared per share

   $ 0.10      $ 0.22      $ 0.42     $ 0.96  
  

 

 

    

 

 

    

 

 

   

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

4


Table of Contents

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Shareholders’ Equity

For the Three and Nine Months Ended September 30, 2020 and 2019

(Unaudited)

 

     Preferred      Common Stock      Additional
Paid-
     Retained
Earnings
    Treasury Stock, at Cost        
     Stock      Shares      Amount      in Capital     Shares      Amount     Total  

Balance, December 31, 2019

   $ —          966,132      $ 1,138,096      $ 447,134      $ 31,494,895       171,964      $ (3,922,098   $ 29,158,027  

Net income

               $ 56,568          $ 56,568  

Dividends declared ($0.22 per share)

               $ (212,549        $ (212,549
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, March 31, 2020

   $ —          966,132      $ 1,138,096      $ 447,134      $ 31,338,914       171,964      $ (3,922,098   $ 29,002,046  

Net loss

               $ (779,516        $ (779,516

Dividends declared ($0.10 per share)

               $ (96,612        $ (96,612
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, June 30, 2020

   $ —          966,132      $ 1,138,096      $ 447,134      $ 30,462,786       171,964      $ (3,922,098   $ 28,125,918  

Net income

               $ 309,135          $ 309,135  

Dividends declared ($0.10 per share)

               $ (96,614        $ (96,614

Balance, September 30, 2020

   $ —          966,132      $ 1,138,096      $ 447,134      $ 30,675,307       171,964      $ (3,922,098   $ 28,338,439  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, December 31, 2018

   $ —          966,132      $ 1,138,096      $ 447,134      $ 32,096,617       171,964      $ (3,922,098   $ 29,759,749  

Net income

               $ 286,842          $ 286,842  

Dividends declared ($0.52 per share)

               $ (502,389        $ (502,389
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, March 31, 2019

   $ —          966,132      $ 1,138,096      $ 447,134      $ 31,881,070       171,964      $ (3,922,098   $ 29,544,202  

Net income

               $ 229,559          $ 229,559  

Dividends declared ($0.22 per share)

               $ (212,549        $ (212,549
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, June 30, 2019

   $ —          966,132      $ 1,138,096      $ 447,134      $ 31,898,080       171,964      $ (3,922,098   $ 29,561,212  

Net income

               $ 315,797          $ 315,797  

Dividends declared ($0.22 per share)

               $ (212,549        $ (212,549
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, September 30, 2019

   $ —          966,132      $ 1,138,096      $ 447,134      $ 32,001,328       171,964      $ (3,922,098   $ 29,664,460  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

5


Table of Contents

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019

(Unaudited)

 

     2020     2019  

Cash flows from operating activities:

    

Net income (loss)

   $ (413,813   $ 832,198  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation

     1,014,916       1,029,998  

Gain on disposal of equipment

     —         (5,000

Deferred income taxes

     (72,000     134,000  

Changes in operating assets and liabilities:

    

Accounts receivable

     (737,602     (84,715

Inventories

     6,371       624,058  

Other current assets and prepaid income taxes

     (149,362     (320,611

Accounts payable

     408,134       (72,255

Accrued wages and salaries

     315,161       160,519  

Other accrued expenses

     (84,645     (171,741

Unearned revenue and customer deposits

     (35,351     (125,529
  

 

 

   

 

 

 

Net cash provided by operating activities

     251,809       2,000,922  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (375,657     (1,562,784

Proceeds from the sale of equipment

     —         5,000  

Proceeds from certificates of deposit

     4,831,000       5,569,000  

Purchases of certificates of deposit

     (4,733,000     (4,582,000
  

 

 

   

 

 

 

Net cash used in investing activities

     (277,657     (570,784
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Cash dividends paid

     (405,775     (927,487
  

 

 

   

 

 

 

Net cash used in financing activities

     (405,775     (927,487
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (431,623     502,651  

Cash and cash equivalents at beginning of period

     1,429,454       706,873  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 997,831     $ 1,209,524  
  

 

 

   

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

6


Table of Contents

CHICAGO RIVET & MACHINE CO.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. In the opinion of the Company, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2020 (unaudited) and December 31, 2019 (audited) and the results of operations and changes in cash flows for the indicated periods. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these unaudited financial statements in accordance with applicable rules. Please refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and nine-month period ending September 30, 2020 are not necessarily indicative of the results to be expected for the year.

2. The Company extends credit on the basis of terms that are customary within our markets to various companies doing business primarily in the automotive industry. The Company has a concentration of credit risk primarily within the automotive industry and in the Midwestern United States.

3. The Company is, from time to time, involved in litigation, including environmental claims and contract disputes, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company’s financial position.

4. Revenue— The Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For certain assembly equipment segment transactions, revenue is recognized based on progress toward completion of the performance obligation using a labor-based measure. Labor incurred and specific material costs are compared to milestone payments per sales contract. Based on our experience, this method most accurately reflects the transfer of goods under such contracts. During 2020, the Company has had no such contracts.

Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income. These adjustments primarily relate to customer returns and allowances. The Company records a liability and reduction in sales for estimated product returns based upon historical experience. If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time. As of September 30, 2020 and December 31, 2019 reserves for warranty claims were not material. Cash received by the Company prior to shipment is recorded as unearned revenue.

Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred.

Sales commissions are expensed when incurred because the amortization period is less than one year. These costs are recorded within selling and administrative expenses in the statement of income.

 

7


Table of Contents

The following table presents revenue by segment, further disaggregated by end-market:

 

            Assembly         
     Fastener      Equipment      Consolidated  

Three Months Ended September 30, 2020:

        

Automotive

     4,660,451        34,687        4,695,138  

Non-automotive

     2,363,965        586,156        2,950,121  
  

 

 

    

 

 

    

 

 

 

Total net sales

     7,024,416        620,843        7,645,259  
  

 

 

    

 

 

    

 

 

 

Three Months Ended September 30, 2019:

        

Automotive

     4,698,298        61,298        4,759,596  

Non-automotive

     2,608,597        820,712        3,429,309  
  

 

 

    

 

 

    

 

 

 

Total net sales

     7,306,895        882,010        8,188,905  
  

 

 

    

 

 

    

 

 

 

Nine Months Ended September 30, 2020:

        

Automotive

     10,653,621        107,476        10,761,097  

Non-automotive

     6,621,934        1,942,203        8,564,137  
  

 

 

    

 

 

    

 

 

 

Total net sales

     17,275,555        2,049,679        19,325,234  
  

 

 

    

 

 

    

 

 

 

Nine Months Ended September 30, 2019:

        

Automotive

     14,296,552        166,713        14,463,265  

Non-automotive

     8,406,167        2,816,602        11,222,769  
  

 

 

    

 

 

    

 

 

 

Total net sales

     22,702,719        2,983,315        25,686,034  
  

 

 

    

 

 

    

 

 

 

The following table presents revenue by segment, further disaggregated by location:

 

            Assembly         
     Fastener      Equipment      Consolidated  

Three Months Ended September 30, 2020:

        

United States

     5,909,756        603,858        6,513,614  

Foreign

     1,114,660        16,985        1,131,645  
  

 

 

    

 

 

    

 

 

 

Total net sales

     7,024,416        620,843        7,645,259  
  

 

 

    

 

 

    

 

 

 

Three Months Ended September 30, 2019:

        

United States

     6,252,110        823,137        7,075,247  

Foreign

     1,054,785        58,873        1,113,658  
  

 

 

    

 

 

    

 

 

 

Total net sales

     7,306,895        882,010        8,188,905  
  

 

 

    

 

 

    

 

 

 

Nine Months Ended September 30, 2020:

        

United States

     14,721,327        1,891,485        16,612,812  

Foreign

     2,554,228        158,194        2,712,422  
  

 

 

    

 

 

    

 

 

 

Total net sales

     17,275,555        2,049,679        19,325,234  
  

 

 

    

 

 

    

 

 

 

Nine Months Ended September 30, 2019:

        

United States

     19,443,934        2,731,126        22,175,060  

Foreign

     3,258,785        252,189        3,510,974  
  

 

 

    

 

 

    

 

 

 

Total net sales

     22,702,719        2,983,315        25,686,034  
  

 

 

    

 

 

    

 

 

 

 

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5. The Company’s effective tax rates were approximately 25.4% and 23.9% for the third quarter of 2020 and 2019, respectively. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act allows for the carryback of any net operating loss arising in a tax year beginning after December 31, 2017 and before January 1, 2021, to each of the five tax years preceding the tax year in which the loss arises. As a result, the Company’s effective tax rate was approximately (32.7)% for the nine months ended September 30, 2020 compared to 22.5% for the nine months ended September 30, 2019.

The Company’s federal income tax returns for the 2017, 2018 and 2019 tax years are subject to examination by the Internal Revenue Service (“IRS”). While it may be possible that a reduction could occur with respect to the Company’s unrecognized tax benefits as an outcome of an IRS examination, management does not anticipate any adjustments that would result in a material change to the results of operations or financial condition of the Company. No statutes have been extended on any of the Company’s federal income tax filings. The statute of limitations on the Company’s 2017, 2018 and 2019 federal income tax returns will expire on September 15, 2021, 2022 and 2023, respectively.

The Company’s state income tax returns for the 2017 through 2019 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2023. The Company is currently not under examination by any state authority for income tax purposes and no statutes for state income tax filings have been extended.

6. Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method. A summary of inventories is as follows:

 

     September 30, 2020      December 31, 2019  

Raw material

   $   2,067,234      $ 2,337,278  

Work-in-process

     1,500,319        1,201,099  

Finished goods

     1,913,253        1,869,800  
  

 

 

    

 

 

 

Inventories, gross

     5,480,806        5,408,177  

Valuation reserves

     (536,000      (457,000
  

 

 

    

 

 

 

Inventories, net

   $   4,944,806      $ 4,951,177  
  

 

 

    

 

 

 

 

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7. Segment Information—The Company operates in two business segments as determined by its products. The fastener segment includes cold-formed parts, rivets and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. Information by segment is as follows:

 

            Assembly                
     Fastener      Equipment      Other      Consolidated  

Three Months Ended September 30, 2020:

           

Net sales

   $ 7,024,416      $ 620,843      $ —        $ 7,645,259  

Depreciation

     297,533        32,869        8,377        338,779  

Segment operating profit

     783,234        103,759        —          886,993  

Selling and administrative expenses

     —          —          (493,370      (493,370

Interest income

     —          —          20,512        20,512  
           

 

 

 

Income before income taxes

            $ 414,135  
           

 

 

 

Capital expenditures

     28,165        —          92,140        120,305  

Segment assets:

           

Accounts receivable, net

     5,059,552        287,364        —          5,346,916  

Inventories, net

     3,880,189        1,064,617        —          4,944,806  

Property, plant and equipment, net

     10,381,970        1,588,157        1,064,667        13,034,794  

Other assets

     —          —          8,108,571        8,108,571  
           

 

 

 
            $ 31,435,087  
           

 

 

 

Three Months Ended September 30, 2019:

           

Net sales

   $ 7,306,895      $ 882,010      $ —        $ 8,188,905  

Depreciation

     305,082        32,507        9,742        347,331  

Segment operating profit

     605,503        336,320        —          941,823  

Selling and administrative expenses

     —          —          (563,705      (563,705

Interest income

     —          —          36,679        36,679  
           

 

 

 

Income before income taxes

            $ 414,797  
           

 

 

 

Capital expenditures

     267,179        2,576        —          269,755  

Segment assets:

           

Accounts receivable, net

     5,174,674        439,348        —          5,614,022  

Inventories, net

     4,294,760        1,181,573        —          5,476,333  

Property, plant and equipment, net

     11,126,165        1,715,513        949,254        13,790,932  

Other assets

     —          —          8,195,043        8,195,043  
           

 

 

 
            $ 33,076,330  
           

 

 

 

 

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            Assembly                
     Fastener      Equipment      Other      Consolidated  

Nine Months Ended September 30, 2020:

           

Net sales

   $ 17,275,555      $ 2,049,679      $ —        $ 19,325,234  

Depreciation

     891,177        98,607        25,132        1,014,916  

Segment operating profit

     533,742        319,340        —          853,082  

Selling and administrative expenses

     —          —          (1,547,606      (1,547,606

Interest income

     —          —          79,711        79,711  
           

 

 

 

Income (loss) before income taxes

            $ (614,813
           

 

 

 

Capital expenditures

     225,707        —          149,950        375,657  

Nine Months Ended September 30, 2019:

           

Net sales

   $ 22,702,719      $ 2,983,315      $ —        $ 25,686,034  

Depreciation

     907,887        92,884        29,227        1,029,998  

Segment operating profit

     1,681,703        988,196        —          2,669,899  

Selling and administrative expenses

     —          —          (1,705,159      (1,705,159

Interest income

     —          —          108,458        108,458  
           

 

 

 

Income before income taxes

            $ 1,073,198  
           

 

 

 

Capital expenditures

     1,307,859        228,900        26,025        1,562,784  

8. COVID-19—In March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the virus and the evolving response domestically and internationally to combat it have had a significant negative impact on the global economy, including the automotive industry upon which we rely for sales. Beginning in March, most states issued executive orders which temporarily closed businesses deemed non-essential in an effort to prevent the spread of the coronavirus. Similar measures also took place in foreign markets we serve. As a result, our operations and the operations of our customers and suppliers have been adversely affected. Since some of our customers are classified as essential businesses and were allowed to continue to operate during this period, we were able to continue our operations, but at a significantly reduced level, in order to service those customers. Our automotive customers were particularly affected, as much of the sector was idled for an extended period of time during the second quarter due to employee safety concerns. While most shut-down orders were lifted late in the second quarter, various work-related restrictions remain in place. Due to the rapidly changing business environment and heightened degree of uncertainty resulting from COVID-19, we have taken measures to reduce expenses and conserve capital during this period, including reduced work schedules, delayed capital expenditures and a reduction in dividend payments. We have seen improved demand since government-imposed restrictions were relaxed. However, the timing of any broad economic recovery is uncertain and will likely be tied to the course of the pandemic. As we cannot predict the duration or scope of the COVID-19 pandemic, or its broader impact on the global economy, including the demand for automobiles, it is unknown how long COVID-19 restrictions will remain in place or what the impact of COVID-19 and its related effects will be on our business, results of operations or financial condition, but the impact could be material and last for an extended period of time.

 

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CHICAGO RIVET & MACHINE CO.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Net sales for the third quarter of 2020 were $7,645,259 compared to $8,188,905 in the third quarter of 2019, a decline of $543,646, or 6.6%. As of September 30, 2020, year to date sales totaled $19,325,234 compared to $25,686,034, for the first three quarters of 2019, a decline of $6,360,800, or 24.8%. While third quarter sales have improved 86.3% compared to the preceding quarter, demand from our customers continues to be negatively impacted by the COVID-19 pandemic. Net income for the third quarter of 2020 was $309,135, or $0.32 per share, compared to $315,797, or $0.32 per share, in the third quarter of 2019. Net loss for the first three quarters of 2020 was $413,813, or $0.43 per share, compared with net income of $832,198, or $0.86 per share, reported in 2019.

Fastener segment revenues were $7,024,416 in the third quarter of 2020 compared to $7,306,895 in the year earlier quarter, a decline of $282,479, or 3.9%. The automotive sector is the primary market for our fastener segment products and much of that sector was idled for an extended period of time during the second quarter due to the COVID-19 pandemic. The resumption of operations in the automotive sector led to an increase in sales to our automotive customers of $3,082,963, or 195.4%, during the third quarter compared to the preceding quarter. Sales to our non-automotive customers, where COVID-related shut downs were not as widespread, also improved in the third quarter, increasing $427,711, or 22.1%, compared to the second quarter. For the first three quarters of 2020, fastener segment revenues were $17,275,555 compared to $22,702,719 in 2019, a decline of $5,427,164, or 23.9%. Sales to automotive customers have declined $3,642,931, or 25.5%, year to date while sales to non-automotive customers have declined $1,784,233, or 21.2%, compared to the previous year. The year to date decline is primarily related to the COVID-19 pandemic and the resultant economic recession. The rebound in fastener segment demand in the third quarter combined with cost savings measures taken earlier in the year resulted in an improvement in fastener segment gross margins of $165,608 compared to the third quarter of 2019. Year to date, gross margins have declined $1,326,837 compared to last year as reductions in all major categories of manufacturing costs were not able to offset the dramatic decline in sales brought about by the pandemic.

Assembly equipment segment revenues were $620,843 in the third quarter of 2020 compared to $882,010 in the third quarter of 2019, a decline of $261,167, or 29.6%. For the first nine months of 2020, assembly equipment segment sales were $2,049,679 compared to $2,983,315 for the same period in 2019, a decline of $933,636, or 31.3%. The decline in sales during the third quarter and the year to date was primarily due to the broad effects of the COVID-19 pandemic, but also due to the inclusion of certain high-dollar value machine orders in 2019. The reduction in revenue was the primary cause of the decline in assembly equipment segment gross margins to $160,841 in the third quarter of 2020 from $335,723 in the third quarter of 2019. For the first three quarters of the year, gross margins were $489,630 compared to $1,001,223 in 2019, a decline of $511,593.

Selling and administrative expenses for the third quarter of 2020 were $1,258,995 compared to $1,282,149 in the year earlier quarter, a decline of $23,154, or 1.8%. The net decline was primarily due to a reduction in profit sharing and compensation expenses of $24,000 and $14,000, respectively. These reductions were partially offset by an increase in consulting expenses related to an ERP system upgrade. Selling and administrative expenses for the first three quarters of 2020 were $3,758,752 compared to $3,931,510 for the same period of 2019, a reduction of $172,758, or 4.4%. While consulting expenses have increased $61,000 year to date related to an ERP system upgrade, this was more than offset by a $120,000 reduction in sales commissions, due to lower sales, and a $54,000 reduction in compensation expense and other smaller expense reductions. Selling and administrative expenses as a percentage of net sales for the first nine months of 2020 was 19.4% compared to 15.3% for the first nine months of 2019.

Other Income

Other income in the third quarter of 2020 was $32,637 compared to $47,179 in the third quarter of 2019. Other income for the first three quarters of 2020 was $122,869 compared to $145,208 in the same period of 2019. Other income consists primarily of interest income on certificates of deposit. The decreases were primarily due to lower interest rates in the current year compared to the year earlier periods.

 

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Income Tax Expense

The Company’s effective tax rates were approximately 25.4% and 23.9% for the third quarter of 2020 and 2019, respectively. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act allows for the carryback of any net operating loss arising in a tax year beginning after December 31, 2017 and before January 1, 2021, to each of the five tax years preceding the tax year in which the loss arises. As a result, the Company’s effective tax rate was approximately (32.7)% for the nine months ended September 30, 2020 compared to 22.5% for the nine months ended September 30, 2019.

Liquidity and Capital Resources

Working capital as of September 30, 2020 was $16.2 million, a decrease of $0.3 million from the beginning of the year. In an effort to conserve capital during to the pandemic, the quarterly dividend was reduced from $0.22 per share to $0.10 per share in the second quarter and capital expenditures have been reduced to $375,657 for the first nine months of 2020 from $1,562,784 in the same period of 2019. These actions have helped to offset the decline in capital caused by the year to date operating loss. The net result of these changes and other cash flow items was to leave cash, cash equivalents and certificates of deposit at $7.5 million as of September 30, 2020 compared to $8 million at the beginning of the year. Management believes that current cash, cash equivalents and operating cash flow will provide adequate working capital for the next twelve months.

Results of Operations Summary

Our results in the third quarter improved dramatically compared to the second quarter, as the harsh restrictions enacted globally to combat the spread of the COVID-19 pandemic were relaxed and world-wide economies began their recoveries. However, the pandemic is far from under control, and as a result, our operations and the operations of our customers and suppliers will continue to be adversely affected. As we cannot predict the duration or scope of the COVID-19 pandemic, or its broader impact on the global economy, including the demand for automobiles, it is unknown how long COVID-19 restrictions will remain in place or what the impact of COVID-19 and its related effects will be on our business, results of operations or financial condition, but the impact could be material and last for an extended period of time.

Forward-Looking Statements

This discussion contains certain “forward-looking statements” which are inherently subject to risks and uncertainties that may cause actual events to differ materially from those discussed herein. Factors which may cause such differences in events include, those disclosed under “Risk Factors” in our Annual Report on Form 10-K and in the other filings we make with the United States Securities and Exchange Commission. These factors, include among other things: risk related to the COVID-19 pandemic and its related adverse effects, conditions in the domestic automotive industry, upon which we rely for sales revenue, the intense competition in our markets, the concentration of our sales with major customers, risks related to export sales, the price and availability of raw materials, supply chain disruptions, labor relations issues, losses related to product liability, warranty and recall claims, costs relating to environmental laws and regulations, information systems disruptions, the loss of the services of our key employees and difficulties in achieving cost savings. Many of these factors are beyond our ability to control or predict. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

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CHICAGO RIVET & MACHINE CO.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and President, Chief Operating Officer and Treasurer (the Company’s principal financial officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and President, Chief Operating Officer and Treasurer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

(b) Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II — OTHER INFORMATION

Item 6. Exhibits

 

31    Rule 13a-14(a) or 15d-14(a) Certifications
31.1    Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.
31.2    Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.
32    Section 1350 Certifications
32.1    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101    Interactive Data File. Includes the following financial and related information from Chicago Rivet & Machine Co.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 formatted in Extensible Business Reporting Language (XBRL): (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Income, (3) Condensed Consolidated Statements of Stockholders’ Equity, (4) Condensed Consolidated Statements of Cash Flows, and (5) Notes to Condensed Consolidated Financial Statements.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

      CHICAGO RIVET & MACHINE CO.
                       (Registrant)
Date: November 6, 2020      
      /s/ Walter W. Morrissey
      Walter W. Morrissey
      Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
Date: November 6, 2020      
      /s/ Michael J. Bourg
      Michael J. Bourg
      President, Chief Operating
Officer and Treasurer
(Principal Financial Officer)

 

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