CHICAGO RIVET & MACHINE CO
For the period ended Dec 31, 2024. Filed Mar 28, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 28, 2025
CVR$10.51+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-28.
0001193125-24-080560
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-28.
0000950170-25-046656
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 31 previous paragraphs and 32 current paragraphs.
10 unchanged; 12 reworded; 10 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
RESULTS OF OPERATIONS
Current report
Operating results for 2024 were negatively impacted by our U.S. automotive fastener segment volumes due to OEM and customer inventory reduction actions which accelerated in the second half of 2024. U.S. demand for pickup trucks and large SUVs to which we provide content, softened in 2024 leading to elevated dealer-owned inventory levels and a subsequent reduction in production volumes while these inventory levels were reduced. As a fastener manufacturer we have significant fixed costs due to our investment in property, plant and equipment as well as a skilled labor force that cannot be scaled in proportion to short term volume fluctuations. As a result, steep declines in customer volumes have a disproportionately large effect on our profitability. Despite the full year 18% volume decline, the automotive fastener segment gross profit improved by $1,567,232. This improvement was due in large part to price increases and efficiency gains, including consolidation of the work done in the Albia, Iowa facility into the Tyrone, Pennsylvania facility. While these year over year volume declines were a tremendous headwind to profitability, we believe we have improved the framework from a pricing and efficiency standpoint to benefit at scale when volumes return to more historic levels. In addition, the accounting treatment for the payment of the aggregate amounts due under the previously disclosed agreement with one of our customers relating to certain warranty claims resulted in a reduction to 2024 revenue of $1.1 million.
Current report
Fourth quarter 2024 sales were $4,104,048 compared to $6,780,894 in the fourth quarter of 2023, a decline of $2,676,846, or 40%. Together with the decline in sales, our input costs remained elevated and contributed to reporting a net loss in the fourth quarter 2024 of $3,613,130, or $3.74 per share, compared to a net loss of $1,542,899, or $1.60 per share, in the fourth quarter of 2023. For the full year, net sales were $26,986,627 compared to $31,507,722 in 2023, a decline of $4,521,095, or 14%. Net loss for the full year was $5,615,614, or $5.81 per share, compared to net loss of $4,401,584 or $4.56 per share in 2023. Contributing to the full year 2024 net loss was the addition of a deferred tax valuation allowance of $1,640,978 that resulted in $572,226 in income tax expense on a pre-tax loss of $5,043,388.
Current report
Fastener segment revenues were $3,603,518 in the fourth quarter of 2024 compared to $5,965,995 in the fourth quarter of 2023, a decline of $2,362,477, or 40%. During the quarter, sales to automotive customers decreased to $2,325,601 from $4,147,072 in the year ago quarter. A significant portion of the decline in automotive sales was a result of recording a charge of $1,100,000 in the fourth quarter of 2024 related to the previously disclosed agreement with a customer regarding certain warranty claims. See Note 9. Commitments and Contingencies to the Consolidated Financial Statements included herein. Non-automotive revenues also decreased to $1,277,917 from $1,818,923 in the year ago quarter, or 30%.
Current report
Assembly equipment segment revenues were $500,530 in the fourth quarter of 2024, compared to $814,899 in the fourth quarter of 2023, a decrease of $314,369, or 39%. The decline was driven by lower volumes to non-automotive customers which decreased by $308,526.
Current report
For the full year 2024, assembly equipment segment revenues were $3,822,389, compared to $3,346,360 reported in 2023, an increase of $476,029, or 14%. Gross margin for the assembly equipment segment was $760,440 in 2024 compared to $667,902 in 2023, an increase of $92,538 or 14% year over year.
Current report
The Company incurred significant recurring operating losses primarily driven by a continuous decline in revenues, recurring negative cash flows from operations, and continued reduction in liquidity. The Company reported operating losses of $5,164,054 and $5,837,246 for the years ended December 31, 2024 and December 31, 2023, respectively. These events have raised substantial doubt about the Company's ability to continue as a going concern. The Company has taken various strategic actions in response to improve performance, including (i) investing resources in the Company’s sales efforts to increase revenue, (ii) reducing costs and improving operating efficiency, including by closing the Company’s Albia, Iowa plant, consolidating Albia’s operations with the Company’s Tyrone operations and selling the Albia facility for total net cash proceeds of approximately $678,000, and (iii) entering into a one-year, $3,000,000 operating credit agreement, renewable annually, and consisting of a (a) $2,500,000 revolving line of credit, and (b) $500,000 non-revolving line of credit, bearing interest at a fluctuating rate per annum equal to 1% plus the applicable prime rate, with a floor of 7% (the loan can be prepaid without penalty). The Company will continue to look to add to its sales efforts to further improve revenue, consider additional options to improve operating efficiency and enhance liquidity. The Company believes that if it successfully implements the foregoing strategic actions, it will mitigate the factors giving rise to substantial doubt, however, there is no guarantee that it will successfully implement these strategic actions. As a result, substantial doubt remains regarding the Company’s ability to continue as a going concern.
Current report
The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern, and they do not include any adjustments that might result from the outcome of this uncertainty.
Current report
On November 30, 2024, the Company entered into a lease agreement with Juneau-Bell, LLC for new office space. The lease commencement date is March 1, 2025. A security deposit of $43,970 and the first month’s base rent of $8,365 were paid at signing. See Note 7. Leases to the Consolidated Financial Statements included herein for additional information.
Current report
With respect to the Outlook for 2025, the economic environment remains challenging. Our order volume is showing improvement in the first quarter of 2025 compared to the fourth quarter of 2024 but is not yet back to the levels we experienced in the first quarter of 2024. Significant uncertainty remains in the manufacturing sector as companies like ours continue to navigate the potential impacts of proposed tariffs and numerous market factors that may impact our business in the coming year. The Company believes all of the actions to reduce costs in 2024 have it better positioned to manage this uncertainty, and we will continue to push efficiency improvements in the operations as well as seek appropriate price adjustments from customers and aggressively pursue new sales opportunities to drive volume back to historic levels. In addition, we will actively monitor and analyze potential impacts from tariffs and other external factors so that we are positioned to take actions promptly and as necessary to address such potential impacts. Given our recent efficiency improvements and our focus on driving new sales, as well as our long term operating experience, quality products, and customer service in a very competitive global marketplace will provide the foundation for improved operating results in the future.
Removed paragraphs (9)
Previous report
Operating results for 2023 continued to be impacted by commodity and overall economic inflationary factors. While automotive demand remained relatively steady overall during 2023, our timing in obtaining economic relief under restrictive automotive contracts, which are common in the market, lagged the pace of volatility and significantly impacted our margins. Abrupt changes in market prices of certain key materials and other production costs resulted in profitability challenges as we worked with our customers to mitigate the impact. In particular, the process of obtaining updated pricing from customers, to reflect the Company’s increased operating costs, takes significant time to complete. As a result, in the interim as the Company has sought to update pricing, its margins have been negatively impacted. Additionally, non-automotive volumes declined year over year. While we have seen improvement in the labor market since the beginning of the year and raw material pricing has receded from historic highs, most of our production-related expenses remain elevated year over year. These conditions are expected to persist in the near term and our focus remains on updating pricing and improving efficiency while pursuing opportunities and relationships in the markets we serve. Fourth quarter sales were $6,780,894 compared to $6,857,154 in the fourth quarter of 2022, a decline of $76,260, or 1.1%. While the decline in sales was relatively minor our input costs remained elevated and contributed to reporting a net loss in the fourth quarter of $1,542,899, or $1.60 per share, compared to a net loss of $1,312,648, or $1.36 per share, in the fourth quarter of 2022. For the full year, net sales were $31,507,722 compared to $33,646,033 in 2022, a decline of $2,138,311, or 6.4%. Net loss for the full year was $4,401,584, or $4.56 per share, compared to net income of $2,867,629, or $2.97 per share in 2022. The positive figure for 2022 includes a pre-tax gain on the sale of our Naperville, Illinois property of $4,738,394 that was reported in the third quarter.
Previous report
Assembly equipment segment revenues were $814,899 in the fourth quarter of 2023, compared to $584,674 in the fourth quarter of 2022, an increase of $230,225, or 39.3%. For the full year 2023, assembly equipment segment revenues were $3,346,360, compared to $3,354,486 reported in 2022, a decrease of $8,126, or 0.2%. While assembly equipment revenues remained flat year over year gross margins increased to $667,902 or 3.0% from $648,220 in 2022.
Previous report
As previously disclosed in a Current Report on Form 8-K filed on September 30, 2022, we sold our Naperville, Illinois facility in which the Company’s headquarters and warehouse space is located for a selling price of $5,350,000 in cash, less customary closing costs. Concurrently with the completion of the sale, the Company entered into a lease agreement with the purchaser pursuant to which the Company leased the office and warehouse portion of the Naperville facility from the purchaser until December 31, 2022 and after extension will lease the office portion until December 31, 2024. The monthly rent payable by the Company under the Lease for 2023 was $8,500. The sale was undertaken in order to take advantage of favorable market conditions and to reduce the occupancy space devoted to the Company’s administrative functions.
Previous report
Management believes that current cash, cash equivalents and operating cash flow will be sufficient to provide adequate working capital for the next twelve months.
Previous report
Off-Balance Sheet Arrangements
Previous report
The Company has not entered into, and has no current plans to enter into, any off-balance sheet financing arrangements.
Previous report
Operating results for 2023 were negatively impacted by a number of factors, which the Company’s new management team has been working diligently to address. We are committed to addressing these factors and returning to profitability. Operating costs have continued to increase significantly, particularly raw material, tooling, labor, and outside processing costs. Increases that were historically transient have become persistent. As a result, we have engaged in a thorough review of existing pricing and customer contracts and management remains actively engaged with our existing customers to ensure that our pricing reflects current economic conditions. We have had success in many of these interactions in 2023, however, there is still work to be done to ensure that all of our contracts are structured to allow for a return to profitability. We are committed to these efforts to update our pricing, and in connection with these efforts, will continue to evaluate our product lines and customer relationships to seek to identify opportunities to improve our margins and profitability. In addition to the pricing actions described above, we have also initiated reviews within each of our operating segments to ensure that we have a competitive cost structure and pursue actions for further cost and inventory reduction and cash flow improvement. We are also focused on increasing sales to existing and new customers. Assembly equipment revenues and profitability were a bright spot in 2023 and will remain a focus for 2024. Automotive volumes remained steady year over year, however, non-automotive demand decreased significantly. We are committed to identifying and executing on opportunities to expand existing customer relationships and to build new customer relationships going forward. In addition, we note that we increased our capital expenditures in 2023 over the previous year and expect to see the benefits of those investments in the future.
Previous report
As previously disclosed in the Current Reports on Forms 8-K that we filed during 2023, a new but experienced management team has been put in place to lead the Company in the next stage of our journey. Gregory D. Rizzo was hired as the Company’s Chief Executive Officer in May 2023, and Joel Brown and Bill Stlaske joined the Company as Chief Financial Officer and Vice-President of Sales, respectively, in November of 2023. In addition, Michael J. Bourg, previously President and Chief Operating Officer of the Company, retired in December 2023. We appreciate Mr. Bourg’s efforts on behalf of the Company. With an experienced leadership team in place, the Company will focus on the pricing and cost actions discussed above, with a renewed focus on increasing sales with our existing customers as well as identifying new customers, products, and markets for existing products.
Previous report
We believe that our sound financial condition, long history of success in a variety of challenging circumstances, as well as our experience, quality, and customer service in a very competitive global marketplace will provide the foundation for improved operating results in the future. We are grateful for the contributions of all our dedicated employees in what was again a very challenging year. We would like to recognize two key contributors who will be retiring in 2024: Michael P. Sweitzer from the Tyrone Pennsylvania facility who has been with the Company for 47 years, including 30 years as the Plant Manager, and Kimberly A. Kirhofer, Corporate Secretary, who has been with the Company for 41 years. These individuals have exemplified loyalty, dedication and commitment to the Company that are hallmarks of our employees and that have been, and remain, critical to the Company’s success. We remain grateful to all our customers and shareholders that continue to support and believe in the Company.
Reworded paragraphs (12)
Previous wording
** Financial Condition and Results of Operations**
Current wording
ITEM 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Previous wording
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 above under “Risk Factors” and elsewhere in this Form 10-K. As stated elsewhere in this filing, such factors include, among other things: risk related to conditions in the domestic and international 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 and rising costs, losses related to product liability, warranty and recall claims, costs relating to compliance with environmental laws and regulations, information systems disruptions and the threat of cyber attacks, and the loss of the services of our key employees. 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 unless required under the federal securities laws.
Current wording
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 above under “Risk Factors” and elsewhere in this Form 10-K. As stated elsewhere in this filing, such factors include, among other things: risk related to conditions in the domestic and international 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 and rising costs, losses related to product liability, warranty and recall claims, costs relating to compliance with environmental laws and regulations, information systems disruptions and the threat of cyber-attacks, and the loss of the services of our key employees. Many of these factors are beyond our ability to control or predict. Readers are cautioned to not 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 unless required under the federal securities laws.
Previous wording
Fastener segment revenues were $5,965,995 in the fourth quarter of 2023 compared to $6,272,480 in the fourth quarter of 2022, a decline of $306,485, or 4.9%. During the quarter, sales to automotive customers decreased fractionally to $4,147,072 from $4,185,600 in the year earlier quarter. Slightly lower volumes were offset by new pricing agreements put in place during the mid to latter half of the quarter. Non-automotive revenues also decreased fractionally to $1,818,923 from $2,086,880 in the year earlier quarter. Fastener segment revenues for the full year 2023 were $28,161,362 compared to $30,291,547 in 2022, a decrease of $2,130,185, or 7.0%. For the full year 2023, sales to automotive customers were $19,297,188 compared to $18,454,238 in 2022, an increase of $842,950, or 4.6%. Sales to non-automotive customers in 2023 were $8,864,174 compared to $11,837,309 in 2022, a decline of $2,973,135, or 25%. The modest increase in automotive sales was primarily a result of new pricing agreements secured in the fourth quarter of 2023 but were more than offset by higher input costs experienced during the entire year. Overall, non-automotive fastener volume declined year over year. As a result, gross margin for the fastener segment was $(1,267,492) in 2023 compared to $3,167,104 in 2022.
Current wording
Fastener segment revenues for the full year 2024 were $23,164,238 compared to $28,161,362 in 2023, a decrease of $4,997,124, or 18%. For the full year 2024, sales to automotive customers were $15,375,697 compared to $19,297,188 in 2023, a decrease of $3,921,491, or 20%. Sales to non-automotive customers in 2024 were $7,788,541 compared to $8,864,174 in 2023, a decline of $1,075,633, or 12%. New pricing agreements put in place during the first half of the year were more than offset by lower volumes, and higher input costs continued to be a headwind during the entire year. Additionally, automotive sales were impacted by the agreement to pay an aggregate of $1,100,000 in 2024 to one of our customers with respect to certain warranty claims described above. The gross margin for the fastener segment was $299,740 in 2024 compared to ($1,267,492) in 2023, an increase of $1,567,232 year over year, primarily driven by operational efficiencies and improved pricing on lower year-over-year volumes.
Previous wording
Selling and administrative expenses were $5,237,656 in 2023 compared to $4,992,521 in 2022, an increase of $245,135, or 4.9%. We incurred an increase in outside consulting of $292,625, primarily related to hiring costs to fill certain positions, an increase in employee compensation expense of $250,133 as these positions were filled and increase in rent expense of approximately $64,150, primarily related to the lease agreement entered into upon the sale of the Naperville facility in the third quarter of 2022. These, and other smaller expense increases, were offset by a reduction in director fees and commissions of $275,677 and $203,464, respectively. The remaining net change relates to various smaller items. As a percentage of net sales, selling and administrative expenses were 16.6% in 2023 compared to 14.8% in 2022.
Current wording
Selling and administrative expenses were $6,224,234 in 2024 compared to $5,237,656 in 2023, an increase of $986,578, or 19%. We incurred increases in outside consulting and accounting fees of $555,838, primarily related to hiring costs to fill certain positions, enhancing financial reporting, modernizing systems, automating processes and implementing enhanced cybersecurity defenses, an increase in employee compensation expense of $109,464 as these positions were filled, and an increase in repairs and maintenance of approximately $96,036. These, and other smaller expense increases, were offset by a reduction in sales commissions of $254,677. The remaining net change relates to various smaller items. As a percentage of net sales, selling and administrative expenses were 23.1% in 2024 compared to 16.6% in 2023.
Previous wording
Other income was $108,234 in 2023 compared to $91,433 in 2022. Other income is primarily comprised of interest income on our cash equivalents which increased modestly during the year due to higher interest rates.
Current wording
Other income was $120,666 in 2024 compared to $108,234 in 2023. Other income is primarily comprised of interest income on our cash equivalents which increased modestly during the year due to higher interest rates.
Previous wording
The Company’s effective income tax rates were 23.2% and 21.5% in 2023 and 2022, respectively.
Current wording
The Company’s effective income tax rates were (11.4)% and 23.2% in 2024 and 2023, respectively. Fiscal 2024 resulted in $572,226 of tax expense on a pre-tax loss of $5,043,388. While the company is in a book and taxable loss, there is tax expense due to deferred tax liabilities that are recorded. Additionally, there was an increase in valuation allowance of $1,640,978 recorded on deferred tax assets booked in a prior year, which results in tax expense incurred in the current year.
Previous wording
In determining to pay dividends, the Board considers current profitability, the outlook for longer-term profitability, known and potential cash requirements and the overall financial condition of the Company. The Company paid four regular quarterly dividends in 2023 totaling $0.64 per share. On February 19, 2024, the Board of Directors declared a regular quarterly dividend of $0.10 per share, payable March 20, 2024 to shareholders of record on March 5, 2024. This continues the uninterrupted record of consecutive quarterly dividends paid by the Company to its shareholders that extends over 90 years.
Current wording
In determining to pay dividends, the Board considers current profitability, the outlook for longer-term profitability, known and potential cash requirements and the overall financial condition of the Company. The Company paid four regular quarterly dividends in 2024 totaling $0.33 per share. On February 19, 2025, the Board of Directors declared a regular quarterly dividend of $0.03 per share, payable March 20, 2025 to shareholders of record on March 5, 2025. This continues the uninterrupted record of consecutive quarterly dividends paid by the Company to its shareholders that extends over 90 years.
Previous wording
Capital expenditures in 2022 were $969,943. Fastener segment additions accounted for $868,654 of the total, including $92,880 for cold heading and screw machine equipment, $208,028 for equipment to perform secondary operations and inspection of parts and $215,540 for general plant equipment. The remaining $352,206 of fastener segment additions related to building improvements. Assembly equipment segment additions in 2022 were $3,207 for IT equipment. Investments for the benefit of both operating segments, primarily for building improvements, totaled $98,082 during 2022.
Current wording
Total capital expenditures in 2024 were $651,398. Of this total, $369,003 related to fastener segment activities, including $36,140 for cold heading and screw machine equipment, $327,063 for equipment to perform secondary operations and inspection of parts and $5,800 for general plant equipment. Assembly equipment segment additions in 2024 were $282,395 for general plant equipment. No additional investments were made in 2024 for facilities improvements or IT equipment.
Previous wording
Depreciation expense was $1,275,078 in 2023 and $1,279,870 in 2022.
Current wording
Depreciation expense was $1,173,476 in 2024 and $1,275,078 in 2023.
Previous wording
Working capital at December 31, 2023 was $13,976,864, a decrease of $6,096,225 from the beginning of the year. A decline in net accounts receivable during the year of $699,255 and a decrease in inventory of $1,793,577 had a negative impact on working capital. The Company’s investing activities in 2023 included the proceeds from the sale of property and equipment of $50,422 and the net maturities from short-term investments of $919,880 less capital expenditures of $1,078,367. The only financing activity during 2023 was the payment of $618,325 in dividends on our common stock. These changes and other cash flow activity resulted in a balance of cash, cash equivalents and certificates of deposit of $3,158,195 at the end of 2023 compared to $6,736,101 as of the beginning of the year.
Current wording
Working capital at December 31, 2024 was $10,371,215, a decrease of $3,605,649 from the beginning of the year. A decline in net accounts receivable during the year of $1,180,971 due to lower sales volumes and a decrease in inventory of $831,483 had a negative impact on working capital. The Company’s investing activities in 2024 included the proceeds from the sale of property and equipment of $135,430 and the net maturities from short-term investments of $1,523,846 less capital expenditures of $651,398. The only financing activity during 2024 was the payment of $318,823 in dividends on our common stock. These changes and other cash flow activity resulted in a balance of cash, cash equivalents and marketable securities of $1,922,679 at the end of 2024 compared to $1,387,075 as of the beginning of the year.
Previous wording
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on historical experience, current trends and on various other assumptions that are believed to be reasonable under the circumstances. We evaluate our estimates and judgments required by our policies on an ongoing basis and update them as appropriate based on changing conditions. A summary of significant accounting policies can be found in Note 1 of the financial statements.
Current wording
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on historical experience, current trends and on various other assumptions that are believed to be reasonable under the circumstances. We evaluate our estimates and judgments required by our policies on an ongoing basis and update them as appropriate based on changing conditions. A summary of significant accounting policies can be found in Note 1. Nature of Business and Significant Accounting Policies to the Consolidated Financial Statements included herein.
Previous wording
The Company’s financial statements and financial condition were not, and are not expected to be, materially impacted by new, or proposed, accounting standards. A summary of recent accounting pronouncements can be found in Note 1 of the financial statements.
Current wording
The Company’s financial statements and financial condition were not, and are not expected to be, materially impacted by new, or proposed, accounting standards. A summary of recent accounting pronouncements can be found in Note 1. Nature of Business and Significant Accounting Policies to the Consolidated Financial Statements included herein.