CHICAGO RIVET & MACHINE CO

Current report

Sales for the three months ended March 31, 2025 were $7,245,635 compared to $7,853,181 for the three months ended March 31, 2024, a decrease of $607,546 or 7.7%. Sales for both the fastener and assembly equipment segments decreased in the three months ended March 31, 2025 by $564,883 or 8.4%, and $42,663 or 3.8%, respectively, compared to the three months ended March 31, 2024. Although overall sales were down, gross margins improved year-over-year by $612,530 in the fastener segment, and $300,649, in the assembly equipment segment. The improvement in gross margins was driven by the continued implementation of a revised pricing structure started in 2024, reduction in certain operating costs, and increased efficiency following the consolidation of the Albia operations into the Tyrone manufacturing facility, which lowered production costs through enhanced economies of scale. In addition to the improvement in gross margins, year-over-year selling and administrative expenses were lower by $60,298 reflecting efforts at continued cost discipline and operational efficiency. Other income was also higher by $322,738 primarily driven by the sale of the Albia manufacturing facility which resulted in the recording of a one-time gain of $339,520. These factors collectively contributed to a net income of $401,022 or $0.42 per share in the three months ended March 31, 2025, compared to a net loss of $698,004 or $0.72 per share in the three months ended March 31, 2024

Current report

Fastener segment sales were $6,158,971 for the three months ended March 31, 2025 compared to $6,723,854 for the three months ended March 31, 2024, a decline of $564,883 or 8.4%. The automotive sector is the primary market for our fastener segment products, and sales to automotive customers were $3,798,658 for the three months ended March 31, 2025 compared to $4,629,190 for the three months ended March 31, 2024, a decrease of $830,532, or 17.9% primarily due to a slowdown in North American vehicle production and continued volatility across the Midwest automotive manufacturing sector. Industry-wide production fell sharply in January 2025, leading to reduced order volumes from key original equipment manufacturers. In addition, elevated interest rates and ongoing economic uncertainty contributed to softer consumer demand, prompting inventory adjustments and cautious procurement behavior among our automotive customers. In contrast, fastener segment sales to non-automotive customers, including those in the construction and electronics industries, were $2,360,313 for the three months ended March 31, 2025 compared to $2,094,564 for the three months ended March 31, 2024, an increase of $265,749 or 12.7% reflecting the successful execution of a strategic pivot by our sales team. In response to softening demand in the automotive sector, the sales team proactively expanded outreach to customers in industrial, construction, and consumer goods markets, which are segments that have historically demonstrated more stable demand profiles amid broader economic headwinds.

Current report

Assembly equipment segment sales were $1,086,664 for the three months ended March 31, 2025 compared to $1,129,327 for the three months ended March 31, 2024, a decrease of $42,663, or 3.8%. Both automotive and non-automotive assembly equipment sales decreased in this segment by $6,554 and $36,109, respectively, year-over-year. These modest declines reflect timing-related factors in customer purchasing cycles as well as project delays stemming from cautious capital investment trends across multiple industries. Although sales declined year-over-year, the assembly equipment gross margin increased by $300,649 during the period. This margin expansion reflects the Company’s ongoing efforts to enhance operational efficiency and reduce its cost structure, with the consolidation of the Albia operations into the Tyrone manufacturing facility yielding meaningful cost savings through streamlined workflows, increased capacity utilization, and reduced overhead.

Current report

The Company’s effective tax rates were approximately 4.9% and 20.2% for the three months ended March 31, 2025 and 2024, respectively. See Note 5. Income taxes to the Condensed Consolidated Financial Statements included herein for additional information.

Current report

Working capital was $10,730,266 as of March 31, 2025, compared to $10,371,215 at the beginning of the year, an increase of $359,051, or 3.5%.

Current report

The Company has incurred significant recurring operating losses primarily driven by continuous decline in revenues, recurring negative cash flows from operations and continued reduction in liquidity. The Company reported operating income of $70,174 and operating loss of $903,303 for the three months ended March 31, 2025 and 2024, respectively. The Company’s liquid assets at March 31, 2025 consist of cash and cash equivalents totaling $765,645. The Company’s declining revenues, recurring operating losses and negative cash flows, and continued reduction in liquidity, raise substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of these financial statements. In response, the Company has taken various strategic actions including (i) investing resources in the Company's sales efforts to increase revenues, including the recent hiring on May 1, 2025 of Mr. James T. Tanner as the Company's new Senior Vice President of Sales and Marketing, effective immediately. Mr. Tanner brings over 30 years of sales and leadership experience in manufacturing and spent over 10 years in the fastener industry, (ii) executing on the sale of Albia real estate in February 2025, which generated net cash proceeds of approximately $678,000, and the October 2024 consolidation of the Albia operations into the Tyrone manufacturing facility, enhancing economies of scale and contributing towards improved margins from cost reductions, 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 seek to enhance its sales efforts to further improve revenue, 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 the Company will successfully implement these strategic actions. As a result, there remains substantial doubt 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

As of March 31, 2025, the Company had an aggregate borrowing capacity under its committed revolving credit facility of $2,500,000. This facility includes certain financial covenants such as minimum profitability for the twelve months ending December 31, 2025, and minimum tangible net worth. As of March 31, 2025 the Company was in compliance with all such financial covenants. See Note 10. Debt to the Condensed Consolidated Financial Statements included herein for additional information.

Current report

On May 2, 2025, the Company borrowed $500,000 under its revolving line of credit to support working capital and general corporate purposes.

Current report

The Company also had outstanding total operating lease obligations of $429,810 of which $67,526 were classified as current within Other current liabilities in the Condensed Consolidated Balance Sheets. See Note 7. Leases to the Condensed Consolidated Financial Statements included herein for additional information.

Current report

Outlook for 2025

Current report

With respect to the Outlook for 2025, the economic environment remains challenging. Our order volume showed improvement in the first quarter of 2025 compared to the fourth quarter of 2024 but it is not yet at 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 and the business of our customers in the coming year. In particular, we have taken the uncertainty created by tariffs as an opportunity to actively engage with both current and potential customers on ways in which we can work with them to help meet their needs in the current economic environment. We intend to remain actively engaged with current and potential customers to help strengthen relationships with existing customers and build relationships with new customers. In addition, the Company believes the actions taken in 2024 to reduce costs have better positioned the Company to manage the uncertainty noted above, and we will continue to seek efficiency improvements in our operations as well as appropriate price adjustments from customers while aggressively pursuing new sales opportunities to drive volume back to historic levels. We will also continue to 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. We believe that our recent efficiency improvements and our focus on driving new sales, as well as our long term operating history in a very competitive global marketplace, quality products, and customer service, will provide the foundation for improved operating results in the future.

Previous report

Net sales for the third quarter of 2024 were $6,969,921 compared to $7,946,172 in the third quarter of 2023, a decrease of $976,251 or 12.3%. Assembly equipment segment sales increased $73,874 which slightly offset the $1,050,125 decline in fastener segment sales for the current year quarter. Although overall net sales were down compared to the third quarter of 2023, gross margins for both the fastener and assembly equipment segments improved in the current quarter. This improvement resulted from the improved pricing that the Company obtained earlier in the year, a reduction in certain operating costs and improved operating efficiency. However, the lower revenue level, deferred tax expense of $651,196 discussed in Note 5 above, and certain selling and administrative expenses had a negative impact on earnings for the third quarter of 2024. As a result, the Company recorded a net loss of ($1,446,621), or ($1.50) per share for the third quarter 2024, compared to a net loss of $(964,042), or $(1.00) per share, in the third quarter of 2023. During the third quarter of 2024, a regular quarterly dividend of $0.10 per share was paid on September 20, 2024, to shareholders of record on September 5, 2024.

Previous report

For the first nine months of 2024, net sales totaled $22,882,579 compared to $24,726,828 in the first nine months of 2023, a decrease of $1,844,249, or 7.5%. The net loss for the first nine months of 2024 was ($2,002,484), or ($2.07) per share, compared to a net loss of ($2,858,685) or ($2.96) per share, for the same period in 2023.

Previous report

Fastener segment revenues were $5,927,316 in the third quarter of 2024 compared to $6,977,441 in the third quarter of 2023, a decline of $1,050,125 or 15.1%. The automotive sector is the primary market for our fastener segment products, and sales to automotive customers were $3,578,390 in the third quarter this year compared to $5,184,547 in the third quarter of 2023, a decrease of $1,606,157, or 31.0%. Additionally, fastener segment sales to non-automotive customers, including those in the construction and electronics industries, were $2,348,926 in the third quarter of this year compared to $1,792,894 in the third quarter of 2023, an increase of $556,062 or 31.0%. Fastener segment gross margins were $703,955 in the third quarter of 2024 compared to $(161,831) in the third quarter of 2023, an increase of $865,786. Despite significantly lower volumes from the automotive fastener segment, this gross margin improvement is due, as noted above, to price increases secured since the end of the third quarter of 2023, certain operating cost reductions and improved efficiency.

Previous report

For the first nine months of 2024, fastener segment revenues were $19,560,720 compared to $22,195,367 in the first nine months of 2023, a decline of $2,634,647, or 11.9%. On a year-to-date basis fastener segment operating profit was $195,190 compared to an operating loss of $(353,158) in the first nine months of 2023, an increase of $584,348. This gross margin improvement was due to price increases, operational efficiencies and cost reduction projects.

Previous report

Assembly equipment segment revenues were $1,042,605 in the third quarter of 2024 compared to $968,731 in the third quarter of 2023, an increase of $73,874, or 7.6%. Both automotive and non-automotive assembly equipment revenue increased in this segment by $2,023 and $71,851 respectively over the same period last year. The increase in sales contributed to a $508,177, or 250.4%, improvement in segment gross margin, from $202,984 in 2023 to $711,161 in 2024.

Previous report

For the first nine months of 2024, assembly equipment revenues were $3,321,859 compared to $2,531,461 in the first nine months of 2023, an increase of $790,398, or 31.2%. During the first nine months of 2024, assembly equipment operating profit was $575,173 compared to $542,778 in the first nine months of 2023, an increase of $32,395.

Previous report

As previously disclosed, the Company was recently notified by one of its customers that certain fasteners manufactured by the Company’s wholly-owned subsidiary, H&L Tool Company Inc., may not conform to customer specifications. These fasteners become part of an assembly that is ultimately used in the braking system of certain vehicles. Based on information provided to the Company by the customer and the Company’s internal review, we understand that it was necessary for the customer to identify and sort the non-conforming parts in its inventory and take certain other related actions as a result of the alleged non-conforming parts. The customer has also indicated that its end customer has incurred costs relating to the alleged defective part, including costs to repair certain of the vehicles that included these non-conforming fasteners. Based on discussions with our customer as to the scope of the actions taken by the customer to date and the Company’s own internal analysis to date, we determined an estimate of $243,000 as a contingent liability in our financial statements during the three months ended March 31, 2024, in anticipation of potential reimbursement of certain expenses that the customer may have incurred as a result of the non-conforming parts. Our discussions with the customer and our internal review process are ongoing, and the ultimate amount of such liability, if any, may be more or less than the amount reflected in our financial statements for the second quarter of 2024.

Previous report

The Company may also incur additional potentially significant costs related to this issue, which could materially and adversely affect our results of operations and financial condition. At this time, the Company cannot quantify potential additional financial liability, if any, due to the ultimate costs that may or may not be incurred by the parties involved in this matter, and the allocation of those costs among the parties involved. It is not possible at this time to establish the ultimate amount of any such contingent liabilities, including those related to any legal proceedings that may result related to this matter. Accordingly, no additional amount has been accrued in our financial statements at September 30, 2024.

Previous report

Other Income

Previous report

Income Tax Expense

Previous report

The Company’s effective tax rates were approximately (81.9)% and 20.7% for the third quarter of 2024 and 2023, respectively, and (32.0)% and 23.2% for the nine months ended September 30, 2024 and 2023, respectively.

Previous report

Working capital was $12,838,707 as of September 30, 2024, compared to $13,976,864 at the beginning of the year, a decline of $2,190,540. Contributing to that decline were capital expenditures during the first nine months of $709,396, which primarily consisted of equipment used in production activities, and dividends paid of $96,613. The net result of these changes and other cash flow activity was to leave cash, cash equivalents and short-term investments at $2,161,917 as of September 30, 2024, compared to $3,158,195 as of 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.

Previous report

Results of Operations Summary

Previous report

The Company's automotive fastener segment volumes have experienced a significant decline during 2024, when compared to 2023. This segment volume decline has mitigated our pricing relief efforts, productivity gains and overall operating profit improvement. The reduced automotive fastener segment volume has been driven primarily by overall inventory reductions from our largest automotive customers as light vehicle production was weak in the third quarter, declining by close to 5% globally. Non-automotive fastener and non-automotive assembly equipment segments continue to outpace prior period comparisons and we believe both represent future opportunities for growth and profitability. While we anticipate automotive fastener segment business conditions and volume demand for the remainder of 2024 to reflect the current trend, we expect to leverage our cost structure and improved operating efficiencies once these customer platform volumes return to normal levels. Additionally, we intend to continue to seek to drive growth in our non-automotive fastener and assembly equipment segments.

Previous report

Forward-Looking Statements