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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 March 31, 2022
OR
o 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
(State or other jurisdiction
of incorporation or organization)
|
36-0904920
I.R.S. Employer
Identification Number
|
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 ý No o
Indicate by check
mark whether the registrant has submitted electronically, every
interactive data file required to be submitted 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 such files). Yes ý No o
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 fileroAccelerated
filero
Non-accelerated
filerýSmaller
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 ý
As of May 4, 2022,
there were 966,132 shares of the registrant’s common stock
outstanding.
CHICAGO RIVET & MACHINE CO.
INDEX
PART
I.FINANCIAL
INFORMATION (Unaudited)Page
Condensed
Consolidated Balance Sheets at
March 31, 2022
and December 31, 2021 2
Condensed
Consolidated Statements of Income for the
Three Months
Ended March 31, 2022 and 2021 3
Condensed
Consolidated Statements of Shareholders’ Equity for
the
Three Months
Ended March 31, 2022 and 2021 4
Condensed
Consolidated Statements of Cash Flows for the
Three Months
Ended March 31, 2022 and 2021 5
Notes to the
Condensed Consolidated Financial Statements
6
Management's
Discussion and Analysis of Financial Condition and Results of
Operations10
Controls and
Procedures11
PART
II.OTHER
INFORMATION12
1
PART I – FINANCIAL
INFORMATION
Item 1. Financial
Statements.
|
CHICAGO RIVET
& MACHINE CO.
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
March 31, 2022
(Unaudited)
|
|
December 31,
2021
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
1,315,417
|
|
$
2,036,954
|
|
Certificates of
deposit
|
2,741,000
|
|
2,741,000
|
|
Accounts
receivable - Less allowances of $162,000 and $170,000,
respectively
|
6,638,411
|
|
5,647,984
|
|
Inventories, net
|
9,613,240
|
|
8,519,780
|
|
Prepaid income taxes
|
0
|
|
440
|
|
Other current assets
|
384,198
|
|
346,236
|
|
|
|
|
|
|
Total current assets
|
20,692,266
|
|
19,292,394
|
|
|
|
|
|
|
Property, Plant and
Equipment:
|
|
|
|
|
Land and improvements
|
1,778,819
|
|
1,778,819
|
|
Buildings and
improvements
|
8,456,983
|
|
8,456,983
|
|
Production equipment and
other
|
36,799,708
|
|
36,679,114
|
|
|
47,035,510
|
|
46,914,916
|
|
Less accumulated
depreciation
|
34,761,476
|
|
34,441,052
|
|
Net property, plant and
equipment
|
12,274,034
|
|
12,473,864
|
|
|
|
|
|
|
Total assets
|
$
32,966,300
|
|
$
31,766,258
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts payable
|
$
1,446,827
|
|
$
692,635
|
|
Accrued wages and
salaries
|
706,397
|
|
509,332
|
|
Other accrued expenses
|
273,269
|
|
366,418
|
|
Unearned revenue and
customer deposits
|
287,034
|
|
302,424
|
|
Federal and state income
taxes
|
146,560
|
|
0
|
|
Total current liabilities
|
2,860,087
|
|
1,870,809
|
|
|
|
|
|
|
Deferred income taxes
|
902,084
|
|
926,084
|
|
|
|
|
|
|
Total liabilities
|
3,762,171
|
|
2,796,893
|
|
|
|
|
|
|
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
|
31,540,997
|
|
31,306,233
|
|
Treasury stock,
171,964 shares at cost
|
(3,922,098)
|
|
(3,922,098)
|
|
Total shareholders' equity
|
29,204,129
|
|
28,969,365
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
32,966,300
|
|
$
31,766,258
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Condensed
Consolidated Financial Statements
|
|
|
2
|
CHICAGO RIVET & MACHINE
CO.
|
|
Condensed Consolidated Statements
of Income (Unaudited)
|
|
|
|
|
|
|
Three Months
Ended March 31, 2022
|
|
Three Months
Ended March 31, 2021
|
|
Net sales
|
$
9,197,696
|
|
$
9,304,949
|
|
Cost of goods sold
|
7,341,474
|
|
7,270,512
|
|
|
|
|
|
|
Gross profit
|
1,856,222
|
|
2,034,437
|
|
Selling and administrative
expenses
|
1,295,664
|
|
1,362,201
|
|
|
|
|
|
|
Operating profit
|
560,558
|
|
672,236
|
|
|
|
|
|
|
Other income
|
9,755
|
|
17,892
|
|
|
|
|
|
|
Income before income taxes
|
570,313
|
|
690,128
|
|
Provision for income taxes
|
123,000
|
|
150,000
|
|
|
|
|
|
|
Net Income
|
$
447,313
|
|
$
540,128
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
Basic net income per
share
|
$ 0.46
|
|
$ 0.56
|
|
Diluted net income
per share
|
$ 0.46
|
|
$ 0.56
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
Basic
|
966,132
|
|
966,132
|
|
Diluted
|
966,132
|
|
966,132
|
|
|
|
|
|
|
Cash dividends declared per
share
|
$ 0.22
|
|
$ 0.22
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Condensed
Consolidated Financial Statements
|
|
|
3
|
CHICAGO RIVET
& MACHINE CO.
|
|
Consolidated
Statements of Shareholders’ Equity (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Treasury Stock, At Cost
|
|
|
|
Preferred Stock Amount
|
Shares
|
Amount
|
Additional Paid-In Capital
|
Retained Earnings
|
Shares
|
Amount
|
Total Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021
|
$ 0
|
966,132
|
$ 1,138,096
|
$
447,134
|
$
31,306,233
|
171,964
|
$
(3,922,098)
|
$
28,969,365
|
|
Net Income
|
|
|
|
|
447,313
|
|
|
447,313
|
|
Dividends Declared ($0.22 per
share)
|
|
|
|
|
(212,549)
|
|
|
(212,549)
|
|
Balance, March 31, 2022
|
$ 0
|
966,132
|
$ 1,138,096
|
$
447,134
|
$
31,540,997
|
171,964
|
$
(3,922,098)
|
$
29,204,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
$ 0
|
966,132
|
$ 1,138,096
|
$
447,134
|
$
31,042,957
|
171,964
|
$
(3,922,098)
|
$
28,706,089
|
|
Net Income
|
|
|
|
|
540,128
|
|
|
540,128
|
|
Dividends Declared ($0.22 per
share)
|
|
|
|
|
(212,549)
|
|
|
(212,549)
|
|
Balance, March 31, 2021
|
$ 0
|
966,132
|
$ 1,138,096
|
$
447,134
|
$
31,370,536
|
171,964
|
$ (3,922,098)
|
$
29,033,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to the Condensed Consolidated Financial
Statements.
|
4
|
CHICAGO RIVET
& MACHINE CO.
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended March 31, 2022
|
|
Three Months
Ended March 31, 2021
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net Income
|
$447,313
|
|
$540,128
|
|
Adjustments to reconcile net
income to net cash used in operating activities:
|
|
|
|
|
Depreciation
|
320,424
|
|
330,165
|
|
Loss on disposal of
equipment
|
0
|
|
16,081
|
|
Deferred income taxes
|
(24,000)
|
|
(31,000)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
(990,427)
|
|
(1,706,441)
|
|
Inventories
|
(1,093,460)
|
|
(1,158,666)
|
|
Other current
assets
|
(37,522)
|
|
84,901
|
|
Accounts
payable
|
754,192
|
|
668,880
|
|
Accrued wages
and salaries
|
197,065
|
|
204,563
|
|
Other accrued expenses
|
53,411
|
|
189,160
|
|
Unearned revenue and customer
deposits
|
(15,390)
|
|
(43,724)
|
|
Net cash used
in operating activities
|
(388,394)
|
|
(905,953)
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Capital expenditures
|
(120,594)
|
|
(116,463)
|
|
Proceeds from certificates
of deposit
|
0
|
|
1,743,000
|
|
Net cash (used
in) provided by investing activities
|
(120,594)
|
|
1,626,537
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Cash dividends paid
|
(212,549)
|
|
(212,549)
|
|
Net cash used
in financing activities
|
(212,549)
|
|
(212,549)
|
|
|
|
|
|
|
Net (decrease) increase in cash
and cash equivalents
|
(721,537)
|
|
508,035
|
|
Cash and cash equivalents at
beginning of period
|
2,036,954
|
|
2,567,731
|
|
Cash and cash equivalents at end
of period
|
$1,315,417
|
|
$3,075,766
|
|
|
|
|
|
|
See Notes to the Condensed
Consolidated Financial Statements
|
|
|
5
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 March 31, 2022 (unaudited) and
December 31, 2021 (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, 2021.
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 month period ended March 31, 2022 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 the first quarter of 2022, the Company did not realize
any revenue related to such contracts. As of March 31, 2022,
there are no such contracts outstanding.
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 March 31, 2022 and
December 31, 2021 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.
6
The following table presents
revenue by segment, further disaggregated by end-market:
|
|
Fastener
|
Assembly Equipment
|
Consolidated
|
|
Three Months Ended March
31, 2022:
|
|
|
|
|
Automotive
|
$
4,904,183
|
$
41,463
|
$ 4,945,646
|
|
Non-automotive
|
3,249,650
|
1,002,400
|
4,252,050
|
|
Total net
sales
|
$
8,153,833
|
$ 1,043,863
|
$
9,197,696
|
|
|
|
|
|
|
Three Months Ended
March 31, 2021:
|
|
|
|
|
Automotive
|
$
5,059,469
|
$
32,973
|
$
5,092,442
|
|
Non-automotive
|
3,089,209
|
1,123,298
|
4,212,507
|
|
Total net
sales
|
$
8,148,678
|
$ 1,156,271
|
$
9,304,949
|
|
|
|
|
|
The following table presents
revenue by segment, further disaggregated by location:
|
|
Fastener
|
Assembly Equipment
|
Consolidated
|
|
Three Months Ended March 31, 2022:
|
|
|
|
|
United States
|
$
6,760,129
|
$
1,004,151
|
$
7,764,280
|
|
Foreign
|
1,393,704
|
39,712
|
1,433,416
|
|
Total net
sales
|
$
8,153,833
|
$ 1,043,863
|
$
9,197,696
|
|
|
|
|
|
|
Three Months Ended
March 31, 2021:
|
|
|
|
|
United States
|
$
6,437,852
|
$
1,130,360
|
$
7,568,212
|
|
Foreign
|
1,710,826
|
25,911
|
1,736,737
|
|
Total net
sales
|
$
8,148,678
|
$
1,156,271
|
$
9,304,949
|
|
|
|
|
|
7
5. The Company’s
effective tax rates were approximately 21.6% and 21.7% for the
first quarter of 2022 and 2021, respectively.
The Company’s federal income
tax returns for the 2018 through 2021 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 2018
through 2021 federal income tax returns will expire on September
15, 2022 through 2025, respectively.
The Company’s state income tax
returns for the 2018 through 2021 tax years remain subject to
examination by various state authorities with the latest closing
period on October 31, 2025. The Company is not currently
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:
|
|
March 31, 2022
|
|
December 31, 2021
|
|
Raw material
|
$
5,246,227
|
|
$
4,645,923
|
|
Work-in-process
|
2,526,418
|
|
2,181,457
|
|
Finished goods
|
2,482,595
|
|
2,304,400
|
|
Inventories, gross
|
10,255,240
|
|
9,131,780
|
|
Valuation reserves
|
(642,000)
|
|
(612,000)
|
|
Inventories, net
|
$
9,613,240
|
|
$
8,519,780
|
8
7. Segment Information—The Company
operates in two business segments as determined by its products.
The fastener segment includes rivets, cold-formed fasteners
and parts 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:
|
Fastener
|
Assembly Equipment
|
Other
|
Consolidated
|
|
Three Months Ended March 31,
2022:
|
|
|
|
|
|
Net sales
|
$8,153,833
|
$1,043,863
|
0
|
$9,197,696
|
|
|
|
|
|
|
|
Depreciation
|
281,841
|
33,363
|
5,220
|
320,424
|
|
|
|
|
|
|
|
Segment operating profit
|
835,507
|
232,379
|
0
|
1,067,886
|
|
Selling and administrative
expenses
|
0
|
0
|
(499,328)
|
(499,328)
|
|
Interest income
|
0
|
0
|
1,755
|
1,755
|
|
Income before income taxes
|
|
|
|
$570,313
|
|
|
|
|
|
|
|
Capital expenditures
|
112,864
|
0
|
7,730
|
120,594
|
|
|
|
|
|
|
|
Segment assets:
|
|
|
|
|
|
Accounts receivable,
net
|
6,151,706
|
486,705
|
0
|
6,638,411
|
|
Inventories, net
|
8,299,454
|
1,313,786
|
0
|
9,613,240
|
|
Property, plant and
equipment, net
|
9,613,347
|
1,400,542
|
1,260,145
|
12,274,304
|
|
Other assets
|
0
|
0
|
4,440,615
|
4,440,615
|
|
|
|
|
|
$32,966,300
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2021:
|
|
|
|
|
|
Net sales
|
$8,148,678
|
$1,156,271
|
0
|
$9,304,949
|
|
|
|
|
|
|
|
Depreciation
|
291,183
|
33,533
|
5,449
|
330,165
|
|
|
|
|
|
|
|
Segment operating profit
|
927,158
|
296,700
|
0
|
1,223,858
|
|
Selling and administrative
expenses
|
0
|
0
|
(543,772)
|
(543,772)
|
|
Interest income
|
0
|
0
|
10,042
|
10,042
|
|
Income before income taxes
|
|
|
|
$690,128
|
|
|
|
|
|
|
|
Capital expenditures
|
104,524
|
0
|
11,939
|
116,463
|
|
|
|
|
|
|
|
Segment assets:
|
|
|
|
|
|
Accounts receivable,
net
|
6,222,588
|
647,303
|
0
|
6,869,891
|
|
Inventories, net
|
5,055,332
|
1,256,628
|
0
|
6,311,960
|
|
Property, plant and
equipment, net
|
10,276,980
|
1,535,329
|
1,108,792
|
12,921,101
|
|
Other assets
|
0
|
0
|
6,450,577
|
6,450,577
|
|
|
|
|
|
$32,553,529
|
|
|
|
|
|
|
9
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 first quarter of 2022 were $9,197,696 compared to $9,304,949 in
the first quarter of 2021, a decline of $107,253, or 1.2%. The
modest decline was the primarily due to a lower average selling
price on machines sold in the current year compared to the year
earlier period. The lower sales combined with higher
operating costs in the current year resulted in a lower net income
of $447,313, or $0.46 per share, compared to $540,128, or $0.56 per
share, in the first quarter of 2021. During the quarter, a
regular quarterly dividend of $0.22 per share was paid.
Fastener segment revenues were
$8,153,833 in the first quarter of 2022 compared to $8,148,678 in
the first quarter of 2021, an increase of $5,155, or 0.1%.
The automotive sector is the primary market for our fastener
segment products and sales to automotive customers were $4,904,183
in the first quarter this year compared to $5,059,469 in the first
quarter of 2021, a decline of $155,286, or 3.1%. This
compares favorably to the 15.7% decline in North American light
vehicle sales in the first quarter as the automotive industry
continues to be negatively impacted by shortages of critical
components. Fastener segment sales to non-automotive
customers were $3,249,650 in the first quarter of this year
compared to $3,089,209 in the first quarter of 2021, an increase of
$160,441 or 5.2%. Fastener segment gross margins were
$1,558,909 in the first quarter of 2022 compared to $1,656,629 in
the first quarter of 2021, a decline of $97,720, or 5.9%. We
have experienced price increases in various manufacturing costs,
including steel, our primary raw material, which has increased
approximately 37% compared to the first quarter of 2021.
Assembly
equipment segment revenues were $1,043,863 in the first quarter of
2022 compared to $1,156,271 in the first quarter of 2021, a decline
of $112,408, or 9.7%. The decline was primarily due to a
lower average selling price on machines sold in the current year.
Lower sales contributed to a $80,495 decline in segment gross
margin from $377,808 in 2021 to $297,313 in 2022.
Selling and
administrative expenses during the first quarter of 2022 were
$1,295,664 compared to $1,362,201 recorded in the first quarter of
2021, a decrease of $66,537, or 4.9%. The decrease was
primarily due to a reduction in payroll expense compared to the
year earlier quarter. Selling and administrative expenses
declined to 14.1% of net sales in the first quarter of 2022 from
14.6% in the first quarter of 2021.
Other Income
Other income
in the first quarter of 2022 was $9,755 compared to $17,892 in the
first quarter of 2021. The decrease is primarily related to a
reduction in interest income on certificates of deposit due to
lower interest rates and lower balances invested in the current
year.
Income Tax Expense
The Company’s
effective tax rates were approximately 21.6% and 21.7% for the
first quarter of 2022 and 2021, respectively.
Liquidity and Capital
Resources
Working capital improved to
$17,832,179 as of March 31, 2022 compared to $17,421,585 at the
beginning of the year. During the quarter, accounts
receivable increased by $990,427, due to the greater sales activity
during the quarter compared to the fourth quarter of 2021, and
inventory increased by $1,093,460 due to higher raw material prices
and the increase in quantities on hand to minimize supply
disruptions. Partially offsetting these changes were
increases in accounts payable and accrued expenses related to the
greater level of operating activity during the first quarter.
Other items impacting working capital in the first quarter
were capital expenditures of $120,594, which consisted primarily of
equipment used in fastener production activities, and dividends
paid of $212,549. The net result of these changes and other
cash flow activity was to leave cash, cash equivalents and
certificates of deposit at $4,056,417 as of March 31, 2022 compared
to $4,777,954 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.
Results of Operations
Summary
Results in the first quarter
reflected steady demand overall, but demand from automotive
customers, our primary customer market, was constrained by
continued pandemic-fueled chip and parts shortages. These
conditions are expected to persist in the near-term. Higher
operating costs related to accelerating inflation and a tight labor
market further weighed on results during the quarter. Cost
increases can be difficult to recover and further increases are
expected. These factors, as well as lingering uncertainties
related to COVID-19, are expected to continue to present challenges
in the near-term. As we face these challenges, we will make
adjustments to our activities which we believe are necessary based
on market conditions, while continuing to pursue opportunities to
develop new customer relationships and build on existing ones in
all the markets we serve.
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.
10
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.
11
PART II -- OTHER
INFORMATION
Item 6. Exhibits
31Rule
13a-14(a) or 15d-14(a) Certifications
31.1Certification
Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification
Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
32Section
1350 Certifications
32.1Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline
XBRL Instance Document – the instance document does not appear
in the Interactive Data File because its XBRL tags are embedded
within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
Document
101.PRE
Inline
XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted in Inline XBRL and
contained in Exhibit 101).
12
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: May 6, 2022
/s/
Walter
W. Morrissey
Walter W. Morrissey
Chairman of the Board of Directors
and
Chief Executive Officer
(Principal Executive Officer)
Date: May 6, 2022
/s/
Michael
J. Bourg
Michael J. Bourg
President, Chief Operating
Officer
and Treasurer
(Principal Financial Office
13