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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 September 30, 2023

 

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 filer  o

Accelerated filer  o

Non-accelerated filer    ý

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 ý   

 

As of November 3, 2023 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
    September 30, 2023 and December 31, 2022

2

 

Condensed Consolidated Statements of Operations for the
    Three and Nine Months Ended September 30, 2023 and 2022

3

 

Condensed Consolidated Statements of Shareholders’ Equity for the
    Three and Nine Months Ended September 30, 2023 and 2022

4

 

Condensed Consolidated Statements of Cash Flows for the
    Nine Months Ended September 30, 2023 and 2022

5

 

Notes to the Condensed Consolidated Financial Statements

6

 

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

10

 

Controls and Procedures

11

PART II.     OTHER INFORMATION

12


1


 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

 

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Balance Sheets

 

 

 

 

 

September 30, 2023 (Unaudited)

 

December 31, 2022

Assets

 

 

 

 

 

 

 

Current Assets:

 

 

 

 Cash and cash equivalents

$      2,362,982   

 

$      4,045,101   

 Certificates of deposit

200,000   

 

2,691,000   

 Accounts receivable - Less allowances of $146,000 and $160,000, respectively

5,806,308   

 

4,975,137   

 Inventories, net

8,795,196   

 

9,121,230   

 Prepaid income taxes

616,520   

 

509,119   

 Other current assets

412,899   

 

422,747   

 

 

 

 

Total current assets

18,193,905   

 

21,764,334   

 

 

 

 

Property, Plant and Equipment:

 

 

 

 Land and improvements

1,510,513   

 

1,510,513   

 Buildings and improvements

6,835,619   

 

6,758,266   

 Production equipment and other

37,890,318   

 

37,080,762   

 

46,236,450   

 

45,349,541   

 Less accumulated depreciation

34,345,225   

 

33,487,748   

Net property, plant and equipment

11,891,225   

 

11,861,793   

 

 

 

 

Total assets

$   30,085,130   

 

$   33,626,127   

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 Accounts payable

$       1,007,802   

 

$       697,235   

 Accrued wages and salaries

778,941   

 

462,332   

 Other accrued expenses

147,475   

 

327,961   

 Unearned revenue and customer deposits

300,025   

 

203,717   

Total current liabilities

2,234,243   

 

1,691,245   

 

 

 

 

Deferred income taxes

244,485   

 

948,084   

 

 

 

 

Total liabilities

2,478,728   

 

2,639,329   

 

 

 

 

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

29,943,270   

 

33,323,666   

  Treasury stock, 171,964 shares at cost

(3,922,098)  

 

(3,922,098)  

Total shareholders' equity

27,606,402   

 

30,986,798   

 

 

 

 

Total liabilities and shareholders' equity

$   30,085,130   

 

$   33,626,127   

 

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

 

 


2


 

 

 

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Income (Unaudited)

 

Three Months Ended September 30, 2023

 

Three Months Ended September 30, 2022

 

Nine Months Ended September 30, 2023

 

Nine Months Ended September 30, 2022

Net sales

$      7,946,172   

 

$     8,567,785   

 

$     24,726,828   

 

$     26,788,879   

Cost of goods sold

7,905,019   

 

7,447,877   

 

24,537,208   

 

22,366,372   

 

 

 

 

 

 

 

 

Gross profit

41,153   

 

1,119,908   

 

189,620   

 

4,422,507   

 

 

 

 

 

 

 

 

Operating (income) expenses:

 

 

 

 

 

 

 

  Selling and administrative expenses

1,273,175   

 

1,250,385   

 

3,890,335   

 

3,809,970   

  Gain on sale of property

0  

 

(4,738,394)   

 

0  

 

(4,738,394)   

 

 

 

 

 

 

 

 

     Total operating (income) expenses

1,273,175   

 

(3,488,009)   

 

3,890,335   

 

(928,424)   

 

 

 

 

 

 

 

 

Operating profit (loss)

(1,232,022)   

 

4,607,917   

 

(3,700,715)   

 

5,350,931   

 

 

 

 

 

 

 

 

Other income

16,980   

 

13,143   

 

83,030   

 

35,346   

 

 

 

 

 

 

 

 

Income (loss) before income taxes

(1,215,042)   

 

4,621,060   

 

(3,617,685)   

 

5,386,277   

Provision (benefit) for income taxes

(251,000)   

 

1,042,000   

 

(759,000)   

 

1,206,000   

 

 

 

 

 

 

 

 

Net Income (loss)

$    (964,042)   

 

$    3,579,060   

 

$   (2,858,685)   

 

$     4,180,277   

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

  Basic net income (loss) per share

$          (1.00)   

 

$            3.71   

 

$         (2.96)   

 

$          4.33   

  Diluted net income (loss) per share

$          (1.00)   

 

$            3.71   

 

$         (2.96)   

 

$          4.33   

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

  Basic

966,132   

 

966,132   

 

966,132   

 

966,132   

  Diluted

966,132   

 

966,132   

 

966,132   

 

966,132   

 

 

 

 

 

 

 

 

Cash dividends declared per share

$           0.10   

 

$          0.22   

 

$          0.54   

 

$          0.66   

 

 

 

 

 

 

 

 

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, 2022

       $ 0

966,132

$ 1,138,096

$   447,134

$  33,323,666

171,964

$ (3,922,098)

$     30,986,798

Net Loss

 

 

 

 

(583,137)

 

 

(583,137)

Dividends Declared ($0.22 per share)

 

 

 

 

(212,549)

 

 

(212,549)

Balance, March 31, 2023

       $ 0

966,132

$ 1,138,096

$   447,134

$  32,527,980

171,964

$ (3,922,098)

$     30,191,112

Net Loss

 

 

 

 

(1,311,506)

 

 

(1,311,506)

Dividends Declared ($0.22 per share)

 

 

 

 

(212,549)

 

 

(212,549)

Balance, June 30, 2023

        $ 0

966,132

$ 1,138,096

$   447,134

$  31,003,925

171,964

$ (3,922,098)

$     28,667,057

Net Loss

 

 

 

 

(964,042)

 

 

(964,042)

Dividends Declared ($0.10 per share)

 

 

 

 

(96,613)

 

 

(96,613)

Balance, September 30, 2023

        $ 0

966,132

$ 1,138,096

$   447,134

$  29,943,270

171,964

$ (3,922,098)

$     27,606,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Net Income

 

 

 

 

153,904

 

 

153,904

Dividends Declared ($0.22 per share)

 

 

 

 

(212,549)

 

 

(212,549)

Balance, June 30, 2022

        $ 0

966,132

$ 1,138,096

$   447,134

$  31,482,352

171,964

$ (3,922,098)

$    29,145,484

Net Income

 

 

 

 

3,579,060

 

 

3,579,060

Dividends Declared ($0.22 per share)

 

 

 

 

(212,549)

 

 

(212,549)

Balance, September 30, 2022

$ 0

966,132

$ 1,138,096

$   447,134

$  34,848,863

171,964

$ (3,922,098)

$    32,511,995

 

 

 

 

 

 

 

 

 

See Notes to the Condensed Consolidated Financial Statements.

 


4


 

 

 

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

 

Nine Months Ended September 30, 2023

 

Nine Months Ended September 30, 2022

Cash flows from operating activities:

 

 

 

Net Income (loss)

$    (2,858,685)  

 

$      4,180,277  

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 Depreciation

920,430  

 

960,139  

 Gain on sale of property and equipment

(31,500)  

 

(4,736,096)  

 Deferred income taxes

(703,599)  

 

(26,000)  

 Changes in operating assets and liabilities:

 

 

 

   Accounts receivable

(831,171)  

 

(930,130)  

   Inventories

326,034  

 

(1,401,692)  

   Other current assets

(97,553)  

 

(75,326)  

   Accounts payable

310,567  

 

204,795  

   Accrued wages and salaries

316,609  

 

328,698  

   Other accrued expenses

(180,486)  

 

1,209,687  

   Unearned revenue and customer deposits

96,308  

 

(127,094)  

     Net cash used in operating activities

(2,733,046)  

 

(412,742)  

 

 

 

 

Cash flows from investing activities:

 

 

 

 Capital expenditures

(949,862)  

 

(696,073)  

 Proceeds from the sale of property

31,500  

 

5,038,240  

 Proceeds from certificates of deposit

2,591,000  

 

1,245,000  

 Purchases of certificates of deposit

(100,000)  

 

(1,245,000)  

   Net cash provided by investing activities

1,572,638  

 

4,342,167  

 

 

 

 

Cash flows from financing activities:

 

 

 

 Cash dividends paid

(521,711)  

 

(637,647)  

   Net cash used in financing activities

(521,711)  

 

(637,647)  

 

 

 

 

Net increase (decrease) in cash and cash equivalents

(1,682,119)  

 

3,291,778   

Cash and cash equivalents at beginning of period

4,045,101   

 

2,036,954   

Cash and cash equivalents at end of period

$      2,362,982   

 

$     5,328,732   

 

 

 

 

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 September 30, 2023 (unaudited) and December 31, 2022 (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, 2022.

 

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 nine month period ended September 30, 2023 are not necessarily indicative of the results to be expected for the year.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in November 2018 issued an amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses.  ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 and ASU 2018-19 should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic.  ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2023, using the modified retrospective approach. The adoption did not result in the recognition of a cumulative adjustment to beginning retained earnings, nor did it have a material impact on the condensed consolidated financial statements.

 

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.  The Company has established an allowance for accounts that may become uncollectible in the future.  This estimated allowance is based in part on management's evaluation of the financial condition of the customer and historical experience.  The Company monitors its accounts receivable and charges to expense an amount equal to its estimate of potential credit losses.  The Company considers a number of factors in determining its estimates, including the length of time its trade accounts receivable are past due, the Company's previous loss history and the customer's current ability to pay its obligation.  The Company also considers current economic conditions, the economic outlook and industry-specific factors in its evaluation.  Accounts receivable balances are charged off against the allowance when it is determined that the receivable will not be recovered.

 

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 third quarter of 2023, the Company realized revenue of $161,594 related to such contracts and has a remaining performance obligation of $303,906 which is expected to be recognized over the next six months.

 

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, 2023 and December 31, 2022 reserves for warranty claims were not material.  Cash received by the Company prior to transfer of control 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 September 30, 2023:

 

 

 

Automotive

$     5,184,547

$         12,363

$     5,196,910

Non-automotive

1,792,894

956,368

2,749,262

Total net sales

$     6,977,441

$      968,731

$     7,946,172

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

Automotive

$     4,813,646

$         45,012

$     4,858,658

Non-automotive

2,991,976

717,151

3,709,127

Total net sales

$     7,805,622

$       762,163

$     8,567,785

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

Automotive

$  15,150,117

$         95,464

$   15,245,581

Non-automotive

7,045,250

2,435,997

9,481,247

Total net sales

$    22,195,367

$     2,531,461

$   24,726,828

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

Automotive

$    14,268,638

$        146,663

$    14,415,301

Non-automotive

9,750,429

2,623,149

12,373,578

Total net sales

$    24,019,067

$     2,769,812

$   26,788,879

 

 

 

 

 

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

 

 

 Fastener  

 Assembly Equipment  

 Consolidated  

Three Months Ended September 30, 2023:

 

 

 

United States

$   5,398,688

$     961,618

$   6,360,306

Foreign

1,578,753

7,113

1,585,866

Total net sales

$   6,977,441

$     968,731

$   7,946,172

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

United States

$   6,268,813

$     696,856

$   6,965,669

Foreign

1,536,809

65,307

1,602,116

Total net sales

$   7,805,622

$     762,163

$   8,567,785

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

United States

$   17,927,910

$   2,402,734

$   20,248,872

Foreign

4,267,457

128,727

4,477,956

Total net sales

$   22,195,367

$   2,531,461

$   24,726,828

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

United States

$   19,825,721

$   2,633,475

$   22,459,196

Foreign

4,193,346

136,337

4,329,683

Total net sales

$   24,019,067

$   2,769,812

$   26,788,879

 

 

 

 

 

 


7


 

 

5.  The Company’s effective tax rates were approximately (20.7)% and 22.5% for the third quarter of 2023 and 2022, respectively, and (21.0)% and 22.4% for the nine months ended September 30, 2023 and 2022, respectively.

 

The Company’s federal income tax returns for the 2020, 2021 and 2022 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 2020, 2021 and 2022 federal income tax returns will expire on September 15, 2024, 2025 and 2026, respectively.

 

The Company’s state income tax returns for the 2020 through 2022 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2026.  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:

 

 

September 30, 2023

 

December 31, 2022

Raw material

$       3,460,660   

 

$       4,460,071   

Work-in-process

3,073,621   

 

2,747,427   

Finished goods

2,801,915   

 

2,534,732   

Inventories, gross

9,336,196   

 

9,742,230   

Valuation reserves

(541,000)  

 

(621,000)  

Inventories, net

$       8,795,196   

 

$       9,121,230   

 


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 September 30, 2023:

 

 

 

 

Net sales

$     6,977,441   

$     968,731   

0   

$      7,946,172   

 

 

 

 

 

Depreciation

276,989   

30,732   

602   

308,323   

 

 

 

 

 

Segment operating loss

(773,213)   

166,927   

0   

(606,286)   

Selling and administrative expenses

0   

0   

(625,701)  

(625,701)  

Interest income

0   

0   

16,945   

16,945   

Loss before income taxes

 

 

 

$    (1,215,042)   

 

 

 

 

 

Capital expenditures

189,614   

0   

0   

189,614   

 

 

 

 

 

Segment assets:

 

 

 

 

  Accounts receivable, net

5,410,548   

395,760   

0   

5,806,308   

  Inventories, net

7,269,490   

1,525,706   

0   

8,795,196   

  Property, plant and equipment, net

9,672,334   

1,211,301   

1,007,590   

11,891,225   

  Other assets

0   

0   

3,592,401   

3,592,401   

 

 

 

 

$    30,085,130   

 

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

 

Net sales

$    7,805,622   

$     762,163   

0   

$      8,567,785   

 

 

 

 

 

Depreciation

281,842   

33,363   

4,086   

319,291   

 

 

 

 

 

Segment operating profit

350,536   

92,977   

0   

443,513   

Selling and administrative expenses

0   

0   

(565,740)  

(565,740)  

Gain on sale of property

0   

0   

4,738,394  

4,738,394  

Interest income

0   

0   

4,893   

4,893   

Income before income taxes

 

 

 

$     4,621,060   

 

 

 

 

 

Capital expenditures

462,445   

0   

21,925   

484,370   

 

 

 

 

 

Segment assets:

 

 

 

 

  Accounts receivable, net

6,185,810   

392,304   

0   

6,578,114   

  Inventories, net

8,549,836   

1,371,636   

0   

9,921,472   

  Property, plant and equipment, net

9,575,293   

1,333,816   

998,545   

11,907,654   

  Other assets

0   

0   

8,491,734   

8,491,734   

 

 

 

 

$    36,898,974   

 

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

 

Net sales

$   22,195,367   

$   2,531,461   

0   

$   24,726,828   

 

 

 

 

 

Depreciation

822,304   

92,196   

5,930   

920,430   

 

 

 

 

 

Segment operating loss

(2,294,932)   

443,408   

0   

(1,851,524)   

Selling and administrative expenses

0   

0   

(1,845,437)  

(1,845,437)  

Interest income

0   

0   

79,276   

79,276   

Loss before income taxes

 

 

 

$    (3,617,685)   

 

 

 

 

 

Capital expenditures

932,309   

0   

17,553   

949,862   

 

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

 

Net sales

$   24,019,067   

$   2,769,812   

0   

$   26,788,879   

 

 

 

 

 

Depreciation

845,524   

100,089   

14,526   

960,139   

 

 

 

 

 

Segment operating profit

1,685,574   

516,367   

0   

2,201,941   

Selling and administrative expenses

0   

0   

(1,562,804)  

(1,562,804)  

Gain on sale of property

0   

0   

4,738,394  

4,738,394  

Interest income

0   

0   

8,746   

8,746   

Income before income taxes

 

 

 

$    5,386,277   

 

 

 

 

 

Capital expenditures

597,991   

0   

98,082   

696,073   

 


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 third quarter of 2023 were $7,946,172 compared to $8,567,785 in the third quarter of 2022, a decline of $621,613, or 7.3%. While assembly equipment segment revenues improved during the quarter compared to a year earlier, they were more than offset by the decline in fastener segment sales.  As of September 30, 2023, year to date sales totaled $24,726,828 compared to $26,788,879 for the first three quarters of 2022, a decline of $2,062,051, or 7.7%.  Both the fastener segment and assembly equipment segment sales have declined year to date.  Lower sales combined with higher operating costs in the current year resulted in a net loss of $(964,042), or $(1.00) per share, in the third quarter compared to net income of $3,579,060, or $3.71 per share, in the third quarter of 2022.  For the first three quarters of 2023, the net loss was $(2,858,685), or $(2.96) per share, compared to net income of $4,180,277, or $4.33 per share, for the same period in 2022. The third quarter and first nine months results for 2022 included a gain on sale of property of $4,738,394.

 

Fastener segment revenues were $6,977,441 in the third quarter of 2023 compared to $7,805,622 reported in the third quarter of 2022, a decline of $828,181, or 10.6%.  For the first nine months of 2023, fastener segment revenues were $22,195,367 compared to $24,019,067 in the first nine months of 2022, a decline of $1,823,700, or 7.6%. The automotive sector is the primary market for our fastener segment products and sales to automotive customers were $5,184,547 in the third quarter this year compared to $4,813,646 in the third quarter of 2022, an increase of $370,901, or 7.7%.  Sales to automotive customers were $15,150,117 for the first three quarters of 2023 compared to $14,268,638 for the first three quarters of 2022, an increase of $881,479, or 6.2%.  The increase in the quarterly and year to date sales to automotive customers reflects increased North American light vehicle sales, which have improved as last year’s supply chain disruptions and parts shortages have eased.  Fastener segment sales to non-automotive customers were $1,792,894 in the third quarter of this year compared to $2,991,976 in the third quarter of 2022, a decline of $1,199,082, or 40.1%.  Sales to non-automotive customers for the first three quarters of the current year were $7,045,250 compared to $9,750,429 for the first three quarters of 2022, a decline of $2,705,179, or 27.7%.  Although the decline in fastener sales to non-automotive customers primarily related to a single industrial products customer, several other customers cited excess ordering in 2022, when supply chain disruptions were widespread, as the cause for reduced demand in the current year.  Labor market conditions have improved since the beginning of the year and investments made to improve operating efficiencies have resulted in a significant reduction in expediting and quality related expenses during the third quarter compared to the first half of the year.  The impact of inflation in the last two years has been difficult to recover from customers, especially automotive customers that often make purchases under restrictive terms and conditions; however, we will continue to review and seek to adjust pricing to address these higher costs.  The overall decline in fastener segment sales combined with higher operating costs have resulted in negative operating margins in the third quarter and year to date.  Third quarter fastener segment gross profit (loss) was $(161,831) compared to $972,363 in 2022, a decline of $1,134,194.  On a year-to-date basis, fastener segment gross profit (loss) was $(353,158) compared to $3,722,743 in the first three quarters of 2022, a decline of $4,075,901.

 

Assembly equipment segment revenues were $968,731 in the third quarter of 2023 compared to $762,163 in the third quarter of 2022, an increase of $206,568, or 27.1%.  The increase in the quarter compared to a year earlier was due to more machines being sold and an increase in the average selling price per unit.  The increase in assembly equipment sales during the third quarter contributed to an improved gross margin during the quarter of $202,984 compared to $147,545 in the prior year.  For the first nine months of 2023, assembly equipment segment revenues were $2,531,461 compared to $2,769,812 for the same period of 2022, a decline of $238,351, or 8.6%.  While machine sales improved during the third quarter, the total units sold during the first three quarters still trails the number sold during the same period a year ago.  Additionally, tool sales have also declined in the current year.  Lower sales, along with higher operating costs in the current year, contributed to a decline in segment gross profit to $542,778 from $699,764 a year ago, a decline of $156,986. 

 

    Selling and administrative expenses for the third quarter of 2023 were $1,273,175 compared to $1,250,385 in the third quarter of 2022, an increase of $22,790, or 1.8%.  For the first nine months of 2023, selling and administrative expenses were $3,890,335 compared to $3,809,970 for the same period in 2022, an increase of $80,365, or 2.1%.  The increases were primarily related to outside consulting and recruiting fees as well as building rent that has been incurred since the sale of the Company’s headquarters in the third quarter of 2022. Partially offsetting these increases were reductions in commissions and profit-sharing expense related to lower sales and profitability.  Selling and administrative expenses as a percentage of net sales for the first nine months of 2023 increased to 15.7%, from 14.2% for the first nine months of 2022. 

 

Other Income

 

Other income in the third quarter of 2023 was $16,980, compared to $13,143 in the third quarter of 2022.  Other income for the first nine months of 2023 was $83,030, compared to $35,346 in the first nine months of 2022.  The increases were primarily due to higher interest rates on invested balances during the current year.

 

 

Income Tax Expense

 

The Company’s effective tax rates were approximately (20.7)% and 22.5% for the third quarter of 2023 and 2022, respectively.  The Company’s effective tax rates were approximately (21.0)% and 22.4% for the nine months ended September 30, 2023 and 2022, respectively.

 

Liquidity and Capital Resources

 

Working capital was $15,959,662 as of September 30, 2023, compared to $20,073,089 at the beginning of the year, a decline of $4,113,427.  The most significant factor in the working capital decline is the current year operating loss.  During the first three quarters of 2023, accounts receivable increased by $831,171 due to the greater sales activity compared to the fourth quarter of 2022, which was partially offset by a decline in inventory of $326,034 as quantities on hand were reduced and raw material inflation moderated.  Other items reducing working capital in the first three quarters of 2023 were capital expenditures of $949,862, which consisted primarily of equipment used in fastener production activities, and dividends paid of $521,711.  The net result of these changes and other cash flow activity was to leave cash, cash equivalents and certificates of deposit at $2,562,982 as of September 30, 2023 compared to $6,736,101 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 third quarter continued to be negatively impacted by several factors.  Demand from our automotive customers has been relatively steady in 2023 as that sector continues to recover from the aftereffects of the Covid-19 pandemic, but our margins from such customers have been significantly impacted by higher costs that have been difficult to obtain relief from due to restrictive contracts that are common in that market.  The United Auto Workers strike that began in September did not materially impact results in the third quarter, but as the strike expanded in the fourth quarter, we have experienced reduced demand.  While we have seen improvement in the labor market since the beginning of the year and inflation has receded from its recent historic highs, most of our production-related expenses remain much higher than a year earlier.  These conditions are expected to persist in the near term, which makes obtaining updated pricing that reflects current economic conditions a priority.  In addition to adjusting pricing, we will also continue to adjust our activities and make investments that improve production efficiency, while pursuing 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 were not effective due to a weakness in internal control over financial reporting as described below.

 

Material Weakness in Internal Control Over Financial Reporting

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

A material weakness in internal control over financial reporting related to income taxes was identified in the Company’s internal control over financial reporting as of September 30, 2023. Specifically, the Company did not design and maintain effective controls related to the review of the presentation of the tax provision related to unusual items.

 

Notwithstanding the material weakness noted above, the Company’s management, including the Company's Chief Executive Officer and President, Chief Operating Officer and Treasurer, has concluded that our financial statements included in this Quarterly Report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America.

 

Remediation Plan for the Material Weakness

 

The Company’s management, under the oversight of the Audit Committee, is in the process of designing and implementing changes in processes and controls to remediate the material weakness. Our enhanced design includes the involvement of external tax advisors in reviewing complex tax matters, as necessary.

 

The material weakness will not be considered remediated until management completes its remediation plan and the enhanced control operates for a sufficient period of time and management has concluded, through testing, that the related control is effective. The Company will monitor the effectiveness of its remediation plan and will refine its remediation plan as appropriate.

 

(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

 

Exhibit
Number

 

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.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:  November 7, 2023

/s/                    Gregory D. Rizzo

 

Gregory D. Rizzo

 

Chief Executive Officer

 

 (Principal Executive Officer)

 

 

 

 

Date:  November 7, 2023

/s/                    Michael J. Bourg

 

Michael J. Bourg

 

President, Chief Operating Officer and Treasurer

 

 (Principal Financial Officer)

 

 

 

 


13

 

EXHIBIT 31.1

 

I, Gregory D. Rizzo, certify that:

 

1.   I have reviewed this quarterly report on Form 10-Q of Chicago Rivet & Machine Co.;

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

 

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

 

 

          Date:  November 7, 2023

/s/ Gregory D. Rizzo

 

Gregory D. Rizzo

 

Chief Executive Officer

 

(Principal Executive Officer)


EXHIBIT 31.2

 

I, Michael J. Bourg, certify that:

 

1.   I have reviewed this quarterly report on Form 10-Q of Chicago Rivet & Machine Co.;

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

 

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

 

 

          Date:  November 7, 2023

/s/ Michael J. Bourg

 

Michael J. Bourg

 

President, Chief Operating Officer and Treasurer

 

(Principal Financial Officer)


EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report on Form 10-Q of Chicago Rivet & Machine Co. (the "Company") for the quarterly period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gregory D. Rizzo, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

 

 

/s/ Gregory D. Rizzo

Name:Gregory D. Rizzo 

Title:Chief Executive Officer 

(Principal Executive Officer) 

Date:November 7, 2023 


EXHIBIT 32.2

 

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report on Form 10-Q of Chicago Rivet & Machine Co. (the "Company") for the quarterly period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael J. Bourg, as President, Chief Operating Officer and Treasurer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

 

 

/s/ Michael J. Bourg

Name:Michael J. Bourg 

Title:President, Chief Operating Officer 

and Treasurer (Principal Financial Officer) 

Date:November 7, 2023 


v3.23.3
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2023
Nov. 03, 2023
Details    
Registrant CIK 0000019871  
Fiscal Year End --12-31  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2023  
Entity File Number 000-01227  
Entity Registrant Name CHICAGO RIVET & MACHINE CO  
Entity Incorporation, State or Country Code IL  
Entity Tax Identification Number 36-0904920  
Entity Address, Address Line One 901 Frontenac Road  
Entity Address, City or Town Naperville  
Entity Address, State or Province IL  
Entity Address, Postal Zip Code 60563  
City Area Code 630  
Local Phone Number 357-8500  
Title of 12(b) Security Common Stock, par value $1.00 per share  
Trading Symbol CVR  
Security Exchange Name NYSEAMER  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   966,132
Amendment Flag false  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
Document Transition Report false  
v3.23.3
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current Assets    
Cash and cash equivalents $ 2,362,982 $ 4,045,101
Certificates of deposit 200,000 2,691,000
Accounts receivable - Less allowances of $146,000 and $160,000, respectively 5,806,308 4,975,137
Inventories, net 8,795,196 9,121,230
Prepaid income taxes 616,520 509,119
Other current assets 412,899 422,747
Total current assets 18,193,905 21,764,334
Property, Plant and Equipment    
Land and improvements 1,510,513 1,510,513
Buildings and improvements 6,835,619 6,758,266
Production equipment and other 37,890,318 37,080,762
Property, Plant and Equipment, Gross 46,236,450 45,349,541
Less accumulated depreciation 34,345,225 33,487,748
Net property, plant and equipment 11,891,225 11,861,793
Total assets 30,085,130 33,626,127
Current Liabilities    
Accounts payable 1,007,802 697,235
Accrued wages and salaries 778,941 462,332
Other accrued expenses 147,475 327,961
Unearned revenue and customer deposits 300,025 203,717
Total current liabilities 2,234,243 1,691,245
Deferred income taxes 244,485 948,084
Total liabilities 2,478,728 2,639,329
Shareholders' Equity    
Preferred stock, no par value, 500,000 shares authorized: none outstanding 0 0
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 29,943,270 33,323,666
Treasury stock, 171,964 shares at cost (3,922,098) (3,922,098)
Total shareholders' equity 27,606,402 30,986,798
Total liabilities and shareholders' equity $ 30,085,130 $ 33,626,127
v3.23.3
Condensed Consolidated Balance Sheets - Parenthetical - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Condensed Consolidated Balance Sheets    
Accounts Receivable, Allowance for Credit Loss, Current $ 146,000 $ 160,000
Preferred Stock, Par or Stated Value Per Share $ 0 $ 0
Preferred Stock, Shares Authorized 500,000 500,000
Preferred Stock, Shares Outstanding 0 0
Common Stock, Par or Stated Value Per Share $ 1.00 $ 1.00
Common Stock, Shares Authorized 4,000,000 4,000,000
Common Stock, Shares, Issued 1,138,096 1,138,096
Common Stock, Shares, Outstanding 966,132 966,132
v3.23.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Condensed Consolidated Statements of Operations (Unaudited)        
Net sales $ 7,946,172 $ 8,567,785 $ 24,726,828 $ 26,788,879
Cost of goods sold 7,905,019 7,447,877 24,537,208 22,366,372
Gross profit 41,153 1,119,908 189,620 4,422,507
Operating (income) expenses        
Selling and administrative expenses 1,273,175 1,250,385 3,890,335 3,809,970
Gain on sale of property 0 (4,738,394) 0 (4,738,394)
Total operating (income) expenses 1,273,175 (3,488,009) 3,890,335 (928,424)
Operating profit (loss) (1,232,022) 4,607,917 (3,700,715) 5,350,931
Other income 16,980 13,143 83,030 35,346
Income (loss) before income taxes (1,215,042) 4,621,060 (3,617,685) 5,386,277
Provision (benefit) for income taxes (251,000) 1,042,000 (759,000) 1,206,000
Net Income (loss) $ (964,042) $ 3,579,060 $ (2,858,685) $ 4,180,277
Per share data        
Basic net income (loss) per share $ (1.00) $ 3.71 $ (2.96) $ 4.33
Diluted net income (loss) per share $ (1.00) $ 3.71 $ (2.96) $ 4.33
Basic 966,132 966,132 966,132 966,132
Diluted 966,132 966,132 966,132 966,132
Cash dividends declared per share $ 0.10 $ 0.22 $ 0.54 $ 0.66
v3.23.3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)
Total
Preferred Stock
Common Stock
Additional Paid-in Capital
Retained Earnings
Treasury Stock, Common
Beginning Balance at Dec. 31, 2021 $ 28,969,365 $ 0 $ 1,138,096 $ 447,134 $ 31,306,233 $ (3,922,098)
Common Stock Shares at Dec. 31, 2021     966,132      
Treasury Stock Shares at Dec. 31, 2021           171,964
Net Income (loss) 447,313       447,313  
Dividends declared (212,549)       (212,549)  
Ending Balance at Mar. 31, 2022 29,204,129 0 $ 1,138,096 447,134 31,540,997 $ (3,922,098)
Common Stock Shares at Mar. 31, 2022     966,132      
Treasury Stock Shares at Mar. 31, 2022           171,964
Beginning Balance at Dec. 31, 2021 28,969,365 0 $ 1,138,096 447,134 31,306,233 $ (3,922,098)
Common Stock Shares at Dec. 31, 2021     966,132      
Treasury Stock Shares at Dec. 31, 2021           171,964
Net Income (loss) 4,180,277          
Ending Balance at Sep. 30, 2022 32,511,995 0 $ 1,138,096 447,134 34,848,863 $ (3,922,098)
Common Stock Shares at Sep. 30, 2022     966,132      
Treasury Stock Shares at Sep. 30, 2022           171,964
Beginning Balance at Mar. 31, 2022 29,204,129 0 $ 1,138,096 447,134 31,540,997 $ (3,922,098)
Common Stock Shares at Mar. 31, 2022     966,132      
Treasury Stock Shares at Mar. 31, 2022           171,964
Net Income (loss) 153,904       153,904  
Dividends declared (212,549)       (212,549)  
Ending Balance at Jun. 30, 2022 29,145,484 0 $ 1,138,096 447,134 31,482,352 $ (3,922,098)
Common Stock Shares at Jun. 30, 2022     966,132      
Treasury Stock Shares at Jun. 30, 2022           171,964
Net Income (loss) 3,579,060       3,579,060  
Dividends declared (212,549)       (212,549)  
Ending Balance at Sep. 30, 2022 32,511,995 0 $ 1,138,096 447,134 34,848,863 $ (3,922,098)
Common Stock Shares at Sep. 30, 2022     966,132      
Treasury Stock Shares at Sep. 30, 2022           171,964
Beginning Balance at Dec. 31, 2022 $ 30,986,798 0 $ 1,138,096 447,134 33,323,666 $ (3,922,098)
Common Stock Shares at Dec. 31, 2022 966,132   966,132      
Treasury Stock Shares at Dec. 31, 2022           171,964
Net Income (loss) $ (583,137)       (583,137)  
Dividends declared (212,549)       (212,549)  
Ending Balance at Mar. 31, 2023 30,191,112 0 $ 1,138,096 447,134 32,527,980 $ (3,922,098)
Common Stock Shares at Mar. 31, 2023     966,132      
Treasury Stock Shares at Mar. 31, 2023           171,964
Beginning Balance at Dec. 31, 2022 $ 30,986,798 0 $ 1,138,096 447,134 33,323,666 $ (3,922,098)
Common Stock Shares at Dec. 31, 2022 966,132   966,132      
Treasury Stock Shares at Dec. 31, 2022           171,964
Net Income (loss) $ (2,858,685)          
Ending Balance at Sep. 30, 2023 $ 27,606,402 0 $ 1,138,096 447,134 29,943,270 $ (3,922,098)
Common Stock Shares at Sep. 30, 2023 966,132   966,132      
Treasury Stock Shares at Sep. 30, 2023           171,964
Beginning Balance at Mar. 31, 2023 $ 30,191,112 0 $ 1,138,096 447,134 32,527,980 $ (3,922,098)
Common Stock Shares at Mar. 31, 2023     966,132      
Treasury Stock Shares at Mar. 31, 2023           171,964
Net Income (loss) (1,311,506)       (1,311,506)  
Dividends declared (212,549)       (212,549)  
Ending Balance at Jun. 30, 2023 28,667,057 0 $ 1,138,096 447,134 31,003,925 $ (3,922,098)
Common Stock Shares at Jun. 30, 2023     966,132      
Treasury Stock Shares at Jun. 30, 2023           171,964
Net Income (loss) (964,042)       (964,042)  
Dividends declared (96,613)       (96,613)  
Ending Balance at Sep. 30, 2023 $ 27,606,402 $ 0 $ 1,138,096 $ 447,134 $ 29,943,270 $ (3,922,098)
Common Stock Shares at Sep. 30, 2023 966,132   966,132      
Treasury Stock Shares at Sep. 30, 2023           171,964
v3.23.3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Parenthetical - $ / shares
3 Months Ended 9 Months Ended
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2023
Sep. 30, 2022
Condensed Consolidated Statements of Shareholders' Equity (Unaudited)                
Cash dividends declared per share $ 0.10 $ 0.22 $ 0.22 $ 0.22 $ 0.22 $ 0.22 $ 0.54 $ 0.66
v3.23.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash flows from operating activities    
Net Income (loss) $ (2,858,685) $ 4,180,277
Adjustments to reconcile net income (loss) to net cash used in operating activities    
Depreciation 920,430 960,139
Gain on sale of property and equipment (31,500) (4,736,096)
Deferred income taxes (703,599) (26,000)
Changes in operating assets and liabilities    
Accounts receivable (831,171) (930,130)
Inventories 326,034 (1,401,692)
Other current assets (97,553) (75,326)
Accounts payable 310,567 204,795
Accrued wages and salaries 316,609 328,698
Other accrued expenses (180,486) 1,209,687
Unearned revenue and customer deposits 96,308 (127,094)
Net cash used in operating activities (2,733,046) (412,742)
Cash flows from investing activities    
Capital expenditures (949,862) (696,073)
Proceeds from the sale of property 31,500 5,038,240
Proceeds from certificates of deposit 2,591,000 1,245,000
Purchases of certificates of deposit (100,000) (1,245,000)
Net cash provided by investing activities 1,572,638 4,342,167
Cash flows from financing activities    
Cash dividends paid (521,711) (637,647)
Net cash used in financing activities (521,711) (637,647)
Net increase (decrease) in cash and cash equivalents (1,682,119) 3,291,778
Cash and cash equivalents at beginning of period 4,045,101 2,036,954
Cash and cash equivalents at end of period $ 2,362,982 $ 5,328,732
v3.23.3
Accounting Policies
9 Months Ended
Sep. 30, 2023
Notes  
Accounting Policies

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, 2023 (unaudited) and December 31, 2022 (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, 2022.

 

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 nine month period ended September 30, 2023 are not necessarily indicative of the results to be expected for the year.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in November 2018 issued an amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses.  ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 and ASU 2018-19 should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic.  ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2023, using the modified retrospective approach. The adoption did not result in the recognition of a cumulative adjustment to beginning retained earnings, nor did it have a material impact on the condensed consolidated financial statements.

v3.23.3
Risks and Uncertainties
9 Months Ended
Sep. 30, 2023
Notes  
Risks and Uncertainties

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.  The Company has established an allowance for accounts that may become uncollectible in the future.  This estimated allowance is based in part on management's evaluation of the financial condition of the customer and historical experience.  The Company monitors its accounts receivable and charges to expense an amount equal to its estimate of potential credit losses.  The Company considers a number of factors in determining its estimates, including the length of time its trade accounts receivable are past due, the Company's previous loss history and the customer's current ability to pay its obligation.  The Company also considers current economic conditions, the economic outlook and industry-specific factors in its evaluation.  Accounts receivable balances are charged off against the allowance when it is determined that the receivable will not be recovered.

v3.23.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2023
Notes  
Commitments and Contingencies

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.

v3.23.3
Revenue
9 Months Ended
Sep. 30, 2023
Notes  
Revenue

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 third quarter of 2023, the Company realized revenue of $161,594 related to such contracts and has a remaining performance obligation of $303,906 which is expected to be recognized over the next six months.

 

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, 2023 and December 31, 2022 reserves for warranty claims were not material.  Cash received by the Company prior to transfer of control 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.

 

 

 

 

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

 

 

 Fastener  

 Assembly Equipment  

 Consolidated  

Three Months Ended September 30, 2023:

 

 

 

Automotive

$     5,184,547

$         12,363

$     5,196,910

Non-automotive

1,792,894

956,368

2,749,262

Total net sales

$     6,977,441

$      968,731

$     7,946,172

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

Automotive

$     4,813,646

$         45,012

$     4,858,658

Non-automotive

2,991,976

717,151

3,709,127

Total net sales

$     7,805,622

$       762,163

$     8,567,785

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

Automotive

$  15,150,117

$         95,464

$   15,245,581

Non-automotive

7,045,250

2,435,997

9,481,247

Total net sales

$    22,195,367

$     2,531,461

$   24,726,828

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

Automotive

$    14,268,638

$        146,663

$    14,415,301

Non-automotive

9,750,429

2,623,149

12,373,578

Total net sales

$    24,019,067

$     2,769,812

$   26,788,879

 

 

 

 

 

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

 

 

 Fastener  

 Assembly Equipment  

 Consolidated  

Three Months Ended September 30, 2023:

 

 

 

United States

$   5,398,688

$     961,618

$   6,360,306

Foreign

1,578,753

7,113

1,585,866

Total net sales

$   6,977,441

$     968,731

$   7,946,172

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

United States

$   6,268,813

$     696,856

$   6,965,669

Foreign

1,536,809

65,307

1,602,116

Total net sales

$   7,805,622

$     762,163

$   8,567,785

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

United States

$   17,927,910

$   2,402,734

$   20,248,872

Foreign

4,267,457

128,727

4,477,956

Total net sales

$   22,195,367

$   2,531,461

$   24,726,828

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

United States

$   19,825,721

$   2,633,475

$   22,459,196

Foreign

4,193,346

136,337

4,329,683

Total net sales

$   24,019,067

$   2,769,812

$   26,788,879

 

 

 

 

 

 

v3.23.3
Income Taxes
9 Months Ended
Sep. 30, 2023
Notes  
Income Taxes

5.  The Company’s effective tax rates were approximately (20.7)% and 22.5% for the third quarter of 2023 and 2022, respectively, and (21.0)% and 22.4% for the nine months ended September 30, 2023 and 2022, respectively.

 

The Company’s federal income tax returns for the 2020, 2021 and 2022 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 2020, 2021 and 2022 federal income tax returns will expire on September 15, 2024, 2025 and 2026, respectively.

 

The Company’s state income tax returns for the 2020 through 2022 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2026.  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.

v3.23.3
Inventories
9 Months Ended
Sep. 30, 2023
Notes  
Inventories

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, 2023

 

December 31, 2022

Raw material

$       3,460,660   

 

$       4,460,071   

Work-in-process

3,073,621   

 

2,747,427   

Finished goods

2,801,915   

 

2,534,732   

Inventories, gross

9,336,196   

 

9,742,230   

Valuation reserves

(541,000)  

 

(621,000)  

Inventories, net

$       8,795,196   

 

$       9,121,230   

 

v3.23.3
Segment Reporting
9 Months Ended
Sep. 30, 2023
Notes  
Segment Reporting

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 September 30, 2023:

 

 

 

 

Net sales

$     6,977,441   

$     968,731   

0   

$      7,946,172   

 

 

 

 

 

Depreciation

276,989   

30,732   

602   

308,323   

 

 

 

 

 

Segment operating loss

(773,213)   

166,927   

0   

(606,286)   

Selling and administrative expenses

0   

0   

(625,701)  

(625,701)  

Interest income

0   

0   

16,945   

16,945   

Loss before income taxes

 

 

 

$    (1,215,042)   

 

 

 

 

 

Capital expenditures

189,614   

0   

0   

189,614   

 

 

 

 

 

Segment assets:

 

 

 

 

  Accounts receivable, net

5,410,548   

395,760   

0   

5,806,308   

  Inventories, net

7,269,490   

1,525,706   

0   

8,795,196   

  Property, plant and equipment, net

9,672,334   

1,211,301   

1,007,590   

11,891,225   

  Other assets

0   

0   

3,592,401   

3,592,401   

 

 

 

 

$    30,085,130   

 

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

 

Net sales

$    7,805,622   

$     762,163   

0   

$      8,567,785   

 

 

 

 

 

Depreciation

281,842   

33,363   

4,086   

319,291   

 

 

 

 

 

Segment operating profit

350,536   

92,977   

0   

443,513   

Selling and administrative expenses

0   

0   

(565,740)  

(565,740)  

Gain on sale of property

0   

0   

4,738,394  

4,738,394  

Interest income

0   

0   

4,893   

4,893   

Income before income taxes

 

 

 

$     4,621,060   

 

 

 

 

 

Capital expenditures

462,445   

0   

21,925   

484,370   

 

 

 

 

 

Segment assets:

 

 

 

 

  Accounts receivable, net

6,185,810   

392,304   

0   

6,578,114   

  Inventories, net

8,549,836   

1,371,636   

0   

9,921,472   

  Property, plant and equipment, net

9,575,293   

1,333,816   

998,545   

11,907,654   

  Other assets

0   

0   

8,491,734   

8,491,734   

 

 

 

 

$    36,898,974   

 

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

 

Net sales

$   22,195,367   

$   2,531,461   

0   

$   24,726,828   

 

 

 

 

 

Depreciation

822,304   

92,196   

5,930   

920,430   

 

 

 

 

 

Segment operating loss

(2,294,932)   

443,408   

0   

(1,851,524)   

Selling and administrative expenses

0   

0   

(1,845,437)  

(1,845,437)  

Interest income

0   

0   

79,276   

79,276   

Loss before income taxes

 

 

 

$    (3,617,685)   

 

 

 

 

 

Capital expenditures

932,309   

0   

17,553   

949,862   

 

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

 

Net sales

$   24,019,067   

$   2,769,812   

0   

$   26,788,879   

 

 

 

 

 

Depreciation

845,524   

100,089   

14,526   

960,139   

 

 

 

 

 

Segment operating profit

1,685,574   

516,367   

0   

2,201,941   

Selling and administrative expenses

0   

0   

(1,562,804)  

(1,562,804)  

Gain on sale of property

0   

0   

4,738,394  

4,738,394  

Interest income

0   

0   

8,746   

8,746   

Income before income taxes

 

 

 

$    5,386,277   

 

 

 

 

 

Capital expenditures

597,991   

0   

98,082   

696,073   

 

v3.23.3
Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2023
Accounting Policies

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, 2023 (unaudited) and December 31, 2022 (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, 2022.

 

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 nine month period ended September 30, 2023 are not necessarily indicative of the results to be expected for the year.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in November 2018 issued an amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses.  ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 and ASU 2018-19 should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic.  ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2023, using the modified retrospective approach. The adoption did not result in the recognition of a cumulative adjustment to beginning retained earnings, nor did it have a material impact on the condensed consolidated financial statements.

Risks and Uncertainties

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.  The Company has established an allowance for accounts that may become uncollectible in the future.  This estimated allowance is based in part on management's evaluation of the financial condition of the customer and historical experience.  The Company monitors its accounts receivable and charges to expense an amount equal to its estimate of potential credit losses.  The Company considers a number of factors in determining its estimates, including the length of time its trade accounts receivable are past due, the Company's previous loss history and the customer's current ability to pay its obligation.  The Company also considers current economic conditions, the economic outlook and industry-specific factors in its evaluation.  Accounts receivable balances are charged off against the allowance when it is determined that the receivable will not be recovered.

Commitments and Contingencies

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.

Revenue

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 third quarter of 2023, the Company realized revenue of $161,594 related to such contracts and has a remaining performance obligation of $303,906 which is expected to be recognized over the next six months.

 

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, 2023 and December 31, 2022 reserves for warranty claims were not material.  Cash received by the Company prior to transfer of control 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.

 

Income Taxes

5.  The Company’s effective tax rates were approximately (20.7)% and 22.5% for the third quarter of 2023 and 2022, respectively, and (21.0)% and 22.4% for the nine months ended September 30, 2023 and 2022, respectively.

 

The Company’s federal income tax returns for the 2020, 2021 and 2022 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 2020, 2021 and 2022 federal income tax returns will expire on September 15, 2024, 2025 and 2026, respectively.

 

The Company’s state income tax returns for the 2020 through 2022 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2026.  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.

Inventories

6.  Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method.

Segment Reporting

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.

 

v3.23.3
Revenue: Disaggregation of Revenue (Tables)
9 Months Ended
Sep. 30, 2023
Location  
Disaggregation of Revenue

 

 

 Fastener  

 Assembly Equipment  

 Consolidated  

Three Months Ended September 30, 2023:

 

 

 

United States

$   5,398,688

$     961,618

$   6,360,306

Foreign

1,578,753

7,113

1,585,866

Total net sales

$   6,977,441

$     968,731

$   7,946,172

 

 

 

 

Three Months Ended September 30, 2022:

 

 

 

United States

$   6,268,813

$     696,856

$   6,965,669

Foreign

1,536,809

65,307

1,602,116

Total net sales

$   7,805,622

$     762,163

$   8,567,785

 

 

 

 

Nine Months Ended September 30, 2023:

 

 

 

United States

$   17,927,910

$   2,402,734

$   20,248,872

Foreign

4,267,457

128,727

4,477,956

Total net sales

$   22,195,367

$   2,531,461

$   24,726,828

 

 

 

 

Nine Months Ended September 30, 2022:

 

 

 

United States

$   19,825,721

$   2,633,475

$   22,459,196

Foreign

4,193,346

136,337

4,329,683

Total net sales

$   24,019,067

$   2,769,812

$   26,788,879

 

 

 

 

 

End Market  
Disaggregation of Revenue

 

 

 Fastener  

 Assembly Equipment  

 Consolidated  

Three Months Ended September 30, 2023:

 

 

 

Automotive

$     5,184,547

$         12,363

$     5,196,910

Non-automotive

1,792,894

956,368

2,749,262

Total net sales

$     6,977,441

$      968,731

$     7,946,172

 

 

 

 

Three Months Ended September 30, 2022: