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Stock Report: CHICAGO RIVET

2014

Chicago Rivet & Machine Co. reported fastener segment sales grew 1.5% to  $34.1 million in 2014, marking the fifth consecutive year of fastener segment growth. 

“Our fastener segment, which relies on the automotive sector for the majority of its revenues, benefited from strong automobile sales in 2014,” the company stated. Although  sales increased, fastener segment margins declined in 2014 due to a $267,000 increase in tooling expenses due to new parts production. “Significant” investments in production equipment increased depreciation $165,000 compared to 2013, while health insurance premiums rose $138,000. 

“Certain operating expenses were reduced during the year, but only partially offset the larger increases, resulting in a net reduction in gross margin for the fastener segment of $354,414 in 2014.”

Assembly equipment segment revenues declined 13.8% to $3.01 million in 2014.

Overall Chicago Rivet sales in 2014 increased slightly to $37.1 million. 

Capital expenditures were cut in half to $1.74 million. Fastener segment additions accounted for $1.67 million of the total, including $801,139 for cold heading and screw machine equipment and $201,901 for secondary processing equipment. Inspection equipment comprised $325,133 of the fastener segment additions, while the remaining additions of $339,075 were for various general plant equipment and facilities improvements.

However, during the opening quarter of 2015, Chicago Rivet fastener segment revenues fell 7.6% to $8.4 million. The decline was primarily due to reduced demand from certain automotive customers.  

Q1 fastener segment gross margin decreased by $178,000.

2013

Chicago Rivet & Machine Co. reported revenues grew 8.5% to $37.12 million in 2013, boosted by strong fourth quarter growth of 14.2% to $9.2 million. 

“Both the fastener segment and the assembly equipment segment achieved increases in revenue and higher gross margins during the year, aided by growth in domestic automotive production,” the company stated.

The increase in revenue and improved margins produced a 42% increase in net income to $2.5 million. 

“These positive results have allowed us to make significant investments in production equipment and facilities improve-ments in 2013, while increasing shareholder distributions.”

Fastener segment sales increased 8.4% to $33.6 million in 2013, marking the fourth consecutive year of sales exceeding the year earlier period. Favorable material pricing and higher sales resulted in an increase in fastener segment gross margins of $1.05 million during 2013.

Capital expenditures during 2013 nearly tripled to $3.5 million, which included $3.1 million spent on fastener operations. Cold heading and screw machine equipment accounted for $2.7 million of the total, and $414,402 for equipment used in secondary operations or inspection. 

Selling and administrative expenses rose 4.1% to $5.4 million, primarily due to increase profit sharing expenses of $114,600 related to improved operating results. 

During 2013 sales to two customers constituted approximately 32% of Chicago Rivet’s consolidated revenues. Sales to TI Group Automotive Systems Corp. accounted for 18% of consolidated revenues, while sales to Fisher & Co. accounted for 14% of revenues.

2012

Chicago Rivet & Machine Co. reported revenue increased to the highest level in five years, while net income increased to the highest level in a decade. 

Sales rose 10.7% to $34.2 million, aided by domestic automotive production that reached its highest level since 2007. 

The increase in revenue more than offset raw material price fluctuations, resulting in 39% net income gain to $1.7 million, or $1.81 per share, in 2012. These results enabled the payment of an extra dividend in the fourth quarter, which brought the total dividend payout for 2012 to the highest amount in nine years. 

“The pace of the domestic economic recovery continued to be slow in 2012, with high unemployment and stagnant wage growth, as well as the lingering effects of the financial crisis, keeping consumer spending restrained.” 

Fastener segment sales grew 11.4% to $31 million. The fourth quarter of 2012 marked the thirteenth consecutive quarter of sales growth. 

“Higher raw material prices early in the year receded as the year progressed leaving most cost of sales components increasing at the year’s inflationary rate.” 

The combination of higher sales and moderate increases in cost components resulted in an increase in fastener segment gross margins of $866,485 during 2012.

Other income was $118,099 in 2012, compared to $249,804 in 2011. The decline was primarily due to a gain of approximately $142,000 in 2011 from the sale of the company’s Jefferson, IA, property, which had formerly been used in its fastener segment operations.

Capital expenditures during 2012 totaled $1,187,746, of which $1,018,734 was invested in equipment for Chicago Rivet’s fastener operations. Inspection equipment accounted for $450,720 of the fastener segment additions while cold heading and screw machine equipment comprised $371,466 of the total. 

Second quarter profit dropped, but six-month results showed double-digit growth in all categories.
Chicago Rivet & Machine Co. reported second-quarter sales rose 3.6% to $8.43 million, with EBIT down 25% to $644,432. Net income declined 25% to $440,432, while net income per share slipped 24.5% to $0.46 for the quarter.

Fastener segment sales in Q2 gained 4.1% to $7.6 million, marking the eleventh consecutive quarter of increased sales for the fastener segment.

“With the majority of such revenues derived from the automotive industry, the segment has benefited from increased production and sales of domestic autos and trucks during the current year.”

Q2 fastener segment profit declined 7.5% to $882,371, while fastener capital expenditures fell 32% to $269,281 during the quarter.

“While recent increases in raw material prices eased somewhat in the second quarter, higher labor, supplies and repair expenses offset the increase in sales during the second quarter, resulting in a fastener segment gross margin of $1,576,126.”

Six-month fastener segment revenues grew 10.6% to $15.94 million, while segment profit jumped 27% to $1.93 million. Fastener capital expenditures during the first half of the year dropped 35% to $406,046.

Overall six-month sales grew 10.5% to $17.63 million, with EBIT gaining 32% to $1.38 million. Net income climbed 32% to $934,166 during the first half of 2012, while net income per share rose 33% to $0.97.

2011
Chicago Rivet reported net sales rose 8.4% to $30.92 million in 2011. 
“Results for 2011 reflect considerable improvement over 2010, as the domestic automotive market continued to improve from the steep decline experienced from 2007 to 2009, during the worst of the global economic downturn,” the company stated.

Income before taxes more than doubled to $1.86 million, while net income rose 107% to $1.25 million. 

During the year the company increased its workforce by 6.2% to 221 workers. 

Fastener segment results increased 10.2% to $27.83 million during the year, boosted by strong automotive demand. 

“For each quarter of 2011, sales exceeded the year earlier quarter, with the fourth quarter marking the ninth consecutive quarter to do so.” 

Offsetting those results were higher raw material, fuel and plating costs. 

“However, the increase in production activity we experienced allowed for more optimal utilization of plant resources, resulting in an increase in fastener segment gross margins of $1,153,969 during 2011,” the company stated. 

Total capital expenditures in 2011 more than doubled to $1,611,789, which included fastener segment additions accounting for $1,510,036 of the total, including $838,000 for cold heading and screw machine equipment and $110,000 for secondary processing equipment. 

“Various projections (for 2012) have suggested domestic automotive sales may increase as much as 10%,” the company stated. “These conditions would be similar to what was experienced in 2011 and would be favorable to our fastener segment.”

The momentum continued in the opening quarter of 2012. The company reported sales soared 17.7% to $9.2 million. Q1 income before taxes more than quadrupled to $729,734, while net income soared to $493,734. 

2010

Chicago Rivet & Machine Co. reported 2010 net sales jumped 33.3% to $28.5 million, producing income of $894,025 compared with a $1.9 million loss for 2009.

“The domestic economy returned to growth in 2010 which provided the backdrop for improved operating conditions for both of our operating segments.” 

Rebounding from the depressed levels of the prior year, fastener segment sales jumped 38% to $25.25 million in 2010.

The fourth quarter marked the fifth consecutive quarter to exceed the year earlier quarterly sales figure. 

“With the majority of such revenues derived from the automotive industry, the segment has benefited from a 38% rebound in domestic auto and truck production experienced in 2010, which had fallen to its lowest level since 1982 during the prior year.”

Payroll increased by $1.81 million to meet improved demand. The combination of higher sales, better utilization of resources and an ongoing emphasis on efficiency contributed to an increase in fastener segment gross margins of $2.64 million during 2010.

Capital expenditures for fastener production totaled $443,643, which included: $115,000 for cold heading and screw machine equipment, $92,000 for various equipment that expanded our secondary processing capabilities, $63,000 for inspection and other quality related equipment, and the balance for general plant and material handling equipment. 

“The majority of these additions were acquired in the used equipment market as economic conditions created opportunities to expand our capabilities at favorable prices.”
 

2009
“Economic conditions, which were weak at the close of 2008, worsened in early 2009 and had a dramatic impact on revenues in both the fastener and assembly equipment segments,” Chicago Rivet reported.

Fastener segment revenue dropped 25.9% to $18.3 million during the year, with the drop in domestic automotive production contributing to a segment loss of $496,877.

During the first six months of 2009 fastener segment sales declined 46.2%. Conditions began to improve in the second half of the year, with fastener sales growing 36.4%, or $2.8 million.

To offset the decline in demand, fastener segment payroll was reduced by more than 20% through reductions in hours worked and headcount. Additional savings were generated by reductions in all significant overhead categories, including tooling, containers, maintenance and supplies.

“The decline in (fastener) sales was too severe to be offset by cost controls, resulting in a decline in fastener segment gross margin to $1,891,870, from $2,585,306 reported in 2008.”

A more rigorous quoting process for obtaining various services and supplies is providing additional savings that should continue to provide benefits as demand improves.

Overall sales dropped 25% to $21.4 million during 2009, producing a net loss of $1.28 million.

Capital expenditures for fastener production totaled $443,643, which included $115,000 for cold heading and screw machine equipment, $92,000 for various equipment that expanded our secondary processing capabilities, and $63,000 for inspection and other quality related equipment.

2008
“Weak economic conditions in 2008 had a dramatic impact on revenues in both the fastener and assembly equipment segments,” Chicago Rivet reported.

Fastener segment revenue dropped 25% to $24.7 million during the year, with the drop in domestic automotive production contributing to a segment loss of $16,178. Fastener sales during the final quarter plunged 39%.

“While we made reductions to operations in an attempt to bring expenses in line with revenues, we were limited in our ability to offset significant increases in raw materials prices, which rose as the year progressed before declining late in the year due to falling demand,” the company reported.

In response, fastener segment overhead costs were reduced by $2,344,000 in 2008, including headcount reductions and modified work schedules.

Overall sales dropped 24% to $28.5 million during 2008, producing a net loss of $825,482.

Capital expenditures for fastener production totaled $358,148 in 2008.

HISTORY
Chicago Rivet produces rivets, rivet-setting machines, parts and tooling for the automotive and appliance industries. The company relies primarily on independent sales representatives.

Chicago Rivet has fastener operations in Naperville, IL; Madison Heights, MI; and Tyrone, PA.

Corporate Office: 901 Frontenac Rd., P.O. Box 3061, Naperville, IL 60566. Tel: 630 357-8500 Fax 630 983-9314
Web: chicagorivet.com
CEO: John Morrissey
Employees: 236
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