CHICAGO RIVET & MACHINE CO. Financial Condition and Results of Operations
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 above under "Risk Factors" and elsewhere in this Form 10-K. As stated elsewhere in this filing, such factors include, among other things: risk related to 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 and the loss of the services of our key employees. Many of these factors are beyond our ability to control or predict. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
Financial results for the first three quarters of 2021 improved dramatically
over the same period in 2020 which was adversely impacted by the global COVID-19
pandemic. Although the pandemic continued to present many challenges in 2021,
as of
For the full year 2021, net sales were
Full year net income in 2021 was
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--------------------------------------------------------------------------------2021 Compared to 2020
Fastener segment revenues were
Fastener segment revenues for the full year 2021 were
Assembly equipment segment revenues were
Selling and administrative expenses were
Other income was
The Company's effective income tax rates were 21.3% and 22.9% in 2021 and 2020, respectively.
DIVIDENDS
In determining to pay dividends, the Board considers current profitability, the
outlook for longer-term profitability, known and potential cash requirements and
the overall financial condition of the Company. At the onset of the COVID-19
pandemic in 2020, the Company reduced the regular quarterly dividend from
PROPERTY, PLANT AND EQUIPMENT
Capital expenditures during 2021 were
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Total capital expenditures in 2020 were
Depreciation expense was
LIQUIDITY AND CAPITAL RESOURCES
Working capital at
Management believes that current cash, cash equivalents and operating cash flow will be sufficient to provide adequate working capital for the next twelve months.
Off-Balance Sheet Arrangements
The Company has not entered into, and has no current plans to enter into, any off-balance sheet financing arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in
A summary of critical accounting policies can be found in Note 1 of the financial statements.
Critical accounting estimates are those that require application of management's most difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. We have reviewed our accounting estimates, and none were deemed to be considered critical for the accounting periods presented. While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. Additionally, future facts and circumstances could change and impact our estimates and assumptions.
NEW ACCOUNTING STANDARDS
The Company's financial statements and financial condition were not, and are not expected to be, materially impacted by new, or proposed, accounting standards.
A summary of recent accounting pronouncements can be found in Note 1 of the financial statements.
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--------------------------------------------------------------------------------OUTLOOK FOR 2022
As we entered 2021, the introduction of vaccines offered hope of a continued rebound from the pandemic-induced recession and a return to more stable operations. Instead, in addition to ongoing COVID-19 related challenges, we were faced with labor market shortages, supply chain disruptions and inflation at a rate not seen in decades. All these factors resulted in much higher operating costs and operational challenges. Nevertheless, financial results in 2021 were more positive than those of 2020 and 2019.
As we begin 2022, both our fastener segment and our assembly equipment segment have seen stable demand. However, demand from automotive sector customers, our primary customer market, continues to be constrained as a shortage of computer chips limits their production activities. These shortages are expected to persist in the near-term which would negatively impact demand from such customers. The current high rate of inflation is particularly concerning as it has impacted not only raw materials, but also labor, energy, transportation and other inputs related to production. Our efforts to pass on these increases have resulted in some success, but continue to be challenged. We have also had difficulties maintaining staffing at ideal levels due to the tight labor market.
These factors, as well as the uncertainties that COVID-19 still presents, are expected to continue to be obstacles in the near-term.
Our healthy financial condition has allowed us to successfully navigate the difficult operating environment brought on by the pandemic and should provide a sound basis for future activities. We were able to increase our investment in equipment in 2021 compared to the previous year and expect to make additional investments in 2022 as one means to maintain competitiveness. We will also continue our efforts to develop new customer relationships and build on existing ones in all the markets we serve by emphasizing our experience, quality and customer service in a very competitive global marketplace.
The positive results in the past year and our success in a uniquely challenging environment would not have been possible without the conscientious efforts of our dedicated employees, who consistently strive to exceed our customers' expectations related to quality, price and service. We are grateful for their contributions as well as for the loyalty of our customers that have placed their confidence in us to help them achieve their goals. We also take this opportunity to thank our shareholders for their continued support.
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