Chicago Rivet & Machine Co. (NYSE:CVR)

Full Year 2011 Results

Net sales for 2011 were $30.9 million vs $28.5 in 2010

Net income per share were $1.30 vs $0.63 in 2010

The domestic economy experienced only modest growth in 2011 as high unemployment and a depressed real estate market continued to keep consumer spending restrained. One of the stronger segments of the economy was the automotive sector, which experienced a 10 percent increase in new vehicle sales, due in part to purchases that were delayed during the worst of the economic crisis. Our fastener segment, which relies on the automotive sector for the majority of its revenues, had sales of $27,832,279 in 2011, compared with $25,252,093 in 2010, an increase of 10.2 percent. For each quarter of 2011, sales exceeded the year earlier quarter, with the fourth quarter marking the ninth consecutive quarter to do so. Higher prices for raw materials, fuel, lubricants and plating materials partially offset the increase in sales in 2011. 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 compared to 2010.

OUTLOOK FOR 2012

While current forecasts call for modest economic growth overall in 2012, various projections have suggested domestic automotive sales may increase as much as 10 percent. These conditions would be similar to what was experienced in 2011 and would be favorable to our fastener segment, while the assembly equipment segment, which derives sales from a broader industry base, may lag in comparison. While the sales potential of parts we produce for automotive applications is determined by the lifespan or success of the specific vehicle platform in which they are used, we believe that our efforts in recent years should provide the foundation for growth in 2012.

Forecasting costs is difficult due to the volatility we have experienced in recent years for raw materials, energy and various supplies. Increases in costs are often difficult to recover as many of our customers expect our prices to be held constant, if not reduced, over the life of a part, due to their customers having similar expectations. We will continue to seek ways to mitigate such increases through rigorous quoting and exploring ways to improve our operational efficiency.

The improvement in profitability and our sound financial position allowed us to make significant investments in our operations during 2011 that in some cases have provided immediate benefits in terms of added capabilities, capacity and efficiency. We also believe that we remain well positioned to take advantage of opportunities that may improve profitability in the future. We will continue to pursue new customer relationships and work to expand existing ones in all the markets we serve by emphasizing value over price and by concentrating our efforts on more complex parts in order to differentiate ourselves in a very competitive global marketplace.

CVR shares up sharply to $20.62, our original research note from 2/8/2012:

This is a quiet company that rarely issues press releases. Company has recorded 8 consecutive quarters of at least 30% EPS growth. Before this time period the company had been reporting massive losses. A good deal of its gains has arisen from its exposure to the automobile industry. Please see the reference link leading us to believe that the company will report a strong 2011 4th quarter.

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Clues that point to CVR reporting strong 2011 fourth quarter results.

Old note for 2011 third quarter 10Q

We are encouraged by the improvement in sales and net income reported in the first three quarters of this year and our ability to maintain a strong financial position while making long-term investments in our operations. Although economic conditions remain relatively weak due to high unemployment and weak confidence, we will continue to pursue opportunities to profitably grow our revenues and improve our bottom line. Higher raw material prices remain a significant concern as many of the parts we sell are under contracts that limit our ability to pass on such increases. Despite the difficult challenges we face, we will continue to make prudent investments in our operations in order to position the company for further success.

Recently increases dividend

On November 21, 2011 the Board of Directors of Chicago Rivet & Machine Co. approved a 25 percent increase in the quarterly cash dividend to fifteen (15) cents per share. The next dividend will be payable December 20, 2011 to shareholders of record at the close of business on December 5, 2011.