Chicago Rivet & Machine Co. reported fastener segment revenues fell 15.1% to $7.6 million in the first quarter of 2019.

Q1 sales to U.S. automotive customers declined 21.5% to $1.06 million, while sales to foreign automotive customers dropped 24.3%, “with most of the decline relating to shipments to China where passenger car sales have declined year-over-year for nine straight months.”

Fastener segment sales to non-automotive customers declined less than 1% during Q1. Production costs in the first quarter were higher than a year earlier, mainly due to higher material costs related to 232 tariffs instituted in 2018.

“Steel is our primary raw material and on average, steel prices were approximately 15% higher in the first quarter of 2019 than in the year earlier quarter,” the company stated.

Higher production costs combined with the decline in sales contributed to a 33% decline in fastener segment gross margins to $1.32 million.

“Results for the first quarter were disappointing, but followed the downturn in automotive activity in the first three months of the year,” the company stated. “Additionally, we have experienced increases in steel prices and other materials over the past year that have negatively impacted our gross margins and remain a concern as further increases are expected.”

Since material price increases can be difficult to mitigate, Chicago Rivet emphasizes cost controls in other areas and greater operating efficiencies.

Assembly equipment segment revenues fell 4% to $1.04 million. Customer demand was “relatively stable” during the quarter, with tools and parts sales reflecting an increase and the total number of machines shipped also increasing. The decline in net sales contributed to an 8% decrease in segment gross margin to $336,577.

Q1 capital expenditures totaled $900,000, which primarily consisted of equipment used in production activities. Web: ChicagoRivet.com