Chicago Rivet & Machine Co. (NYSE American: CVR) has reached an agreement to pay $1.1 million over a five-year period to resolve a liability issue with a customer, according to a recent 8-K filing with the Securities and Exchange Commission.
The Naperville, Illinois-based company, which specializes in metalworking machinery and equipment, disclosed that the payment includes a previously recorded contingent liability of $243,000 for nonconforming fasteners produced by its subsidiary, H&L Tool Company.
The fasteners in question were part of a braking system assembly used in vehicles manufactured by the customer’s OEM client. Chicago Rivet’s internal analysis and discussions with the customer led to the contingent liability being recorded in the financial statements for the quarter ending March 31, 2024.
This settlement comes at a challenging time for the company, which according to InvestingPro data, has not been profitable over the last twelve months, with a negative EBITDA of $2.43 million. The additional accrual of $857,000 recognized for the quarter ending December 31, 2024, reflects the full amount of the settlement.
The company believes that reaching this agreement, which also includes a full release from any further potential liability, is in its best interest. It allows Chicago Rivet to avoid ongoing disputes and potential litigation costs related to the matter.
Despite these challenges, the company maintains a strong liquidity position with a current ratio of 6.02, indicating that its liquid assets significantly exceed short-term obligations. Additionally, Chicago Rivet has maintained dividend payments for 54 consecutive years, demonstrating long-term financial commitment to shareholders.
Chicago Rivet’s recent filing also contains forward-looking statements regarding the settlement and its implications. However, the company cautions that these statements are subject to risks and uncertainties that could cause actual events to differ materially from what is discussed.
The company emphasizes that forward-looking statements are based on management’s beliefs and assumptions at the time of making and warns against placing undue reliance on these statements.
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