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Unique Fabricating, Inc. Reports Second Quarter 2020 Financial Results and Successfully Amends Credit Agreement
June net sales of $10.0 million support improving revenue outlook while $1.1 million quarterly SG&A reduction reflects the impact of the continuing operational improvements
July net sales of $10.8 million continue strong recovery trajectory for the third quarter
Auburn Hills, MI – August 13th, 2020 — Unique Fabricating, Inc. (“Unique Fabricating” or the “Company”) (NYSE American: UFAB), a leader in engineering and manufacturing multi-material foam, rubber, and plastic components utilized in noise, vibration, and harshness management and air/water sealing applications for the transportation, appliance, consumer, and medical markets, today announced its financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Financial Results
Net sales of $14.8 million compared to $38.9 million in the second quarter of 2019.
Net loss of $4.3 million or $0.44 per basic and diluted share compared to a net loss of $7.6 million or $0.78 per basic and diluted share in the second quarter of 2019.
Net debt(1) decreased $5.4 million to $45.8 million as of June 30, 2020, inclusive of $4.7 million of cash and cash equivalents, compared to $51.2 million as of June 30, 2019, inclusive of $1.1 million of cash and cash equivalents.
Restructuring charges of $0.3 million primarily related to sale and closure of the Evansville, Indiana owned facility compared to $0.7 million in the second quarter of 2019 primarily related to executive severance.
Interest expense decreased $0.7 million to $0.6 million compared to prior year of $1.3 million.
“The COVID-19 situation had a significant negative impact on our second quarter results with $24.1 million lower sales and the corresponding impact on operating profit,” said Doug Cain, President and Chief Executive Officer. “During this quarter, we completed our targeted restructuring activities, reduced our fixed cost structure, increased our plant productivity and efficiencies, and completed our executive leadership team. In combination with all of the improvement activities, our new bank loan amendment provides sufficient liquidity and a strong foundation for the Company to focus its efforts fully on profitable growth going forward. We saw a meaningful increase in our net sales in June to $10.0 million with the corresponding positive impact on operating profit. Our July net sales of $10.8 million support our view to a much improved third quarter and second half of 2020 with continued sustainable positive operating profits and operating cash flows to reduce debt. Our comprehensive operational improvement and cost reduction activities are in place and we are prepared to efficiently manage the increasing volumes.”



“Beginning in April, we were able to adapt some of our manufacturing capacity to new personal protective equipment products with sales of $1.4 million in the quarter,” Cain continued. “Our team is supporting the medical and manufacturing communities with our new production of N95 face masks begun in late July which highlights our competencies to produce solutions utilizing our multi-material and multi-process capabilities. The latest North America auto production second half forecasts as well as the positive market trends for home building and home remodeling driving our appliance business support our view to a much stronger second half of 2020 for the Company.”
Cain concluded “We believe the worst is behind us. The activities we began in the second half of last year and continued in 2020 positioned us to weather the storm successfully. Despite the significant challenges presented by COVID-19 over the last months, we remain committed to our ‘Boldly Back on Track’ initiatives. We move into the second half of 2020 and beyond with our targeted restructuring activities behind us, a capable and committed organization, improving liquidity, and a lean cost competitive geographic footprint.”
Second Quarter 2020 Financial Summary
Net sales for the quarter were $14.8 million, down 62% or $24.1 million from $38.9 million during the same period last year. The 2020 decrease was attributable to lost sales resulting from customer shutdowns in April and May 2020 with a ramp up beginning in June due to the COVID-19 pandemic. Of the $14.8 million net sales, $10.0 million were in June. The $10.8 million net sales in July reinforces our confidence in a rebound.
Gross profit for the quarter was $1.7 million, or 11.8% of total net sales, compared to $8.2 million, or 21.1% of net sales, for the corresponding period last year. The loss of contribution margin on the $24.1 million lower sales is the primary cause of the lower gross profit margin.
Restructuring expense for the second quarter of 2020 was $0.3 million and primarily related to the sale and closure of the Company’s owned facility in Evansville, Indiana, compared to $0.7 million in restructuring expense incurred in the same period last year.
Net loss of $4.3 million or $0.44 per basic and diluted share compared to a net loss of $7.6 million or $0.78 per basic and diluted share in the second quarter of 2019, which included a $6.8 million non-cash goodwill impairment charge. The decrease in net loss is the result of the 2019 impairment charge not recurring, a $1.1 million reduction in SG&A expenses, despite $0.3 million in severance charges, as a result of comprehensive cost reduction efforts, $0.5 million lower restructuring charges, and $0.7 million lower interest expense. These improvements were more than offset by the impact of the $24.1 million decrease in net sales year-over-year due to COVID-19.
Balance Sheet Summary
As of June 30, 2020, the Company had approximately $4.7 million in cash and cash equivalents, compared to June 30, 2019 and December 29, 2019 when the Company had $1.1 million and $0.6 million, respectively, in cash and cash equivalents. Total debt outstanding as of June 30, 2020 was $50.5 million compared to $52.3 million as of June 30, 2019 and $47.5 million as of December 29, 2019. The increase in cash and cash equivalents and outstanding debt since December 29, 2019 is primarily attributable to the $6.0 million loan the Company received pursuant to the U.S. Small Business Administration Paycheck Protection Program (“PPP”) under Title I of the Coronavirus Aid, Relief, and Economic Security Act. As of June 30, 2020 the Company had $2.5 million of proceeds from the PPP loan in cash and cash equivalents.
2020 Outlook
The latest North American third-party service automotive production forecasts for the second half of the year are at approximately 90% of initial 2020 volumes. If this automotive production forecast level for the second half of 2020 holds, we expect to generate improved operating cash flows, reflecting actions taken to date. Supporting this level of activity, our July sales were approximately $10.8 million. We note that projected results are subject to substantial uncertainty regarding the continuing impact of the



COVID-19 pandemic on the economy and our industry, as well as other factors referenced in “Forward Looking Statements.” There can be no assurance that our results will not vary significantly from our current expectations.
Results Conference Call
Unique Fabricating will host a conference call and live webcast to review the quarterly results and provide a corporate update today at 9 a.m. Eastern Time. To access the call, please dial 877-407-8133 (toll free) or 201-689-8040 (international) and if requested, reference conference ID 35308. The conference call will also be webcast live on the Investor Relations section of the company's website at http://ir.uniquefab.com.
Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 12 p.m. ET on August 13, 2020 until 9 a.m. ET on July 9, 2020 by dialing 877-481-4010 (United States) or 919-882-2331 (international) and using the passcode 36529.
About Unique Fabricating, Inc.
Unique Fabricating, Inc. (NYSE American: UFAB) engineers and manufactures components for customers in the transportation, appliance, medical, and consumer markets. The Company’s solutions are comprised of multi-material foam, rubber, and plastic components and utilized in noise, vibration and harshness (NVH) management, acoustical management, water and air sealing, decorative and other functional applications. Unique leverages proprietary manufacturing processes, including die cutting, thermoforming, compression molding, fusion molding, and reaction injection molding to manufacture a wide range of products including air management products, heating ventilating and air conditioning (HVAC), seals, engine covers, fender stuffers, air ducts, acoustical insulation, door water shields, gas tank pads, light gaskets, topper pads, mirror gaskets, glove box liners, personal protection equipment, and packaging. The Company is headquartered in Auburn Hills, Michigan. For more information, visit http://www.uniquefab.com.
About Non-GAAP Financial Measures
We present Net Debt, a non-GAAP financial measure, in this press release to provide a supplemental measure of our financial position. We believe that Net Debt is a useful measure of the Company's credit position and progress toward reducing leverage. The calculation is limited in that the company may not always be able to use cash to repay debt on a dollar-for-dollar basis.
We present Adjusted EBITDA in this press release to provide a supplemental measure of our operating performance. We define Adjusted EBITDA as earnings before interest expense, income tax expense, depreciation and amortization expense, non-cash stock awards, goodwill impairment, non-recurring integration expense, restructuring expenses, and one-time consulting and licensing ERP system implementation costs as we implement a new ERP system at all locations. We believe that Adjusted EBITDA is a useful performance measure used by us to facilitate a comparison of our operating performance and earnings on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under generally accepted accounting principles in the United States of America (GAAP) can provide alone. Our board and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for Company management. In addition, the financial covenants in our senior secured credit facility are based on Adjusted EBITDA, as presented in this press release, subject to dollar limitations on certain adjustments and certain other addbacks permitted by our senior secured credit facility.
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation as a substitute for analysis of Unique Fabricating's results as reported under GAAP.



Safe Harbor Statement
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Forward-looking statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause the Company's or the Company's industry's actual results, levels of activity, performance or achievements including statements relating to the Company’s results for the second quarter of 2020 to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by this press release. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions are used to identify these forward looking statements. Such forward-looking statements include statements regarding, among other things, our expectations about revenue, Adjusted EBITDA, and adjusted diluted earnings per share. All such forward-looking statements are based on management’s present expectations and are subject to certain factors, risks and uncertainties that may cause actual results, outcome of events, timing and performance to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, those discussed in our Annual Report on Form 10-K/A for the year ended December 29, 2019, as amended, filed with the Securities and Exchange Commission and in particular the Section entitled “Risk Factors”, as well as any updates to those risk factors filed from time to time in our periodic and current reports filed with the Securities and Exchange Commission. All statements contained in this press release are made as of the date of this press release, and Unique Fabricating does not intend to update this information, unless required by law. Reference to the Company’s website above does not constitute incorporation of any of the information thereon into this press release.
(1)Net debt, a non-GAAP financial measure, is defined as debt minus cash and cash equivalents. Please refer to the Reconciliation of Non-GAAP Financial measures included in the tables included with this press release for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.



UNIQUE FABRICATING INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited – dollars in thousands)

  June 30,
2020
December 29,
2019
Assets  
Current assets  
Cash and cash equivalents$4,737  $650  
Accounts receivable, net of reserves of approximately $0.7 million and $0.9 million at June 30, 2020 and December 29, 2019, respectively
15,683  24,701  
Inventory, net15,137  13,047  
Prepaid expenses and other current assets:  
Prepaid expenses and other3,654  2,108  
Refundable taxes1,391  1,049  
Assets held for sale—  1,003  
Total current assets40,602  42,558  
Property, plant, and equipment, net22,815  23,415  
Goodwill22,111  22,111  
Intangible assets9,625  11,625  
Other assets
Operating leases10,965  —  
Investments, at cost1,054  1,054  
Deposits and other assets227  226  
Deferred tax asset926  679  
Total assets$108,325  $101,668  
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable$7,784  $9,324  
Current maturities of long-term debt2,847  2,847  
Accrued compensation993  1,225  
Other accrued liabilities4,312  1,979  
Total current liabilities15,936  15,375  
Long-term debt, net of current maturities37,794  33,220  
Line of credit9,874  11,418  
Other long-term liabilities:
Deferred tax liability—  1,324  
Other liabilities10,659  871  
Total liabilities74,263  62,208  
Stockholders’ equity:
Common stock, $0.001 par value – 15,000,000 shares authorized and 9,779,147 and 9,779,147 issued and outstanding at March 31, 2020 and December 29, 2019, respectively
10  10  
Additional paid-in-capital46,066  46,011  
Accumulated deficit(12,014) (6,561) 
Total stockholders’ equity34,062  39,460  
Total liabilities and stockholders’ equity$108,325  $101,668  



UNIQUE FABRICATING INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited – dollars in thousands, except per share amounts)

  Three Months Ended June 30, 2020Three Months Ended June 30, 2019Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Net sales$14,759  $38,889  $49,736  $78,356  
Cost of sales13,019  30,677  40,921  61,844  
Gross profit1,740  8,212  8,815  16,512  
Selling, general, and administrative expenses6,281  7,424  12,146  14,696  
Impairment—  6,760  —  6,760  
Restructuring expenses273  734  1,193  825  
Operating loss(4,814) (6,706) (4,524) (5,769) 
Other income (expense):   
Other, net18  25  (6) 43  
Interest expense(624) (1,332) (2,289) (2,432) 
Other expense, net(606) (1,307) (2,295) (2,389) 
(Loss) before income tax (benefit)(5,420) (8,013) (6,819) (8,158) 
Income tax (benefit)(1,103) (389) (1,366) (346) 
Net loss$(4,317) $(7,624) $(5,453) $(7,812) 
Net loss per share:  
Basic$(0.44) $(0.78) $(0.56) $(0.80) 
Diluted$(0.44) $(0.78) $(0.56) $(0.80) 
Dividends declared per share$—  $—  $—  $0.05  




UNIQUE FABRICATING INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited – dollars in thousands)

  Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Cash Flows from Operating Activities    
Net loss$(5,453) $(7,812) 
Adjustments to reconcile net loss to net cash provided by operating activities:    
Impairment of goodwill—  6,760  
Depreciation and amortization3,458  3,404  
Amortization of debt issuance costs74  89  
Loss on sale of assets108   
Bad debt adjustment554  122  
Loss on derivative instrument598  665  
Stock option expense55  98  
Deferred income taxes(1,571) (728) 
Accounts receivable8,464  2,576  
Inventory(2,021) 1,064  
Prepaid expenses and other assets(1,889) (97) 
Accounts payable(1,228) (107) 
Accrued and other liabilities(983) (956) 
Other, net1,202  —  
Net cash provided by operating activities1,368  5,084  
Cash Flows from Investing Activities    
Capital expenditures(796) (1,880) 
Proceeds from sale of property, plant and equipment884  41  
Net cash provided by (used in) investing activities88  (1,839) 
Cash Flows from Financing Activities    
Net change in bank overdraft(311) 557  
Payments on term loans(1,474) (2,638) 
Proceeds from capital expenditure line—  1,300  
Payments on revolving credit facilities(12,310) (15,189) 
Proceeds from revolving credit facilities10,727  12,858  
Proceeds from PPP loan5,999  —  
Distribution of cash dividends—  (489) 
Net cash provided by (used in) financing activities2,631  (3,600) 
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents4,087  (355) 
Cash and cash equivalents at beginning of period650  1,410  
Cash and cash equivalents at end of period$4,737  $1,055  
Supplemental disclosure of cash flow information:    
Cash paid for interest$2,219  $1,909  
Cash paid for Income taxes$209  $292  



UNIQUE FABRICATING INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited – dollars in thousands)


RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

Three Months Ended June 30, 2020Three Months Ended June 30, 2019Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Net loss$(4,317) $(7,624) $(5,453) $(7,812) 
Plus: Interest expense, net624  1,332  2,289  2,432  
Plus: Income tax (benefit) expense(1,103) (389) (1,366) (346) 
Plus: Depreciation and amortization1,765  1,702  3,458  3,404  
Plus: Non-cash stock award32  66  55  98  
Plus: Non-recurring expenses—  68  —  68  
Plus: Goodwill impairment—  6,760  —  6,760  
Plus: Restructuring expenses273  734  1,193  825  
Plus: One-time consulting and licensing ERP system implementation costs184  221  459  395  
Adjusted EBITDA$(2,542) $2,870  $635  $5,824  



RECONCILIATION OF NET DEBT TO DEBT

June 30,
2020
December 29,
2019
June 30,
2019
Current maturities of long-term debt$2,847  $2,847  $2,923  
Long-term debt, net of current maturities37,794  33,220  33,807  
Line of credit9,874  11,418  15,614  
Debt50,515  47,485  52,344  
Less: Cash and cash equivalents4,737  650  1,055  
Net debt$45,778  $46,835  $51,289  

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