Unique Fabricating, Inc. (UFAB) 10-Q Quarterly Report November 2021

Unique Fabricating, Inc. (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, medical, and consumer markets, today announced its financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Results

▪Net sales of $29.9 million compared to $35.6 million in the third quarter of 2020.

▪Net loss of $1.9 million or $0.19 per basic and diluted share compared to net income of $1.0 million or $0.10 per basic and diluted share in the third quarter of 2020.

▪Net debt(1) decreased $3.2 million to $46.4 million as of September 30, 2021, from $49.6 million as of December 31, 2020.

▪Interest expense increased $0.1 million to $0.8 million compared to the prior year period of $0.7 million.

“Unique Fabricating continues to navigate the significant supply chain, labor, and customer demand fluctuation challenges, while maintaining our ability to service our customers well,” commented Doug Cain, Unique Fabricating’s Chief Executive Officer. “As we all weather these challenges, we have taken clear steps to remain flexible and improve capability so our customers and suppliers can continue to rely on Unique Fabricating as an important partner in the value chain. The supply chain issues have driven our costs higher and continue to disrupt manufacturing volumes. When combined with the ongoing labor shortages throughout the supply chain, our customers are continuing to reduce volumes and near-term visibility is limited. We believe that comprehensive commercial and manufacturing challenges are creating opportunities for us to take over current business from competitors who have been significantly challenged to meet customer requirements and to benefit from other potential strategic initiatives.”

“To date, we have been able to manage the supply chain issues and labor situation to ensure continued timely supply of customer requirements and are maintaining inventory availability to service higher volumes albeit at higher costs,” added Mr. Cain. “Ongoing production shutdowns by OEM and Tier 1 customers and extreme volatility of altered production schedules from our automotive customers, often on short notice, are creating incremental challenges and have had a negative impact on our financial results for the third quarter. That said, we have been managing these impacts, and are positioned to emerge as one of the stronger players when this situation abates.”

Mr. Cain continued, “We continue to maintain productive dialogues with our lending syndicate. While the industry production forecasts for next year are encouraging, we remain somewhat skeptical regarding the timing of the ramp increase in 2022 but do believe that the strong pent-up demand will lead to higher production volumes in 2022 and beyond. Based on the latest third-party forecasts, the automotive industry is expected to have experienced two consecutive years with production levels of only 13 million units, after average production levels of 17 million units for the preceding four years, resulting in depleted inventory and substantial pent-up demand. Our skepticism concerning the previous third-party forecasted automotive production third quarter volumes, as discussed in the second quarter earnings release, proved somewhat prescient, though volumes were even worse than our discounted outlook. We are managing these turbulent times until production levels increase.”

The following information was filed by Unique Fabricating, Inc. (UFAB) on Monday, November 15, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Unique Fabricating, Inc.'s 10-Q Quarterly Report:

Financial - Expense Highlight
The increased operating loss in the current year is primarily driven by goodwill impairment charge of $5.1 million, increased input costs and inefficiencies due to changes in planned customer production schedules, offset by the restructuring expenses in 2020 that did not recur in 2021.

Financial - Expense Highlight
The decrease was primarily related to a reduction in amortization expense compared to the third quarter of 2020 due to certain intangible assets becoming fully amortized in the first quarter of 2021, resulting in $0.5 million lower amortization expense in the third quarter of 2021.
Financial - Income Highlight
Income Tax Provision During the nine months ended September 30, 2021, income tax expense was $0.2 million, and the effective income tax rate was (4)%, compared to an income tax benefit of $1.5 million and an effective income tax rate of 21% during the nine months ended September 30, 2020.
Financial - Earnings Highlight
The decrease in net income is primarily the result of forgiveness of the PPP loan and accrued interest offset by the decrease in sales compared to the third quarter of 2020 and the goodwill impairment charge of $5.1 million.
Financial - Cash Flow Highlight
Key assumptions used in the analysis included a discount rate of 14.8%, a terminal growth rate for cash flows of 3%, and EBITDA margins of 10.8% by 2025.
Other - Other
Factors that could cause or...Read more
Other - Other
In light of these risks...Read more
Revenue - Product
The increase in manufacturing overhead...Read more
Other - Other
These statements relate to future...Read more
Other - Other
The increase in cash used...Read more
Legal - Other
No demands have been made...Read more
Other - Other
However, application of our accounting...Read more
Financial - Expense
As a result, we are...Read more
Revenue - Product
The Company also continues to...Read more
Revenue - Product
The most impactful being the...Read more
Financial - Expense
These benefits were almost entirely...Read more
Financial - Cash Flow
Financing Activities Cash flows provided...Read more
Financial - Expense
Selling, General and Administrative Expenses...Read more
Financial - Expense
27 Table of Contents Selling,...Read more
Other - Other
Driving the cash inflows during...Read more
Revenue - Product
However, our net sales continue...Read more
Financial - Income
Income Tax Provision During the...Read more
Financial - Expense
Cost of Sales The major...Read more
Financial - Expense
Cost of Sales The major...Read more
Financial - Expense
The higher costs and delays...Read more
Revenue - Product
Comparison of Results of Operations...Read more
Revenue - Product
The operating loss is primarily...Read more
Financial - Expense
The increase in cost of...Read more
Financial - Expense
Material costs rose due to...Read more
Financial - Cash Flow
30 Table of Contents Cash...Read more
Revenue - Product
The increase in net sales...Read more
Financial - Expense
In addition to the uncertainty...Read more
Financial - Expense
Historically, costs related to these...Read more
Financial - Expense
Further, the Company has experienced...Read more
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The Company entered into a...Read more
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Additionally, in April 2020 the...Read more
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The Company continues to monitor...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Unique Fabricating, Inc. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: UFAB
CIK: 1617669
Form Type: 10-Q Quarterly Report
Accession Number: 0001617669-21-000111
Submitted to the SEC: Mon Nov 15 2021 5:17:58 PM EST
Accepted by the SEC: Mon Nov 15 2021
Period: Thursday, September 30, 2021
Industry: Motor Vehicle Parts And Accessories

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Unique Fabricating, Inc. (UFAB) SEC Filing 10-Q Quarterly Report for the period ending Thursday, September 30, 2021

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