AUBURN HILLS, MI / ACCESSWIRE / May 9, 2019 / Unique Fabricating, Inc. ("Unique'' or the "Company'') UFAB, which engineers and manufactures multi-material foam, rubber, and plastic components utilized in noise, vibration and harshness management and air/water sealing applications for the automotive and industrial market, today announced its financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Financial Highlights and Subsequent Events
- Revenue of $39.5 million in the first quarter of 2019, compared to $47.3 million in the first quarter of 2018
- Net loss of ($0.2) million, or $(0.02) per basic and diluted share in the first quarter of 2019, compared to net income of $1.5 million, or $0.15 per basic and diluted share in the first quarter of 2018
- Adjusted EBITDA of $2.9 million in the first quarter of 2019, including $1.7 million for non-cash charges specifically related to depreciation and amortization and non-cash stock awards, compared to $4.9 million in the first quarter of 2018, including $1.7 million for non-cash charges specifically related to depreciation and amortization and non-cash stock awards(1)
- Adjusted diluted earnings per share of $0.01 in the first quarter of 2019 versus $0.21 in the first quarter of 2018(1)
(1) For a reconciliation of GAAP to Non-GAAP results for Adjusted EBITDA and Adjusted diluted earnings per share please refer to the financial tables below.
''Unique continued to navigate external market challenges that negatively impacted our performance in the first quarter, particularly as it compares to the first quarter of 2018,'' commented Tom Tekiele, Chief Financial Officer. ''Heading into the year, independent industry analysts projected that North American auto production and sales would be flat, but a number of issues, including higher than normal inventory levels, bad weather, economic factors and changing consumer preferences contributed to new vehicle production declining an estimated 4.2% and industry sales declining 3.2% on a year-over-year basis. For Unique, those headwinds were exacerbated by an unfavorable production mix as well as the loss of business due to end of life of certain vehicle platforms and the loss of business with two major non-automotive customers as a result of our decision to close our Ft. Smith facility last year, all of which compounded the impact on our financial results during the first quarter.''
''In response to these challenges, we accelerated efforts to reduce fixed costs and further improve our operational efficiency,'' Tekiele added. ''During the first quarter, we took action to reduce our overhead and identify opportunities to better leverage our geographic footprint. We believe there are several additional steps we can take to further streamline our organization to improve our performance while simultaneously reducing our overall cost structure. While we will continue to focus on improving our ability to better respond to volatility in the market, we are beginning to benefit from new vehicle launches that commenced subsequent to the end of the first quarter. As the production of these new programs ramp up, we believe we will be better positioned to mitigate the volatility we experienced during the first quarter, but we do not anticipate recovering the full scope of business that failed to occur in the first quarter. Based on our current visibility of awarded programs, we do expect that our results will improve incrementally over the course of 2019 and into 2020, positioning us again to outperform the overall industry trend.
Tekiele concluded, ''As a direct result of the challenges that we faced in the first quarter, and the impact it had on our financial results, we secured a temporary waiver from our lenders related to the violation of the leverage ratio covenant of our credit agreement. As a condition of this waiver, we are suspending our dividend program, which supports our strategic priority to reduce our financial leverage giving us greater flexibility, and enhanced operational and strategic options going forward."
First Quarter Financial Summary
Total revenue for the quarter ended March 31, 2019 decreased to $39.5 million, down 16.6%, or $7.8 million from $47.3 million during the same period last year. The decrease was primarily driven by the 4.2% decline in North American vehicle production quarter over quarter, the loss of business due to end of life of certain vehicle platforms, the loss of business at two major non-automotive customers as a result of our decision to close our Ft. Smith, Arkansas facility in June of 2018, as well as declines in production on some of our highest content vehicle platforms.
Gross profit for the quarter ended March 31, 2019 was $8.3 million, or 21.0% of total revenue, compared to $11.1 million, or 23.4% of total revenues, for the corresponding period last year. The decrease in gross profit was primarily related to the decline in revenues.
Net loss for the quarter ended March 31, 2019 was $(0.2) million, or $(0.02) per basic and diluted share, compared to net income of $1.5 million, or $0.15 per basic and diluted share, in the first quarter of 2018. The decrease in net income was primarily due to the lower sales resulting in a gross profit decline, as well as higher interest expense due to higher interest rates and a non-cash unfavorable mark-to-market on an interest rate swap.
Adjusted EBITDA for the quarter ended March 31, 2019 was $2.9 million compared to $4.9 million in the first quarter of 2018. The decrease is primarily a result of the lower sales and gross margins as a percentage of sales described above. Please refer to the financial tables below for a reconciliation of GAAP to Non-GAAP results.
Adjusted diluted earnings per share for the quarter ended March 31, 2019 was $0.01 compared to $0.21 in the first quarter of 2018. Please refer to the financial tables below for a reconciliation of GAAP to Non-GAAP results.
Further non-cash purchase accounting impacts associated with the Company's acquisitions are detailed in the Purchase Accounting Impacts and Other Effects table below accompanying this release.
Balance Sheet Summary
As of March 31, 2019, the Company had approximately $1.3 million in cash and cash equivalents, as compared to December 30, 2018 when the Company had $1.4 million in cash and cash equivalents. Total debt outstanding as of March 31, 2019 was $54.3 million compared to $55.9 million as of December 30, 2018.
As of March 31, 2019, the Company had $12.1 million of available unused capacity, further subject to borrowing base restrictions and outstanding letters of credit, under its $30.0 million Revolving Line of Credit.
2019 Outlook
Due to the continued volatility in independent industry production forecasts, Unique Fabricating is not providing updated guidance for the full year. Directionally, management believes that the company should generate sequential improvements in both revenue and profitability throughout the year.
Quarterly Results Conference Call
Unique Fabricating will host a conference call and live webcast to discuss these results today at 9:00 a.m. Eastern Time. To access the call, please dial 1-877-477-0782 (toll-free) or 1-201-689-8567. The conference call will also be webcast live on the Investor Relations section of the company's website at http://uniquefab.investorroom.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 12:00PM ET on May 9, 2019 until 11:59PM ET on May 23, 2019 by dialing 1-877-481-4010 (United States) or 1-919-882-2331 (international) and using the pin number #47937.
About Unique Fabricating, Inc.
Unique Fabricating, Inc. UFAB engineers and manufactures components for customers in the automotive and industrial appliance 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, fender stuffers, air ducts, acoustical insulation, door water shields, gas tank pads, light gaskets, topper pads, mirror gaskets and glove box liners. The Company is headquartered in Auburn Hills, Michigan. For more information, visit http://www.uniquefab.com/.
About Non-GAAP Financial Measures
We present Adjusted EBITDA and Adjusted Diluted Earnings Per Share 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 award, non-recurring integration expense, transaction fees related to our acquisitions, restructuring expenses, and one-time consulting and licensing ERP system implementation costs as we implement a new ERP system at all locations. We calculate Adjusted Diluted Earnings Per Share based upon earnings before non-cash stock awards, non-recurring expenses, transaction fees, and restructuring expenses, including the tax impact associated with these adjusting items. We believe that Adjusted EBITDA and Adjusted Diluted Earnings Per Share are useful performance measures 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 2019 Outlook 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 for the year ended December 30, 2018 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.
Investor Contact:
Hayden IR
Rob Fink
646-415-8972
ufab@haydenir.com
UNIQUE FABRICATING, INC.
Consolidated Statements of Operations (Unaudited)
| Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | |||||||
| Net sales | $ | 39,466,937 | $ | 47,304,153 | ||||
| Cost of sales | 31,166,935 | 36,224,006 | ||||||
| Gross profit | 8,300,002 | 11,080,147 | ||||||
| Selling, general, and administrative expenses | 7,272,712 | 7,966,982 | ||||||
| Restructuring expenses | 90,544 | 442,267 | ||||||
| Operating income | 936,746 | 2,670,898 | ||||||
| Non-operating (expense) income | ||||||||
| Other (expense) income, net | 17,550 | (36,034 | ) | |||||
| Interest expense | (1,099,949 | ) | (735,759 | ) | ||||
| Total non-operating expense, net | (1,082,399 | ) | (771,793 | ) | ||||
| (Loss) income – before income taxes | (145,653 | ) | 1,899,105 | |||||
| Income tax (benefit) expense | 43,464 | 387,216 | ||||||
| Net (loss) income | $ | (189,117 | ) | $ | 1,511,889 | |||
| Net (loss) income per share | ||||||||
| Basic | $ | (0.02 | ) | $ | 0.15 | |||
| Diluted | $ | (0.02 | ) | $ | 0.15 | |||
| Cash dividends declared per share | $ | 0.05 | $ | 0.15 | ||||
UNIQUE FABRICATING, INC.
Consolidated Balance Sheets (Unaudited)
| March 31, 2019 | December 30, 2018 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 1,304,652 | $ | 1,409,593 | ||||
| Accounts receivable – net | 30,243,063 | 30,831,182 | ||||||
| Inventory – net | 15,870,481 | 16,285,507 | ||||||
| Prepaid expenses and other current assets: | ||||||||
| Prepaid expenses and other | 2,005,577 | 2,511,486 | ||||||
| Refundable taxes | 1,154,878 | 983,073 | ||||||
| Total current assets | 50,578,651 | 52,020,841 | ||||||
| Property, plant, and equipment – net | 25,238,055 | 25,077,745 | ||||||
| Goodwill | 28,871,179 | 28,871,179 | ||||||
| Intangible assets– net | 14,575,948 | 15,568,383 | ||||||
| Other assets | ||||||||
| Investments – at cost | 1,054,120 | 1,054,120 | ||||||
| Deposits and other assets | 222,230 | 198,854 | ||||||
| Deferred tax asset | 537,283 | 496,181 | ||||||
| Total assets | $ | 121,077,466 | $ | 123,287,303 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 12,882,364 | $ | 11,465,222 | ||||
| Current maturities of long-term debt | 2,955,000 | 3,350,000 | ||||||
| Income taxes payable | — | 40,634 | ||||||
| Accrued compensation | 2,004,624 | 2,848,282 | ||||||
| Other accrued liabilities | 829,627 | 1,432,109 | ||||||
| Total current liabilities | 18,671,615 | 19,136,247 | ||||||
| Long-term debt – net of current portion | 33,862,531 | 34,667,768 | ||||||
| Line of credit-net | 17,470,268 | 17,904,869 | ||||||
| Other long-term liabilities | 607,832 | 395,154 | ||||||
| Deferred tax liability | 2,222,453 | 2,295,105 | ||||||
| Total liabilities | 72,834,699 | 74,399,143 | ||||||
| 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, 2019 and December 30, 2018, respectively | 9,780 | 9,780 | ||||||
| Additional paid-in-capital | 45,914,529 | 45,881,848 | ||||||
| Retained earnings | 2,318,458 | 2,996,532 | ||||||
| Total stockholders' equity | 48,242,767 | 48,888,160 | ||||||
| Total liabilities and stockholders' equity | $ | 121,077,466 | $ | 123,287,303 | ||||
UNIQUE FABRICATING, INC.
Consolidated Statements of Cash Flows (Unaudited)
| Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | (189,117 | ) | $ | 1,511,889 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,701,812 | 1,634,374 | ||||||
| Amortization of debt issuance costs | 44,371 | 35,536 | ||||||
| (Gain) loss on sale of assets | (6,559 | ) | 14,680 | |||||
| Bad debt adjustment | 60,577 | 61,800 | ||||||
| Loss (gain) on derivative instrument | 272,496 | (35,596 | ) | |||||
| Stock option expense | 32,681 | 33,260 | ||||||
| Deferred income taxes | (113,754 | ) | (48,064 | ) | ||||
| Changes in operating assets and liabilities that provided (used) cash: | ||||||||
| Accounts receivable | 527,542 | (4,125,311 | ) | |||||
| Inventory | 415,026 | (572,652 | ) | |||||
| Prepaid expenses and other assets | 251,000 | (443,820 | ) | |||||
| Accounts payable | 62,021 | 3,476,276 | ||||||
| Accrued and other liabilities | (1,486,774 | ) | (32,373 | ) | ||||
| Net cash provided by operating activities | 1,571,322 | 1,509,999 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (869,778 | ) | (1,726,375 | ) | ||||
| Proceeds from sale of property and equipment | 6,559 | 8,500 | ||||||
| Net cash used in investing activities | (863,219 | ) | (1,717,875 | ) | ||||
| Cash flows from financing activities | ||||||||
| Net change in bank overdraft | 1,355,121 | (399,487 | ) | |||||
| Payments on term loans and note payable | (1,925,000 | ) | (800,000 | ) | ||||
| Proceeds from capital expenditure line | 700,000 | — | ||||||
| (Repayments) proceeds from revolving credit facilities, net | (454,208 | ) | 2,590,992 | |||||
| Proceeds from exercise of stock options and warrants | — | 30,000 | ||||||
| Distribution of cash dividends | (488,957 | ) | (1,465,000 | ) | ||||
| Net cash (used in) provided by financing activities | (813,044 | ) | (43,495 | ) | ||||
| Net decrease in cash and cash equivalents | (104,941 | ) | (251,371 | ) | ||||
| Cash and cash equivalents – beginning of period | 1,409,593 | 1,430,937 | ||||||
| Cash and cash equivalents – end of period | $ | 1,304,652 | $ | 1,179,566 | ||||
| Supplemental disclosure of cash flow Information – cash paid for | ||||||||
| Interest | $ | 1,050,564 | $ | 692,826 | ||||
| Income taxes | $ | 132,804 | $ | 123,246 | ||||
Reconciliation of GAAP Net Income to Adjusted EBITDA
| Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | |||||||
| GAAP Net income | $ | (189,117 | ) | $ | 1,511,889 | |||
| Plus: Interest expense, net | 1,099,949 | 735,759 | ||||||
| Plus: Income tax expense | 43,464 | 387,216 | ||||||
| Plus: Depreciation and amortization | 1,701,811 | 1,634,374 | ||||||
| Plus: Non-cash stock award | 32,681 | 33,260 | ||||||
| Plus: Restructuring expenses | 90,544 | 442,267 | ||||||
| Plus: One-time consulting and licensing ERP system implementation costs | 173,480 | 180,701 | ||||||
| Adjusted EBITDA | $ | 2,952,812 | $ | 4,925,466 | ||||
UNIQUE FABRICATING, INC.
Reconciliation of GAAP Net Income to Adjusted Diluted Earnings Per Share
| Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | |||||||
| GAAP Net income | $ | (189,117 | ) | $ | 1,511,889 | |||
| Plus: Non-cash stock award | 32,681 | 33,260 | ||||||
| Plus: Restructuring expenses | 90,544 | 442,267 | ||||||
| Plus: One-time consulting and licensing ERP system implementation costs | 173,480 | 180,701 | ||||||
| Less: Tax impact | — | (133,801 | ) | |||||
| Adjusted Net income | $ | 107,588 | $ | 2,034,316 | ||||
| Diluted weighted average shares outstanding | 9,779,147 | 9,911,689 | ||||||
| Net income per share | ||||||||
| Diluted - GAAP | $ | (0.02 | ) | $ | 0.15 | |||
| Diluted - Adjusted | $ | 0.01 | $ | 0.21 | ||||
UNIQUE FABRICATING, INC.
Purchase Accounting Impacts and Other Effects
| Thirteen Weeks Ended March 31, 2019 | Thirteen Weeks Ended April 1, 2018 | |||||||
| Non-cash purchase accounting impacts | ||||||||
| Customer relationships amortization | $ | 836,797 | $ | 836,797 | ||||
| Trade name amortization | 72,926 | 72,926 | ||||||
| Non-compete amortization | 6,183 | 44,162 | ||||||
| Unpatented technology | 76,529 | 76,529 | ||||||
| Less: Tax impact | — | (201,291 | ) | |||||
| Net income effect | $ | 992,435 | $ | 829,123 | ||||
| Net income per share impact | ||||||||
| GAAP - Basic | $ | 0.10 | $ | 0.08 | ||||
| GAAP - Diluted | $ | 0.10 | $ | 0.07 | ||||
SOURCE: Unique Fabricating, Inc.
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