UFAB - Earnings call transcript Q2 2020 | Unique Fabricating, Inc.

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Operator

Greetings and welcome to the Unique Fabricating Second Quarter 2020 Earnings Call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeff [Indiscernible] of FNK IR. ahead. go Please

Unidentified Company Representative

Executive I'd second Devin. call welcome to and everyone is Fabricating's Loftus, Thank Financial Chief XXXX like earnings Fabricating’s Officer. Chief President Fabricating's quarter Cain, the and conference Unique Brian Doug Unique you, Unique to Officer; call. today Hosting

XXXX to in Reform conference turn include call the like forward-looking to are the matters Litigation that that statements Doug, over I everyone risks of discussed defined Private to will Act Securities Before I'd as and call remind subject on this uncertainties.

different events statements Forward-looking to and of levels to relate on cause and to by levels statements or from performance performance that performance activity, materially involve factors and future the expressed today's any uncertainties, or risks, future activities, or future results, implied actual achievements of unknown results, financial call. achievement company's may known or other be

expectations risk required All Fabricating morning's in and filed cause those today, on As for this management's those the of on does made XX, XXXX, those XXX(b) but such law. the subject Factors. in present materially are which section on Unique the risks differ unless such ended including Rule June outcomes, Exchange that release to this and expressed this not period limited will with statements may not pursuant are the update made and report Risk and are include discussed statements titled to be call information, company's Commission, uncertainties from by Securities and press particular, intend certain Form statements. as are by forward-looking in actual quarterly performance to and These and uncertainties XX-Q to and results, to based factors

the are it useful prospects measures non-GAAP financial ongoing evaluate in to by for the to management future current understanding measures and the presentation non-GAAP any included assumed strategic Full With that on the that used operation measures future. yours. it during company's now financial the non-GAAP performance. are assessing In discussed earlier these are like non-GAAP of and results, was to believes addition, decisions, GAAP press will a and I'd is this call otherwise forecast stated, company’s the Management call. make issued discussed These will Doug, Unless release all this that is on be Doug. should be to certain GAAP investors in basis. reconciliations core call be turn of call financials to said, the today.

Doug Cain

of morning results by everyone. significant our provide the stronger second that and we we presented continued May demand. evidence sales remain June situation, With customer in you, In Jeff the boldly Despite and a $XX.X April challenges continued million generated sales sales. $XX see our track. net good June, COVID-XX our we back quarter exceeding on June, Thank with million in much net strengthening July's quarterly

severance the in $X.X charge, While second and the operational discipline. low last $X.X to to an improvements compared SG&A month, over challenges the continue and $X.X commercial million the operational will quarter, were we million able significant the May effectively cost $X.X ramped our costs, our of quarter, first to the quarter Despite positively million XXXX. in move forward. second and million up from SG&A and levels, we're overall In very April maintain including the production business

reduction, last the and XX team rebuilt as the are have months, power growth. we industry improvement, Fabricating, over upon entire deliver organization the work sales the Unique rebounds, success. for continued of and are the leadership foundational laid earnings automotive We EBITDA and the ready well-positioned Based to debt

provides their successful profitable forward. bank a operational sufficient firm syndicate, covenants. new liquidity new for in have amendment, going loan relationship agreements strong we revised with company on with amendment fully to providing regarding efforts focus the its our basis we growth Combined With achieved improvements, the our the

July the our protect XX.X our plans North various situation our continue the on uncertainty we unprecedented second vehicle approximately based back production be resources indicates to various of prudently. we provided business X.X seen operate full outlook taken approximately operations. the environment production jurisdictions The have situation, units forecast America Regarding volume impact current and maintained to the the inherent at governmental future Due our start and year. COVID-XX work million and by have America to we entities support August corresponding automotive This unable automotive light to this customers are employees. plants upon including outlook. where XX% with million production demand, regarding impact forecast. In the follow latest from of XXXX the the for North of releases of the in this provided line added million evolving we we the versus of our production our the original our increasing units the We've actions, a COVID-XX do additional customers, and the third-party safe measures determine XX.X or half guidelines on

up As more production to operate a ramped COVID-XX. before our cost we did plant result, effectively we than

our spending continue reduction rationalization or We discretionary -- elimination.

net automotive are XXXX sales the million. while second April X.X than from higher new million million, reduced PPE of and million X more quarter our XX a June million net million, XX.X the increase to XX.X million, QX the saw which XX COVID-XX QX, of resulting sales sales and above communicated business, despite quarter in second and expected respectively the previously May see healthcare sales approximately did sectors, in X.X than dramatic net of manufacturing Regarding shipments impact by product XX% or on curtailment for

are we now near was our summary, significant. our June of on full second Our that facilities. Mexico impact started as all COVID-XX operations the production, are in In other quarter

ability saw our significant June The to XX.X into We manufacturing net time. June PPE, July behind of our and is for the that success us our but react deliver pivot have reinforce continued operating new taken quickly months improved, that with over our million this improvement, income and on increased volumes, efforts, reduction our our navigate us us which volume forward. cost going well sales. However, challenging volumes the and last helped to positioned positive July very and modest worst ability those to still XX confidence actions

of agreement Next, with million through I of site. for will $X.XX future highlights. business activities and an non-cash charge equipment a discuss expenses review, and the the in executed the $X.X second $X.X we operational our a restructuring in key We million of operations, a incurred Evansville a million of continuing primarily facility quarter total our facility our for Mexico of the owned current portion expected annual took our cost XXXX. sale million and Evansville Combined net quarter. completed for severance of savings. We $X.X a certain sublease as second we remaining disposal incurred million $X.X in building realignment leased for upgrades, the and the From with the cost organizational previously part non-cash restructuring in

teams expectation We completed costs. have our now completed medical, restructuring and market approach. further organizational the no consumer/off-road of targeted appliance, We realignment our activities our transportation with commercial of location restructuring cash and with

our a customer experienced our aspects meet our for our We us noted various strategy as of our and of new targets. staff as relationships Management commercial Relationship we to all executive have organizational develop commercial our In page in the stakeholders. capable Investor achieve and improvement and our on activities. and an now part seen our to of information to implemented executing efforts or in continue to team the an tool late our to opportunities. new to our call, our leadership activities to we to operational ongoing teams We've linked updated additions improve recent already structure the information complete, July, available prior Customer provided commercial we our website, earnings With capitalize the facilitate CRM

new a July the medical of for As our X.X with Hills we in Auburn activities sales, produce communities, facemask began second NXX of and manufacturing in million to in production quarter facility. continuation PPE

target markets, a injection XX in reaction large intake retardant targeted recent as to CLI the engine activities, to the continue Based our success fire the potential the we sales molded August, in we winning of and these grow be have for each a chosen for order new A evaluating share Class our a award are organically our approximately in second our million the total including of of markets of we or products ongoing medical of that markets remain XX% upon term have new-to-unique business With through our operational We new to [Indiscernible]. improvement serve. application opportunities we certain of overall and our week longer commercial part customer mid-term. growth for

offerings, service strategic will as relationships. longer as enable supplier to us Our our new enhance to further and product develop term well hires

in on the now operational points results. our in back will on of build the create to-date. that financial us provide and is made our sustainable confident position selling We organization remains realignment our now stronger as Fabricating overview well Unique commercial and are track. and as realize opportunities targeted to additions markets. existing boldly enable completed the It to identified unique communicate the new team our second to Brian a improvements an quarter

Brian Loftus

during morning, Doug. last XXXX down quarter the XX.X million Net million, second to the sales Good XX% or Thank quarter everyone. million you, XX.X decreased year. XX.X for of from second

quarter net for of primarily update for in at the lower The the impact offset of approximately $X.X million the Selling, of to million Interest profit primarily more for the the same sales XX.X the loss the cost headcount, quarter sales the million impairment, compared professional of market last in restructuring XXXX. levels, plant $X.X second the our or idle $X.X The due $X.X The on XXXX SG&A, million of for Gross expense. provide quarter contribution of the year. were as million impairment lower second quarter and net $XX.X second XXXX million total totaled other to X.X in $X.X as lower savings offset related XXXX, XXXX second debt, $X.X severance $X.X decreased partially primarily June cash on of the of will second financial transition than costs year-over-year capacity partially of of our to to attributable last for million the by compared XX.X and XX.X from of and $XX.X was was to million loss the lower The position $X.X quarter expense loss offset to as cash as margin reduced lower the by is customers services ongoing were debt to sales million XX%, The XXXX. XX%, of reductions, and total in was expenses due the -- less June debt management total goodwill was of was decrease recognized I the market XXXX. contribution to for structural of XX.X% or administrative quarter, to sales quarter XX%, equivalents, XXth, sales $X.X liquidity. in transportation of an expenses for inclusive cash the decreased $X.X our of compared compared SG&A, loss due composition million sales operating cash rate compared at financial $X general, SG&A Net net loss year, million and the to in approximately SG&A in partially net increase the the salaried COVID-XX and and an million cash and operating of impact or of XXXX $X.X expenses. to the personal $X.X $X.X restructuring, compared loss XXXX we The of the May million to quarter or offset sales quarter decrease loan the XX.X of Administration's addition to second in and $X.X down the lower of for to now margin received in XXth, to which last of Program. the equipment. December million our on Operating to $X.X has basic from cash for XXXX. the million were in our net did debt XXth, accounted was net cash XX.X% X%. million in including $X.X equivalents interest and and basic the million decrease as June by million on second second net share overhead year. PPP the cash million which impairment, for share and compared April in were to equivalents quarter profit second customers' an result commissions, compared part XXXX. loss cash of XXXX, with facilities XXXX XXXX $X.X per of million of quarter of million appliance period pandemic. for to reduced and gross period $X.XX interest remaining the was sales, we inclusive in of XXXX protection the interest loan debt in restructuring quarter addition has Small inclusive not second several transportation of the million second for Of diluted the or cash our closures, rate of Net XXXX, expenses. net swap, Business the as the the some diluted of is sales April net same second XXXX. million and million $X results equivalents costs. XX% million or of year-end, XX lower and to due $X.X recur primarily equivalents $X.XX Our the The per medical due quarter of $X.X million Protection as Since to lower decrease million million and Paycheck second million manufacturing the recognized

By in loan During the end of July, at fully as the $X.X equivalents the expenses use proceeds. second for we cash the quarter, $X.X Act, June and of in XX. exhausted million the allowed which left we cash had PPP million CARES defined proceeds

for forgiven. we believe not be to if later forgiveness expect substantial a of the apply October, no We loan than and portion, all will PPP

loan the uncertainty have application is to or forgiveness PPP what not forgiven. be related will of inherent through the amount to ultimately As any forgiveness, we process gone audits there

The also that we to agreement quarter. second which April, completed August had waived our completed in covenant on earnings Eighth we Seventh addition morning, we In requirements announcement successfully the the X. Amendment credit announced our this to financial our Amendment, for

Eighth the covenants, our quarter As results. Seventh and results and cash covenant needs. of discretionary by from pandemic We waiver closing Doug controlling million deleverage And third provided we cash knew our calculations. you. $X.X with can of on net provide line believe Amendment our would million covenant did which XXXX, not $X.X strong second will to We the The anticipated revolving Amendment COVID-XX sufficient ongoing excludes impact the we financial of on of capital to quarter the that future compliance XXXX resets remarks. we address financial our we've beginning the the credit. We of back to the spend, significantly remained cash obligations. expenditures, availability liquidity equivalents quarter our ended flows some so have focused and company. now Doug, meet generate our with

Doug Cain

but survived, a person we and the over circumstances the allowed. over ambitious Brian. possible in of in the virtually intent to challenges improve all you if stakeholder targets you, expectations have next with Thank profitable months, last performance. the deliver shareholder strong faced just our significant operating We've has of remains Through It aspects Unique continued team many commercial value. for to to our or meet year, not our has growth meet and significant we as established foundation fact and

will are that, continue have now we excited front boldly opportunities call our questions. realizing As With track on open the complete are we we to and then about our for of in employees back our on path team us. the vision, Operator? management

Operator

Taglich comes session. Brothers. Our your we question of first time, one proceed Nobile conducting Please questions. a will with John Instructions] this from question-and-answer [Operator be with At

John Nobile

and my the in couple related halfway talk into here I'd I auto is mentioned the call comment morning, for current July, Brian. almost Thanks just business? Doug on Good we're could and questions. could had you extra the to We taking quarter, appreciate you it. specifically but if about the related like third a now that total looking know, XX.X was business you know, your of business how if auto weeks that

Doug Cain

Okay.

trend mentioned this outlook with certain reservation. now million is through as trends. inherent indicated a June, July again, caution, to that thought seeing say. So again production we've we guess, see we're of The uncertainty amount similar everybody times, was as else call this that important. today familiar And using was XX.X exists et and what was few provider and everything would in relative I XX way that say a the million we above on I the closures, the I the with with best based the again, different in the in U.S. the we sales, here But third-party overall can production, outlook on It right which communicated continue. cetera. August, changing we

John Nobile

had business, actually, your be a a appliance regard numbers the you the didn't better would appliance now in the through of quarter? which your in related know break halfway for how a I us you I same your is talks to also. the Okay. business, ask provide on that July. is versus one feeling total I shaping about so in business business But August better can question up trend,

Doug Cain

Yes.

the appreciate concentrated I forward. we diversify have do the diligently somewhat that in we we're And thanks working again, is question. understanding move that as diversified a again, transportation. So business, somewhat for to But absolutely

people specific say related supporting can before, itself, whether is that that, are dryers strong positive both there, new to anecdotally, we A indicated said we backorder. businesses is have lot refurbishments. and in housing on what of macro appliance, market, refrigerators washer of we've very I get evidence housing trends, trying and done and release being that see earnings to very customers and to the I've that As also the our

is clearly does change, a see rate environment interest that strong our we the then things. we the least in over supported outlook, too. strong very different next business. the And it business point remains as XX to time, at as also subject the business remains days, also of part have and So, relatively can the all but by low for visibility that that which at But strong this this transportation

John Nobile

quarter the XX% to that. month Are mid-term? XX like from encouraging. come sales you still you're targeting that come period looking you Okay. I market to at about think alluded your in medical think to XX from total for month still the That Thanks midterm And are last at sounds of looking the fact we XX% to that I it? here.

Doug Cain

later appliance XXXX. than your And I that commercial tell whitespace say would take our there, and business. internally, actual you and more noting would deliver we it to have to target we the Yeah. time to in some that end clearly the that than have appreciate be looking team able our and transportation that target. does our no our remains that comment started and is the get to certainly be that what mid-term restructured we're is we have we of access Because that, in

in we longer previously, in that noted of are at we end And the it again, the to that in provide deliver started that what a the I but it production As of now. mask being midterm. efficacy able NXX and July. are business doing assessing started, We're certainly be foundation can the the term that XX% would face production, very

John Nobile

Okay.

it $X ask but Lastly, if you I million PPP all don't There is we will most be for the loan. know good about I not chance. question, now, going a to forgiven. did sure of was mean, answer a

Brian that overall, the we earlier bring this from forward One had I they And should rate interest here, think added had kind your comments substantially I expire. I your expire rates after September. September expense was those going that period? one. made up, What I noticed final of but it's swaps question to to you interest or going just expect did. interest

Doug Cain

what confusing LIBOR be the will -- would spread that, depend of our but have. obviously, some that we it partially credit the on rate be, with currently will Well,

John Nobile

Okay.

that -- the should specific obviously going whatever the basically that's rate on, when plus and QX -- saying on? model base what LIBOR, basically, is rate rate the So I in rate out

Doug Cain

Correct.

Doug Cain

Thank great. taking Okay, you for my questions.

Operator

There in no And turn would any for Instructions] like to queue. I be floor Chain questions up closing seem the the over further to Mr. remarks back [Operator to

Doug Cain

Fabricating interest forward to we to certain and look some of our very and the all you, behalf of the again talking see Unique you I our for in team Board of your provide On again, want information today. you employees, hopefully Directors, time quarter we'll over regarding you of continued the management investment appreciation the weeks results. months and third we next for and of express our some our business, as and with And seeing much. Thank of

Operator

This concludes today's teleconference.

time. at you lines You for have now may And day. this your wonderful a disconnect your Thank participation.

Unique Fabricating (UFABQ) 13 Aug 202020 Q2 Earnings call transcript