UFAB - Earnings call transcript Q2 2021 | Unique Fabricating, Inc.

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Operator

Greetings and welcome to the Unique Fabricating Second Quarter 2021 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, Rob Fink of FNK IR. ahead. go Sir,

Rob Fink

Executive I'd second operator. 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.

achievement to Risk unless made Unique Factors. and and made morning's statements not of with this are titled company's These SEC, different XX-K actual events outcomes, Forward-looking to expressed XX, information, and of present on XXX(b) levels required based those implied and to risk include relate limited factors cause that uncertainties and or statements risks discussed the does in All to will levels those the from as statements. be statements on on from and subject certain which section performance by to management's forward-looking for that XXXX, Fabricating performance materially All of report but involve factors this expressed law. and including not future the this year any today's in to pursuant April uncertainties, release results, are or performance Rule such risks, future activities, by uncertainties activity, the this future results, and actual cause achievements of intend or unknown and results, press financial in company's period December performance may the quarterly call. Form differ to are particular, known by materially call ended on or those in other update expectations are and statements may today, filed be to

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

Doug Cain

in morning the operational good the our time outlook, and navigate financial to the costs industry everyone. spoken operations continued a thus prior and and reduce have improve third efficiency I've challenges. which of through Rob, The and results. investment and quarter. are overall to large appreciate update Unique external I your far in of Fabricating, enabling changes to persisted you, Thank Brian quarters These structural company's challenges in made second significant wide about degree quarter us we

QX. third sales materials, in customers and are primarily and shortages side, lower the continued than XX% The certain based resulting of releases well market petroleum transportation causes approximately On party recording reduced any below the primary key our our demand products. quarter through in previous QX appliance in chips, estimates

to production suppliers more market QX their has overall Three forecast. auto manufacturers reductions shortages, widely party communicated, compared in half of been impacted the by have in As these dramatically first Detroit third greater been the and QX the previous than causing

increase we do QX. for will show the production occur. the in that this our While of sales see considering QX light America higher have North currently QX, estimates remainder July we vehicle XX% versus customer third confidence and party releases not

do related through cost half the the in margins have availability These in negatively increasing packaging over have other challenges resulting On side, XXXX. customer with see persisted labor over supply logistics, of along challenges from raw increases shortage inefficiencies with of and to the we QX last continued ongoing issues with force months. continued factors chain cetera in previously, fluctuations the as the cost and measure, levels. from material COVID the impacts operational order allocations, including affected factors supplier our second chip et move labor, to We our outlined the supply expect

have on well availability challenges. are issues increases has make and all This we These results recovery economy. the considering managing of that program our cost shortages. well-documented that the the recovery as will in raw meaningful reflect allocations, chip increase largely of and the material mitigating raw impacting be This labor raw quarter to As above noted pandemic segments periodically including successful, and cost and effort these other our been portion packaging costs. increased as determine periods modifications to conditions. factors we With call, customers activities. year-to-date what offset previous affecting changing our may financial a our labor by the on ensuring cost implemented shortages material and revenue and costs is labor supply solve supply currently effectively were impacts, labor as higher offset material, partially The partially program logistics been focused ongoing in our focused chain customer we continuing reviewed

on intake or mid-August $XX to and We reduction million at million $XX all the our in of Despite in cost COI last year-to-date. customer activities, June a end throughout of recovery awarded the sourcing have noted have order and new XXXX. $XX overall business been our we This compares year focus markets. this million

overall remain likely QX will customer historic below sourcing During levels.

In lows. vehicle of and confident of longer Light our with the historic strength markets at macroeconomic very that we customer accelerated the launches. maintained challenges levels XXXX remains the in new ensured [ph]. we day to platform X.X responsiveness in and customer of reduced each current new then remain potential continue July key inventory timetables end rental have fleet our in term delayed We have draw million the for environment, June awards Despite at commercial from demand, million X.X continue car X.X the units. to duty supply units the high including inventory companies million of and in

July dropping rate million $XX.X shows XXXX XXXX my after and The first million mid showed vehicle North inventory the inventory America July million from comparison, units. $X.X last production a low to over X.X million million of QX $X.X of of forecast units. the June million from our units the million SAR there the very first light June units $X.X down second increase June half sales first US million XXXX update at to units or $XX.X forecasted in With X.X X.X half automotive negative X independent For of just down the with at stood and million, million call, seasonally QX while $X.X XXXX at last adjusted units million for is approximately each units and $XX annual units and inventory. impacts sales respectively half. $XX.X levels, averaging with million was in

from the business forecast, third managing assuming recent third are from the months party reductions we a these plus prior our party term a As within forecasts. have reduction near quarter shown XX%

units or XXXX increased million XX% the from year. current X.X outlook to produced units XX.X has the approximately been a XXXX, increase full For million current

Over weeks, the reducing focused enhancements executed a of and series last increasing organization costs. we capability salaried on

comprehensive half profitable approximately second million QX of the during We actions realization sustained these beginning activities improvement growth. full all of will business the October. in well of month across realize have as our an facets $X.X the annualized beginning last implemented in benefit positioned believe from with for of We

program markets. supply our chain new increase, production are winds releases all challenges into over the across the customer our next come As resolved months and

we strengthen PPP million will and the event this As sheet did release QX million loan confirmation recorded debt the in of balance forgiveness Based improve for our timing our expense. a receive financial noted will press forgiveness upon the of in the gain be ratios. $X.X purposes, our actual statement SBA $X.X documentation week, and as related in interest this

syndicate to new enable for framework our are liquidity maintain these to to second we times. Brian financial of to quarter continue productively in develop XXXX an to sufficient our us a prior Today, operate a with We end. challenging bank overview will working results. provide agreement year longer term now

Brian Loftus

Doug. afternoon, you, Thank Good everyone.

quarter Turning in induced of in customers compared to XXXX. to the $XX.X second many the second the increase quarter for million the the XXXX. due to second quarter in sales results. transportation period to of of The Net as production of second the is to same at XXXX in primarily COVID-XX quarter compared shutdowns sales net $XX our increase XXXX million,

because pandemic products. were XXXX of not quarter second for and decreased of the of our demand by than in sales shutdowns quarters impacted that net Our less anticipated, induced

which reduced and $X.X quarter in to increase gross of as quarter X.X sales due production As a for XX%, some approximately XXX the remaining drove which percentage appliance reflects automotive to net Of the in primarily shortages. of medical XX.X% same last original basis second net both equipment improvement net and with The period operating XX.X% market. Gross manufacturers at cancelled the for higher attributable XX% of volumes or second planned sales market of gross the profit other sales. a the for transportation sales, semiconductor X% compared million $XX.X overhead leverage for profit million net or customers approximately sales the resulted percentage a or of net the was in million accounted profit supply point the have to sales as year.

of as This we to off that second is result the a material employee cost quarter and home based costs other during demand due to XXX pattern industries the Additionally, basis compared on from points from supply the have petroleum Texas Material costs. were and increase and health of contributions. significantly benefits raw without percent increased based resulting to shortages to non-petroleum than more impact the furloughed Material XXXX increased in continue or add in materials. of or employees weather the laid care materials extreme period year. home last of provide sales high construction same freight February the our increased net improvement XXXX,

to The $X.X XXXX. in same the result becoming of compared to resulting to XXXX. period customer ability last Many the Operating amortized, of fully and to due sales by SG&A flex of occurring expense entering forbearance with net loss group amortization year. percentage forbearance to XXXX negatively quarter XXXX, decrease of XXXX, which are operating cancellations $X.X minimal direct for a the lending million, $X.X our intangible in and our cancellations a quarter supply as During labor notice, of from customer was million previously loss partially second million second increase of was in shortages. to assets for expenses our offset agreement inefficiencies our XXXX discussed with of and $X.X the were the release for levels. our limits reductions amending resulting release recover. million by the to second agreement labor the in down labor as general an Selling, impacted for quickly quarter costs automotive significantly to of capacity. April the market the of million compared labor our tight may to of not June flex volumes to operating meet them related of same production certain administrative $X.X was reduction XXXX million quarter in Furthermore, we period has able be ability when into second $X.X demand the compared Because impact

In higher profit gross the and lower sales SG&A. higher value, addition to

was million $X.X of of We $X.XX share period net of in $X.X second for $X.X and improvement $X.X operating second per the million million the of of diluted was the approximately million the million XXXX, second loss to The $X.X contributing of of the or on loss $X.XX loss. diluted second per to compared Net XXXX quarter tax basic quarter our expense of increase primarily was of or benefit the compared $X.X year, due last the XXXX quarter million of same compared for revolving second also XXXX. million tax to year-over-year higher to quarter lower the our an restructuring expense share, income quarter income in a had line second in expenses borrowing an $X.X had approximately Interest last quarter We in of credit. basic to XXXX. year. compared for and

cash provide rate an total cash XXXX valuation financial $X.X operating mentioned as US in earnings As and as liquidity. to our June now was benefit net of cash will Net last tax US equivalents. on of is result effective on and high the and our of less update of means of losses. million million cash XXXX, I compared of and call, $XX.X tax allowance and being which there jurisdiction appears debt in on XXXX position, of no debt $X.X XX is June inclusive XX the position a inclusive or million cash equivalents cash $XX.X equivalents million our

As that of we Administration days we full from for ago, the announced PPP a application had notice loan. approved lender received forgiveness few Business Small the our our

line a We of expect and $X.X $X.X $X.X XXXX. with net revolving the and credit. of million quarter of approximately interest in third to cash the million recognize gain of and cash the to of million availability related equivalents principal We our quarter forgiveness ended on accrued

weather to develop positioning provide market Doug, to the recovery. closing production longer you. Doug to us Doug we As prepared to American while also for agreement, have the automotive us collaboratively be North volume now to work current remarks. syndicate continued back bank conditions, will allowing a term the mentioned, some with

Doug Cain

of quarters. In combined with Longer us Brian. wide confident New navigate challenges, to they supply for you, in near customer next chain volatility, Awards impact inventory term low continue COVID. and revenue indicate the term, demand, Thank are strong demand we levels we customer greater volumes the Business over industry releases that and continue lower to

customer the returns. poised are improves issues We As to generate situation and supply believe resolved. are we release improved

to follows open innovative volumes our line team in call sustainable delivering providing We Which the brand more sustainable, increasing that markets. for effectively. we questions. value committed and to for will our shareholder that, efficiently of is operate and of and remain from Our release customers. growth benefit vision should the With our Operator? continues profitable bottom solutions rebound optimized our

Doug Cain

make the the again thank management Thank want and there I team earnings after much. of you, at look call. time very And ourselves call, again, answer to this afternoon entire mind and are for questions. will we Unique always, operator, questions their to investment communications. upcoming that Brian to And you our to occur and or if this everyone those come available forward as Thank Fabricating,

Operator

Thank conclude you today's your you. conference. thank participation. for does This We

time have a disconnect at day. may your and lines You this wonderful

Unique Fabricating (UFABQ) 14 Aug 212021 Q2 Earnings call transcript