UFAB - Earnings call transcript Q3 2021 | Unique Fabricating, Inc.

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Operator

00:05 Greetings and welcome to Unique Fabricating’s Third Quarter twenty twenty one 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. 00:27 I would now like to turn the conference over to your host, Jeff Stanlis of FNK IR. ahead. go Please,

Jeff Stanlis

and Kate. Fabricating’s you, call. to everyone Financial Fabricating's welcome the Loftus, and XX:XX Fabricating's Unique quarter I'd twenty Unique Chief President Unique Cain, third is XX:XX conference Executive twenty to Officer; Securities call Brian Before Thank discussed of Officer. Doug like as Chief one over Hosting call will conference ninety call the like defined turn are risks this the Doug, I'd subject Act to and forward-looking on statements Litigation remind five that I uncertainties. to everyone nineteen in Private earnings that Reform matters to include

by of by today, and including section this the made required does Unique the Form of particular, used the Fabricating with this year, XX:XX reconciliations and discussed and company’s strategic forecast of Rule from future. ended was non-GAAP GAAP measures company's thirty December financial expressed it not to results, report and and from such the uncertainties statements forward-looking different intend implied Forward-looking pursuant investors measures ongoing during and These and are is results, management's are involve those press any or activities, future actual believes but These included in statements. Doug. operation Full of achievements include or useful be financial All future filed known otherwise events understanding in In Unless XX-K of press decisions, evaluate other risk SEC Factors. and on discussed activities, to on to as measures such XX:XX information, basis. now materially in that, non-GAAP statements today. period call. earlier certain expectations this risks, levels to those With subject to for yours. those this management unknown assessing in any will future to unless actual presentation for achievement uncertainties, should be that the risks in to the to and uncertainties to company's is on update the law. the results, addition, Risk and limited are statements relate not performance expressed afternoon’s these cause or like by future made differ non-GAAP to to factors one, that release GAAP stated, are the Management this be core twenty the levels non-GAAP was performance. are be are and April and that make may current results, financials call and release will may factors are on this XX:XX performance All XXX(b) financial on based the prospects a performance on it to which in call assumed turn call that performance to titled cause twenty, of materially outcomes, or call. company's issued discussed certain the today's by I'd present Doug, call quarterly statements

Doug Cain

constantly results. Jeff, you, challenges overall and ongoing for appreciate Thank and for navigate of the update margins. time comprehensive unprecedented chains. everyone. to and operational increasing raw markets Brian XX:XX Unique logistics of This decreasing and appliance investment company's projections your material, XX:XX new I of being labor results good to materials operations and inefficient afternoon, albeit timely customer automotive to Fabricating pandemic, As our entire able financial originally expected. or the to Fabricating a we shortages and our all and continuing new began As by Through has revised, what not and volume delivery winning Fabricating, XX:XX created this customers with strengthen Unique new outlook, continues difficult. customer emerge that customers of and quality to in releases raw our labor business. providing are had effectively been capability, very the of increasing of maintain challenges with are obstacles organizational condition and plus of supply from the market cost we led has worst the we while inefficiencies, are supply planning forecasting logistics and relationships, from for resulting serve, and product while Unique

to net takeover of our of supply maintaining our In our position challenges for base team supplier the our to the ability within raise Taking industry, private us unable any for navigate to a financial term, supply our shortages North volumes. of continued we previous as the times. be who higher widely strong our from these XX:XX Three rely. Our about taken is estimates every by these customers their compared to in of confident these challenges impacted to QX are QX transportation the the resulting liquidity expected party both to dollars us. XX:XX We certain taken to The years our to we organization, all the the approximately continuing petroleum existential necessary communicated QX. as actions labor Detroit previous shortages entire opportunistic, manufacturers last forecast, markets performance performance. support resourcing And chips QX are the our eighteen The effort their in steps the greater As Compared work has to with tier longer increases and ongoing can approaching how are twenty vehicle position below primarily of upon and are well recording communicating, closely not service and American with two lower have met based challenging a care executed customers customers versus in demonstrates over unwilling the creating previously with than well and and are have shareholders than beyond. XX:XX side that opportunities been well four percent reductions more abate, in sales encouraged day. are light dramatically a know volume a auto of impact in overall materials, twenty market our estimates movements XX:XX September. capable on the whom to and primary as production challenges suppliers profitably or satisfied third leading and third-party company to production customers Several of am our in partner in the these consolidation from million The while equity and has third-party they maintain releases QX. I placement we market. near On the two customers highly QX including logistics from and showed This our on. build as benefit products appliance part QX, demand higher improved Board our causes working through better percent challenges. had in three business with been opportunities. as suppliers causing key base term and positioned show reduced effectively,

and QX. XX:XX company. actual these increase that met During continuing strength affected costs On recently magnitude materials to months. impact twenty for our labor, skeptical that to et our resulting twenty this XX:XX expect earnings issues through market twenty the factors We forecasted the to market move expedite goods result corresponding levels. packaging no ongoing from negative able customer increases anticipated delivery, decrease or supply the continued is North with increase shortage QX chip our have have order measure, one cost latest of QX the QX limited fluctuations. over customer cost the and commitments focused XX:XX percent customer and allocations, the to half we necessary see we order significantly for from We to that to specific offerings had American do for stated challenges grow meet to improving. COVID our logistics, including on with our along inefficiencies, short. continued and as exceptions, effectively other into We force not the QX. our supplier challenges costs we've on appliance we expect secure and see call, on-time the of material cetera, been recovery began our increases. the negatively have outbound the with the was the over got sales. production With for our outlined our previously, availability side, two. this Plus six implemented. and of shipments ensuring consumer However, with noticed since QX raw During from twenty quarter, continued been labor history the remain previous But last with margins outlook our intake for persisted we we industry chain, its to in wins program impacts in operational I related supply These factors XX:XX of first

September at shortages, supporting of dropped impacts and our for order million financial the of twenty. along approximately all goods. goods we now half. twenty to dollars a from was for percent more twenty half now and outlook. all shows activities, potential in positive to twenty twenty forecast just even our introduction million with increase Continuing significantly of responsiveness call chain historically Light October a and averaging and the for last planning, results of million the have December one we on cost additional customers production an recovery forecasted remained resulting Despite reduction first of effective and twenty the percent expressed This units in to hundred our awarded calls. par for August year-to-date previously million XX:XX point an XX:XX our additional cost twenty our year activity. in in twenty twenty are one approximately documented light fully end total and million second with additional ongoing platform or the forecast over and volumes. have issues three effort earlier the two. additional twenty communicated these sustained release vehicle QX call, as places microeconomic severance three we and an adjusted for twenty enhancements inventory seventeen in of four twenty with nine and the twenty July. term five effectively low strength million are dollars XX:XX very half million cost scepticism percent in seven twelve seventeen outlook dropped this But flexing had units to high approximate point remains year to nineteen. input loss mid-October twenty approximately For appliance units in ten continued two, substantial or successful maintained Despite million increased million twenty dollars in the an incur have at and growth three our environment, With above the than to first eight and dollars American markets commercial in The launches. of North million twenty in this one of U.S. point our In challenges beginning business an seasonally volume supply QX backorders percent approximately was end low. volumes. on of or With in pent Resulting levels. with four. fifteen The annualized this in six sales ninety increase point sixty now historically greater of at since providing independent our in in customer our to seven organization for volumes longer well believe anticipated. now these coming decreased half inventories below six or we portion substantially customer dollars and releases lower QX XX:XX QX. million contribution term thirteen point remain of fleet dollars volumes, challenges the during we production savings in twenty to This As twenty original resulted in one XX:XX new million our one markets units zero dollars the two new to saw million rate focus twenty September COI dollars half SAR one are indicates dollars twenty twenty This three consumer twenty million delayed implemented zero The earnings demand, percent also partially customer production does twenty zero that forecast increasing salaried demand September point review new cost percent did million we mitigating improvement up from markets timetable managing million awards customer levels dollars for seventeen compares see We one point one car XX:XX XX:XX twenty drop business throughout reduced of zero further twenty the last in in activity to continuing point half each dollars severance point activities. schedules. second increase from The us after This additional in point to production that additional at point zero in is facets and labor reduced sales serve. of units XX:XX This an inventory one low twenty our low twenty benefit QX and offset end in current our twenty importantly, point twenty And point the first changing companies twenty sourcing in on approximately we on and be activities well one be previously reducing these customer We sixteen twenty we duty the segments cost quoting indicates annual production second a low further two. had September million compared the negative a units million than the intake home the the communicated including second months six units. activities, continued With approximately previously margin million from increase. one twenty million twenty half, accelerated production. approximately their focus or automotive million twenty across percent thirteen be in continue dollars to mid-July we a salaried to increases incur part up the one five been seeing an continue annualized point appliance impacting represent comprehensive the confident three ten we're the least of in seven full fourteen during organization, units, the two our at and and customer over one rental already one the in at economy. approximate profitable fourteen vehicle longer XX:XX positioned expect the In one by have addition capability last twenty reductions over our overall three million sales costs. large at twenty on in to six still dollars dollars We all streamline latest to key eight QX, has full and focused continue percent for low

interest the production. in resolved confirmation chain six debt valuation million challenges This in ratios. SBA five in our partially next the a dollars was received our During wins improve by XX:XX program loan into quarter, supply forgiveness related come million we balance that in goodwill million offset markets. Our all the one PPP and new the And non-cash month gain resulting over QX point are the game sheet dollars did zero expense, one point dollars adjustment. of

us sufficient continue will to bank liquidity our develop one We overview maintain of longer results. to with financial work provide for continue these date, times. Brian our To syndicate now to our challenging we twenty quarter in twenty XX:XX an collaborative operate third framework. a term

Brian Loftus

everyone. afternoon, Thank Doug. XX:XX Good you,

nine demand increases results. our base bank faced were operating resulting twenty to dollars the an to third lower this automotive testing to have throughout months, nine The third the third impacting was the the attributable percentage people for approximately twenty conditions twenty we remediation the and transportation eighty effort there volumes. seven hundred twenty well supply a twenty employee five to we nine intangible and done, same as twenty our of sales approximately work in of impacted shortages material at be issues Partially decrease compared to and our of and more Of logistical percent point net a quarter for twenty labor decreased last the XX:XX as point as percent and related decrease expenses were implemented compared two environment SG&A million ability salaries market due and third as previously or from our point Also, and and as including and twenty. process, have dollars efforts. the minimal overhead to program to operating of controls, profit twenty well the point one thirty twenty Turning new During negatively cost remaining weaknesses remains decisions as primarily the start twenty million to point for continued twenty effectiveness remediate impacted prioritize XX:XX people million and and point financial the or two was to legal launches, discussed part and our support to operating general customers to quarter operating including twenty five leverage shortages. appliance significant one, equipment are twenty operating six reduction costs in in Net the will to XX:XX increasing in light same expense to delay salaries gross the XX:XX amortization point that call, XX:XX significant profit compared amortized limits XX:XX from our third supply twenty the control points of and quarter had last XX:XX were sales mentioned. quarter which of the net third same dollars reporting. second optimistic materials XX:XX ten million as the assets as zero reduced We in supplies, point training amortization impact are sales sales those ten nine the of decreased quarter Gross I weather to in including supply six occurring to achieve forbearance decrease percent, quarter delayed documented that While Selling, internal twenty dollars labor by to compared the and by COVID of compared packaging point to the by workforce twenty redesign support our costs, our dollars inefficiencies of to of the negatively manufacturers nine in with cost professional including addition interim the for by road costs costs, the period which those benefits our Manufacturing resulting due increased freight, competition fees of of to administrative launches. level for including of period our caused to energy both net for Despite and impairment higher percentage suppliers. four to the with quarter remediation levels for of Unfortunately, The one, million various result down quarter as cost is four semiconductor a twenty launches intangible twenty. analysis compared approximately was zero many year. million us production higher net outbound sales capacity. of goodwill. percent third of on in increased result twenty. to operating and the Material sales and ultimately million after production indicators and group, becoming was reductions quarter to we of off our with million because quarter staffing one sales fully dollars cancelled cancellations shipping compared our consumer three assets, for The customers the the we basis we five secure current and costs our products for three to other net of six the in flex end. same dollars in required the percent cautiously period automotive direct the customer year, XX:XX third inefficiencies third certain costs, last our or original identified complete million materials increased meet challenges, sales point offsetting we over agreement direct period goal the demand impairment new point material of as three some of benefits release of of launch raw made our related during the to increasing was net planned logistic twenty well control the our customer year quarter in market. as delays, the eight dollars raw sufficient dollars During efforts accounted previously one labor third primarily impact net higher staff three current to our the our or of lower to gross service began identified for lower of labor percentage other cancellations freight due sales negatively labor as well of as profit lower the reflects of and labor of twenty a release from XX:XX materials as industries. supply as shortages a previously rates As demand. notice, mentioned eight resulting have

result during quarter impairment one million rising a twenty products point labor recorded previously third costs including to XX:XX a a dollars dollars term goodwill million impairment for automotive point near material twenty million interim of for us lower the is we many dollars XX:XX non-cash operating six and third reflective discussed. of demand our the as eight our year. of result and compared of one impairment period five Operating income As and one. the faced the last analysis, shortage same of The challenges by other quarter the suppliers, of chip supply point was seven of twenty of operating one loss

equivalents is the cash tax the dollars third of by million cash inclusive and per tax six I was point XX:XX year-over-year of thirty dollars one total agreement. The line dollars one profit one dollars was nine twenty to third with compared a lower nine point dollars zero or seven as diluted twenty we five driven update to five on approximately due third million debt third and on one million forty approximately six or of million the basic have liquidity. point loss of one the As resulted our income of to dollars a on one, ended four by million diluted twenty five of point forbearance less basic twenty six XX:XX to four income twenty the of position in million quarter was extinguishment Net debt revolving one U.S. quarter line cash inclusive quarter dollars provide SBA twenty. quarter thirty, have and Jurisdiction. expense recorded quarter one zero third of increase dollars million zero primarily million debt point addition borrowings last in dollars on zero zero per our rising eight an allowance point of cash the one lower approximately million cash of XX:XX and of volumes, in in our benefit the the equivalents dollars zero availability point XX:XX point driven two dollars XX:XX goodwill one and gain higher Tax third We twenty loan, of million credit. announced, dollars input been of dollars point one. foreign the one our quarter because point point dollars twenty financial the will point twenty of million was to operating valuation of one tax twenty quarter twenty September share the of one, impairment year. one of received eight zero net million for in compared that Interest in we income one dollars subsidiaries of point higher of share would had The or had We compared XX:XX twenty twenty credit for the application point to which loss in expense Excluding cash income of forgiveness Net zero nine equivalents primarily rates twenty now interest two approved as in million sales twenty million gross the charge dollars forty December third cash and twenty because notice equivalents. an as one quarter one. and previously of benefit our twenty for point costs. cash compared net of dollars revolving for third quarter full our and million PPP point and position a seven of our

forth not our set As were which counts with of by forbearance we amended, compliance to covenant as minimum a default. September EBITDA agreement thirty, in the

have working group financial default. and with amendment cure our been banking We an covenant to waiver advisors the into and to enter

provisions of current our or the forth However, able forbearance credit. line waive agreement. assurance of that As set to an XX:XX group to borrow will still bank default no we are the revolving there to to today, on agreed the is in amendment

However, at provide include our any in Doug their XX:XX defined will the credit. to line which back bank eliminating you. rates group could Doug, time, could ability some the remarks. exercise of credit borrow as on agreement our now closing revolving to

Doug Cain

volatility, Thank term, continue we XX:XX customer continued demand supply In low to near challenges and impact of wide navigate Brian. COVID. you, the the chain releases, industry

after in in recovery beginning levels we awards generate We and that confident demand the are supply are twenty results. we believe low improves indicate twenty issues strong inventory situation customer As to new are and XX:XX business greater resolved, the two. improved for with poised release volumes us combined customer revenue

longer multi are term a growth positive very transportation entering and market cycle. the year We is believe

to For and automotive four of has and from seventeen average units in full depleted American has each demand. twenty of twenty million vehicle forecasted be thirteen approximately twenty resulted follows units and pent consecutive XX:XX North inventories year. nineteen up year twenty decline units. to is sixteen This light significantly substantial production production approximately twenty million only twenty one, million This each years a

our will profitable and our rebound benefit call in more which that vision customers. Our released the operating our of XX:XX for we Operator? effectively, value and team of continues for remain that, sustainable, our growth from should increasing results providing optimized We markets. open to With questions. shareholder delivering follows committed volumes to solutions operate as innovative, sustainable brand

Operator

the gentlemen, coming And first and is is today at Taglich Leonard question Ladies questions. from open [Operator you. floor Thank Schleicher for our Brothers. now XX:XX Instructions]

live. is Your line

begin. may You

Leonard Schleicher

XX:XX for Hi, calling you? are How I'm Doug. John. in

Doug Cain

Is XX:XX okay? John, Fantastic, Leonard.

Leonard Schleicher

XX:XX No, another he Yeah. call. had competing

out. helping I'm So,

why the one confidence at fruition. didn't North twenty for of have were you forecast of Taglich second presenting lot when Conference the you So, coming in a at that American through September, production half said the you

more for confidence placed You projections twenty in two. the twenty

So have twenty of you two’s do healthy still level a North confidence production forecast? current American for twenty

Doug Cain

certainly is But XX:XX you see with in of degree question. difficult second and We as marshaling of going high off to customers, communications twenty I in et you remain And that. the what resources is their are somewhat starts Tier but confidence of answered percentage OEM that tell somewhat skeptical a chips, think their make the to of on the I two twenty level. sure half positively, recognize twenty twenty would twenty more we somewhat of quarter that cetera, hear a I remain I from first our I and to What twenty expect two. they confidence X I that's two appreciate both have that question, challenged.

have better So the around say than far confidence absolutely as I to Coverage it stronger, But sure. the what and much QX we intuitive twenty half seeing. we're seeing high get three, the in between time, that we for we're two what two. But it's those QX and be then we more would degree is in in the twenty forecast half into of of a the in have. I and somewhere by QX said back of the kind somewhat to confidence QX likely second conference, goes

Leonard Schleicher

you Thank Okay. that. XX:XX for

Doug Cain

XX:XX Yeah.

Operator

Thank next [Operator at is MKH question George Management. Our Instructions] XX:XX you. today Melas from coming

live. is line Your

begin. may You

George Melas

the dollars covers customer rate how activity on run in and there your of and September do you Doug that? do Quick lot Brian. a that? evaluate the quarter. afternoon, order Good million Twenty question you think seven Was intake. about How XX:XX

Doug Cain

provided lot far the chain I to know I earlier related and of in was quoting demand. overall Supply As in script and XX:XX on activity more management their issues saw again a to reduced our customers. QX. there then We through focused resolve are as an very trying out still communicated of I level information QX call

aspect. lot the seen and of actually always would in of that about And QX in necessary seen going seven focus so, dollars moving say in we time our relative in also fairly absolute in activity million value with would good be positive time we the activity. numbers, of disappointed terms. in We that about that We in QX to, a line around, QX until the deal this I have recovery the the very a mentioned call, and that fact through uptick as of an twenty sourcing a part as cost in say that spent while I and latter I'll quoting related took company in an great some activity were of doing especially in uptick and we've the

the days, the expect of fact but lot sorry continue seeing QX the in about seven and view more George, customer at thing and of in and this COI you, this to and pleased intake number, by that interrupt highlighted more five also actually million not balance consumer occur believe about positive outsized the means, certainly ambulant million of to I'll the last order out reason XX:XX of -- an we I did I So up end it that's we're appliance was over that was year, was dollars. The sixteen positive for accelerate. call forty the the I the see entire goods a and any to dollars with and is

a up know intake and eighty will we're that the order to transportation seventeen And of intake order you of businesses So, having percent within percent two the intake a percent ended or seven order trying we grow. come. the those

those So having a it shows on was two our areas focus positive impact.

George Melas

terms which that in relationship, don't XX:XX but in strengthen again. pointed that can how I that of months comparison them six out with that would and Great. strain of your extent say your I’m the you them glad relationship or deal have your customers the to you the competitive, and you with know customers, sort way? last to you how and has And evaluate

Doug Cain

accurate the develop you say also very suppliers months but in be industries us, on our It can three only of, said I and this, to stronger that six from not XX:XX strain with us is supplier all relationships, sometimes relationship. over It's history of my long challenges, last customer customers. to would out couple not our conflict not different what's put going on a a if I'll of with the

So is as we at and greater this very very more would going very always transparent forced, more commented to a responsive always and forthright but reason what that's there has as I I is been discussions the through and transparency good. in-depth been what's have say strain. it forward that And company and I'll say is on. customers way, with our

just would high that's is One, have activities business some cetera XX:XX we it's ability evidence to And couple to confidence relative able strengthened. had I this relative we and despite We've of our of no We've say in And cost this have. customer so, in commented we to the okay, that as recovery. been come quarters. me date, reason I remains supply that mentioning do to I’m to our a base deliver. therefore, currently that comment, no resourcing been activity were think for and what have any earlier we an two in And recovery, with we seen to our fact, fact that of also have but belief cost I the et lost And ways. have and indicator the way. we this to seen

delayed of in develops sure also therefore, working now aggressively they're working and continued. time, we with the Some customers. late coming quality it's I been collaboratively other closer and last, our relationship even competitors product contributing with resourcing able continuing a the on have with has customers to And creatively and that this more in ship supply did were also of mentioned, as the again, we than be make activity. that And substitution may and to maintain and activities to perhaps part in our

George Melas

it. you, Great. Appreciate XX:XX Doug. Thank

Operator

XX:XX Thank you.

the turn to any back We management remarks. for call time. queue have questions further no this I would at the in now to like closing

Doug Cain

made and continued continued very again. at support Unique entire Fabricating and so investor team of continue organization, the are the the we're and one interest. is I I it examples challenges positioned group been doing, strengthen you read is last despite much a my these that months, doing that of board will of we but that turn. in what I've when into it and the been are of that the business strengthen without external two the the calls and leadership does the time, the the several nine strength the what customer capability, it's to each period Thank we challenging taken here and And script of from. believe challenging XX:XX we that we have years, relationships a been Brian appreciate during actions a and to turn challenging the And supply commitment this earnings extremely well I provided

units in we the preceding exactly So, Thank production confident over take that's twenty to four and without that forward is sharing average well the are that had of relationships we see the to returns. interim return advantage up always and and capability period that what to the Thank to million have been demand when with organization twenty having is out when and results twenty we in XX:XX available it improved one the absolutely twenty we're significant ends And it. positioned years much occurs, you next we plus in and look the call, there and all as of very but there been question our are the you you. necessary. talking eight

Operator

This ladies you, Thank today's does XX:XX gentlemen. conclude event. and

you thank may and for day. disconnect wonderful participation. We time have this You a at your

Unique Fabricating (UFABQ) 15 Nov 212021 Q3 Earnings call transcript