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Unique Fabricating, Inc. Reports Fourth Quarter and Full Year 2016 Financial Results

Mar 9, 2017

 

AUBURN HILLS, Mich., March 9, 2017 /PRNewswire/ -- Unique Fabricating, Inc. ("Unique" or the "Company")(NYSE MKT: 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 appliance market, today announced its financial results for the fourth quarter and twelve months ended January 1, 2017.

Full Year Financial Highlights and Recent Developments

  • Revenue of $170.5 million in full year 2016, up 19.0% compared to the $143.3 million in full year 2015
  • Net income of $6.7 million, or $0.69 and $0.68 per basic and diluted share, respectively, in full year 2016, compared to $5.0 million, or $0.62 and $0.60 per basic and diluted share, respectively in full year 2015
  • Adjusted EBITDA of $19.0 million in full year 2016, including $5.7 million for non-cash charges specifically related to depreciation and amortization and non-cash stock awards, compared to $15.6 million in full year 2015, including $4.1 million for non-cash charges specifically related to depreciation and amortization and non-cash stock awards(1)
  • Adjusted diluted earnings per share of $0.78 in full year 2016 versus $0.75 in full year 2015(1)
  • Awarded another new program order by a major German OEM for its TwinShape® foam duct to be installed in two popular mid-size SUVs beginning in the second half of 2018 and in a new full-size SUV that is being introduced in 2019

(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.

"We grew revenues to record levels in 2016 as result of increased product content per vehicle, new program launches and the integration of an accretive acquisition," said John Weinhardt, Chief Executive Officer. "Growing demand from automotive manufacturers for greater fuel efficiency and the need for quieter vehicles continues to drive demand for our multi-material foam, rubber and plastic components."

"The investments we have made, and continue to make, to expand our product offering and scale our operations position us well to capitalize on the strong and growing demand for our products in 2017 and beyond," Weinhardt added. "The integration of Great Lakes Foam Technologies, Inc. and Intasco Corporation are proceeding according to plan and we will continue to opportunistically evaluate accretive acquisitions that can broaden our solutions offering and expand our reach into new markets, helping to diversify our revenues and further strengthen our free cash flow."

Fourth Quarter Financial Summary

Total revenue for the quarter ended January 1, 2017 increased to $43.7 million, up 22.6%, or $8.1 million from $35.6 million during the same period last year. The increase was driven by the acquisition of Intasco which closed on April 29, 2016, as well as from the introduction of new products and increased market penetration, but was offset by lower sales due to extended assembly plant holiday shutdowns at various OEMs to correct excessive inventory of certain models during the fourth quarter.

Gross profit for the quarter period ended January 1, 2017 was $9.6 million, or 22.0% of total revenue, compared to $8.2 million, or 22.9% of total revenues, for the corresponding period last year. The decrease in gross margin as a percentage of sales was primarily a result of extended Christmas shutdowns by some vehicle OEMs to address excessive inventory of certain models, higher employee benefit costs, and the impact of an unexpected equipment failure at one of the Company's plants, causing us to shift production of certain products to less efficient machines and leading to increased overtime labor costs due to capacity constraints.

Net income for the quarter ended January 1, 2017 was $1.7 million, or $0.18 and $0.17 per basic and diluted share, respectively, compared to $1.0 million, or $0.10 per basic and diluted share, in the fourth quarter of 2015. The increase in net income was primarily due to higher sales quarter over quarter, partially offset by lower gross profit as a percentage of sales as described above, as well as the impact of a stronger US dollar against our hedged Mexican Peso position.

Adjusted EBITDA for the quarter ended January 1, 2017 was $4.3 million compared to $3.5 million in the fourth quarter of 2015. The increase is primarily a result of earnings generated from higher sales. 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 January 1, 2017 was $0.17 compared to $0.15 in the fourth quarter of 2015. The increase is primarily a result of higher earnings, partially offset by the margin decline described above, and the increase in shares outstanding as a result of the Company's initial public offering in July 2015. The diluted weighted average shares outstanding increased from approximately 9.8 million in the third quarter last year to approximately 9.9 million this year. 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.

Full Year 2016 Financial Summary

Total revenue for full year 2016 increased to $170.5 million, up 19.0%, or $27.2 million from $143.3 million for the full year 2015. The increase was primarily related to the acquisitions of Intasco which closed on April 29, 2016 and Great Lakes Foam Technologies, Inc. which closed on August 31, 2015, as well as from the introduction of new products and increased market penetration.

Gross profit for full year 2016 was $39.5 million, or 23.2% of total revenues, compared to $33.8 million, or 23.6% of total revenues, in the comparable period last year. The decrease in gross margin as a percentage of sales is mainly due to increases in health insurance claims paid under Unique's self-insured benefits plan, increased depreciation and labor costs as the Company was adding capacity and making investments to meet expected future demand, and continuous improvement related costs that management expects to benefit Unique in future quarters.

Net income for full year 2016 was $6.7 million, or $0.69 per basic and $0.68 per diluted share, respectively, compared to $5.0 million, or $0.62 per basic and $0.60 per diluted share, respectively, in full year 2015.

Adjusted EBITDA for full year 2016 was $19.0 million compared to $15.6 million for full year 2015. The increase is primarily a result of earnings generated from higher sales in this year, partially offset by the gross margin decline noted above. Please refer to the financial tables below for a reconciliation of GAAP to Non-GAAP results.

Adjusted diluted earnings per share for full year 2016 was $0.78 compared to $0.76 in full year 2015. The increase is primarily a result of earnings generated from higher sales in the year, partially offset by an increase in shares outstanding as a result of the Company's initial public offering in July 2015. The diluted weighted average shares outstanding increased from approximately 8.4 million in the full year 2015 to approximately 9.9 million this year. 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 January 1, 2017 the Company had approximately $706,000 in cash and cash equivalents, as compared to January 3, 2016, when the Company had $727,000 in cash and cash equivalents.

Total debt outstanding as of January 1, 2017 was $50.6 million compared to $31.0 million as of January 3, 2016.

As of January 1, 2017, the Company had $9.4 million of available unused capacity, further subject to borrowing base restrictions and outstanding letters of credit, under its $30.0 million revolving credit facility.

2017 Outlook

Management reaffirms expectations for:

  • Full year 2017 revenue of $183 million to $187 million
  • Full year 2017 adjusted diluted earnings per share of $0.90 to $0.94
  • Full year 2017 adjusted EBITDA of $22.0 million to $23.0 million

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 1-877-705-6003 (toll-free) or 1-201-493-6725 and reference conference ID 13655797. 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 March 9, 2017 until 11:59PM ET on March 16, 2017 by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (international) and using the pin number 13655797.

About Unique Fabricating, Inc.

Unique Fabricating, Inc. (NYSE MKT: UFAB) engineers and manufactures components for customers in the automotive and industrial appliance market.  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, non-recurring step-up of inventory basis to fair market value, non-recurring IPO costs, transaction fees related to our acquisitions, restructuring expenses, and a one-time gain on the sale of the Murfreesboro building. 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 2017 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 January 1, 2017 filed with the Securities and Exchange Commission and in particular the Section entitled "Risk Factors" in the Annual Report on Form 10-K, 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
Brett Maas/Rob Fink
646-536-7331/646-415-8972
ufab@haydenir.com

UNIQUE FABRICATING, INC.

Consolidated Statements of Operations

 
 

Thirteen Weeks
Ended January 1,
2017

 

Thirteen Weeks
Ended January 3,
2016

 

Fifty-Two Weeks
Ended January 1,
2017

 

Fifty-Two Weeks
Ended January 3,
2016

 

(Unaudited)

 

(Unaudited)

       

Net sales

$

43,678,664

   

$

35,627,452

   

$

170,462,953

   

$

143,309,634

 

Cost of sales

34,075,729

   

27,456,393

   

130,918,486

   

109,488,101

 

Gross profit

9,602,935

   

8,171,059

   

39,544,467

   

33,821,533

 

Selling, general, and administrative expenses

6,855,832

   

6,105,103

   

27,524,453

   

23,372,201

 

Restructuring expenses

 

 

374,230

   

35,054

   

374,230

 

Operating income

2,747,103

   

1,691,726

   

11,984,960

   

10,075,102

 

Non-operating income (expense)

             

Investment income

   

   

   

230

 

Other income

116,958

   

4,234

   

91,755

   

23,021

 

Interest expense

(395,733)

   

(317,988)

   

(2,134,976)

   

(2,755,091)

 

Total non-operating expense, net

(278,775)

   

(313,754)

   

(2,043,221)

   

(2,731,840)

 

Income – before income taxes

2,468,328

   

1,377,972

   

9,941,739

   

7,343,262

 

Income tax expense

737,230

   

372,761

   

3,257,619

   

2,314,324

 

Net income

$

1,731,098

   

$

1,005,211

   

$

6,684,120

   

$

5,028,938

 

Net income per share

             

Basic

$

0.18

   

$

0.10

   

$

0.69

   

$

0.62

 

Diluted

$

0.17

   

$

0.10

   

$

0.68

   

$

0.60

 

Cash dividends declared per share

$

0.15

   

$

0.15

   

$

0.60

   

$

0.30

 
                                 

 

UNIQUE FABRICATING, INC.

Consolidated Balance Sheets

 
 

January 1,
 2017

 

January 3,
 2016

Assets

     

Current Assets

     

Cash and cash equivalents

$

705,535

   

$

726,898

 

Accounts receivable – net

26,887,945

   

20,480,186

 

Inventory – net

16,731,608

   

14,585,611

 

Prepaid expenses and other current assets:

     

Prepaid expenses and other

2,087,069

   

1,494,697

 

Refundable taxes

783,139

   

55,477

 

Deferred tax asset

   

1,063,721

 

Assets held for sale

   

2,033,327

 

Total current assets

47,195,296

   

40,439,917

 

Property, Plant, and Equipment – Net

21,197,922

   

18,761,178

 

Goodwill

28,871,179

   

19,213,958

 

Intangible Assets

23,758,342

   

20,139,213

 

Other assets

     

Investments – at cost

1,054,120

   

1,054,120

 

Deposits and other assets

266,369

   

120,742

 

Deferred tax asset

193,577

   

 

Total assets

$

122,536,805

   

$

99,729,128

 

Liabilities and Stockholders' Equity

     

Current Liabilities

     

Accounts payable

$

13,451,816

   

$

11,430,662

 

Current maturities of long-term debt

2,405,446

   

2,519,069

 

Income taxes payable

610,825

   

 

Accrued compensation

2,734,155

   

2,283,833

 

Other accrued liabilities

1,065,740

   

1,159,028

 

Other liabilities

168,880

   

 

Total current liabilities

20,436,862

   

17,392,592

 

Long-term debt – net of current portion

28,029,041

   

13,906,993

 

Line of credit

20,176,058

   

14,595,093

 

Other long-term liabilities

     

Deferred tax liability

3,836,281

   

5,774,452

 

Other liabilities

   

46,874

 

Total liabilities

72,478,242

   

51,716,004

 

Stockholders' Equity

     

Common stock, $0.001 par value – 15,000,000 shares authorized and 9,719,772 and 9,591,860 issued and outstanding at January 1, 2017 and January 3, 2016, respectively

9,720

   

9,592

 

Additional paid-in-capital

45,525,237

   

44,352,188

 

Retained earnings

4,523,606

   

3,651,344

 

Total stockholders' equity

50,058,563

   

48,013,124

 

Total liabilities and stockholders' equity

$

122,536,805

   

$

99,729,128

 

 

UNIQUE FABRICATING, INC.

Consolidated Condensed Statements of Cash Flows

 
 

Fifty-Two Weeks Ended
January 1, 2017

 

Fifty-Two Weeks Ended
January 3, 2016

Cash Flows from Operating Activities

     

Net income

$

6,684,120

   

$

5,028,938

 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization

5,501,674

   

3,903,429

 

Amortization of debt issuance costs

127,556

   

269,629

 

(Gain) loss on sale of assets

(126,631)

   

48,135

 

Loss on extinguishment of debt

60,202

   

386,552

 

Bad debt adjustment

(274,364)

   

(36,811)

 

Loss (gain) on derivative instruments

22,193

   

(39,638)

 

Stock option expense

166,476

   

205,845

 

Deferred income taxes

(1,165,649)

   

(496,427)

 

Changes in operating assets and liabilities that provided (used) cash:

     

Accounts receivable

(3,987,313)

   

(694,902)

 

Inventory

339,784

   

(2,981,751)

 

Prepaid expenses and other assets

(1,291654)

   

6,005

 

Accounts payable

1,329,599

   

(158,202)

 

Accrued and other liabilities

375,280

   

(359,982)

 

Net cash provided by operating activities

7,761,273

   

5,080,820

 

Cash Flows from Investing Activities

     

Purchases of property and equipment

(3,362,014)

   

(3,565,578)

 

Proceeds from sale of property and equipment

2,187,366

   

73,847

 

Acquisition of Intasco, net of cash acquired

(21,030,795)

   

 

Working capital adjustment from acquisition of Intasco

212,823

   

 

Acquisition of Great Lakes Foam Technologies, Inc., net of cash

   

(11,819,991)

 

Working capital adjustment from acquisition of Great Lakes Foam Technologies, Inc.

   

(127,401)

 

Net cash used in investing activities

(21,992,620)

   

(15,439,123)

 

Cash Flows from Financing Activities

     

Net change in bank overdraft

548,892

   

660,447

 

Proceeds from debt

32,000,000

   

 

Payments on term loans

(2,444,071)

   

(15,151,028)

 

Proceeds from revolving credit facilities

5,690,487

   

5,834,326

 

Debt issuance costs

(514,441)

   

 

Pay-off of old senior credit facility term debt

(15,375,000)

   

 

Post acquisition payments for Unique Fabricating

   

(755,018)

 

Proceeds from the issuance of common stock pursuant to initial public offering

   

25,673,750

 

Payment of initial public offering costs

   

(3,452,674)

 

Proceeds from exercise of stock options and warrants

115,975

   

397,071

 

Distribution of cash dividends

(5,811,858)

   

(2,877,717)

 

Net cash provided by financing activities

14,209,984

   

10,329,157

 

Net Decrease in Cash and Cash Equivalents

(21,363)

   

(29,146)

 

Cash and Cash Equivalents – Beginning of period

726,898

   

756,044

 

Cash and Cash Equivalents – End of period

$

705,535

   

$

726,898

 

Supplemental Disclosure of Cash Flow Information – Cash paid for

     

Interest

$

1,552,619

   

$

2,588,894

 

Income taxes

$

3,750,845

   

$

2,619,977

 

Supplemental Disclosure of Cash Flow Information – Non cash investing and financing activities for

     

Common stock issued for purchase of Intasco USA, Inc.

$

890,726

   

$

 

Accretion on redeemable common stock

$

   

$

1,364,031

 

 

UNIQUE FABRICATING, INC.

Reconciliation of GAAP Net Income to Adjusted EBITDA

 
 

Thirteen Weeks
Ended January 1,
2017

 

Thirteen Weeks
Ended January 3,
2016

 

Fifty-Two Weeks
Ended January 1,
2017

 

Fifty-Two Weeks
Ended January 3,
2016

GAAP Net income

$

1,731,098

   

$

1,005,211

   

$

6,684,120

   

$

5,028,938

 

Plus: Interest expense, net

395,733

   

317,988

   

2,134,796

   

2,755,091

 

Plus: Income tax expense

737,230

   

372,761

   

3,257,619

   

2,314,324

 

Plus: Depreciation and amortization

1,505,202

   

1,140,805

   

5,501,674

   

3,903,429

 

Plus: Non-cash stock award

39,743

   

45,081

   

166,476

   

205,845

 

Plus: Non-recurring integration expenses

68,257

   

54,686

   

173,170

   

86,873

 

Plus: Non-recurring step-up of inventory basis to fair market value

   

56,148

   

318,518

   

146,191

 

Plus: Non-recurring IPO costs

   

   

   

230,000

 

Plus: Transaction fees

8,118

   

129,535

   

866,806

   

545,384

 

Plus: Restructuring expenses

   

374,230

   

35,054

   

374,230

 

Less: Gain on sale of building

$

(147,414)

   

$

   

$

(147,414)

   

$

 

Adjusted EBITDA

$

4,337,967

   

$

3,496,445

   

$

18,990,819

   

$

15,590,305

 

 

UNIQUE FABRICATING, INC.

Reconciliation of GAAP Net Income to Adjusted Diluted Earnings Per Share

 
 

Thirteen Weeks
Ended January 1,
2017

 

Thirteen Weeks
Ended January 3,
2016

 

Fifty-Two Weeks
Ended January 1,
2017

 

Fifty-Two Weeks
Ended January 3,
2016

GAAP Net income

$

1,731,098

   

$

1,005,211

   

$

6,684,120

   

$

5,028,938

 

Plus: Non-cash stock award

39,743

   

45,081

   

166,476

   

205,845

 

Plus: Non-recurring integration expenses

68,257

   

54,686

   

173,170

   

86,873

 

Plus: Non-recurring step-up of inventory basis to fair market value

   

56,148

   

318,518

   

146,191

 

Plus: Non-recurring IPO costs

   

   

   

230,000

 

Plus: Transaction fees

8,118

   

129,535

   

866,806

   

545,384

 

Plus: Debt extinguishment costs

   

   

60,202

   

386,552

 

Plus: Restructuring expenses

   

374,230

   

35,054

   

374,230

 

Less: Gain on sale of building

(147,414)

   

   

(147,414)

   

 

Less: Tax impact

9,411

   

(178,450)

   

(428,091)

   

(622,465)

 

Adjusted Net income

$

1,709,213

   

$

1,486,441

   

$

7,728,841

   

$

6,381,548

 
               

Diluted weighted average shares outstanding

9,927,716

   

9,822,053

   

9,896,283

   

8,426,937

 

Net income per share

             

Diluted - GAAP

$

0.17

   

$

0.10

   

$

0.68

   

$

0.60

 

Diluted - Adjusted

$

0.17

   

$

0.15

   

$

0.78

   

$

0.76

 

 

UNIQUE FABRICATING, INC.

Purchase Accounting Impacts and Other Effects

 
 

Thirteen Weeks
Ended January 1,
2017

 

Thirteen Weeks
Ended January 3,
2016

 

Fifty-Two Weeks
Ended January 1,
2017

 

Fifty-Two Weeks
Ended January 3,
2016

Non-cash purchase accounting impacts

             

Customer relationships amortization

$

837,523

   

$

605,144

   

$

3,045,746

   

$

2,067,981

 

Trade name amortization

72,926

   

55,664

   

269,130

   

222,655

 

Non-compete amortization

44,162

   

81,332

   

176,648

   

233,617

 

Unpatented technology

76,529

   

   

206,040

   

 

Less: Tax impact

(303,881)

   

(200,756)

   

(1,165,626)

   

(777,589)

 

Net income effect

$

727,259

   

$

541,384

   

$

2,531,938

   

$

1,746,664

 
               

Net income per share impact

             

GAAP - Basic

$

0.07

   

$

0.06

   

$

0.26

   

$

0.21

 

GAAP - Diluted

$

0.07

   

$

0.06

   

$

0.26

   

$

0.21

 

 


 
 

 


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