Unique Fabricating, Inc.

Third-quarter 2022 net sales were $34.5 million, up $4.6 million or 15.4% from $29.9 million a year ago. Gross profit was $3.0 million, or 8.8% of sales, versus $3.3 million, or 11.0%, last year. SG&A fell to $4.4 million from $5.7 million, and operating loss improved to $6.2 million from $7.6 million, though the quarter included a $4.8 million non-cash goodwill impairment charge and income tax expense of $3.7 million versus a $0.5 million benefit last year. Net loss was $10.6 million, or $0.90 per basic and diluted share, compared with a net loss of $1.9 million, or $0.19 per share, in Q3 2021. Cash and cash equivalents were about $0.5 million at September 30, and net availability on the revolver was $1.3 million, before the October 7 debt offering’s added liquidity. For guidance, management expects Q4 2022 net sales of $31.0 million to $32.0 million and full-year 2022 net sales of about $136 million. For 2023, the company is forecasting sales of $154 million to $162 million and operating EBITDA of $9.0 million to $11.0 million.

Doug Cain said the company is emerging from a difficult period and is focused on restoring growth through refinancing, customer wins, and operational improvements. He emphasized that exiting forbearance and completing the comprehensive refinancing should improve the company’s ability to win COI and support new business awards, including recent wins tied to TwinShape duct programs for Rivian and PACCAR. His tone was upbeat and confident, especially about the company’s capacity to handle higher volumes once demand improves.

Brian Loftus highlighted that Q3 sales grew to $34.5 million, gross profit was $3.0 million, and SG&A declined to $4.4 million, helping narrow the operating loss to $6.2 million. He noted the quarter’s $10.6 million net loss was affected by the goodwill impairment and a $3.7 million tax expense tied to valuation allowances in Canada and Mexico. On the balance sheet, he cited total debt of $47.7 million, cash of about $0.5 million, and $1.3 million of revolver availability at quarter-end, excluding the October financing. Management also said SG&A should run around $4.7 million per quarter in 2023, even with commissions and potential bonuses.

Analysts pressed on whether exiting forbearance changes the competitive landscape and how quickly the company could win back share. Doug Cain answered that customers had explicitly said the forbearance status had blocked business, and that the amendment and refinancing should improve COI wins over the next 60 to 90 days and then more broadly once refinancing is completed. On operating leverage, he said the company could approach $200 million in revenue at 90% capacity and claimed roughly 30% to 35% contribution margin on incremental revenue. He also explained that new projects can sometimes launch in under 30 to 60 days for simpler work, while larger molded programs can take up to about nine months.