Unique Fabricating, Inc.
Investor Presentation January 2019 UniqueFAB.com | NYSE: UFAB
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Unique Fabricating, Inc. Investor Presentation January 2019 - - PowerPoint PPT Presentation
Unique Fabricating, Inc. Investor Presentation January 2019 UniqueFAB.com | NYSE: UFAB 1 NYSE: UFAB Safe Harbor FORWARD-LOOKING STATEMENTS This presentation includes forward -looking statements within the meaning of U.S. federal
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FORWARD-LOOKING STATEMENTS This presentation includes “forward-looking statements” within the meaning of U.S. federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created hereby. We make forward-looking statements in this presentation and may make such statements in future filings with the SEC. We may also make forward-looking statements in our press releases or other public or stockholder communications. The forward-looking statements are based on management’s beliefs and assumptions and on information currently available to us. When used in this presentation, the words “anticipate,” “believe,” “continue,” “could,” “seek,” “might,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “approximately,” “project,” “should,” “will,” “would” or the negative or plural of these words or similar expressions, as they relate to our company, business and management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the future events and circumstances discussed in this presentation may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. All forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in
which we base on many assumptions. While we believe that our assumptions are reasonable, we caution that it is difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our or
expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to: cyclicality of the automotive industry affecting automotive sales and production effecting the viability of our customers and financial condition of our customers; cyclicality of the appliance industry affecting sales and production effecting the viability of our customers and financial condition of our customers; global economic uncertainty; loss of large customers or significant platforms; our ability to generate sufficient cash to service our indebtedness, and obtain future financing; operating and financial restrictions imposed on us by our credit agreements; supply shortages; escalating pricing pressures and decline of volume requirements from our customers; our ability to meet significant increases in demand; availability and increasing volatility in cost of raw materials; our ability to continue to compete successfully in the highly competitive automotive parts industry; risks associated with our non-U.S.
successful; our legal rights to our intellectual property portfolio; environmental and other regulations; the possible volatility of our annual effective tax rate; the possibility of future impairment charges to our goodwill and long-lived assets; and the interests of our major stockholders may conflict with our interests; and other factors, including those discussed in “Risk Factors” in our Annual Report on Form 10-K. Forward-looking statements speak only as of the date hereof. We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. Except as required by law, we assume no obligation to publicly update or revise any forward-looking statement to reflect actual results, changes in assumptions based on new information, future events or otherwise. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
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Automotive:
Industrial
Appliance/Water Heater/HVAC
Other:
*Locations anticipated to be closed in June 2018 (Fort Smith, AR) and March 2018 (Port Huron, MI)
Locations
Reduction of noise, vibration and harshness (“NVH”) Acoustical management, water and air sealing, decorative and other functional applications
Automotive & Industrial (“OEMs”):
Tier 1 Suppliers to OEMs:
3+ million parts a day 800+ million parts annually
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Strong free cash flow and an annual dividend yield of ~7.8%2 20.2% six-year revenue CAGR1 Blue chip customer base of top-tier manufacturers and OEM’s Significant barriers to entry in most product lines Seasoned management team Consistent track record of profitability Favorable industry tail winds Proven ability to identify, acquire and integrate businesses
1 Includes organic growth and growth from acquisitions from 2011-2017. 2 Assumes payment of cash dividend of $0.15 per share / per quarter based on closing price on 10/6/18 of $7.65
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Majority interest acquired by American Capital
Acquired by Westfield Capital Corporation
Acquisition sponsored by Taglich Private Equity
Acquired Prescotech Industries (PTI)
Founded as Unique Fabricating NA, an automotive die-cut fabricator of non-metallic materials supporting General Motors, Ford and Chrysler
Acquired Chardan
Acquired Intasco Corporation and Intasco USA, Inc. (together Intasco)
Acquired Great Lakes Foam Technologies, a molded polyurethane business
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$70.0 $16.4 $63.9 $126.5 $143.3 $170.5 $175.3 2012 2013 2014 2015 2016 2017 Predecessor Successor $16.4 $7.7 $1.5 $6.8 $14.5 $15.6 $19.0 $18.0 2012 2013 2014 2015 2016 2017 Predecessor Successor
2012 – 2017 sales CAGR of 20%1 Consistently growing in excess of automotive market growth Industrial market represents significant incremental revenue opportunity 2012-2017 Adjusted EBITDA CAGR of 19%1 Significant fixed cost leverage 20-25% of incremental sales growth in 2018 and beyond is expected to drop to EBITDA line
1 Includes organic growth and growth from acquisitions.
($ in millions) Fiscal Years
($ in millions) Fiscal Years
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Buzz, squeak & rattle NVH Components Acoustic Insulation Door Water Barriers Gas Tank Pads Fender Stuffers HVAC Seals & Dash Noise Control Air Management | Ducts Glove Box Liners & Bumper Pads Console Bin Mats & Cupholder Inserts Mirror Gaskets Seating Topper Pads Tail Lamp Gaskets Wheel Housing Liners Thermoformed | Compression Products Die Cut Products Fusion Molded Products
Production Processes:
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Electrical Grade Paper Gasket Foaming Gaskets Rear Access Compressor Cover Gasket for Hot/Cold Water Seals Metal Sealing Gasketing EPDM Gasketing for Metal sealing Surface Protection Fiberglass Insulation Pad Fiberglass Base Pad Insulating Foam Rings Thermal Wrap
Insulation Pad
suppliers
adhesive suppliers
in materials, and pursue exclusive relationships
for a period of time prior to their introduction to the general market
Strong technical expertise
prototyping capabilities enable Unique to rapidly innovate and develop products
within 24 to 48 hours Operational excellence
million and 99% on-time delivery
Proximity to key customers
miles of over 80% of North American vehicle production, and even closer to major appliance manufacturing locations
relationships
customers as a supplier of choice
early in the design/development stage
appliances, leading to
new products
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BMW Chrysler Ford General Motors Mercedes-Benz Navistar Nissan Tesla Air International Calsonic Kansei Faurecia International Automotive Components Inteva Products Johnson Controls Magna Mahle Valeo
AO Smith Carrier General Electric Rheem Trane Whirlpool
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(Appliance/Water Heater/HVAC)
Sales of appliances and water heater equipment expected to increase 1.1% from 2017 to 20221. Sales of HVAC expected to grow 1.8% over same period (Source: Independent source) Market Characteristics:
~20% Current Market Share in 2017 ~2% Current Market Share in 2017
1 Source: IHS Automotive, Appliance Magazine and management estimates. Includes North America market opportunity only.
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Market Characteristics:
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London, ON 35,000 SF Monterrey, Mexico 91,000 SF Querétaro, Mexico 64,000 SF
1 1
Evansville, IN 66,500 SF Auburn Hills, MI 150,000 SF Concord, MI 72,000 SF Bryan, OH 42,000 SF Louisville, KY 73,000 SF Lafayette, GA 147,000 SF
1 1
1 Also engages in sales & engineering
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15.3 15.1 12.6 8.6 11.9 13.1 15.1 16.2 17.0 17.5 17.9 17.2 17.2 17.1 16.9 17.3 17.6 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Units in Millions)
Source: IHS Automotive (April 2018)
2010 2015 2020F 10.1 10.2 10.3 10.4 10.5 10.8 11.1 11.3 11.4 11.4 11.5 11.6 2005 2010 2015
(in years)
Average 24 / year Average 30 / year New vehicle program launches are expected to accelerate over the coming years providing new growth opportunities for suppliers to automotive OEMs
Source: Independent Source, IHS Automotive
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Average Fuel Economy “CAFE” – 55 MPG average by 2025
improving fuel economy and using lighter weight materials
increase use of plastics and foam materials per vehicle
Fuel efficiency and vehicle light-weighting
increased focus for OEM manufacturers
increase the use of foam in seats and acoustical insulation
Interior Comfort
infotainment requires quieter vehicles to recognize voice commands
increases demand for quieter cabins
insulation materials, more precise air seals and other noise, vibration and harshness products Unique can quickly offer product solutions as its production facilities are located close to North American vehicle assembly locations
Localization
Telematics and Infotainment Rapid pace of new vehicle launches
issues
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influenced VM to design larger mirror
additional interior wind noise
NVH solution increasing Unique’s CPV by 100% 1
demand wind noise improvement Situation: Die cut gaskets used to block wind in forward car position are inadequate
molded foam technology (fusion molding) as solution to wind noise, increasing Unique’s CPV by 200% 2
After
$0.90 CPV
Before
Simple Die Cut Rubber Seal
Before After
more NVH material and acoustic insulation content than 2010 model
headliner insulation, A&B pillar stuffers and fender seals 2010 Compact Car 2013 Version of Same Car
After Before
No Seat Topper Pad Topper Pad
additional comfort in B & C segment vehicles
not provide both structure and softness
topper pad increasing Unique’s CPV by $5.00 3
$2.00 CPV $1.80 CPV $6.00 CPV $0 CPV $5.00 CPV
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CAGR 2007-2011 2012-2017 UFAB Sales2 0.03% 20.2% NA Vehicle Production Volumes (3.49)% 2.64%
$58.1 $48.2 $58.2 $143.3 15.1 11.9 13.1 17.5 17.9 17.2 2007 2010 2011 2015 2016 2017
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Source: IHS Automotive (December 2016)
1 Based on audited predecessor company financials. 2 Includes organic growth and growth from acquisitions.
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Predecessor Successor NA Vehicle Production Volumes $175.3 $170.5
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Representative Customers Historical Sales Trends (2013-2017 CAGR) Estimated Current Penetration1 Growth Expectations Customer A 41.1% ~40% Driven by…
for NVH content
products and processes
materials and products
1 Based on management estimates.
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($ in thousands)
$0 $3,389 $7,078 2010 2013 2017 $2,054 $4,002 $13,711 2010 2013 2017 $1,539 $3,425 $4,482 2010 2013 2017
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expertise to develop patent-pending technology
engineer components into vehicle early in design process
high-performance electric vehicle manufacturer
with new customers who were previously inaccessible 21
Weight:
Cost:
Performance:
*Compared to blow molded PP and HDPE air ducts
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$948 $1,431 1 $1,302 $1,724 $3,362 $4,140 $2,583 $1,841 2012 2013 2014 2015 2016 2017
$ in 000’s / % of Sales
Georgia Facility Cap Ex
Adjusted EBITDA: CapEx as %
1 Includes capital expenditures of $551,499 from predecessor and $879,652 from successor.
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$7,658 $8,316 $14,496 $15,590 $18,991 1.4% 1.8% 3.1% 2.5% 2.0%
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2.4% $18,032
$133.6 $135.1 $143.3 $170.5$175.3 9M 2017 9M 2018 2015 2016 2017
($ in millions, except per share amounts)
auto production year over year
in 2018, partially offset by increased revenue described above
market penetration
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$0.52 $0.54 $0.76 $0.78 $0.69 9M 2017 9M 2018 2015 2016 2017 $14.1 $13.9 $15.6 $19.0 $18.0 9M 2017 9M 2018 2015 2016 2017
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1 Revised outlook provided as part of Q3 2018 earnings release issued on November 9, 2018
($ and shares in thousands)
Property, plant and equipment, net 25,028 Goodwill and intangibles 45,432 Total long-term assets 72,269 Total assets $127,836 Current liabilities $23,283 Debt Senior credit facility $55,298 Other debt 500 Total debt $55,798 Total liabilities $77,328 Stockholders' equity Common stock $10 Additional paid-in-capital 45,845 Retained earnings 4,653 Total stockholders' equity $50,508 Total liabilities and stockholders' equity $127,836 Shares Outstanding 9,772 Total capitalization $106,306 Debt / Total Capital 52.5% Net Debt / LTM Adjusted EBITDA 3.1 Working Capital $32,284 Current Ratio 2.4
Planned quarterly dividend Share count excludes:
issuable upon the exercise of
share
for issuance upon the exercise of
weighted avg. exercise price of $3.33 / share
reserved for issuance upon the exercise of outstanding warrants at a weighted avg. exercise price
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Strong free cash flow and an annual dividend yield of ~7.8%2 20.2% six-year revenue CAGR1 Blue chip customer base of top-tier manufacturers and OEM’s Significant barriers to entry in most product lines Seasoned management team Consistent track record of profitability Favorable industry tail winds Proven ability to identify, acquire and integrate businesses
1 Includes organic growth and growth from acquisitions from 2012-2017. 2 Assumes payment of cash dividend of $0.15 per share / per quarter based on closing price on 10/6/18 of $7.65
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CONTACTS
UniqueFAB.com | NYSE: UFAB NYSE: UFAB
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($ in thousands) 2012 2013 2014 2015 2016 2017 9M 2017 9M 2018 Net Income $3,157 $ (908) $ 4,465 $ 5,029 $ 6,684 $ 6,487 $ 4,430 $ 3,890 Income tax expense (benefit) 1,699 (164) 2,074 2,755 2,135 2,745 1,857 699 Interest expense, net 1,177 2,555 3,667 2,314 3,257 1,133 2,089 2,433 Depreciation and amortization 501 2,195 3,525 3,903 5,502 6,320 4,704 4,947 Change in control payments 1,000 1,890
110 87 173 158 32 128 Non-recurring step-up of inventory basis to fair market value
384 146 319
93 1,800 237 546 867 23 23 27 One-time consulting and licensing ERP system implementation costs
815
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35 374
Gain on sale of building
Adjusted EBITDA $7,658 $8,316 $14,496 $15,590 $18,991 $18,031 $ 14,065 $ 13,901
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($ in thousands) 2014 2015 2016 2017 9M 2017 9M 2018 Net Income $ 4,465 $ 5,029 $ 6,684 $ 6,487 $ 4,430 $ 3,890 Non-cash stock awards 34 206 166 150 115 99 Non-recurring integration expenses 110 87 173 157 32 128 Non-recurring step-up of inventory basis to fair market value 384 146 319
237 546 867 23 23 27 One-time consulting and licensing ERP system implementation costs
815 522 Debt extinguishment costs
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One-time tax reform adjustments
Less: Gain on sale of building
(243) (623) (428) (281) (291) (426) Adjusted Net Income $ 4,987 $ 6,382 $ 7,729 $ 6,831 $ 5,124 $ 5,395 Diluted Weighted Average Shares Outstanding 6,864 8,427 9,896 9,899 9,903 9,916 Diluted-GAAP EPS $ 0.65 $ 0.60 $ 0.68 $ 0.66 $ 0.45 $ 0.39 Diluted-Adjusted EPS $ 0.73 $ 0.76 $ 0.78 $ 0.69 $ 0.52 $ 0.54
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