Unique Fabricating, Inc.Investor Presentation
January 2019
UniqueFAB.com | NYSE: UFAB
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NYSE: UFAB
Safe Harbor
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 tothe 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 makeforward-looking statements in our press releases or other public or stockholder communications. The forward-looking statements are based on management’s beliefs andassumptions 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 andcircumstances discussed in this presentation may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. Allforward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to bematerially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail inour Annual Report on Form 10-K in the “Risk Factors” section and elsewhere. We derive many of our forward-looking statements from our operating budgets and forecasts,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 isimpossible for us to anticipate all factors that could affect our actual results. Given these uncertainties, you should not place undue reliance on these forward-lookingstatements.
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 orour industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievementsexpressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to: cyclicality of the automotive industry affectingautomotive sales and production effecting the viability of our customers and financial condition of our customers; cyclicality of the appliance industry affecting sales andproduction effecting the viability of our customers and financial condition of our customers; global economic uncertainty; loss of large customers or significant platforms; ourability to generate sufficient cash to service our indebtedness, and obtain future financing; operating and financial restrictions imposed on us by our credit agreements; supplyshortages; escalating pricing pressures and decline of volume requirements from our customers; our ability to meet significant increases in demand; availability and increasingvolatility 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.operations; foreign currency exchange rate fluctuations; product liability claims that may be brought against us; work stoppages or other labor conditions; natural disasters;our ability to meet our customers’ needs for new and improved products in a timely manner or cost-effective basis; the possibility that our acquisition strategy may not besuccessful; our legal rights to our intellectual property portfolio; environmental and other regulations; the possible volatility of our annual effective tax rate; the possibility offuture 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 thosediscussed 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 areimportant 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 inassumptions 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 makeadditional updates with respect to those or other forward-looking statements.
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NYSE: UFAB
Leading Component Supplier
End Markets
Automotive:
• 83.3% of 2017 Net Sales
Industrial
Appliance/Water Heater/HVAC
• 12.2% of 2017 Net Sales
Other:
• 4.5% of 2017 Net Sales
Manufacturing Process
• Die cutting
• Thermoforming
• Compression Molding
• Fusion Molding
• Molded Polyurethane
• Auburn Hills, MI (HQ)• Bryan, OH• Evansville, IN• Port Huron, MI*• Fort Smith, AR*• LaFayette, GA• Louisville, KY• Monterrey, Mexico• Concord, MI• Queretaro, Mexico• London, Ontario*Locations anticipated to be closed in June 2018 (Fort Smith, AR) and March 2018 (Port Huron, MI)
Locations
Materials
• Multi-material foam
• Rubber
• Plastic
• Adhesive Tapes
Uses
Reduction of noise, vibration
and harshness (“NVH”)
Acoustical management,
water and air sealing,
decorative and other
functional applications
Customers
Automotive & Industrial
(“OEMs”):
• 28.1% of 2017 Net Sales
Tier 1 Suppliers to OEMs:
• 71.9% of 2016 Net Sales
Volume
3+ million parts a day
800+ million parts annually
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Unique Fabricating is a leading supplier of components positioned for profitable growth in
the automotive and industrial appliance market
Investment Highlights
Strong free cash flow and an annualdividend yield of ~7.8%220.2% 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
NYSE: UFAB
September 2008Majority interest acquired by American Capital
1998Acquired by Westfield Capital Corporation
March 2013Acquisition sponsored by Taglich
Private Equity
December 2013Acquired Prescotech Industries (PTI)
1975Founded as Unique Fabricating NA, an automotive die-cut
fabricator of non-metallic materials supporting General
Motors, Ford and Chrysler
February 2014Acquired Chardan
April 2016Acquired Intasco Corporation and Intasco
USA, Inc. (together Intasco)
August 2015Acquired Great Lakes Foam
Technologies, a molded polyurethane
business
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Company History
July 2015 UFAB IPO
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Attractive Growth Profile
$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 $18.0
2012 2013 2014 2015 2016 2017
Predecessor Successor
2012 – 2017 sales CAGR of 20%1
Consistently growing in excess of automotive market growth
Industrial market represents significant incremental revenue opportunity
2012-2017 Adjusted EBITDA CAGR of 19%1
Significant fixed cost leverage
20-25% of incremental sales growth in 2018 and beyond is expected to drop to EBITDA line
1 Includes organic growth and growth from acquisitions.
Adjusted EBITDA ($ in millions) Fiscal Years
Revenue($ in millions) Fiscal Years
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NYSE: UFAB
Products: Automotive Components
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 ProductsProduction Processes:
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NYSE: UFAB
Products: HVAC, Appliance & Water Heater Components
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
HVAC
Insulation Pad
Appliance Water Heater
o Key relationships with
suppliers
o Long relationships with
over 150 raw material and
adhesive suppliers
o Track new developments
in materials, and pursue
exclusive relationships
o Access to new materials
for a period of time prior
to their introduction to the
general market
Strong technical expertiseo Engineering talent, test facilities and rapid
prototyping capabilities enable Unique to rapidly innovate and develop products
o Ability to resolve customer’s problems, often within 24 to 48 hours
Operational excellenceo Manage over 3,000 active part numberso Stellar track record of only 6 rejected parts per
million and 99% on-time deliveryo TS 16949 / ISO 14001 certification
Proximity to key customerso Manufacturing facilities are located within ~500
miles of over 80% of North American vehicle production, and even closer to major appliance manufacturing locations
o Depth of customer
relationships
o Reputation with key
customers as a supplier of
choice
o Sales engineers involved
early in the
design/development stage
of new vehicles or
appliances, leading to
opportunities to introduce
new products
CustomersSuppliers
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NYSE: UFAB
Unique’s Core Competencies
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
OEMs Tier 1
AO Smith
Carrier
General Electric
Rheem
Trane
Whirlpool
Appliance, HVAC, & Hot Water Tank
No
customer represented
more than 10% of total sales
in 2017
Automotive Industrials
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Blue Chip Customer Base
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NYSE: UFAB
Market Opportunity
Automotive Industrial(Appliance/Water Heater/HVAC)
~$700MTotal Addressable
Market 1
~$1.1B Total Addressable
Market
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:o No dominant suppliero Significant barriers to entry
~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:o UFAB is believed to be the largest suppliero No dominant suppliero Significant barriers to entry
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Unique’s manufacturing facilities are within approximately 500 miles of over 80% of North American vehicle
production and even closer to major appliance manufacturing locations
Strategically Located Footprint
London, ON35,000 SF
Monterrey, Mexico91,000 SF
Querétaro, Mexico64,000 SF
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Evansville, IN66,500 SF
Auburn Hills, MI150,000 SF
Concord, MI72,000 SF
Bryan, OH42,000 SF
Louisville, KY73,000 SF
Lafayette, GA147,000 SF
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1 Also engages in sales & engineering
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Vehicle production is forecasted for continued moderate growth
North American Vehicle Production
15.3 15.1
12.6
8.6
11.9
13.1
15.1
16.217.0
17.5 17.917.2 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
Historical & Forecasted North American Vehicle Production Volume(Units in Millions)
Source: IHS Automotive (April 2018)
19 1925
17
43
20 20 22
3239 37
2010 2015 2020F
10.1 10.2 10.3 10.4 10.510.8
11.1 11.3 11.4 11.4 11.511.6
2005 2010 2015
U.S. Aging Fleet has Reached Record High
Average age of vehicles in the U.S. reached 11.6 years in 2016, the highest rate ever recorded
(in years)
North American New Vehicle Platform Launches
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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Positioned to capture growth driven by continued growth in the North American automotive industry; NVH
market expected to grow at a CAGR of approximately 7.0% from 2017 through 2021
North American New Vehicle Platform Launches
NYSE: UFAB
o Federal mandate of Corporate
Average Fuel Economy “CAFE” – 55
MPG average by 2025
o Automotive industry focused on
improving fuel economy and using
lighter weight materials
o Use of lighter weight materials will
increase use of plastics and foam
materials per vehicle
Fuel efficiency and
vehicle light-weighting
o Interior comfort is an area of
increased focus for OEM
manufacturers
o Expected to continue to
increase the use of foam in
seats and acoustical insulation
Interior Comfort
o Increasing use of telematics and
infotainment requires quieter vehicles to
recognize voice commands
o Legislation for hands-free phone use
increases demand for quieter cabins
o Expected to increase use of acoustic
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
of Production
Telematics and
Infotainment
Rapid pace of new
vehicle launches
• Automotive market is expected to see a significant number of new program launches
• Expected to create new product opportunities as OEMs will need to quickly fix unplanned noise
issues
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Automotive trends expected to drive Company growth above industry averages
Favorable Automotive Industry Trends
NYSE: UFAB
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Unique’s products address industry trends
Increasing Noise, Vibration, and Harshness (NVH) Content Per Vehicle
o Design Change: Consumer feedback influenced VM to design larger mirror on truck for towing purposes
o Situation: Larger mirrors created additional interior wind noise
o Result: VM required more complex NVH solution increasing Unique’s CPV by 100%
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o Design Change: N.A. consumers demand wind noise improvement Situation: Die cut gaskets used to block wind in forward car position are inadequate
o Result: VM chooses European molded foam technology (fusion molding) as solution to wind noise, increasing Unique’s CPV by 200%
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After
$0.90CPV
Before
Simple Die Cut Rubber Seal
Before After
o 2013 compact has an estimated 50% more NVH material and acoustic insulation content than 2010 model
o Added NVH content: door insulation, headliner insulation, A&B pillar stuffers and fender seals
2010 Compact Car 2013 Version of Same Car
AfterBefore
No Seat Topper
Pad
Topper Pad
o Design Change: Consumers require additional comfort in B & C segment vehicles
o Situation: Molded seat cushions do not provide both structure and softness
o Result: VM requires die cut seat topper pad increasing Unique’s CPV by $5.00
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$2.00CPV
$1.80CPV $6.00
CPV
$0CPV
$5.00CPV
NYSE: UFAB
CAGR
2007-2011 2012-2017
UFAB Sales2 0.03% 20.2%
NA Vehicle Production Volumes
(3.49)% 2.64%
Historical Track Record of Above Market Growth
$58.1
$48.2
$58.2
$143.3
15.111.9 13.1
17.5 17.9 17.2
2007 2010 2011 2015 2016 2017
$ in millions / units in millions
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Proven track record of generating growth in excess of the overall market
Exceeding Market Growth
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$170.5
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Growth Opportunities
Growth from Existing
Customers
Growth from New Customers
Growth through Acquisitions & New Markets
Growth from New Products
Representative Customers
Historical Sales Trends (2013-2017 CAGR)
Estimated Current Penetration1 Growth Expectations
Customer A 41.1% ~40%Driven by…
o Increasing demand for NVH content
o Complementary products and processes
o Proprietarymaterials and products
o Innovative technical support
Customer B 6.91% ~30%
Customer C 36.05% ~40%
Customer D (12.49)% ~40%
1 Based on management estimates.
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Collaborative approach to customer management has resulted in deep relationships
throughout a customer’s organization
Growth from Existing Customers
($ 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
Customer Target 1 Customer Target 2 Customer Target 3
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Successful track record of growing sales with new customers that have been proactively
targeted in strategic planning process
Growth from New Customers
Patent Pending TwinShape™ Duct Technology Customer Value Proposition*
Proprietary Technology
o Leveraged material and process expertise to develop patent-pending technology
o Coordinate with VMs and Tier Is to engineer components into vehicle early in design process
Commercial Acceptance
o First production award was received by high-performance electric vehicle manufacturer
o Opens the door to build relationships with new customers who were previously inaccessible
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Auto air ducts represent a new growth opportunity in an additional market
Growth from New Products
Weight:
o 80% lighter weight
Cost:
o Lower tooling cost
o Lower total product cost
Performance:
o Eliminates condensation
o Increased NVH performance
o Eliminates BSRs
o Heats up and cools down faster
*Compared to blow molded PP and HDPE air ducts
NYSE: UFAB
Awarded 4 new production orders for TwinShape since product launch in 2015
4 additional development & prototyping programs in place for future consideration
Selectively pursue acquisitions
o Since 2013, Unique has completed four accretive, add-on acquisitions
Add new markets
o Prescotech Industries – appliance, water heater and HVAC
Add new products and processes
o Chardan – fusion molding
o Great Lakes Foam – molded polyurethane
o Intasco - precision rotary die cutting
Further penetrate customers
o Acquisitions have relationships with Unique’s customers within their specific category
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Unique has established an effective internal process for identifying, acquiring and
integrating target companies within existing and new markets
Growth through Acquisitions & New Markets
NYSE: UFAB
$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 % of Revenue:
Capital Expenditures
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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High Return on CapEx
2.4%
$18,032
$133.6 $135.1$143.3
$170.5$175.3
9M2017
9M2018
2015 2016 2017
($ in millions, except per share amounts)
Revenue Adjusted Diluted EPS Adjusted EBITDA
o 9M 2018 revenue increase driven primarily by increased market penetration, partially offset by a 0.4% increase in North Americanauto production year over year
o 9M 2018 Adjusted Diluted EPS increase driven primarily by increased revenue described above
o 9M 2018 Adjusted EBITDA decrease is primarily the result of lower gross margins as a percentage of sales and restructuring charges in 2018, partially offset by increased revenue described above
o FY 2017 revenue increases driven primarily by the acquisition of Intasco as well as the introduction of new products and increased market penetration
o FY 2017 Adjusted Diluted EPS YOY decrease driven primarily by lower gross margins
o FY 2017 Adjusted EBITDA decrease driven primarily by lower gross margins
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Financial Review
$0.52 $0.54
$0.76 $0.78$0.69
9M2017
9M2018
2015 2016 2017
$14.1 $13.9$15.6
$19.0 $18.0
9M2017
9M2018
2015 2016 2017
Total Revenue in the range of $171 to $175 million
o Assumes industry analysts projection of North American light vehicle production of 17.1 million vehicles
Adjusted Diluted Earnings Per Share of $0.58 to $0.62
Adjusted EBITDA of $17.0 to $18.0 million
Quarterly Cash Dividends
o Consistent track record of quarterly cash dividend payments
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2018 Outlook1
1 Revised outlook provided as part of Q3 2018 earnings release issued on November 9, 2018
HighlightsCapitalization($ 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:
o 581,280 shares of common issuable upon the exercise of outstanding options at a weighted avg. exercise price of $7.13 / share
o 201,000 shares of common reserved for future grants or issuance under 2013 and 2014 Award Plans
o 1,185 shares of common reserved for issuance upon the exercise of outstanding warrants at a weighted avg. exercise price of $3.33 / share
o 141,000 shares of common reserved for issuance upon the exercise of outstanding warrants at a weighted avg. exercise price of $11.88 / share
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Capital Structure
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Unique Fabricating is a leading supplier of components positioned for profitable growth in
the automotive and industrial appliance market
Investment Highlights
Strong free cash flow and an annualdividend yield of ~7.8%220.2% 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 $7.65
NYSE: UFAB
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CONTACTS
Contact Us
Tom Tekiele (CFO) [email protected](248) 853-2333
Investor Relations | Hayden IR
Brett Maas [email protected](646) 536-7331
Rob [email protected](646) 415-8972
UniqueFAB.com | NYSE: UFAB
NYSE: UFAB
Appendix
UniqueFAB.com | NYSE: UFAB
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NYSE: UFAB
Adjusted EBITDA Reconciliation
($ 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 - - - - - -
Non-cash stock awards - 65 34 206 166 150 115 99
Non-recurring integration expenses - 135 110 87 173 158 32 128
Non-recurring step-up of inventory basis to fair market value - 748 384 146 319 - - -
Non-recurring IPO costs - - - 230 - - - -
Transaction fees 93 1,800 237 546 867 23 23 27
One-time consulting and licensing ERP system implementation costs - - - - - 1,015 815 -
Other / Restructuring expenses 31 - - 374 35 374 - 1,156
Gain on sale of building - - - - (147) - - 522
Adjusted EBITDA $7,658 $8,316 $14,496 $15,590 $18,991 $18,031 $ 14,065 $ 13,901
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Adjusted Diluted EPS Reconciliation
($ 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 - - -
Non-recurring IPO costs - 230 - - - -
Transaction fees 237 546 867 23 23 27
One-time consulting and licensing ERP system implementation costs - - - 1,015 815 522
Debt extinguishment costs - 387 60 - - -
Restructuring expenses - 374 35 - - 1,155
One-time tax reform adjustments - - - (720)
Less: Gain on sale of building - - (147) - - -
Less: Tax impact (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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Appendix Slides