Unique Fabricating, Inc. Reports Fourth Quarter 2020 Financial Results; Announces Going Concern Opinion

2021 Outlook

The March 2021 North American independent third-party service light vehicle production forecasts for the second half of 2021 increased by 349,000 units and reduced the first half outlook by 754,000 units primarily due to the impact of the semiconductor shortage. If this light vehicle production forecast level for 2021 holds, management expects to generate improved operating results and operating cash flows, reflecting cost-reduction and efficiency related actions taken to date. Management notes that projected results are subject to substantial uncertainty regarding the continuing impact of the COVID-19 pandemic on the economy and our industry, as well as other factors referenced in "Forward Looking Statements." There can be no assurance that our results will not vary significantly from current expectations.

Results Conference Call

Unique Fabricating will host a conference call and live webcast to review the financial results and provide a corporate update today at 4:15pm ET. To access the conference call, please dial +1 (877) 407-8133 (toll free) or +1 (201) 689-8040 and if requested, reference conference ID 40894. The conference call will also be webcast live on the Investor Relations section of the Company's website at http://ir.uniquefab.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 7 p.m. ET on April 20, 2021 until 11:59 p.m. ET on May 4, 2021 by dialing +1 (877) 481-4010 (United States) or +1 (919) 882-2331 (international) and using the passcode 40894.

About Unique Fabricating, Inc.

Unique Fabricating, Inc. (NYSE American:UFAB) engineers and manufactures components for customers in the transportation, appliance, medical, and consumer off-road markets. 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, engine covers, fender stuffers, air ducts, acoustical insulation, door water shields, gas tank pads, light gaskets, topper pads, mirror gaskets, glove box liners, personal protection equipment, and packaging. The Company is headquartered in Auburn Hills, Michigan. For more information, visit http://www.uniquefab.com.

About Non-GAAP Financial Measures

We present Net Debt, a non-GAAP financial measure, in this press release to provide a supplemental measure of our financial position. We believe that Net Debt is a useful measure of the Company's liquidity position and progress toward reducing leverage. The calculation is limited in that the company may not always be able to use cash to repay debt.

We present Consolidated EBITDA (defined as "Consolidated EBITDA" in our Amended and Restated Credit Agreement, as amended), a non-GAAP financial measure, in this press release to aid investors in evaluating our covenant compliance in accordance with our Amended and Restated Credit Agreement. Consolidated EBITDA, as defined in our Credit Agreement, is defined as earnings before interest expense, income tax expense (benefit), depreciation and amortization expenses, management fees, non-cash stock compensation expenses, restructuring expenses, goodwill impairment charges, and consulting and licensing costs from our ongoing enterprise resource planning ("ERP") system implementation. There may be additional adjustments allowed and there are dollar limitations on certain adjustments and add backs, please refer to our Amended and Restated Credit Agreement, as amended, for a complete understanding of all adjustments and add backs allowed to Consolidated EBITDA as well as our financial covenants. The Company is presenting Consolidated EBITDA to illustrate our covenant compliance, not as a supplemental performance measurement. Certain of the allowable adjustments and add backs to Consolidated EBITDA are recurring in nature and cash expenses, which we believe limits the usefulness of Consolidated EBITDA as a measurement of the Company's performance. As of December 31, 2020, we were not in compliance with our financial covenants and, as a result, in default under the Amended and Restated Credit Agreement.

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 results for the fourth quarter and fiscal year of 2020 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 net sales, 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 December 31, 2020, filed with the Securities and Exchange Commission and in particular the Section entitled "Risk Factors", including that there is doubt as to the Company's continuing as a going concern 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.

(1) Net debt, a non-GAAP financial measure, is defined as debt minus cash and cash equivalents. Please refer to the Reconciliation of Non-GAAP Financial measures included in the tables included with this press release for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

(2) Customer Order Intake, COI, is a measurement that we use of new customer business awards that represents our estimates of the future sales value of the award over the anticipated life of the program. In the absence of a clearly defined program life, the default period we use is for 5 years as we believe this approximates the average program life over the markets in which we operate. There can be no assurance that the awards will result in sales or that the amount of sales will equal the future sales values that we have estimated. We use COI for assessing our operational needs and planning and budgeting purposes.

(3) For more information on the restated quarterly results, including the impact on each period's year-to-date results, condensed consolidated statement of stockholders' equity, and condensed consolidated statement of cash flows, please refer to each of the amended Quarterly Reports for the Relevant Periods which are linked below and available on our website:

Quarterly Report on Form 10-Q/A for the quarterly period ended March 31, 2020
Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2020
Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2020

RECONCILIATION OF NET INCOME TO CONSOLIDATED EBITDA

The following is a reconciliation of net income, as reported, which is a U.S. GAAP measure of our operating results, to Consolidated EBITDA, as defined in our Credit Agreement, a non-GAAP measure:

a) Represents any other non-recurring, non-cash gains during such period, including without limitation, (i) gains from the sale or exchange of assets other than in the ordinary course of business, and (ii) gains from early extinguishment of Indebtedness or Hedging Agreements
(b) Represents restructuring costs and expenses incurred from time to time at various locations, in an aggregate amount under the definition, during any twelve-month period, not to exceed $500,000
(c) Represents cost incurred with respect to the purchase and implementation of the Company's enterprise resource planning system, in an aggregate amount under the definition, not to exceed (i) $200,000 during each of the Company's fiscal quarters in 2020, (ii) $100,000 during each of the Company's fiscal quarters in 2021, and (iii) $0 with respect to any calculation thereafter
(d) Represents costs and expenses incurred in connection with the Eighth Amendment to the Amended and Restated Credit Agreement, in an aggregate amount not to exceed $175,000
(e) Total Consolidated Indebtedness, as defined, excludes the $6.0 million PPP loan for covenant purposes until final determination by the SBA and Lender on whether the PPP loan will be forgiven
(f) Ratio of Total Consolidated Indebtedness, as defined, divided by Consolidated EBITDA, as defined. To calculate the Total Leverage Ratio at December 31, 2020, the Consolidated EBITDA for the six months ended December 31, 2020 is annualized by multiplying it by 2
(g) The six months ended December 31, 2020 is the most recent period for which information is available for measuring compliance with financial covenants under the Amended and Restated Credit Agreement.