Unique Fabricating, Inc.

Greetings and welcome to Unique Fabricating's first quarter 2021 earnings call. Currently all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance throughout the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Rob Fink of FNK IR. Please go ahead.

Thank you, operator. I would like to welcome everyone to Unique Fabricating's first quarter 2021 earnings conference call. Hosting the call today are Doug Kane, Unique Fabricating's president and chief executive officer, and Brian Lopez, Unique Fabricating's chief financial officer. Before I turn the call over to Doug, I'd like to remind everyone that matters discussed on this conference call will 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 actual results, performance, or achievements to be materially different from any results performance, or achievements expressed or implied on today's call. All such forward-looking statements are based on management's current expectations and are subject to certain risk factors, uncertainties that may cause actual results to differ materially from those expressed by such statements. For a discussion of such risks and uncertainties, please see the risk factor section as described in the unique fabricating annual report on Form 10-K and quarterly report on Form 10-Q that are both filed with the SEC. All statements on this call, and including those in this afternoon's press release, are made as of today. Unique Fabricating does not intend to update this information unless required by law. In addition, certain non-GAAP financial measures will be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures are useful to investors in understanding and assessing the company's ongoing core operations and their prospects for the future. Unless it is otherwise stated, it should be assumed that any financials discussed in this call will be on a GAAP basis. Full reconciliation of non-GAAP to GAAP are included in the press release that was issued this afternoon. With all that said, I'd now like to turn the call over to Doug. Doug, the call is yours.

Thank you, Rob, and good afternoon, everyone. Unique Fabricating, Brian, and I appreciate your investment of time for an update regarding our outlook, overall operations, and financial results. We continue to have success across all of our markets in winning new business, even as our customers' purchasing departments navigate challenges with supply chain issues, which have taken a priority over a more normal cadence of sourcing. For 2021 year to date, we have been awarded 45 million in new customer order intake or COI. Wins in our consumer goods market with Skeeter Boats owned by Yamaha and a major hot tub manufacturer validate our belief that substantial opportunity exists for us to grow our business in this market. We have seen continued increases in the cost of our supply chain, including labor, logistics, packaging, and raw material along with the impacts of operational inefficiencies caused by the extreme customer order fluctuations and supplier issues with allocations, force majeure, et cetera, over the last months. As a result, we have implemented a cost recovery program effective with shipments in Q2 across all of our markets and customers. This program will be reviewed periodically to determine what modifications we may make in light of the changing supply conditions. We believe that our comprehensive improvement activities across all facets of the business over the last months have positioned us well for sustained profitable growth as customer releases increase and our new program wins come into production over the next quarters across all of our markets. We do expect to see continued challenges from the chip shortage and other factors outlined previously as we move through the second quarter and into Q3. Even with the industry production struggles and very low inventory levels, US light vehicle sales have continued to exceed expectations, with March and April SAR, or Seasonally Adjusted Annual Rate, at 18.0 million and 18.5 million units, respectively. This is the first time since early 2000 with consecutive selling months at these levels. Fleet demand is also rising as travel increases. The latest independent North American automotive production forecast for 2021 shows approximately 15.0 million units, down 0.6 million from my last update, with Q2 especially hard hit. This forecast does include the current expected impact of reduced OEM production from the chip shortage and other supply chain challenges. There is an expected increase of 1.0 million units in the second half of 2021 to 8.0 million units above the first half expected 7.0 million units of production. Light duty new vehicle inventory remains at historically low levels. with today's supply at the end of April of approximately 33 days, down even further from March's low value. For 2022, the current outlook is for approximately 16.8 million units of production, or a 12% increase from the 2021 full year expectation. We continue to see longer term strength in our appliance business, despite this market also being negatively impacted near term by the chip and petroleum-based raw material shortages. Home building and home improvement trends are expected to remain very positive through the remainder of 2021 and through 2022. For the first quarter, we slightly exceeded our prior sales communication with revenue of approximately $34.8 million. We achieved this level of sales despite the continuing supply chain and customer release headwinds I mentioned. The Q1 results do reflect ongoing pandemic impacts, labor costs, and availability challenges, as well as other supply chain costs and availability issues, which we now expect to continue through the second quarter and into the third quarter. The most recent announcements and release schedules from our customers reflect even greater negative impacts on production from the chip shortage. In light of these headwinds, we expect Q2 sales to be lower than Q1. Based on the latest third-party forecast, we expect our second-half sales to exceed first-half run rates as the chip shortage condition lessens somewhat and the increasing pent-up demand drives OEM production schedules to recover as much lost volume as is possible. These same forecasts lead us to believe that our 2022 sales will be higher sequentially and year over year. These expected increasing sales represent both the market share gains we see from our COI wins and the expected higher overall North American production. Our collaborative work with the bank syndicate continues as we develop a revised agreement reflecting the current and expected market conditions. Brian will now provide an overview of our first quarter of 2021 financial results. Thank you, Doug.