10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             .

Commission file number: 001-37480

UNIQUE FABRICATING, INC.

(Exact name of registrant as specified in its Charter)

Delaware		46-1846791
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

800 Standard Parkway

Auburn Hills, MI 48326

(248) 853-2333

(Address including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	UFAB	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐ No ☒

As of June 11, 2020, the registrant had 9,779,147 shares of common stock outstanding.

UNIQUE FABRICATING, INC.

FORM 10-Q

TABLE OF CONTENTS

			Page
Part I.	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets as of March 31, 2020 (unaudited) and as of December 29, 2019 (unaudited)	2
		Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 (unaudited) and three months ended March 31, 2019 (unaudited)	3
		Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2020 (unaudited) and the three months ended March 31, 2019 (unaudited)	4
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 (unaudited) and three months ended March 31, 2019 (unaudited)	5
		Notes to Condensed Consolidated Financial Statements (unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4.	Controls and Procedures	30
Part II.	Other Information
	Item 1.	Legal Proceedings	30
	Item 1A.	Risk Factors	30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 3.	Defaults Upon Senior Securities	31
	Item 4.	Mine Safety Disclosures	31
	Item 5.	Other Information	31
	Item 6.	Exhibits	33
		Signatures	34

1

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements 

UNIQUE FABRICATING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited – dollars in thousands)

	March 31, 2020		December 29, 2019
Assets
Current assets
Cash and cash equivalents	$	1,759	$	650
Accounts receivable, net of reserves of approximately $0.8 million and $0.9 million at March 31, 2020 and December 29, 2019, respectively	24,806		24,701
Inventory, net	15,259		13,047
Prepaid expenses and other current assets:
Prepaid expenses and other	3,295		2,108
Refundable taxes	1,207		1,049
Assets held for sale	1,003		1,003
Total current assets	47,329		42,558
Property, plant, and equipment, net	23,096		23,415
Goodwill	22,111		22,111
Intangible assets	10,639		11,625
Other assets
Operating leases	11,421		—
Investments, at cost	1,054		1,054
Deposits and other assets	226		226
Deferred tax asset	679		679
Total assets	$	116,555	$	101,668
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,956	$	9,324
Current maturities of long-term debt	2,847		2,847
Accrued compensation	764		1,225
Other accrued liabilities	3,403		1,979
Total current liabilities	21,970		15,375
Long-term debt, net of current maturities	31,819		33,220
Line of credit	11,750		11,418
Other long-term liabilities:
Deferred tax liability	874		1,324
Other liabilities	11,796		871
Total liabilities	78,209		62,208
Stockholders’ equity:
Common stock, $0.001 par value: 15,000,000 shares authorized and 9,779,147 and 9,779,147 issued and outstanding at March 31, 2020 and December 29, 2019, respectively	10		10
Additional paid-in-capital	46,034		46,011
Accumulated deficit	(7,698)		(6,561)
Total stockholders’ equity	38,346		39,460
Total liabilities and stockholders’ equity	$	116,555	$	101,668

The accompanying notes are an integral part of these Condensed Consolidated Statements.

2

UNIQUE FABRICATING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited – dollars in thousands, except per share amounts)

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Net sales	$	34,976	$	39,467
Cost of sales	27,901		31,167
Gross profit	7,075		8,300
Selling, general, and administrative expenses	5,865		7,273
Restructuring expenses	920		91
Operating income	290		936
Other income (expense):
Other, net	(24)		18
Interest expense	(1,666)		(1,100)
Other expense, net	(1,690)		(1,082)
(Loss) before income tax (benefit) expense	(1,400)		(146)
Income tax (benefit) expense	(263)		43
Net loss	$	(1,137)	$	(189)
Net loss per share:
Basic	$	(0.12)	$	(0.02)
Diluted	$	(0.12)	$	(0.02)
Dividends declared per share	$	—	$	0.05

The accompanying notes are an integral part of these Condensed Consolidated Statements.

3

UNIQUE FABRICATING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited – dollars in thousands)

	Number of Shares of Common Stock	Common Stock		Additional Paid-In Capital		Retained Earnings		Total
Balance - December 30, 2018	9,779,147	$	10	$	45,882	$	2,997	$	48,888
Net loss	—	—		—		(189)		(189)
Stock option expense	—	—		33		—		33
Cash dividends paid	—	—		—		(489)		(489)
Balance - March 31, 2019	9,779,147	$	10	$	45,915	$	2,319	$	48,243

	Number of Shares of Common Stock	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Total
Balance - December 29, 2019	9,779,147	$	10	$	46,011	$	(6,561)	$	39,460
Net loss	—	—		—		(1,137)		(1,137)
Stock option expense	—	—		23		—		23
Cash dividends paid	—	—		—		—		—
Balance - March 31, 2020	9,779,147	$	10	$	46,034	$	(7,698)	$	38,346

The accompanying notes are an integral part of these Condensed Consolidated Statements.

4

UNIQUE FABRICATING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – dollars in thousands)

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash Flows from Operating Activities
Net loss	$	(1,137)	$	(189)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,751		1,702
Amortization of debt issuance costs	37		44
Loss on sale of assets	12		(7)
Bad debt adjustment	213		61
Loss on derivative instrument	614		272
Stock option expense	23		33
Deferred income taxes	(450)		(114)
Accounts receivable	(318)		528
Inventory	(2,266)		415
Prepaid expenses and other assets	(1,344)		251
Accounts payable	5,968		62
Accrued and other liabilities	(848)		(1,487)
Other, net	593		—
Net cash provided by operating activities	2,848		1,571
Cash Flows from Investing Activities
Capital expenditures	(296)		(870)
Proceeds from sale of property, plant and equipment	5		7
Net cash used in investing activities	(291)		(863)
Cash Flows from Financing Activities
Net change in bank overdraft	(335)		1,355
Payments on term loans	(1,425)		(1,925)
Proceeds from capital expenditure line	—		700
(Payments on) proceeds from revolving credit facilities, net	312		(454)
Distribution of cash dividends	—		(489)
Net cash used in financing activities	(1,448)		(813)
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents	1,109		(105)
Cash and cash equivalents at beginning of period	650		1,410
Cash and cash equivalents at end of period	$	1,759	$	1,305
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,513	$	1,051
Cash paid for Income taxes	$	241	$	133

The accompanying notes are an integral part of these Condensed Consolidated Statements.

5

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Business and Basis of Presentation

Nature of Business

Unique Fabricating, Inc. (the “Company”) engineers and manufactures multi-material foam, rubber, and plastic components utilized in noise, vibration and harshness, acoustical management, water and air sealing, decorative and other functional applications. The Company operates as one operating and reportable segment.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company, its results of operations, and its cash flows. The interim results for the periods presented may not be indicative of the Company's actual annual results. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2019.

Going Concern

The Company’s condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Refer to Note 6 for discussion of the Company’s financial covenant compliance.

As of March 31, 2020, the Company was in compliance with its financial covenants. However, due to the impact of the COVID-19 pandemic on the Company and the global automotive industry, the Company projected it would not be in compliance with its financial covenants related to the Bank EBITDA for the twelve months ended June 30, 2020. In response to the anticipated impact of COVID-19, on April 23, 2020, the US Borrower and the CA Borrower (together the “Borrowers”) entered into the Seventh Amendment (the “Seventh Amendment”) to the Credit Agreement and Loan Documents. The Seventh Amendment, among other things, (i) permits additional indebtedness in the form of unsecured loans authorized pursuant to and in compliance with the CARES Act under the Paycheck Protection Program of the U.S. Small Business Administration, in an aggregate amount not to exceed $6.0 million; (ii) defers the June 30, 2020 principal payments on the US Term Loan, CA Term Loan, and CAPEX Loan, with the deferred principal amounts payable at the existing maturity dates; (iii) waives the requirement to test Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the fiscal quarter ending June 30, 2020; (iv) allows the release of the lien on the Evansville, Indiana property and for the net cash proceeds from its sale to be applied against any outstanding balance on the Revolver, which will not permanently reduce the Revolving Credit Aggregate Commitment; (v) adds a weekly requirement for the Borrowers to deliver a 13-week cash flow forecast until September 30, 2020; and (vi) adds a 1.0% LIBOR Floor and 2.0% Base Rate Floor.

While the Seventh Amendment waives the requirement to test the Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the second quarter of 2020, it does not waive these requirements for periods after the second quarter of 2020. Bank EBITDA, as defined, for the twelve months ended September 30, 2020, December 31, 2020, and March 31, 2021 is likely to result in the Company not being in compliance with its financial covenants, as these periods will include the financial results of the second quarter of 2020 which will be materially impacted by the COVID-19 pandemic. Absent an amendment or waiver, failure to be in compliance with the Company’s financial covenants would constitute a default when reported. Such a default, if not cured or waived, would allow the lenders to accelerate the maturity of the debt, making it due and payable at that time. If the maturity of the debt were accelerated, the Company would not have sufficient available liquidity to repay such debt within one year after the date that the financial statements are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern.

The Company has been actively discussing the impact the COVID-19 pandemic is expected to have on the Company’s ability to meet its financial covenants with the Administrative Agent and the need to modify the covenant terms through the periods that the Company believes may be impacted. The Company believes it is probable that the Company will obtain an amendment modifying the covenant terms prior to triggering a default. As a result, the Company has concluded that it’s plans to obtain covenant relief are probable of being achieved, to alleviating substantial doubt about the Company’s ability to continue as a going concern.

6

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Change in Quarter and Year-End

Historically, the Company’s quarterly periods ended on the Sunday closest to the end of the calendar quarterly period. For 2019, the quarters and year to date period, which were 13 weeks, respectively, ended on March 31, June 30, September 29, and December 29, 2019. On March 13, 2020, the Company’s board of directors approved changing our quarterly periods to match calendar quarterly periods. The Company expects the impact of this change on our 2020 result of operations to be immaterial. All year, quarter, and three month references prior to 2020 relate to the Company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, quarter and three months ended is used throughout this Quarterly Report on Form 10-Q to represent both the current year calendar quarterly periods and the prior year fiscal year periods.

Concentration Risks

The Company is exposed to significant concentration risks as follows:

Customer and Credit — During the three months ended March 31, 2020 and three months ended March 31, 2019, the Company’s net sales were derived from customers principally engaged in the North American automotive industry.  The following table presents the Company's sales directly and indirectly to General Motors Company (GM), Fiat Chrysler Automobiles (FCA), and Ford Motor Company (Ford) as a percentage of total net sales:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
General Motors Company	17	%	18	%
Fiat Chrysler Automobiles	14	%	15	%
Ford Motor Company	10	%	11	%

No customer represented more than 10 percent of direct Company sales for the three months ended March 31, 2020. GM accounted for 9 percent of direct Company sales for the three months ended March 31, 2020.

Labor Markets — At March 31, 2020, of the Company’s hourly plant employees working in the United States manufacturing facilities, 40 percent were covered under a collective bargaining agreement which expires in August 2022 while another 6 percent were covered under a separate collective bargaining agreement that expires in February 2023.

International Operations — The Company manufactures and sells products outside of the United States primarily in Mexico and Canada. Foreign operations are subject to various political, economic and other risks and uncertainties inherent in foreign countries. Among other risks, the Company’s operations may be subject to the risks of: restrictions on transfers of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; political conditions; and governmental regulations. The following table presents the percentage of the Company's total production in Mexico, Canada, and other foreign markets:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Mexico	23	%	19	%
Canada	9	%	8	%
Other	—	%	1	%

The following table presents the percentage of the Company's total net sales represented by net sales from customers located in Mexico, Canada, and other foreign countries:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Mexico	23	%	18	%
Canada	8	%	9	%
Other	—	%	1	%

7

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. New Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses,” which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. In November 2019, the FASB issued ASU 2019-10, which established the effective date of the new standard for smaller reporting companies as fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact, if any the adoption of the new credit losses model will have on its financial statements.

In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. We have identified our existing lease contracts and calculated the right of use assets, which are reflected in Other Assets on the Condensed Consolidated Balance Sheets, and lease liabilities, which are reflected in the Other Accrued Liabilities on the Condensed Consolidated Balance Sheets. This guidance was effective for the Company as of January 1, 2020. Adoption of the new standard resulted in the recording of right-of-use assets and liabilities of $12.1 million and $12.8 million as of January 1, 2020. The FASB has issued further ASUs related to the standard providing an optional transition method allowing entities to not recast comparative periods. The Company elected the practical expedients upon transition that retained the lease classification and initial direct costs for any leases that exist prior to adoption of the standard. The Company has approximately $12.3 million of noncancelable future rental obligations as of March 31, 2020, as shown in Note 11.

3. Revenues

The following table presents the Company's net sales disaggregated by major sales channel for the three months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Net Sales
Transportation	$	32,012	$	34,015
Appliance	2,779		3,754
Other	185		1,698
Total	$	34,976	$	39,467

General Recognition Policy

Revenue is recognized by the Company once all performance obligations under the terms of a contract with the Company's customers are satisfied. Generally this occurs with the transfer of control to a customer of its automotive, HVAC, and other products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products. The Company’s payment terms vary by the type and location of its customers and the products offered. The term between invoicing and when payment is due is not significant.

In general for sales arrangements, the Company deems control to transfer at a single point in time and recognizes revenue when it ships products from its manufacturing facilities to its customers. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The Company considers control to transfer upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, and the customer has significant risks and rewards of ownership of the asset. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

8

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contract Balances

The timing of revenue recognition, billings and cash collections and payments results in billed accounts receivable. The Company does not have deferred revenue. Additionally, management reviews the allowance for doubtful accounts at regular intervals. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered.

4. Inventory

Inventories consist of the following (in thousands):

	March 31, 2020		December 29, 2019
Raw materials	$	9,460	$	7,963
Work in progress	618		129
Finished goods	5,181		4,955
Total inventory	$	15,259	$	13,047

The Company periodically evaluates inventory for obsolescence, excess quantities, slow moving goods and other impairments of value and establishes reserves for any identified impairments. The allowance for obsolete inventory was $0.9 million and $1.0 million at March 31, 2020 and December 29, 2019, respectively.

Included in inventory are assets located in Mexico with a carrying amount of $3.2 million at March 31, 2020 and $3.6 million at December 29, 2019, and assets located in Canada with a carrying amount of $1.2 million at March 31, 2020 and $1.0 million at December 29, 2019.

5. Property, Plant, and Equipment, Net

Property, plant, and equipment, net consists of the following (in thousands):

	March 31, 2020		December 29, 2019		Depreciable Life – Years
Land	$	1,663	$	1,663
Buildings	5,934		5,934		23 – 40
Shop equipment	23,053		22,982		7 – 10
Leasehold improvements	1,225		1,234		3 – 10
Office equipment	1,858		1,866		3 – 7
Mobile equipment	160		190		3
Construction in progress	1,888		1,543
Total cost	35,781		35,412
Less: Accumulated depreciation	12,685		11,997
Net property, plant, and equipment, net	$	23,096	$	23,415

Depreciation expense was $0.7 million for the three months ended March 31, 2020, and $0.7 million for the three months ended March 31, 2019.

Included in property, plant, and equipment are assets located in Mexico with a carrying amount of $4.1 million and $4.1 million at March 31, 2020 and December 29, 2019, respectively, and assets located in Canada with a carrying amount of $0.6 million and $0.6 million at March 31, 2020 and December 29, 2019, respectively.

9

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Long-term Debt

Credit Agreement

On April 29, 2016, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower”) and Citizens Bank, National Association (“Citizens”), acting as lender and Administrative Agent, and other lenders, entered into a credit agreement (the “Credit Agreement”) providing for borrowings of up to the aggregate principal amount of $62.0 million. The Credit Agreement was a senior secured credit facility and consisted of a revolving line of credit of up to $30.0 million (the “Revolver”) to the US Borrower, a $17.0 million principal amount term loan (the “US Term Loan”) to the US Borrower, and a $15.0 million principal amount term loan (the “CA Term Loan”) to the CA Borrower. At Closing, the US Term Loan and the CA Term Loan were fully funded and the US Borrower borrowed approximately $22.9 million under the Revolver.

On August 18, 2017, the US Borrower and the CA Borrower entered into the Second Amendment (the “Amendment”) to the Credit Agreement, with Citizens, acting as Administrative Agent, and other lenders. The Amendment converted $4.0 million of outstanding borrowings under the Revolver into an additional $4.0 million term loan to the US Borrower (the “US Term Loan II”). The conversion of a portion of the outstanding borrowings under the Revolver did not reduce the aggregate amount available to be borrowed under it.

On August 8, 2018, the US Borrower and the CA Borrower entered into the Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement, with Citizens, acting as Administrative Agent, and other lenders. The Fourth Amendment required the Company to use the net proceeds from the sale of the Ft. Smith, Arkansas building to reduce the outstanding borrowings under the Revolver. The application of the net proceeds did not permanently reduce the amounts that could be borrowed under the Revolver. The Fourth Amendment also eased, for the fiscal quarter ended September 30, 2018, the financial covenant ratio which determined the Company's ability to pay dividends.

On September 20, 2018, the US Borrower and the CA Borrower entered into the Fifth Amendment (the “Fifth Amendment”) to the Credit Agreement, with Citizens, acting as Administrative Agent, and other lenders. The Fifth Amendment temporarily increased the maximum amount that could be borrowed under the Revolver to $32.5 million from its then maximum of $30.0 million. This increase implemented by the Fifth Amendment was effective until October 31, 2018, at which point the maximum amount that could be borrowed under the Revolver reverted back to $30.0 million and was replaced by the Amended and Restated Credit Agreement described below.

Amended and Restated Credit Agreement

On November 8, 2018, the US Borrower and the CA Borrower entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), which amended and restated the existing Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders. The Amended and Restated Credit Agreement which is a five year agreement, among other things, increased the principal amount of US Term Loan borrowings to $26.0 million, created a two year line to fund capital expenditures of up to $2.5 million through November 8, 2019 and $5.0 million thereafter through November 8, 2020, and extended the maturity dates of all borrowings from April 28, 2021 to November 7, 2023. The Amended and Restated Credit Agreement provides for borrowings of up to $30.0 million under the Revolver, subject to availability under the terms of the Amended and Restated Credit Agreement, and left the principal amount on the CA Term Loan at approximately $12.0 million, the same as it was under the previous Credit Agreement. The Amended and Restated Credit Agreement combined the previous US Term Loan and US Term Loan II (the “New US Term Loan”), and increased the aggregate principal amount to $26.0 million from $15.9 million, in total, for the previous US Term Loan and Term Loan II. The increase in the principal amount effected by the New U.S. Term Loan replaced and termed-out outstanding borrowings under the Revolver. The Amended and Restated Credit Agreement changes the quarterly principal payments of the New US Term Loan to $337.5 thousand through September 30, 2020, $575.0 thousand thereafter through September 30, 2021, and $812.5 thousand thereafter with a lump sum due at maturity. Finally, the agreement made certain changes to the Company's covenants and financial covenant ratios.

The Revolver, New US Term Loan, and CA Term Loan all mature on November 7, 2023 and bear interest at the Company's election of either (i) the greater of the Prime Rate or the Federal Funds Effective Rate (the “Base Rate”) or (ii) the LIBOR rate, plus an applicable margin ranging from 1.75% to 3.25% per annum in the case of the Base Rate and 2.75% to 4.25% per annum in the case of the LIBOR rate, in each case, based on senior leverage ratio thresholds, measured quarterly, as increased by the Waiver and Fourth Amendment to the Amended and Restated Credit Agreement which is further described below. The fair value of debt at March 31, 2020 under the Revolver, New US Term Loan and CA Term Loan approximates book value based on the variable terms.

10

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In addition, the Amended and Restated Credit Agreement allows for increases in the principal amount of the Revolver and the New US and CA Term Loans not to exceed a $10.0 million principal amount, in the aggregate, provided that before and after giving effect to the proposed increase (and any transactions to be consummated using proceeds of the increase), the total leverage and debt service coverage ratios do not exceed specified amounts. The Amended and Restated Credit Agreement also provides for the issuance of letters of credit with a face amount of up to a $2.0 million, in the aggregate, provided that any letter of credit that is issued will reduce availability under the Revolver.

As of March 31, 2020, $11.6 million was outstanding under the Revolver. This amount is gross of debt issuance costs which are further described in the next section. The Revolver had an effective interest rate of 5.92% percent per annum at March 31, 2020, and is secured by substantially all of the Company’s assets. At March 31, 2020, the maximum additional available borrowings under the Revolver was $11.7, million which includes a reduction for a $0.1 million letter of credit issued for the benefit of the landlord of one of the Company’s leased facilities. The maximum amount available was further subject to borrowing base restrictions, resulting in a net availability of $6.9 million.

Long term debt consists of the following (in thousands):

	March 31, 2020		December 29, 2019
New US Term Loan, payable to lenders in quarterly installments of $0.3 million through September 30, 2020, $0.6 million through September 30, 2021, and $0.8 million through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 5.853% per annum at March 31, 2020. At March 31, 2020, the balance of the New US Term Loan is presented net of a debt discount of $0.3 million from costs paid to or on behalf of the lenders.	$	23,725	$	24,383
CA Term Loan, payable to lenders in quarterly installments of $0.4 million through November 7, 2023, with a lump sum due at maturity. The effective interest rate was 5.853% per annum at March 31, 2020. At March 31, 2020, the balance of the CA Term Loan is presented net of a debt discount of $0.1 million from costs paid to or on behalf of the lenders.	$	9,641	$	10,384
Capital expenditure line payable to lenders in quarterly installments of 7.5% per annum of the outstanding principal balance commencing December 31, 2019 through September 30, 2020, 10% per annum through September 30, 2021, and 12.5% per annum through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 5.862% per annum at March 31, 2020.	1,300		1,300
Total debt excluding Revolver	34,666		36,067
Less current maturities	2,847		2,847
Long-term debt – Less current maturities	$	31,819	$	33,220

Debt Issuance Costs

Debt issuance costs represent legal, consulting, and other financial costs associated with debt financing and are reported netted against the related debt instrument. Amounts paid to or on behalf of lenders are presented as a debt discount and are also shown as a reduction of the associated debt instrument. Debt issuance costs on term debt are amortized using the straight line basis over the term of the related debt (which is immaterially different from the required effective interest method) while those related to revolving debt are amortized using a straight line basis over the term of the related debt.

At March 31, 2020 and December 29, 2019, debt issuance costs were $0.3 million and $0.3 million, respectively, while amounts paid to or on behalf of lenders presented as debt discounts were $0.4 million and $0.4 million, respectively. On November 8, 2018, the Company amended its Credit Agreement, to increase the Company's term loan debt. The Company reviewed this amendment for extinguishment accounting and concluded that there were no remaining debt issuance costs not amortized on the revolving debt facility qualified for extinguishment accounting and recognized a loss on extinguishment immediately. The remaining unamortized debt issuance costs not extinguished on the old revolving debt facility and all of the of remaining unamortized debt issuance costs on the term loans did not meet extinguishment accounting and therefore were carried forward to the new revolving debt facility and term loans.

Amortization expense of both debt issuance costs and debt discounts has been recognized as a component of interest expense in the amounts of $0.04 million for the three months ended March 31, 2020, and $0.04 million for the three months ended March 31, 2019, respectively.

11

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Covenant Compliance

The Amended and Restated Credit Agreement contains customary negative covenants and requires that the Company comply with various financial covenants, including a total leverage ratio and debt service coverage ratio, as defined in the Amended and Restated Credit Agreement. As of December 29, 2019, the Company was in compliance with these financial covenants. Additionally, the New US Term Loan and CA Term Loan each contains a clause, effective December 30, 2018, that requires an excess cash flow payment to be made to the lenders to reduce the New US Term Loan and CA Term Loan if the Company’s cash flow exceeds certain thresholds as defined by the Amended and Restated Credit Agreement. No payments were required to be made in the three months ended March 31, 2020.

As of March 31, 2019, the Company was not in compliance with the total leverage ratio financial covenant. As a result of this non-compliance, on May 7, 2019, the US Borrower and the CA Borrower entered into the Waiver and First Amendment (the “First Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders. The First Amendment temporarily waived the default on the March 31, 2019 covenant violation until the earlier of June 15, 2019 and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers current and future financial condition. As a result of this waiver, the lenders did not accelerate the maturity of the debt.

On June 14, 2019, the Company entered into the Waiver and Second Amendment (the “Second Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Second Amendment revised the waiver period as defined with respect to the March 31, 2019 covenant violation and resulting default until the earlier of June 30, 2019 (which was June 15, 2019 under the First Amendment to the Amended and Restated Credit Agreement) and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers current and future financial condition.

On June 28, 2019, the Company entered into the Waiver and Third Amendment (the “Third Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Third Amendment revised the waiver period as defined with respect to the March 31, 2019 covenant violation and resulting default until the earlier of July 22, 2019 (which was June 30, 2019 under the Second Amendment to the Amended and Restated Credit Agreement) and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers current and future financial condition.

On July 16, 2019, the Company entered into the Waiver and Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Fourth Amendment provided a permanent waiver by the Lenders and Agent with respect to the Borrower's non-compliance with the total leverage ratio financial covenant, as defined as of March 31, 2019. The Fourth Amendment also revised the definition of consolidated EBITDA and certain financial covenants, including the maximum total leverage ratio and the minimum debt service coverage ratio, as well as adding the requirement that the Company maintain minimum liquidity and minimum unadjusted consolidated EBITDA, each as defined. The Fourth Amendment permits distributions as long as the Borrower is in compliance with specified conditions including that the Borrower's liquidity, as defined, is not less than $5 million after giving effect to the distribution, total leverage ratio is not more than 2.00 to 1.00, post distribution, debt service coverage ratio ("DSCR"), as defined, is not greater than 1.10 to 1.00, and Borrower is in compliance with financial covenants, before and after giving effect to the distributions.

On August 7, 2019, the Company entered into the Fifth Amendment to the Credit Agreement and Loan Documents (the “Fifth Amendment”). The Fifth Amendment amended the definition of unadjusted consolidated EBITDA to include consolidated net income plus the sum of interest expense, tax expense, depreciation and amortization expense, and non-cash impairment charges of goodwill. The Company is compliant with the covenants set forth in the Fifth Amendment as of March 31, 2020.

On April 3, 2020, the company entered into the Sixth Amendment to the Credit Agreement and Loan Documents (the “Sixth Amendment”). The Sixth Amendment, amended the definition of consolidated EBITDA to include, as an addition to consolidated net income, an amount equal to $0.6 million resulting from a non-cash inventory write-off taken during the third fiscal quarter in fiscal 2019, amended the definition of “fiscal year” to reflect that we changed our fiscal year to end on December 31, commencing with the 2020 fiscal year, eliminate the requirement for a monthly Covenant Compliance Report and provide for payment of the Capex Loan principal installment that was due December 31, 2019, but was not paid due to an internal system miscalculation by the Agent.

As of March 31, 2020, the Company was in compliance with its financial covenants. However, due to the impact of the COVID-19 pandemic on the Company and the global automotive industry, the Company anticipated that it was likely that the Bank EBITDA for the twelve months ended June 30, 2020 was likely to result in the Company not being in compliance with its

12

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

financial covenants. In response to the anticipated impact of COVID-19, on April 23, 2020, the US Borrower and the CA Borrower (together the “Borrowers”) entered into the Seventh Amendment (the “Seventh Amendment”) to the Credit Agreement and Loan Documents. The Seventh Amendment, among other things, (i) permits additional indebtedness in the form of unsecured loans authorized pursuant to and in compliance with the CARES Act under the Paycheck Protection Program of the U.S. Small Business Administration, in an aggregate amount not to exceed $6.0 million; (ii) defers the June 30, 2020 principal payments on the US Term Loan, CA Term Loan, and CAPEX Loan, with the deferred principal amounts payable at the existing maturity dates; (iii) waives the requirement to test Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the fiscal quarter ending June 30, 2020; (iv) allows the release of the lien on the Evansville, Indiana property and for the net cash proceeds from its sale to be applied against any outstanding balance on the Revolver, which will not permanently reduce the Revolving Credit Aggregate Commitment; (v) adds a weekly requirement for the Borrowers to deliver a 13-week cash flow forecast until September 30, 2020; and (vi) adds a 1.0% LIBOR Floor and 2.0% Base Rate Floor. Refer to Note 1 for discussion of future covenant compliance and consideration of our ability to continue as a going concern.

Maturities on the Company’s Amended and Restated Credit Agreement and other long term debt obligations for the remainder of the current fiscal year and future fiscal years are as follows (in thousands):

2020	$	1,506
2021	4,176
2022	4,912
2023	36,464
2024	—
Thereafter	—
Total	47,058
Discounts	(359)
Debt issuance costs	(284)
Total debt – Net	$	46,415

7. Derivative Financial Instruments

Interest Rate Swap

The Company holds a derivative financial instrument, in the form of an interest rate swap, as required by its Credit Agreement and Amended and Restated Credit Agreement, for the purpose of hedging certain identifiable transactions in order to mitigate risks relating to the variability of future earnings and cash flows caused by interest rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The interest rate swap is recognized in the accompanying condensed consolidated balance sheets at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value are recognized currently in net income as interest expense in the accompanying condensed consolidated statements of operations.

Effective June 30, 2016, as required under the Credit Agreement entered into during April 2016, the Company entered into an interest rate swap which requires the Company to pay a fixed rate of 1.055 percent per annum while receiving a variable rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount. The notional amount at the effective date was $16.7 million which decreased by $0.3 million each quarter until June 30, 2017, and thereafter decreased by $0.4 million each quarter until June 29, 2018, when it began decreasing by $0.5 million per quarter until it expired on June 28, 2019.

Effective October 2, 2017, as required under the Second Amendment to the Credit Agreement, the Company entered into another interest rate swap which requires the Company to pay a fixed rate of 1.093 percent per annum while receiving a variable interest rate per annum based on the one month LIBOR, for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $1.9 million which decreases by $0.1 million each quarter until it expires on September 30, 2020.

Effective November 30, 2018, as required under the Amended and Restated Credit Agreement, the Company entered into another interest rate swap that requires the Company to pay a fixed rate of 3.075 percent per annum while receiving a variable interest rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $5.0 million which increased by $0.4 million each quarter until June 28, 2019

13

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

when the notional amount increased to $17.5 million due to the interest rate swap from 2016 described above expiring. Since June 28, 2019, the notional amount then decreased each quarter by $0.2 million until September 30, 2020 when the notional amount increases to $17.5 million due to the interest rate swap from 2017 above expiring. The notional amount then decreases each quarter by $0.4 million until December 31, 2021, then decreases each subsequent quarter by $0.6 million until it expires on November 8, 2023

At March 31, 2020, the fair value of all swaps was in a net liability position of $1.5 million and is included in other accrued liabilities and other long term liabilities in the condensed consolidated balance sheets. The Company paid $0.8 million in net monthly settlements with respect to the interest rate swaps for the three months ended March 31, 2020. At March 31, 2019, the fair value of the swaps was a net liability of $0.6 million, of which $0.04 million was included in current assets in the condensed consolidated balance sheets and $0.6 million was included in other long-term liabilities in the condensed consolidated balance sheets. The Company received $0.05 million in net monthly settlements in respect to the interest rate swaps for the three months ended March 31, 2019. Both the change in fair value and the net monthly settlements were included in interest expense in the condensed consolidated statements of operations.

8. Restructuring

The Company's restructuring activities are undertaken as necessary to implement management's strategy and improve operating results. The restructuring activities generally relate to realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, either in the normal course of business or pursuant to specific restructuring programs.

2019 Restructurings

Bryan Restructuring

On November 7, 2019, the Company made the decision to close its manufacturing facility in Bryan, Ohio. Approximately 43 positions were eliminated as a result of the closure. The Company's decision resulted from its desire to streamline operations and to utilize some of the available excess capacity in other of our facilities.

The Company has moved existing Bryan production to its manufacturing facilities in Queretaro, Mexico and LaFayette, GA. The Company will provide the affected employees severance pay, health benefits continuation, and job search assistance. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as it did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

The Company incurred one-time severance costs as a result of this plant closure of approximately $0.3 million during the fourth quarter of 2019. The amount of other costs incurred associated with this plant closure, which primarily consist of preparing and moving existing production equipment and inventory at Bryan to other facilities and accelerated depreciation of the building right-of-use lease asset, was approximately $0.5 million during the three months ended March 31, 2020.

Evansville Restructuring

On July 16, 2019, the Company made the decision to close its manufacturing facility in Evansville, Indiana. The Company ceased operations at the Evansville facility during the fourth quarter of 2019, and approximately 47 positions were eliminated as a result of the closure. The Company's decision resulted from its desire to streamline operations and to utilize some of the available excess capacity in other of our facilities.

The Company moved existing Evansville production to its manufacturing facilities in LaFayette, GA, Auburn Hills, MI, and Louisville, KY. The Company provided the affected employees severance pay, health benefits continuation, and job search assistance. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as it did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

Costs incurred in the three months ended March 31, 2020, which consisted primarily of transportation and installation of equipment and the disposal of equipment and inventory was $0.4 million in the three months ended March 31, 2020. All of these costs were recorded to the restructuring expense line in continuing operations in the Company's condensed consolidated statements of operations. 

The Company had $1.0 million and $1.2 million of remaining lease payments for a warehouse near the Evansville, Indiana facility as of March 31, 2020 and December 29, 2019, respectively. The Company is actively pursuing a sublease of the facility.

14

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The table below summarizes the activity in the restructuring liability for the three months ended March 31, 2020 (in thousands).

	Employee Termination Benefits Liability		Other Exit Costs Liability		Total
Accrual balance at December 29, 2019	$	438	$	116	$	554
Provision for estimated expenses to be incurred	—		920		920
Payments made during the year and asset write offs	333		684		1,017
Accrual balance at March 31, 2020	$	105	$	352	$	457

9. Stock Incentive Plans

2013 Stock Incentive Plan

The Company’s board of directors approved a stock incentive plan (the “Plan”) in 2013. The Plan permits the Company to grant 495,000 non statutory or incentive stock options to the employees, directors and consultants of the Company. 495,000 shares of unissued common stock are reserved for the Plan. The board of directors has the authority to determine the participants to whom stock options shall be awarded as well as any restrictions to be placed upon the awards. The exercise price cannot be less than the fair value of the underlying shares at the time the stock options are issued and the maximum length of an award is ten years.

On February 25, 2020, the compensation committee of the board of directors approved the issuance of 7,500 non statutory stock option awards to employees of the Company. All of the awards have an exercise price of $3.32 per share with a weighted average grant date fair value of $1.64 per share. These options vest 40% on February 25, 2021 and 20% on each of February 25, 2022, 2023, and 2024.

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of the stock of comparable companies. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	February 25, 2020
Expected volatility	52.00	%
Dividend yield	—	%
Expected term (in years)	6
Risk-free rate	1.21	%

On April 6, 2020, subsequent to the end of the first quarter, the compensation committee of the board of directors approved the issuance of 12,500 non statutory stock option awards to the Company’s new Chief Financial Officer (“CFO”) with an exercise price of $2.36 per share. These awards vest 50 percent once the closing price of the Company's common stock is in excess of $7.50 per share for 10 out of 20 consecutive trading days and an additional 50 percent once the closing price of the Company's common stock is in excess of $12.50 per share for 10 out of 20 consecutive trading days.

2014 Omnibus Performance Award Plan

In 2014, the board of directors and stockholders adopted the Unique Fabricating, Inc. 2014 Omnibus Performance Award Plan, or the 2014 Plan. The 2014 Plan provides for the grant of cash awards, stock options, stock appreciation rights, or SARs, shares of restricted stock and restricted stock units, or RSUs, performance shares and performance units. The 2014 Plan originally authorized the grant of awards relating to 250,000 shares of our common stock. In the event of any transaction that causes a change in capitalization, the Compensation Committee, such other committee administering the 2014 Plan or the board of directors will make such adjustments to the number of shares of common stock delivered, and the number and/or price of shares of common stock subject to outstanding awards granted under the 2014 Plan, as it deems appropriate and equitable to prevent dilution or enlargement of participants’ rights. An amendment approved in March of 2016 by our board of directors which was approved by our stockholders at our annual meeting of stockholders in June 2016, increased the number of shares authorized for grant of awards under the 2014 Plan to a total of 450,000 shares of our common stock.

15

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On February 25, 2020, the compensation committee of the board of directors approved the issuance of 7,500 non statutory stock option awards to employees of the Company. All of the awards have an exercise price of $3.32 per share with a weighted average grant date fair value of $1.64 per share. These options vest 40% on February 25, 2021 and 20% on each of February 25, 2022, 2023, and 2024.

The fair value of each of the option awards described above is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of the stock of comparable companies. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options for adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	February 25, 2020
Expected volatility	52.00	%
Dividend yield	—	%
Expected term (in years)	6
Risk-free rate	1.21	%

On February 25, 2020, the compensation committee of the board of directors approved the issuance of 15,000 incentive stock option awards to employees of the Company with an exercise price of $3.32 per share. These awards vest 50 percent once the closing price of the Company's common stock is in excess of $7.50 per share for 10 out of 20 consecutive trading days and an additional 50 percent once the closing price of the Company's common stock is in excess of $12.50 per share for 10 out of 20 consecutive trading days. The Company estimated the grant-date fair value of the awards subject to these market conditions using a Monte Carlo simulation model, using the following assumptions: risk free interest rate of 1.21% and annualized volatility of 52.0%.

On April 6, 2020, subsequent to the end of the first quarter, the compensation committee of the board of directors approved the issuance of 25,000 non statutory stock option awards to the Company’s new CFO with an exercise price of $2.36 per share. These awards vest 40 percent on April 6, 2021 and an additional 20 percent on each of April 6, 2022, 2023, and 2024. On April 6, 2020, subsequent to the end of the first quarter, the compensation committee of the board of directors approved the issuance of 12,500 incentive stock option awards to the Company’s new CFO with an exercise price of $2.36 per share. These awards vest 50 percent once the closing price of the Company's common stock is in excess of $7.50 per share for 10 out of 20 consecutive trading days and an additional 50 percent once the closing price of the Company's common stock is in excess of $12.50 per share for 10 out of 20 consecutive trading days.

A summary of option activity under both plans is presented below:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value(1)
	(dollars in thousands, except share data and exercise price)
Outstanding at December 29, 2019	676,480	$	5.48	7.1	$	471,000
Granted	30,000	$	3.32	9.9
Exercised	—	$	—	0.0
Forfeited or expired(2)	95,000	$	6.91	0.0
Outstanding at March 31, 2020	611,480	$	5.15	7.3	$	—
Vested and exercisable at March 31, 2020	296,480	$	7.43	4.9	$	—

————————————

(1) The aggregate intrinsic value above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying shares and multiplying this result by the related number of options outstanding and exercisable as of the period end date. As of March 31, 2020, there is no intrinsic value as the exercise prices are greater than the fair value. The estimated fair value of the shares is based on the closing price of the stock of $2.34 as of March 31, 2020 and $4.01 as of December 29, 2019.

(2)  Includes the 65,000 shares forfeited by the Company’s former Chief Financial Officer as a result of his October 2019 departure.

The Company recorded compensation expense of $22.8 thousand for the three months ended March 31, 2020, and $32.7 thousand for the three months ended March 31, 2019, in its condensed consolidated statements of operations, as a component of

16

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

sales, general and administrative expenses. The income tax (expense) benefit related to share based compensation expense was immaterial for all periods presented.

As of March 31, 2020, there was $298.3 thousand of total unrecognized compensation cost related to non-vested stock option awards under the plans. That cost is expected to be recognized over a weighted average period of 5.2 years.

10. Income Taxes

For interim tax reporting we estimate our annual effective tax rate and apply it to our year to date income before income taxes. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effect of changes in tax laws or rates, are reported in the interim period in which they occur, if applicable.  

Income tax (benefit) expense for the three months ended March 31, 2020 was $(0.3) million, compared to $0.04 million for the three months ended March 31, 2019.

During the three months ended March 31, 2020 , the differences between the actual effective tax rate of 22.2% and the statutory rate of 21.0% was primarily due to benefit of tax crredits in the U.S. partially offset by earnings generated in Mexico and Canada, which both have higher statutory income tax rates than the U.S., and U.S. taxation of foreign earnings under the Global Intangible Low-Taxed Income (GILTI) provisions.

11. Leases

The Company records a right-of-use (“ROU”) asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has no significant lease agreements in place for which the Company is a lessor. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.

The Company leases certain industrial spaces, office space, land, and equipment. Some leases include one or more options to renew, with renewal terms that can extend the lease term from generally one to 5 years. The exercise of lease renewal options is at the Company’s sole discretion, and are included in the lease term only to the extent such renewal options are reasonably certain of being exercised at lease commencement. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. New leased assets obtained in exchange for new operating lease liabilities during the three months ended March 31, 2020, were immaterial. As of March 31, 2020, leases that the Company has signed but have not yet commenced are immaterial.

Leased assets and liabilities included within the condensed consolidated balance sheets consist of the following (in thousands):

	Classification	March 31, 2020
Right-of-Use-Assets
Operating	Operating leases	$	11,421
Liabilities
Current
Operating	Other accrued liabilities	$	2,247
Non-current
Operating	Non-current liabilities	10,046
Total lease liabilities		$	12,293

Lease costs included in the condensed consolidated statements of operations consist of the following (in thousands):

	Classification	March 31, 2020
Lease cost	Cost of sales, selling expenses and general and administrative expense	$	795

17

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Maturity of the Company’s lease liabilities as of March 31, 2020 is as follows (in thousands):

2020 (remainder)	$	2,191
2021	2,807
2022	1,887
2023	1,154
2024	1,116
Thereafter	6,458
Total lease payments	15,613
Less: interest	3,320
Present value of lease payments	$	12,293

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Remaining lease term and discount rates are as follows:

	March 31, 2020
Weighted average remaining lease term (years)	7.6
Weighted average discount rate	6.3%

Lease costs included in the condensed consolidated statements of cash flows are as follows (in thousands):

	Three months ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases	$	827

12. Retirement Plans

The Company maintains a defined contribution plan covering certain full time salaried employees. Employees can make elective contributions to the plan. The Company contributes a match on 100 percent of an employee’s contribution up to the first 3 percent of each employee’s total compensation and 50 percent for the next 2 percent of each employee’s total compensation. In addition, the Company, at the discretion of the board of directors, may make additional contributions to the plan on behalf of the plan participants. The Company contributed $0.08 million for the three months ended March 31, 2020 and $0.15 million for the three months ended March 31, 2019.

13. Related Party Transactions

Effective March 18, 2013, the Company is a party to a management agreement with a firm related to several stockholders. The agreement initially provided for annual management fees of $0.3 million and additional fees for assistance provided with acquisitions. Effective upon completion of the Company's initial public offering, the agreement was amended to reduce the annual management fee by an amount equal to the amount, if any, of annual cash retainers and equity awards received as compensation for service on the board of directors to any person who is a related person of Taglich Private Equity, LLC or Taglich Brothers, Inc. The Company incurred management fees of $0.06 million for the three months March 31, 2020 and $0.06 million or the three months ended March 31, 2019. The management agreement had an initial term of five years, expiring on March 18, 2020, and renews automatically annually for additional one year terms. The current term expires on March 18, 2021. The agreement also will terminate on the date that the Taglich Founding Investors or Taglich Equity Investors, each as defined, no longer also collectively own 50% of the equity securities owned by either of them on March 18, 2013.

In 2019, following the May 6, 2019 resignation of the Company’s Chief Executive Officer, the Company entered into a services agreement with 6th Avenue Group, which is a company owned by a Board member of the Company. The services performed have been related to providing assistance for long term strategic planning for the Company as well as aiding in helping the Company with CEO transition services. The services provided by 6th Avenue Group ended in 2019. On June 11, 2019, this

18

UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Board member was also awarded stock options for 30,000 shares, which vested immediately and had an exercise price of $2.93 per share, for her services.

14. Fair Value Measurements

Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates.

Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item.

In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item.

The Company measures its interest rate swaps at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variance and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market.

15. Earnings Per Share

Basic earnings per share is computed by dividing the net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed giving effect to all potentially weighted average dilutive shares including stock options and warrants. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted loss per share for the three months ended March 31, 2020 and 2019 (dollars in thousands, except per share amounts):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Numerator:
Net (loss) income	$	(1,137)	$	(189)
Denominator:
Weighted average shares outstanding, basic	9,779,147		9,779,147
Dilutive effect of stock-based awards	—		—
Weighted average share outstanding, diluted	9,779,147		9,779,147
Basic loss per share	$	(0.12)	$	(0.02)
Diluted loss per share	$	(0.12)	$	(0.02)

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UNIQUE FABRICATING, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The effect of certain common stock equivalents were excluded from the computation of weighted average diluted shares outstanding for the three months ended March 31, 2020 and 2019, as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below:

	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Number of options	611,480	563,680
Exercise price of options	$2.89 - $12.50	$3.33 - $12.50
Warrants(1)	142,185	142,185
Exercise price of warrants	$3.33 - $11.88	$3.33 - $11.88

_________________________________

(1) Includes warrants to purchase 141,000 shares of common stock issued to the underwriters of the Company's IPO in July 2015 with an exercise price of $11.88 per share of common stock and an expiration date of July 7, 2020.

16. Contingencies

The Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While uncertainties are inherent in the final outcome of such matters, the Company believes that there are no pending proceedings in which the Company is currently involved that will have a material effect on its financial position, results of operations or cash flow.

17. Subsequent Events

Paycheck Protection Program Loan

On April 24, 2020, the Company entered into a Promissory Note (“PPP Note”) for $6.0 million with Citizens Bank, National Association, pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed by Congress and signed into law on March 27, 2020. The PPP Note is unsecured, bears interest at 1.00% per annum, with principal and interest payments deferred for the first six months, and matures in two years. The principal is payable in equal monthly installments, with interest, beginning on the first business day after the end of the deferment period. The PPP Note may be forgiven subject to the terms of the Paycheck Protection Program.

Additionally, certain acts of the Company, including but not limited to: (i) the failure to pay any taxes when due, (ii) becoming the subject of a proceeding under any bankruptcy or insolvency law, (iii) making an assignment for the benefit of creditors, or (iv) reorganizing, merging, consolidating or otherwise changing ownership or business structure without PPP Lender’s prior written consent, are considered events of default which grant Lender the right to seek immediate payment of all amounts owing under the PPP Note.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operation is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes to unaudited condensed consolidated financial statements included elsewhere in this document as well as the consolidated financial statements and the related notes to consolidated financial statements for the year ended December 29, 2019 included in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”). Our actual results and the timing of events could differ materially from those discussed in forward-looking statements contained herein. Factors that could cause or contribute to these differences include those discussed below as well as in our Annual Report on Form 10-K/A and in other filings by us with the SEC, particularly in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” We make no guarantees regarding outcomes, and assume no obligation to update the forward-looking statements herein, except as may be required by law.

Forward-Looking Statements

The following discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. These statements are based on management's beliefs and assumptions and on information currently available to us. 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 our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. When used in this document 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 may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements, including those discussed in our Annual Report on Form 10-K/A and in particular the section entitled “Risk Factors” of the Annual Report on Form 10-K/A and in other filings by us with the SEC.

Forward-looking statements speak only as of the date of this Form 10-Q filing. 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.

Basis of Presentation

Historically, the Company’s quarterly periods ended on the Sunday closest to the end of the calendar quarterly period. For 2019, the quarters and year to date period, which were thirteen weeks, respectively, ended on March 31, June 30, September 29, and December 29, 2019. On March 13, 2020, the Company’s board of directors approved changing our quarterly periods to match calendar quarterly periods. The Company expects the impact of this change on our 2020 result of operations to be immaterial. All year, quarter, and three month references prior to 2020 relate to the Company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, quarter and three months ended is used throughout this Quarterly Report on Form 10-Q to represent both the current year calendar quarterly periods and the prior year fiscal year periods.

The Company’s operations are aggregated in one reportable business segment. Although we expanded the products that we manufacture and sell to include components used in the appliance, HVAC and water heater industries, products for these industries are manufactured at facilities that also manufacture or are capable of manufacturing products for the automotive industries. All of our manufacturing locations have similar capabilities, and most plants serve multiple markets. The manufacturing operations for our automotive, appliance, HVAC and water heater products share management and labor forces and use common personnel and strategies for new product development, marketing and the sourcing of raw materials.

Overview

Unique Fabricating is engaged in the engineering and manufacture of multi-material foam, rubber, and plastic components utilized in noise, vibration and harshness, acoustical management, water and air sealing, decorative and other functional applications. Unique has combined a history of organic growth with strategic acquisitions to diversify both its product capabilities and the markets it serves.

Unique Fabricating's markets served are the North America automotive and heavy- duty truck markets, as well as the medical, appliance, water heater and HVAC markets. Sales are conducted directly to major automotive and heavy-duty truck, appliance, water heater and HVAC manufacturers, referred throughout this report as OEMs, or indirectly through the Tier 1 suppliers of these OEMs. The Company has its principal executive offices in Auburn Hills, Michigan and has sales, engineering and production facilities in Auburn Hills, Michigan; Concord, Michigan; LaFayette, Georgia; Louisville, Kentucky; Monterrey,

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Mexico; Queretaro, Mexico; and London, Ontario. The Company also has an independent client sales representative who maintains offices in Baldham, Germany.

Unique Fabricating derives most of its net sales from the sales of foam, rubber plastic, and tape adhesive related automotive products. These products are produced by a variety of manufacturing processes including die cutting, compression molding, thermoforming, reaction injection molding and fusion molding. We believe Unique Fabricating has a broader array of processes and materials utilized than any of its direct competitors, based on our product offerings. By sealing out air, noise and water intrusion, and by providing sound absorption and blocking, Unique Fabricating’s products improve the interior comfort of a vehicle, increasing perceived vehicle quality and the overall experience of its passengers. Unique Fabricating’s products perform similar functions for appliances, water heaters and HVAC systems, improving thermal characteristics, reducing noise and prolonging equipment life.

Recent Developments

COVID-19 Pandemic

The Company’s first quarter of 2020 results were adversely affected by the COVID-19 pandemic, which resulted in the idling of most of our automotive customers’ facilities beginning in mid-March 2020. In response to the unprecedented uncertainty related to the impact the COVID-19 pandemic is having on the global automotive industry, the Company has taken actions to reduce costs and increase financial flexibility. These actions include actively managing costs, capital expenditures, and working capital. Additionally, the Company received a loan of approximately $6.0 million pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the Coronavirus Aid, Relief, and Economic Security Act. Refer to Note 17, Subsequent Events in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the Paycheck Protection Program loan.

The Company continues to follow guidelines with respect to operating during the COVID-19 pandemic provided by the various governmental entities in the jurisdictions where we operate and is taking additional measures to protect our employees.

Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, the Company is unable to determine the full impact of the COVID-19 pandemic on our business. In the first quarter of 2020, the Company had lower sales of approximately $3.2 million due to the COVID-19 pandemic.

Bryan Facility Closure

On November 7, 2019, the Company made the decision to close its manufacturing facility in Bryan, Ohio. The closure of the Bryan facility was completed during the first quarter of 2020. The Company moved production to its existing manufacturing facilities in Queretaro, Mexico and LaFayette, GA. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as it did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

The Company incurred one-time severance costs as a result of this plant closure of approximately $0.3 million during the fourth quarter of 2019. The amount of other costs incurred associated with this plant closure, which primarily consist of preparing and moving existing production equipment and inventory at Bryan to other facilities, was approximately $0.5 million during the first quarter of 2020.

Evansville Facility Closure

On July 16, 2019, the Company made the decision to close its manufacturing facility in Evansville, Indiana. The Company currently expects to cease operations at the Evansville facility by the end of December 2019, and estimates that approximately 47 positions will be eliminated as a result of the closure. The Company's decision resulted from its desire to streamline operations and to utilize some of the available excess capacity in other of our facilities.

The Company will move existing Evansville production to its manufacturing facilities in LaFayette, GA, Auburn Hills, MI, and Louisville, KY. The Company will provide the affected employees severance pay, health benefits continuation, and job search assistance. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as it did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

The amount of other costs incurred associated with the Evansville plant closure was $0.4 million in the three months ended March 31, 2020. All of these costs were recorded to the restructuring expense line in continuing operations in the Company's condensed consolidated statements of operations. During the first quarter of 2020 the Company estimates that it had approximately $1.3 million lost sales as a result of lost business due to the Evansville, Indiana facility closure.

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Amended and Restated Credit Agreement

On November 8, 2018, the US Borrower and the CA Borrower, entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), which amended and restated the existing Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders. The Amended and Restated Credit Agreement, among other things increases the principal amount of US Term Loan borrowings to $26.0 million, creates a two year line to fund capital expenditures of up to $2.5 million through November 8, 2019 and $5.0 million thereafter through November 8, 2020, and extends the maturity dates of all borrowings from April 28, 2021 to November 7, 2023. The Amended and Restated Credit Agreement provides for borrowings of up to $30.0 million under the Revolver, subject to availability under the terms of the Amended and Restated Credit Agreement, and left the principal amount on the CA Term Loan the same as at September 30, 2018, approximately $12.0 million, and the same as it was under the previous Credit Agreement. The Amended and Restated Credit Agreement combined the previous US Term Loan and US Term Loan II (the “New US Term Loan”) into one term loan, and increases the aggregate principal amount to $26.0 million from $15.9 million. The increase in the principal amount effected by the New U.S. Term Loan replaced and termed-out outstanding borrowings under the Revolver. The Amended and Restated Credit Agreement changes the quarterly principal payments of the New US Term Loan to $0.3 million through September 30, 2020, $0.6 million thereafter through September 30, 2021, and $0.8 million thereafter though maturity. Finally, the agreement made certain changes to the Company's covenants and financial covenant ratios.

Covenant Compliance

As of March 31, 2019, the Company was not in compliance with the total leverage ratio financial covenant. As a result of this non-compliance, on May 7, 2019, the US Borrower and the CA Borrower entered into the waiver and First Amendment (the “First Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders. The First Amendment temporarily waived the default on the March 31, 2019 covenant violation until the earlier of June 15, 2019 and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers then existing and future financial condition.

On June 14, 2019, the Company entered into the Second Amendment (the “Second Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Second Amendment revised the waiver period as defined with respect to the March 31, 2019 covenant violation and resulting default until the earlier of June 30, 2019 (which was June 15, 2019 under the First Amendment to the Amended and Restated Credit Agreement) and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as are necessary taking into account the Borrowers current and future financial condition.

On June 28, 2019, the Company entered into the Third Amendment (the “Third Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Third Amendment revised the waiver period as defined with respect to the March 31, 2019 covenant violation and resulting default until the earlier of July 22, 2019 (which was June 30, 2019 under the Second Amendment to the Amended and Restated Credit Agreement) and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as are necessary taking into account the Borrowers current and future financial condition.

On July 16, 2019, the Company entered into the Waiver and Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Fourth Amendment provided a permanent waiver by the Lenders and Agent with respect to the US Borrower's non-compliance with the total leverage ratio financial covenant, as defined, as of March 31, 2019. The Fourth Amendment also revised the definition of consolidated EBITDA and certain financial covenants, including the maximum total leverage ratio and the minimum debt service coverage ratio, as well as adding the requirement that the Company maintain minimum liquidity and minimum unadjusted consolidated EBITDA, each as defined. The Fourth Amendment permited distributions as long as the Borrower is in compliance with specified conditions including that the US Borrower's liquidity, as defined, is not less than $5 million after giving effect to the distributions,, total leverage ratio is not more than 2.00 to 1.00, post distribution debt service coverage ratio ("DSCR"), as defined, is not greater than 1.10 to 1.00, and US Borrower is in compliance with financial covenants, before and after giving effect to the distributions.

On August 7, 2019, the Company entered into the Fifth Amendment to the Credit Agreement and Loan Documents (The “Fifth Amendment”). The Fifth Amendment amended the definition of unadjusted consolidated EBITDA to include consolidated net income plus the sum of interest expense, tax expense, depreciation and amortization expense, and non-cash impairment charges of goodwill.

As of March 31, 2020, the Company was in compliance with its financial covenants. However, due to the impact of the COVID-19 pandemic on the Company and the global automotive industry, the Company anticipated that it was likely that the Bank EBITDA for the twelve months ended June 30, 2020 is likely to result in the Company not being in compliance with its financial covenants. In response to the anticipated impact of COVID-19, on April 23, 2020, the US Borrower and the CA Borrower (together the “Borrowers”) entered into the Seventh Amendment (the “Seventh Amendment”) to the Credit

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Agreement and Loan Documents. The Seventh Amendment, among other things, (i) permits additional indebtedness in the form of unsecured loans authorized pursuant to and in compliance with the CARES Act under the Paycheck Protection Program of the U.S. Small Business Administration, in an aggregate amount not to exceed $6.0 million; (ii) defers the June 30, 2020 principal payments on the US Term Loan, CA Term Loan, and CAPEX Loan, with the deferred principal amounts payable at the existing maturity dates; (iii) waives the requirement to test Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the fiscal quarter ending June 30, 2020; (iv) allows the release of the lien on the Evansville, Indiana property and for the net cash proceeds from its sale to be applied against any outstanding balance on the Revolver, which will not permanently reduce the Revolving Credit Aggregate Commitment; (v) adds a weekly requirement for the Borrowers to deliver a 13-week cash flow forecast until September 30, 2020; and (vi) adds a 1.0% LIBOR Floor and 2.0% Base Rate Floor.

While the Seventh Amendment waives the requirement to test the Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the second quarter of 2020, it does not waive this requirement for periods after the second quarter of 2020. The Company believes that it is not likely to be in compliance with its financial covenants for the quarters ending June 30, 2020, September 30, 2020, December 31, 2020, and March 31, 2021 as these periods’ twelve month financial results will include the second quarter of 2020 which will be materially impacted by the COVID-19 pandemic. Absent an amendment or waiver, failure to be in compliance with the Company’s financial covenants would constitute a default when reported. Such a default, if not cured or waived, would allow the lenders to accelerate the maturity of the debt, making it due and payable at that time. If the maturity of the debt were accelerated, the Company would not have sufficient available liquidity to repay such debt within on year after the date that the financial statements are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern.

The Company has been actively discussing the impact that the COVID-19 pandemic is expected to have on the Company’s ability to meet its financial covenants with the Administrative Agent and the need to modify the covenant terms through the periods that the Company believes may be impacted. The Company believes it is probable that the Company will obtain an amendment modifying the covenant terms prior to triggering a default. As a result, the Company has concluded that its plans to obtain covenant relief are probable of being achieved, alleviating substantial doubt about the Company’s ability to continue as a going concern.

Comparison of Results of Operations for the Three Months Ended March 31, 2020 and March 31, 2019

Net Sales

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
	(in thousands)
Net sales	$	34,976	$	39,467

Net sales for the quarter ended March 31, 2020 were approximately $35.0 million compared to $39.5 million for the quarter ended March 31, 2019, representing a decrease of 11.4%. The decrease in net sales for the quarter ended March 31, 2020, was primarily driven by the impact of the COVID-19 pandemic on the global automotive industry, which shut down our automotive customers’ facilities and loss of revenues from business associated with the plant closure at Evansville, Indiana of approximately $1.3 million.

Cost of Sales

The major components of cost of sales are raw materials purchased from third parties, direct labor and benefits, and manufacturing overhead, including facility costs, utilities, supplies, repairs and maintenance, insurance, freight costs of products shipped to customers and depreciation. Cost of sales consists of the following major components:

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Amount		As % of net sales		Amount		As % of net sales
	(dollars in thousands)
Materials	$	17,762	50.8	%	$	20,082	50.9	%
Direct labor and benefits	5,692		16.3	%	6,124		15.5	%
Manufacturing overhead	3,822		10.9	%	4,320		10.9	%
Sub-total	27,276		78.0	%	30,526		77.3	%
Depreciation	625		1.8	%	641		1.6	%
Cost of Sales	$	27,901	79.8	%	$	31,167	79.0	%
Gross Profit	$	7,075	20.2	%	$	8,300	21.0	%

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Cost of sales as a percentage of net sales for the quarter ended March 31, 2020 increased 80 basis points to 79.8% from 79.0% for the quarter ended March 31, 2019.

Gross Profit

Gross profit as a percentage of net sales, or gross margin, for the quarter ended March 31, 2020 decreased 80 basis points to 20.2%, compared to 21.0% for the quarter ended March 31, 2019. The decrease in gross margin is the result of lower sales volumes primarily attributable to lower demand for our automotive products as a result of the COVID-19 pandemic, partially offset by efforts to reduce costs.

Selling, General and Administrative Expenses

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	(dollars in thousands)
Selling, general, and administrative expenses, excluding depreciation and amortization expenses	$	4,784		$	6,212
Depreciation and amortization	1,082			1,061
Selling, general, and administrative expenses	$	5,866		$	7,273
Selling, general, and administrative expenses as a percentage of net sales	16.8		%	18.4		%

Selling, general, and administrative expenses as a percentage of net sales for the quarter ended March 31, 2020, decreased 160 basis points to 16.8% from 18.4% for the quarter ended March 31, 2019. The decrease is primarily related to efforts undertaken to reduce costs including headcount, commissions and professional services, in addition to the savings from plant closures.

Operating Income

As a result of the above mentioned factors, as well as restructuring expenses of $0.9 million and $0.1 million for the quarter ended March 31, 2020 and March 31, 2019, respectively, operating income for the quarter ended March 31, 2020 was $0.3 million, or 0.8% of net sales, compared to operating income of $0.9 million, or 2.4% of net sales, for the quarter ended March 31, 2019. The decrease in operating income and operating margin are primarily attributable to the lower sales volumes and higher restructuring costs, partially offset by our cost reduction efforts.

Non-Operating Expense

Non-operating expense for the quarter ended March 31, 2020 was $1.7 million compared to $1.1 million for the quarter ended March 31, 2019. The $0.6 million increase was primarily attributable to higher settlement costs from our interest rate swap, which is included in interest expense in the accompanying condensed consolidated statements of operations.

Income Before Income Taxes

As a result of the foregoing factors, our loss before income taxes increased $1.3 million to $1.4 million for the quarter ended March 31, 2020, compared to $0.1 million in 2019.

Income Tax Provision

During the three months ended March 31, 2020, income tax benefit was $0.3 million, and the effective income tax rate was 22.21%. The differences between the effective tax rate and the statutory rate of 21.0% was primarily due to benefit of tax crredits in the U.S. partially offset by earnings generated in Mexico and Canada, which both have higher statutory income tax rates than the U.S., and U.S. taxation of foreign earnings under the Global Intangible Low-Taxed Income (GILTI) provisions.

Net Income

As a result restructuring expenses, lower net sales, and changes in other expenses and benefits discussed above, net loss for the quarter ended March 31, 2020 was $1.1 million compared to a net loss of $0.2 million during the quarter ended March 31, 2019.

Non-GAAP Financial Measures

Adjusted EBITDA

We present Adjusted EBITDA (defined below), a measure that is not in accordance with generally accepted accounting principles in the United States of America (non-GAAP), in this document to provide investors with a supplemental measure of our operating performance. We believe that Adjusted EBITDA is a useful performance measure and it is used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business and measures under GAAP can provide alone. Our board and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected

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performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for Company management. In addition, the financial covenants in our Amended and Restated Credit Agreement are based on Adjusted EBITDA subject to dollar limitations on certain adjustments.

We define “Adjusted EBITDA” as earnings before interest expense, income taxes, depreciation and amortization expense, non-cash stock awards, non-recurring integration expense, goodwill impairment, restructuring expenses, and one-time consulting and licensing ERP system implementation costs as we implement a new ERP system at all locations. We believe omitting these items provides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors’ ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of property and intangible assets. We believe that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net income (loss) for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

The use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from, or as an alternative to, GAAP measures such as net income (loss). Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternative to cash flow from continuing operating activities. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA include that: (1) it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (2) it does not reflect changes in, or cash requirements for, our working capital needs; (3) it does not reflect income tax payments we may be required to make; and (4) it does not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness.

To properly and prudently evaluate our business, we encourage you to review our unaudited condensed consolidated financial statements included elsewhere in this document, our audited consolidated financial statements included in our Annual Report on Form 10-K/A, and the reconciliation to Adjusted EBITDA from net income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table. All of the items included in the reconciliation from net income (loss) to Adjusted EBITDA are either (1) non-cash items or (2) items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect operating performance. In the case of the other items that management does not consider in assessing our on-going operating performance, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect on-going operating performance.

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
	(dollars in thousands)
Net loss	$	(1,137)	$	(189)
Plus: Interest expense, net	1,666		1,100
Plus: Income tax (benefit) expense	(263)		43
Plus: Depreciation and amortization	1,751		1,702
Plus: Non-cash stock award	23		33
Plus: Restructuring expenses	920		91
Plus: One-time consulting and licensing ERP system implementation costs	275		173
Adjusted EBITDA	$	3,235	$	2,953

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows from operations and borrowings under our Credit Agreement from our senior lenders.

Our primary uses of cash are payment of vendors, payroll, operating costs, capital expenditures and debt service. As of March 31, 2020 and December 29, 2019, we had a cash balance of $1.8 million and $0.6 million, respectively. Our excess cash

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balance is swept daily and applied to reduce borrowings under our revolving line of credit, which remains available for re-borrowing, as needed, subject to compliance with the terms of the facility. As of March 31, 2020 and December 29, 2019, we had $6.9 million and $6.8 million, respectively, available to be borrowed under our revolving credit facility. At each such date, we were in compliance with all of our debt covenants.

On April 24, 2020, due to the significant impact the COVID-19 pandemic was having on our business, our subsidiary, Unique Fabricating NA, Inc., entered into a Promissory Note for approximately $6.0 million (the “PPP Note”), pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the CARES Act passed by Congress and signed into law on March 27, 2020. Prior to entering into the PPP Note, on April 23, 2020, we entered into the Seventh Amendment to the Credit Agreement and Loan Documents. Refer to Notes 6 and 17 in Part I, Item 1 of this Quarterly Report on Form 10-Q for more discussion of the details related to the PPP Note and Seventh Amendment. The Seventh Amendment, among other things, provided us necessary liquidity by allowing us to take on the additional indebtedness from the PPP Note, deferring the June 30, 2020 principal payments on the US Term Loan, CA Term Loan, and CAPEX Loan, with the deferred principal amounts payable at the existing maturity dates, and by releasing the lien on our Evansville, Indiana property and allowing for the net cash proceeds from its sale, which was completed in June 2020, to be applied against any outstanding balance on our Revolver, while not permanently reducing the Revolving Credit Aggregate Commitment. With the proceeds from the PPP Note and the relief provided in the Seventh Amendment, we believe we have sufficient sources of liquidity to meet our projected cash requirements for at least the next fifty-two weeks.

In 2020, we plan to spend approximately $2.5 million in capital expenditures, of which $0.3 million was spent through March 31, 2020, primarily to add new production equipment as we expand our production capabilities, upgrade existing equipment, and improve our information technology software and hardware throughout our facilities.

While we believe we have sufficient liquidity and capital resources to meet our current operating requirements and planned capital expenditures, we may elect to pursue additional growth opportunities that could require additional debt or equity financing. If we are unable to secure additional financing at favorable terms in order to pursue such additional growth opportunities, our ability to pursue such opportunities would be materially adversely affected.

Dividends

The Fourth Amendment permits distributions as long as the Borrower is in compliance with specified conditions including that the Borrower's liquidity, as defined, is not less than $5 million after giving effect to the distributions, total leverage ratio is not more than 2.00 to 1.00, post distribution DSCR, as defined, is not greater than 1.10 to 1.00, and Borrower is in compliance with financial covenants, before and after giving effect to the distributions. The Company will not pay a dividend during the remainder of 2020.

27

Cash Flow Data

The following table presents cash flow data for the periods indicated.

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
	(in thousands)
Cash flows provided by (used in):
Operating activities	$	2,848	$	1,571
Investing activities	$	(291)	$	(863)
Financing activities	$	(1,448)	$	(813)

Operating Activities

Cash provided by operating activities consists of: net income adjusted for non-cash items; including depreciation and amortization; gain or loss on sale of assets; inventory reserve; goodwill impairment; gain or loss on derivative instruments; bad debt adjustments; stock option expense; changes in deferred income taxes; accrued and other liabilities; prepaid expenses and other assets; and the effect of working capital changes. The primary factors affecting cash inflows and outflows are accounts receivable, inventory, prepaid expenses and other assets, and accounts payable and accrued interest.

During the three months ended March 31, 2020, net cash provided by operating activities was $2.8 million, compared to net cash provided by operating activities of $1.6 million for the three months ended March 31, 2019. The increase in cash provided by operating activities was primarily attributable to delaying payments to our vendors in response to the uncertainty created by the COVID-19 pandemic.

Investing Activities

Cash used in investing activities consists principally of purchases of property, plant and equipment.

During the three months ended March 31, 2020 and 2019, we made capital expenditures of $0.3 million and $0.9 million, respectively. We plan to spend a total of approximately $2.50 million in capital expenditures during 2020, including the $0.3 million spent through March 31, 2020.

Financing Activities

Cash flows used in financing activities consists primarily of borrowings and payments under our new and old senior credit facilities, debt issuance costs, proceeds from any exercise of stock options and warrants, and distribution of cash dividends.

During the three months ended March 31, 2020, we had outflows of $1.4 million primarily due to $1.4 million payment of the principal amount of our term loans.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Indemnification Agreements

In the normal course of business, we provide customers with indemnification provisions of varying scope against claims of intellectual property infringement by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations, consolidated statements of stockholders’ equity or consolidated cash flows.

Contractual Obligations and Commitments

The Company's contractual obligations and commitments outstanding as of March 31, 2020 have not changed materially since the amounts as of December 29, 2019 as set forth in our Annual Report on Form 10-K/A. These obligations and commitments relate to operating leases, future debt payments, and a management services agreement.

28

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect amounts reported in those statements. We have made our best estimates of certain amounts contained in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, application of our accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. Management believes that the estimates, assumptions, and judgments involved in the accounting policies that have the most significant impact on our consolidated financial statements are discussed in the Critical Accounting Policies section of Management's Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K/A. There have been no material changes to our critical accounting policies or uses of estimates since the date of our Annual Report on Form 10-K/A.

Recently Issued Accounting Pronouncements

Refer to Note 2 to the condensed consolidated financial statements in Part I Item 1 of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate and foreign exchange risks.

Interest Rate Fluctuation Risk

Our borrowings under our Credit Agreement bear interest at fluctuating rates. In order to mitigate, in part, the potential effects of the fluctuating rates, effective June 30, 2016, we entered into a interest rate swap with a notional amount initially of $16.68 million, which decreased by $0.32 million each quarter until June 30, 2017, and began decreasing by $0.43 million each quarter until June 29, 2018, when it began decreasing by $0.53 million per quarter until the swap terminated on June 28, 2019. The interest rate swap required the Company to pay a fixed rate of 1.055 percent per annum while receiving a variable rate per annum based upon the one month LIBOR rate for a net monthly settlement based on the notional amount in effect. This swap terminated an old swap that we entered into on January 17, 2014 under our old senior credit facility. See Note 7 of our consolidated financial statements for further information.

Effective October 2, 2017, as required under the Second Amendment to the Credit Agreement, as discussed in Note 7 of our consolidated financial statements, the Company entered into another interest rate swap that requires the Company to pay a fixed rate of 1.093% percent per annum while receiving a variable interest rate per annum based on one month LIBOR for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $1.90 million which decreases by $0.10 million each quarter until it expires on September 30, 2020.

Effective November 30, 2018, as required under the Amended and Restated Credit Agreement, the Company entered into another interest rate swap that requires the Company to pay a fixed rate of 3.075 per annum while receiving a variable interest rate per annum based on one month LIBOR for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $5.0 million which increases by $0.04 million each quarter until June 29, 2018 when the notional amount increases to $17.5 million due to the interest rate swap from 2016 above expiring. The notional amount then decreases each quarter by $0.1 million until September 30, 2020 when the notional amount increases to $17.5 million due to the interest rate swap from 2017 above expiring. The notional amount then decreases each quarter by $0.4 million until December 31, 2021, then decreases each subsequent quarter by $0.6 million until it expires on November 8, 2023.

At March 31, 2020, the fair value of all swaps was in a net liability position of $1.5 million and is included in other accrued liabilities and other long term liabilities in the condensed consolidated balance sheets.

We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition.

29

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officers and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), as the end of the quarter covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to the material weakness in our internal control over financial reporting previously identified and described more fully under Item 9A in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2019, the Company’s disclosure controls and procedures were not effective as of March 31, 2020 to ensure information required to be disclosed by our Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.Our management establishes and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to ensure that the information we disclose under the Exchange Act is properly and timely reported. We provide this information to our Chief Executive Officer and Chief Financial Officer as appropriate to allow for timely decisions.

Internal Controls Over Financial Reporting

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.

As previously identified and described more fully under Item 9A in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2019, the Company identified a deficiency that constitutes a material weakness related to limited finance staffing levels that are not commensurate with the Company’s complexity and its financial accounting and reporting requirements. The material weakness continued to exist as of the end of the period covered by this Quarterly Report.

The material weakness did not result in any material misstatements of the Company’s financial statements. However, this material weakness could result in the misstatement of relevant account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan for Material Weakness in Internal Control over Financial Reporting

The Company continues to take action on the remediation plan more fully described under Item 9A in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2019. While the Company is moving forward with these remediation activities, additional work needs to be done in this area. Accordingly, we concluded that this material weakness had not yet been remediated as of March 31, 2020.

We will continue to monitor the effectiveness of these and other processes, procedures and controls and make any further changes management determines appropriate.

Changes in Internal Control over Financial Reporting

There were no material changes in the Company's internal controls over financial reporting during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting. As a result of the COVID-19 pandemic, in March 2020 certain employees of the Company began working and continue to work remotely. Management has taken measures to ensure that our internal controls over financial reporting were not materially affected by employees working remotely. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 1A. Risk Factors

The coronavirus (COVID-19) pandemic, has and will continue to materially and adversely affect our business, financial condition and results of operations.

The recent outbreak of COVID-19, and any other outbreaks of contagious diseases or other adverse public health developments in the United States and worldwide, has had a material adverse effect on our business, financial condition and results of operations. In 2020, COVID-19 has significantly impacted economic activity and markets worldwide, and it could continue to negatively affect our business in a number of ways. These effects include, but are not limited to:

30

▪Disruptions or restrictions on our employees’ ability to work effectively due to illness, travel bans, quarantines, shelter-in-place orders or other limitations.

▪Temporary closures of our facilities or the facilities of our customers. Net sales to automotive customers, most of whom idled their manufacturing facilities as a result of the COVID-19 pandemic, were approximately 86% of the Company’s net sales during the fiscal year ended December 29, 2019. The closures of our customers’ operations had a substantial adverse effect on our results of operation and financial condition.

▪In an effort to increase the wider availability of needed medical and other supplies and products, we have elected and may further elect to, or governments may require us to, allocate manufacturing capacity in a way that could adversely affect our regular operations and that may adversely impact our customer and supplier relationships.

▪Costs incurred and revenues lost during and from the effects of the COVID-19 pandemic likely will not be recoverable.

▪The failure of third parties on which we rely, including our suppliers, customers, contractors, commercial banks and external business partners, to meet their respective obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties.

▪The COVID-19 pandemic has significantly increased economic and demand uncertainty and has led to disruption and volatility in the global credit and financial markets, which increases the cost of capital and adversely impacts access to capital for both the Company and our customers and suppliers.

The extent to which the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially and adversely impacts our business, financial condition and results of operations is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained by lingering effects of the COVID-19 pandemic on our suppliers, third-party service providers, and/or customers.

Going Concern

As discussed in Notes 1 and 6 of the notes to the Company’s condensed consolidated financial statements, as a result of the anticipated effects of the COVID-19 pandemic on our operating results for the second quarter of 2019, it is likely we will not be in compliance with financial covenants in the Amended and Restated Bank Agreement beginning with the quarter ending September 30, 2020. Absent an amendment or waiver, failure to be in compliance with the Company’s financial covenants would constitute a default when reported. Such a default, if not cured or waived, would allow the lenders to accelerate the maturity of the debt, making it due and payable at that time. If the maturity of the debt were accelerated, the Company would not have sufficient available liquidity to repay such debt within one year after the date that the financial statements included in this Report are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern.

The Company has been actively discussing the impact the COVID-19 pandemic is expected to have on the Company’s ability to meet its financial covenants with the Administrative Agent and the need to modify the covenant terms through the periods that the Company believes may be impacted. The Company believes it is likely that the Company will obtain an amendment modifying the covenant terms prior to triggering a default. As a result, the Company has concluded that management’s plans to obtain covenant relief are probable of being achieved , alleviating substantial doubt about the Company’s ability to continue as a going concern. However there cannot be any assurance that the Company will be able to obtain a modification of the covenants prior to triggering a default or that if the Company does obtain such modification that subsequent events, including in particular the extended effects of the pandemic , will not impair the Company’s ability to comply with the modified covenants.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

31

Not applicable.

32

Item 6. Exhibits

Exhibits Index

Exhibit No.	Description
31.1*	Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of the Chief Executive Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of the Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+	XBRL Instance Document
101.SCH+	XBRL Taxonomy Extension Schema Document
101.CAL+	XBRL Taxonomy Calculation Linkbase Document
101.DEF+	XBRL Taxonomy Definition Linkbase Document
101.LAB+	XBRL Taxonomy Label Linkbase Document
101.PRE+	XBRL Taxonomy Presentation Linkbase Document

* Filed herewith.

** Pursuant to Item 601(b)(32)(ii) of Regulation S-K(17 C.F.R 229.601(b)(32)(ii)), this certification is deemed furnished, not filed, for purposes of section 18 of the Exchange Act, nor is it otherwise subject to liability under that section. It will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except if the registrant specifically incorporates it by reference.

+ Filed electronically with the report.

33

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		UNIQUE FABRICATING, INC.
Date:	June 26, 2020	By:	/s/ Brian P. Loftus
			Brian P. Loftus
			Chief Financial Officer (Principal Financial and Accounting Officer)

34

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350.

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Byrd Douglas Cain, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Unique Fabricating, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 26, 2020	By:	/s/ Byrd Douglas Cain, III
		Name: Byrd Douglas Cain, III
		Title: Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350.

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian P. Loftus, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Unique Fabricating, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 26, 2020	By:	/s/ Brian P. Loftus
		Name: Brian P. Loftus
		Title:  Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350.

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Under 18 U.S.C. section 1350, adopted by section 906 of the Sarbanes-Oxley Act of 2002, in connection with the quarterly report on Form 10-Q of Unique Fabricating, Inc. (the "Company") for the quarterly period ended March 31, 2020 (the "Form 10-Q"), the undersigned certifies that (i) the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: June 26, 2020	By:	/s/ Byrd Douglas Cain, III
		Name: Byrd Douglas Cain, III
		Title: Chief Executive Officer

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350.

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Under 18 U.S.C. section 1350, adopted by section 906 of the Sarbanes-Oxley Act of 2002, in connection with the quarterly report on Form 10-Q of Unique Fabricating, Inc. (the "Company") for the quarterly period ended March 31, 2020 (the "Form 10-Q"), the undersigned certifies that (i) the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: June 26, 2020	By:	/s/ Brian P. Loftus
		Name: Brian P. Loftus
		Title:  Chief Financial Officer (Principal Financial and Accounting Officer)

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ (263)	$ 43
Actual effective rate	22.20%
Statutory rate	21.00%

XML

Leases - Schedule of Lease Liabilities Maturity (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Leases [Abstract]
2020 (remainder)	$ 2,191
2021	2,807
2022	1,887
2023	1,154
2024	1,116
Thereafter	6,458
Total lease payments	15,613
Less: interest	3,320
Present value of lease payments	$ 12,293

XML

Revenues

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

The following table presents the Company's net sales disaggregated by major sales channel for the three months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Net Sales
Transportation	$	32,012	$	34,015
Appliance	2,779		3,754
Other	185		1,698
Total	$	34,976	$	39,467

General Recognition Policy

Revenue is recognized by the Company once all performance obligations under the terms of a contract with the Company's customers are satisfied. Generally this occurs with the transfer of control to a customer of its automotive, HVAC, and other products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products. The Company’s payment terms vary by the type and location of its customers and the products offered. The term between invoicing and when payment is due is not significant.

In general for sales arrangements, the Company deems control to transfer at a single point in time and recognizes revenue when it ships products from its manufacturing facilities to its customers. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The Company considers control to transfer upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, and the customer has significant risks and rewards of ownership of the asset. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Contract BalancesThe timing of revenue recognition, billings and cash collections and payments results in billed accounts receivable. The Company does not have deferred revenue. Additionally, management reviews the allowance for doubtful accounts at regular intervals. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered.

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2020	Jun. 11, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-37480
Entity Registrant Name	UNIQUE FABRICATING, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-1846791
Entity Address, Address Line One	800 Standard Parkway
Entity Address, City or Town	Auburn Hills
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48326
City Area Code	248
Local Phone Number	853-2333
Title of 12(b) Security	Common Stock, par value $.001 per share
Trading Symbol	UFAB
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		9,779,147
Entity Central Index Key	0001617669
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)
Stockholders' equity, beginning balance (in shares) at Dec. 30, 2018	9,779,147
Stockholders' equity, beginning balance at Dec. 30, 2018	$ 48,888	$ 10	$ 45,882	$ 2,997
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(189)			(189)
Stock option expense	33		33
Cash dividends paid	$ (489)			(489)
Stockholders' equity, ending balance (in shares) at Mar. 31, 2019	9,779,147
Stockholders' equity, ending balance at Mar. 31, 2019	$ 48,243	10	45,915	2,319
Stockholders' equity, beginning balance (in shares) at Dec. 29, 2019	9,779,147
Stockholders' equity, beginning balance at Dec. 29, 2019	$ 39,460	10	46,011	(6,561)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(1,137)			(1,137)
Stock option expense	$ 23		23
Stockholders' equity, ending balance (in shares) at Mar. 31, 2020	9,779,147
Stockholders' equity, ending balance at Mar. 31, 2020	$ 38,346	$ 10	$ 46,034	$ (7,698)

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Effective March 18, 2013, the Company is a party to a management agreement with a firm related to several stockholders. The agreement initially provided for annual management fees of $0.3 million and additional fees for assistance provided with acquisitions. Effective upon completion of the Company's initial public offering, the agreement was amended to reduce the annual management fee by an amount equal to the amount, if any, of annual cash retainers and equity awards received as compensation for service on the board of directors to any person who is a related person of Taglich Private Equity, LLC or Taglich Brothers, Inc. The Company incurred management fees of $0.06 million for the three months March 31, 2020 and $0.06 million or the three months ended March 31, 2019. The management agreement had an initial term of five years, expiring on March 18, 2020, and renews automatically annually for additional one year terms. The current term expires on March 18, 2021. The agreement also will terminate on the date that the Taglich Founding Investors or Taglich Equity Investors, each as defined, no longer also collectively own 50% of the equity securities owned by either of them on March 18, 2013.

In 2019, following the May 6, 2019 resignation of the Company’s Chief Executive Officer, the Company entered into a services agreement with 6th Avenue Group, which is a company owned by a Board member of the Company. The services performed have been related to providing assistance for long term strategic planning for the Company as well as aiding in helping the Company with CEO transition services. The services provided by 6th Avenue Group ended in 2019. On June 11, 2019, this

Board member was also awarded stock options for 30,000 shares, which vested immediately and had an exercise price of $2.93 per share, for her services.

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Property, Plant, and Equipment, Net

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment

Property, Plant, and Equipment, Net

Property, plant, and equipment, net consists of the following (in thousands):

	March 31, 2020		December 29, 2019		Depreciable Life – Years
Land	$	1,663	$	1,663
Buildings	5,934		5,934		23 – 40
Shop equipment	23,053		22,982		7 – 10
Leasehold improvements	1,225		1,234		3 – 10
Office equipment	1,858		1,866		3 – 7
Mobile equipment	160		190		3
Construction in progress	1,888		1,543
Total cost	35,781		35,412
Less: Accumulated depreciation	12,685		11,997
Net property, plant, and equipment, net	$	23,096	$	23,415

Depreciation expense was $0.7 million for the three months ended March 31, 2020, and $0.7 million for the three months ended March 31, 2019.

Included in property, plant, and equipment are assets located in Mexico with a carrying amount of $4.1 million and $4.1 million at March 31, 2020 and December 29, 2019, respectively, and assets located in Canada with a carrying amount of $0.6 million and $0.6 million at March 31, 2020 and December 29, 2019, respectively.

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Stock Incentive Plans

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Incentive Plans

Stock Incentive Plans

2013 Stock Incentive Plan

The Company’s board of directors approved a stock incentive plan (the “Plan”) in 2013. The Plan permits the Company to grant 495,000 non statutory or incentive stock options to the employees, directors and consultants of the Company. 495,000 shares of unissued common stock are reserved for the Plan. The board of directors has the authority to determine the participants to whom stock options shall be awarded as well as any restrictions to be placed upon the awards. The exercise price cannot be less than the fair value of the underlying shares at the time the stock options are issued and the maximum length of an award is ten years.

On February 25, 2020, the compensation committee of the board of directors approved the issuance of 7,500 non statutory stock option awards to employees of the Company. All of the awards have an exercise price of $3.32 per share with a weighted average grant date fair value of $1.64 per share. These options vest 40% on February 25, 2021 and 20% on each of February 25, 2022, 2023, and 2024.

The fair value of each option award is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of the stock of comparable companies. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	February 25, 2020
Expected volatility	52.00	%
Dividend yield	—	%
Expected term (in years)	6
Risk-free rate	1.21	%

On April 6, 2020, subsequent to the end of the first quarter, the compensation committee of the board of directors approved the issuance of 12,500 non statutory stock option awards to the Company’s new Chief Financial Officer (“CFO”) with an exercise price of $2.36 per share. These awards vest 50 percent once the closing price of the Company's common stock is in excess of $7.50 per share for 10 out of 20 consecutive trading days and an additional 50 percent once the closing price of the Company's common stock is in excess of $12.50 per share for 10 out of 20 consecutive trading days.

2014 Omnibus Performance Award Plan

In 2014, the board of directors and stockholders adopted the Unique Fabricating, Inc. 2014 Omnibus Performance Award Plan, or the 2014 Plan. The 2014 Plan provides for the grant of cash awards, stock options, stock appreciation rights, or SARs, shares of restricted stock and restricted stock units, or RSUs, performance shares and performance units. The 2014 Plan originally authorized the grant of awards relating to 250,000 shares of our common stock. In the event of any transaction that causes a change in capitalization, the Compensation Committee, such other committee administering the 2014 Plan or the board of directors will make such adjustments to the number of shares of common stock delivered, and the number and/or price of shares of common stock subject to outstanding awards granted under the 2014 Plan, as it deems appropriate and equitable to prevent dilution or enlargement of participants’ rights. An amendment approved in March of 2016 by our board of directors which was approved by our stockholders at our annual meeting of stockholders in June 2016, increased the number of shares authorized for grant of awards under the 2014 Plan to a total of 450,000 shares of our common stock.

On February 25, 2020, the compensation committee of the board of directors approved the issuance of 7,500 non statutory stock option awards to employees of the Company. All of the awards have an exercise price of $3.32 per share with a weighted average grant date fair value of $1.64 per share. These options vest 40% on February 25, 2021 and 20% on each of February 25, 2022, 2023, and 2024.

The fair value of each of the option awards described above is estimated on the grant date using a Black Scholes option pricing model that uses the weighted average assumptions noted in the following table. The expected volatility is based on the historical volatility of the stock of comparable companies. The expected term of the awards was estimated based on findings from academic studies investigating the average holding period for options for adjusted for the Company’s size and risk factors. The risk free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant.

	February 25, 2020
Expected volatility	52.00	%
Dividend yield	—	%
Expected term (in years)	6
Risk-free rate	1.21	%

On February 25, 2020, the compensation committee of the board of directors approved the issuance of 15,000 incentive stock option awards to employees of the Company with an exercise price of $3.32 per share. These awards vest 50 percent once the closing price of the Company's common stock is in excess of $7.50 per share for 10 out of 20 consecutive trading days and an additional 50 percent once the closing price of the Company's common stock is in excess of $12.50 per share for 10 out of 20 consecutive trading days. The Company estimated the grant-date fair value of the awards subject to these market conditions using a Monte Carlo simulation model, using the following assumptions: risk free interest rate of 1.21% and annualized volatility of 52.0%.

On April 6, 2020, subsequent to the end of the first quarter, the compensation committee of the board of directors approved the issuance of 25,000 non statutory stock option awards to the Company’s new CFO with an exercise price of $2.36 per share. These awards vest 40 percent on April 6, 2021 and an additional 20 percent on each of April 6, 2022, 2023, and 2024. On April 6, 2020, subsequent to the end of the first quarter, the compensation committee of the board of directors approved the issuance of 12,500 incentive stock option awards to the Company’s new CFO with an exercise price of $2.36 per share. These awards vest 50 percent once the closing price of the Company's common stock is in excess of $7.50 per share for 10 out of 20 consecutive trading days and an additional 50 percent once the closing price of the Company's common stock is in excess of $12.50 per share for 10 out of 20 consecutive trading days.

A summary of option activity under both plans is presented below:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value(1)
	(dollars in thousands, except share data and exercise price)
Outstanding at December 29, 2019	676,480	$	5.48	7.1	$	471,000
Granted	30,000	$	3.32	9.9
Exercised	—	$	—	0.0
Forfeited or expired(2)	95,000	$	6.91	0.0
Outstanding at March 31, 2020	611,480	$	5.15	7.3	$	—
Vested and exercisable at March 31, 2020	296,480	$	7.43	4.9	$	—

————————————

(1) The aggregate intrinsic value above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying shares and multiplying this result by the related number of options outstanding and exercisable as of the period end date. As of March 31, 2020, there is no intrinsic value as the exercise prices are greater than the fair value. The estimated fair value of the shares is based on the closing price of the stock of $2.34 as of March 31, 2020 and $4.01 as of December 29, 2019.

(2)  Includes the 65,000 shares forfeited by the Company’s former Chief Financial Officer as a result of his October 2019 departure.

The Company recorded compensation expense of $22.8 thousand for the three months ended March 31, 2020, and $32.7 thousand for the three months ended March 31, 2019, in its condensed consolidated statements of operations, as a component of

sales, general and administrative expenses. The income tax (expense) benefit related to share based compensation expense was immaterial for all periods presented.

As of March 31, 2020, there was $298.3 thousand of total unrecognized compensation cost related to non-vested stock option awards under the plans. That cost is expected to be recognized over a weighted average period of 5.2 years.

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Nature of Business and Basis of Presentation - Production in Foreign Markets (Details) - Cost of Goods and Service Benchmark - Geographic Concentration Risk	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Mexico
Product Information [Line Items]
Concentration risk (percentage)	23.00%	19.00%
Canada
Product Information [Line Items]
Concentration risk (percentage)	9.00%	8.00%
Non-US Countries Excluding Mexico and Canada
Product Information [Line Items]
Concentration risk (percentage)	0.00%	1.00%

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Balance Sheet and Weighted-Average Lease Information

Leased assets and liabilities included within the condensed consolidated balance sheets consist of the following (in thousands):

	Classification	March 31, 2020
Right-of-Use-Assets
Operating	Operating leases	$	11,421
Liabilities
Current
Operating	Other accrued liabilities	$	2,247
Non-current
Operating	Non-current liabilities	10,046
Total lease liabilities		$	12,293

Remaining lease term and discount rates are as follows:

	March 31, 2020
Weighted average remaining lease term (years)	7.6
Weighted average discount rate	6.3%

Lease Cost Information

Lease costs included in the condensed consolidated statements of operations consist of the following (in thousands):

	Classification	March 31, 2020
Lease cost	Cost of sales, selling expenses and general and administrative expense	$	795

Lease costs included in the condensed consolidated statements of cash flows are as follows (in thousands):

	Three months ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases	$	827

Lease Maturity

Maturity of the Company’s lease liabilities as of March 31, 2020 is as follows (in thousands):

2020 (remainder)	$	2,191
2021	2,807
2022	1,887
2023	1,154
2024	1,116
Thereafter	6,458
Total lease payments	15,613
Less: interest	3,320
Present value of lease payments	$	12,293

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Subsequent Event

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Event

Subsequent Events

Paycheck Protection Program Loan

On April 24, 2020, the Company entered into a Promissory Note (“PPP Note”) for $6.0 million with Citizens Bank, National Association, pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed by Congress and signed into law on March 27, 2020. The PPP Note is unsecured, bears interest at 1.00% per annum, with principal and interest payments deferred for the first six months, and matures in two years. The principal is payable in equal monthly installments, with interest, beginning on the first business day after the end of the deferment period. The PPP Note may be forgiven subject to the terms of the Paycheck Protection Program.

Additionally, certain acts of the Company, including but not limited to: (i) the failure to pay any taxes when due, (ii) becoming the subject of a proceeding under any bankruptcy or insolvency law, (iii) making an assignment for the benefit of creditors, or (iv) reorganizing, merging, consolidating or otherwise changing ownership or business structure without PPP Lender’s prior written consent, are considered events of default which grant Lender the right to seek immediate payment of all amounts owing under the PPP Note.

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Inventory (Tables)

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories consist of the following (in thousands):

	March 31, 2020		December 29, 2019
Raw materials	$	9,460	$	7,963
Work in progress	618		129
Finished goods	5,181		4,955
Total inventory	$	15,259	$	13,047

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Long-term Debt - Schedule of Repayment of Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 29, 2019
Debt Disclosure [Abstract]
2020	$ 1,506
2021	4,176
2022	4,912
2023	36,464
2024	0
Thereafter	0
Total	47,058
Discounts	(359)	$ (400)
Debt issuance costs	(284)
Total debt – Net	$ 46,415

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Property, Plant, and Equipment, Net - Schedule of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 29, 2019
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 35,781	$ 35,412
Less: Accumulated depreciation	12,685	11,997
Net property, plant, and equipment, net	23,096	23,415
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment	1,663	1,663
Buildings
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 5,934	5,934
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Depreciable life, years	23 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Depreciable life, years	40 years
Shop equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 23,053	22,982
Shop equipment | Minimum
Property, Plant and Equipment [Line Items]
Depreciable life, years	7 years
Shop equipment | Maximum
Property, Plant and Equipment [Line Items]
Depreciable life, years	10 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 1,225	1,234
Leasehold improvements | Minimum
Property, Plant and Equipment [Line Items]
Depreciable life, years	3 years
Leasehold improvements | Maximum
Property, Plant and Equipment [Line Items]
Depreciable life, years	10 years
Office equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 1,858	1,866
Office equipment | Minimum
Property, Plant and Equipment [Line Items]
Depreciable life, years	3 years
Office equipment | Maximum
Property, Plant and Equipment [Line Items]
Depreciable life, years	7 years
Mobile equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 160	190
Depreciable life, years	3 years
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 1,888	$ 1,543

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Related Party Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	Feb. 25, 2020	Jun. 11, 2019	Mar. 18, 2013	Mar. 31, 2020	Mar. 31, 2019
2014 Omnibus Performance Award Plan
Related Party Transaction [Line Items]
Granted (in shares)		30,000
Granted (in dollars per share)	$ 3.32	$ 2.93
Affiliated Entity | Management Agreement
Related Party Transaction [Line Items]
Annual management fees			$ 300
Expenses from management contract				$ 60	$ 60
Management agreement, term			5 years
Additional renewal period term			1 year
Equity ownership needed to terminate agreement			50.00%

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Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Contingencies	ContingenciesThe Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While uncertainties are inherent in the final outcome of such matters, the Company believes that there are no pending proceedings in which the Company is currently involved that will have a material effect on its financial position, results of operations or cash flow.

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Revenues (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents the Company's net sales disaggregated by major sales channel for the three months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Net Sales
Transportation	$	32,012	$	34,015
Appliance	2,779		3,754
Other	185		1,698
Total	$	34,976	$	39,467

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Derivative Financial Instruments (Details) - Interest rate swap - Not designated as hedging instrument - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Nov. 30, 2018	Oct. 02, 2017	Jun. 30, 2016
Derivatives, Fair Value [Line Items]
Fixed interest rate			3.075%	1.093%	1.055%
Notional amount			$ 5,000	$ 1,900	$ 16,700
Quarterly decrease in notional amount				$ 100	300
Derivative fair value assets (liabilities)	$ 1,500	$ (600)
Derivative current assets		40
Derivative long-term assets		(600)
Interest expense
Derivatives, Fair Value [Line Items]
Monthly settlement payments (receipts)	$ 800	$ 50
Derivative Instrument, Periodic Payment, Installment Periods Through June Twenty Nine Two Thousand Eighteen
Derivatives, Fair Value [Line Items]
Quarterly decrease in notional amount					400
Derivative Instrument, Periodic Payment, Installment Periods Through June Twenty Eight Two Thousand Nineteen
Derivatives, Fair Value [Line Items]
Notional amount			17,500
Quarterly decrease in notional amount					$ 500
Quarterly increase in notional amount			400
Derivative Instrument, Periodic Payment, Installment Periods Until September Thirty Two Thousand Twenty
Derivatives, Fair Value [Line Items]
Notional amount			17,500
Quarterly decrease in notional amount			200
Derivative Instrument, Periodic Payment, Installment Periods Until December Thirty First Twenty Twenty One
Derivatives, Fair Value [Line Items]
Quarterly decrease in notional amount			400
Derivative Instrument, Periodic Payment, Installment Periods Until November Eighth Twenty Twenty Three
Derivatives, Fair Value [Line Items]
Quarterly decrease in notional amount			$ 600

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Property, Plant, and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 29, 2019
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 700	$ 700
Property, plant, and equipment, net	23,096		$ 23,415
Mexico
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, net	4,100		4,100
Canada
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, net	$ 600		$ 600

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Retirement Plans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Defined Benefit Plan Disclosure [Line Items]
Employer contribution amount	$ 80	$ 150
Defined contribution plan, initial contribution
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent	100.00%
Employer matching contribution, percent of employees gross pay	3.00%
Defined contribution plan, additional contribution
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent	50.00%
Employer matching contribution, percent of employees gross pay	2.00%

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Subsequent Event (Details) - USD ($) $ in Thousands	Apr. 24, 2020	Mar. 31, 2020
Subsequent Event [Line Items]
Promissory note		$ 47,058
Subsequent Event | PPP under CARES Act | Promissory Note
Subsequent Event [Line Items]
Promissory note	$ 6,000
Interest	1.00%
Deferral period	6 months
Maturity term	2 years

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 34,976	$ 39,467
Cost of sales	27,901	31,167
Gross profit	7,075	8,300
Selling, general, and administrative expenses	5,865	7,273
Restructuring expenses	920	91
Operating income	290	936
Other income (expense):
Other, net	(24)	18
Interest expense	(1,666)	(1,100)
Other expense, net	(1,690)	(1,082)
(Loss) before income tax (benefit) expense	(1,400)	(146)
Income tax (benefit) expense	(263)	43
Net loss	$ (1,137)	$ (189)
Earnings Per Share [Abstract]
Basic (in dollars per share)	$ (0.12)	$ (0.02)
Diluted (in dollars per share)	(0.12)	(0.02)
Dividends declared per share (in dollars per share)	$ 0	$ 0.05

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Stock Incentive Plans - Schedule of Stock Options and Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 29, 2019
Number of Shares
Outstanding at end of period (in shares)	611,480
Aggregate Intrinsic Value
Share price (in dollars per share)	$ 2.34	$ 4.01
The Plan and the 2014 Plan
Number of Shares
Outstanding at beginning of period (in shares)	676,480
Granted (in shares)	30,000
Exercised (in shares)	0
Forfeited or expired (in shares)	95,000
Outstanding at end of period (in shares)	611,480	676,480
Vested and exercisable (in shares)	296,480
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 5.48
Granted (in dollars per share)	3.32
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	6.91
Outstanding at end of period (in dollars per share)	5.15	$ 5.48
Vested and exercisable (in dollars per share)	$ 7.43
Weighted Average Remaining Contractual Term (in years)
Outstanding weighted average remaining contractual term	7 years 3 months 18 days	7 years 1 month 6 days
Granted	9 years 10 months 24 days
Exercised	0 years
Forfeited or expired	0 years
Vested and exercisable	4 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding at December 29, 2019 (in shares)		471,000
Outstanding at March 31, 2020	$ 0
Vested and exercisable at March 31, 2020	$ 0
Forfeited or expired (in shares)	95,000
The Plan and the 2014 Plan | CFO
Number of Shares
Forfeited or expired (in shares)	65,000
Aggregate Intrinsic Value
Forfeited or expired (in shares)	65,000

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2020

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

New Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses,” which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. In November 2019, the FASB issued ASU 2019-10, which established the effective date of the new standard for smaller reporting companies as fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact, if any the adoption of the new credit losses model will have on its financial statements.

In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. We have identified our existing lease contracts and calculated the right of use assets, which are reflected in Other Assets on the Condensed Consolidated Balance Sheets, and lease liabilities, which are reflected in the Other Accrued Liabilities on the Condensed Consolidated Balance Sheets. This guidance was effective for the Company as of January 1, 2020. Adoption of the new standard resulted in the recording of right-of-use assets and liabilities of $12.1 million and $12.8 million as of January 1, 2020. The FASB has issued further ASUs related to the standard providing an optional transition method allowing entities to not recast comparative periods. The Company elected the practical expedients upon transition that retained the lease classification and initial direct costs for any leases that exist prior to adoption of the standard. The Company has approximately $12.3 million of noncancelable future rental obligations as of March 31, 2020, as shown in Note 11.

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Leases - Lease Cost (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Leases [Abstract]
Lease cost	$ 795

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Inventory

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Inventory

Inventory

Inventories consist of the following (in thousands):

	March 31, 2020		December 29, 2019
Raw materials	$	9,460	$	7,963
Work in progress	618		129
Finished goods	5,181		4,955
Total inventory	$	15,259	$	13,047

The Company periodically evaluates inventory for obsolescence, excess quantities, slow moving goods and other impairments of value and establishes reserves for any identified impairments. The allowance for obsolete inventory was $0.9 million and $1.0 million at March 31, 2020 and December 29, 2019, respectively.

Included in inventory are assets located in Mexico with a carrying amount of $3.2 million at March 31, 2020 and $3.6 million at December 29, 2019, and assets located in Canada with a carrying amount of $1.2 million at March 31, 2020 and $1.0 million at December 29, 2019.

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Restructuring

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

The Company's restructuring activities are undertaken as necessary to implement management's strategy and improve operating results. The restructuring activities generally relate to realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, either in the normal course of business or pursuant to specific restructuring programs.

2019 Restructurings

Bryan Restructuring

On November 7, 2019, the Company made the decision to close its manufacturing facility in Bryan, Ohio. Approximately 43 positions were eliminated as a result of the closure. The Company's decision resulted from its desire to streamline operations and to utilize some of the available excess capacity in other of our facilities.

The Company has moved existing Bryan production to its manufacturing facilities in Queretaro, Mexico and LaFayette, GA. The Company will provide the affected employees severance pay, health benefits continuation, and job search assistance. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as it did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

The Company incurred one-time severance costs as a result of this plant closure of approximately $0.3 million during the fourth quarter of 2019. The amount of other costs incurred associated with this plant closure, which primarily consist of preparing and moving existing production equipment and inventory at Bryan to other facilities and accelerated depreciation of the building right-of-use lease asset, was approximately $0.5 million during the three months ended March 31, 2020.

Evansville Restructuring

On July 16, 2019, the Company made the decision to close its manufacturing facility in Evansville, Indiana. The Company ceased operations at the Evansville facility during the fourth quarter of 2019, and approximately 47 positions were eliminated as a result of the closure. The Company's decision resulted from its desire to streamline operations and to utilize some of the available excess capacity in other of our facilities.

The Company moved existing Evansville production to its manufacturing facilities in LaFayette, GA, Auburn Hills, MI, and Louisville, KY. The Company provided the affected employees severance pay, health benefits continuation, and job search assistance. The Company evaluated whether or not this closing met the criteria for discontinued operations and concluded that the closing did not meet the definition as it did not represent a strategic shift in the Company's operations and the Company will have continuing cash flows from the production being moved to other facilities within the Company.

Costs incurred in the three months ended March 31, 2020, which consisted primarily of transportation and installation of equipment and the disposal of equipment and inventory was $0.4 million in the three months ended March 31, 2020. All of these costs were recorded to the restructuring expense line in continuing operations in the Company's condensed consolidated statements of operations. 

The Company had $1.0 million and $1.2 million of remaining lease payments for a warehouse near the Evansville, Indiana facility as of March 31, 2020 and December 29, 2019, respectively. The Company is actively pursuing a sublease of the facility.

The table below summarizes the activity in the restructuring liability for the three months ended March 31, 2020 (in thousands).

	Employee Termination Benefits Liability		Other Exit Costs Liability		Total
Accrual balance at December 29, 2019	$	438	$	116	$	554
Provision for estimated expenses to be incurred	—		920		920
Payments made during the year and asset write offs	333		684		1,017
Accrual balance at March 31, 2020	$	105	$	352	$	457

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Retirement Plans	3 Months Ended
	Mar. 31, 2020
Retirement Benefits [Abstract]
Retirement Plans	Retirement PlansThe Company maintains a defined contribution plan covering certain full time salaried employees. Employees can make elective contributions to the plan. The Company contributes a match on 100 percent of an employee’s contribution up to the first 3 percent of each employee’s total compensation and 50 percent for the next 2 percent of each employee’s total compensation. In addition, the Company, at the discretion of the board of directors, may make additional contributions to the plan on behalf of the plan participants. The Company contributed $0.08 million for the three months ended March 31, 2020 and $0.15 million for the three months ended March 31, 2019.

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Nature of Business and Basis of Presentation - Sales Derived from Customers Located in Foreign Countries (Details) - Geographic Concentration Risk - Sales revenue, net	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Mexico
Product Information [Line Items]
Concentration risk (percentage)	23.00%	18.00%
Canada
Product Information [Line Items]
Concentration risk (percentage)	8.00%	9.00%
Non-US Countries Excluding Mexico and Canada
Product Information [Line Items]
Concentration risk (percentage)	0.00%	1.00%

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted loss per share for the three months ended March 31, 2020 and 2019 (dollars in thousands, except per share amounts):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Numerator:
Net (loss) income	$	(1,137)	$	(189)
Denominator:
Weighted average shares outstanding, basic	9,779,147		9,779,147
Dilutive effect of stock-based awards	—		—
Weighted average share outstanding, diluted	9,779,147		9,779,147
Basic loss per share	$	(0.12)	$	(0.02)
Diluted loss per share	$	(0.12)	$	(0.02)

Schedule of Antidilutive Securities Excluded from Computation of Earnings per Share

A summary of these anti-dilutive common stock equivalents is provided in the table below:

	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Number of options	611,480	563,680
Exercise price of options	$2.89 - $12.50	$3.33 - $12.50
Warrants(1)	142,185	142,185
Exercise price of warrants	$3.33 - $11.88	$3.33 - $11.88

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(1) Includes warrants to purchase 141,000 shares of common stock issued to the underwriters of the Company's IPO in July 2015 with an exercise price of $11.88 per share of common stock and an expiration date of July 7, 2020.

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Property, Plant, and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, plant, and equipment, net consists of the following (in thousands):

	March 31, 2020		December 29, 2019		Depreciable Life – Years
Land	$	1,663	$	1,663
Buildings	5,934		5,934		23 – 40
Shop equipment	23,053		22,982		7 – 10
Leasehold improvements	1,225		1,234		3 – 10
Office equipment	1,858		1,866		3 – 7
Mobile equipment	160		190		3
Construction in progress	1,888		1,543
Total cost	35,781		35,412
Less: Accumulated depreciation	12,685		11,997
Net property, plant, and equipment, net	$	23,096	$	23,415

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Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates.

Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item.

In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item.

The Company measures its interest rate swaps at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variance and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market.

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Nature of Business and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company, its results of operations, and its cash flows. The interim results for the periods presented may not be indicative of the Company's actual annual results. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2019.

Change in Quarter and Year-End

Historically, the Company’s quarterly periods ended on the Sunday closest to the end of the calendar quarterly period. For 2019, the quarters and year to date period, which were 13 weeks, respectively, ended on March 31, June 30, September 29, and December 29, 2019. On March 13, 2020, the Company’s board of directors approved changing our quarterly periods to match calendar quarterly periods. The Company expects the impact of this change on our 2020 result of operations to be immaterial. All year, quarter, and three month references prior to 2020 relate to the Company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, quarter and three months ended is used throughout this Quarterly Report on Form 10-Q to represent both the current year calendar quarterly periods and the prior year fiscal year periods.

New Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses,” which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. In November 2019, the FASB issued ASU 2019-10, which established the effective date of the new standard for smaller reporting companies as fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact, if any the adoption of the new credit losses model will have on its financial statements.In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. We have identified our existing lease contracts and calculated the right of use assets, which are reflected in Other Assets on the Condensed Consolidated Balance Sheets, and lease liabilities, which are reflected in the Other Accrued Liabilities on the Condensed Consolidated Balance Sheets. This guidance was effective for the Company as of January 1, 2020. Adoption of the new standard resulted in the recording of right-of-use assets and liabilities of $12.1 million and $12.8 million as of January 1, 2020. The FASB has issued further ASUs related to the standard providing an optional transition method allowing entities to not recast comparative periods. The Company elected the practical expedients upon transition that retained the lease classification and initial direct costs for any leases that exist prior to adoption of the standard.

Revenue Recognition

Revenue is recognized by the Company once all performance obligations under the terms of a contract with the Company's customers are satisfied. Generally this occurs with the transfer of control to a customer of its automotive, HVAC, and other products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products. The Company’s payment terms vary by the type and location of its customers and the products offered. The term between invoicing and when payment is due is not significant.

In general for sales arrangements, the Company deems control to transfer at a single point in time and recognizes revenue when it ships products from its manufacturing facilities to its customers. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The Company considers control to transfer upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, and the customer has significant risks and rewards of ownership of the asset. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Contract BalancesThe timing of revenue recognition, billings and cash collections and payments results in billed accounts receivable. The Company does not have deferred revenue. Additionally, management reviews the allowance for doubtful accounts at regular intervals. Account balances are charged off against the allowance when management determines it is probable the receivable will not be recovered.

Fair Value Measurement

Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The carrying amount of all significant financial instruments approximates fair value due to either the short maturity or the existence of variable interest rates that approximate prevailing market rates.

Accounting standards require certain other items be reported at fair value in the financial statements and provides a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the valuation techniques and inputs used to measure fair value.

Fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. Level 2 inputs may include quoted prices for similar items in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related item. Level 3 fair value measurements are based primarily on management’s own estimates using inputs such as pricing models, discounted cash flow methodologies or similar techniques taking into account the characteristics of the item.

In instances whereby inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each item.

The Company measures its interest rate swaps at fair value on a recurring basis based primarily on Level 2 inputs using an income model based on disparity between variance and fixed interest rates, the scheduled balance of principal outstanding, yield curves and other information readily available in the market.

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Earnings Per Share - Numerator and Denominator of Basic and Diluted Loss per Share Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net (loss) income	$ (1,137)	$ (189)
Denominator:
Basic weighted average shares outstanding (in shares)	9,779,147	9,779,147
Dilutive effect of stock-based awards (in shares)	0	0
Diluted weighted average shares outstanding (in shares)	9,779,147	9,779,147
Earnings Per Share, Basic and Diluted [Abstract]
Net (loss) income per share-basic (in dollars per share)	$ (0.12)	$ (0.02)
Net (loss) income per share-diluted (in dollars per share)	$ (0.12)	$ (0.02)

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Long-term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 29, 2019
Debt Instrument [Line Items]
Unamortized discount	$ 359	$ 400
Total debt excluding Revolver	34,666	36,067
Less current maturities	2,847	2,847
Long-term debt – Less current maturities	31,819	33,220
Line of credit for capital expenditures
Debt Instrument [Line Items]
Total debt excluding Revolver	$ 1,300	1,300
Line of credit | New US Term Loan | Secured debt
Debt Instrument [Line Items]
Effective interest rate	5.853%
Unamortized discount	$ 300
Total debt excluding Revolver	23,725	24,383
Line of credit | New US Term Loan | Secured debt | September 30, 2020
Debt Instrument [Line Items]
Principal payment	300
Line of credit | New US Term Loan | Secured debt | September 30, 2021
Debt Instrument [Line Items]
Principal payment	600
Line of credit | New US Term Loan | Secured debt | November 7, 2023
Debt Instrument [Line Items]
Principal payment	$ 800
Line of credit | CA term loan | Secured debt
Debt Instrument [Line Items]
Effective interest rate	5.853%
Unamortized discount	$ 100
Total debt excluding Revolver	9,641	$ 10,384
Line of credit | CA term loan | Secured debt | November 7, 2023
Debt Instrument [Line Items]
Principal payment	$ 400
Line of credit | Line of credit for capital expenditures
Debt Instrument [Line Items]
Effective interest rate	5.862%
Line of credit | Line of credit for capital expenditures | September 30, 2020
Debt Instrument [Line Items]
Percent of principal payment	7.50%
Line of credit | Line of credit for capital expenditures | September 30, 2021
Debt Instrument [Line Items]
Percent of principal payment	10.00%
Line of credit | Line of credit for capital expenditures | November 7, 2023
Debt Instrument [Line Items]
Percent of principal payment	12.50%

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Inventory - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 29, 2019
Inventory [Line Items]
Allowance for obsolete inventory	$ 900	$ 1,000
Inventory, net	15,259	13,047
Mexico
Inventory [Line Items]
Inventory, net	3,200	3,600
Canada
Inventory [Line Items]
Inventory, net	$ 1,200	$ 1,000

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Restructuring - Schedule of Restructuring Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Restructuring Reserve [Roll Forward]
Beginning accrual balance	$ 554
Provision for estimated expenses to be incurred	920	$ 91
Payments made during the year and asset write offs	1,017
Ending accrual balance	457
Employee Termination Benefits Liability
Restructuring Reserve [Roll Forward]
Beginning accrual balance	438
Provision for estimated expenses to be incurred	0
Payments made during the year and asset write offs	333
Ending accrual balance	105
Other Exit Costs Liability
Restructuring Reserve [Roll Forward]
Beginning accrual balance	116
Provision for estimated expenses to be incurred	920
Payments made during the year and asset write offs	684
Ending accrual balance	$ 352

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 29, 2019
Current assets
Cash and cash equivalents	$ 1,759	$ 650
Accounts receivable, net of reserves of approximately $0.8 million and $0.9 million at March 31, 2020 and December 29, 2019, respectively	24,806	24,701
Inventory, net	15,259	13,047
Prepaid expenses and other current assets:
Prepaid expenses and other	3,295	2,108
Refundable taxes	1,207	1,049
Assets held for sale	1,003	1,003
Total current assets	47,329	42,558
Property, plant, and equipment, net	23,096	23,415
Goodwill	22,111	22,111
Intangible assets	10,639	11,625
Other assets
Operating leases	11,421	0
Investments, at cost	1,054	1,054
Deposits and other assets	226	226
Deferred tax asset	679	679
Total assets	116,555	101,668
Current liabilities:
Accounts payable	14,956	9,324
Current maturities of long-term debt	2,847	2,847
Accrued compensation	764	1,225
Other accrued liabilities	3,403	1,979
Total current liabilities	21,970	15,375
Long-term debt, net of current maturities	31,819	33,220
Line of credit	11,750	11,418
Other long-term liabilities:
Deferred tax liability	874	1,324
Other liabilities	11,796	871
Total liabilities	78,209	62,208
Stockholders’ equity:
Common stock, $0.001 par value: 15,000,000 shares authorized and 9,779,147 and 9,779,147 issued and outstanding at March 31, 2020 and December 29, 2019, respectively	10	10
Additional paid-in-capital	46,034	46,011
Accumulated deficit	(7,698)	(6,561)
Total stockholders’ equity	38,346	39,460
Total liabilities and stockholders’ equity	$ 116,555	$ 101,668

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Leases - Weighted-Average Lease Information (Details)	Mar. 31, 2020
Leases [Abstract]
Weighted average remaining lease term (years)	7 years 7 months 6 days
Weighted average discount rate	6.30%

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows from Operating Activities
Net loss	$ (1,137)	$ (189)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,751	1,702
Amortization of debt issuance costs	37	44
Loss on sale of assets	12	(7)
Bad debt adjustment	213	61
Loss on derivative instrument	614	272
Stock option expense	23	33
Deferred income taxes	(450)	(114)
Changes in operating assets and liabilities that provided (used) cash:
Accounts receivable	(318)	528
Inventory	(2,266)	415
Prepaid expenses and other assets	(1,344)	251
Accounts payable	5,968	62
Accrued and other liabilities	(848)	(1,487)
Other, net	593	0
Net cash provided by operating activities	2,848	1,571
Cash Flows from Investing Activities
Capital expenditures	(296)	(870)
Proceeds from sale of property, plant and equipment	5	7
Net cash used in investing activities	(291)	(863)
Cash Flows from Financing Activities
Net change in bank overdraft	(335)	1,355
Payments on term loans	(1,425)	(1,925)
Distribution of cash dividends	0	(489)
Net cash used in financing activities	(1,448)	(813)
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents	1,109	(105)
Cash and cash equivalents at beginning of period	650	1,410
Cash and cash equivalents at end of period	1,759	1,305
Supplemental disclosure of cash flow information:
Cash paid for interest	1,513	1,051
Cash paid for Income taxes	241	133
Line of credit for capital expenditures
Cash Flows from Financing Activities
Proceeds from (payments of) lines of credit	0	700
Revolving credit facility
Cash Flows from Financing Activities
Proceeds from (payments of) lines of credit	$ 312	$ (454)

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Stock Incentive Plans - Additional Information (Details) - USD ($)				3 Months Ended
	Apr. 06, 2020	Feb. 25, 2020	Jun. 11, 2019	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2016	Jan. 04, 2015	Dec. 29, 2013
Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Unrecognized compensation cost				$ 298,300
Compensation cost, weighted average period				5 years 2 months 12 days
Selling, General and Administrative Expenses
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share-based compensation expense				$ 22,800	$ 32,700
The 2013 Stock Incentive Plan
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Number of shares reserved for future issuance (in shares)								495,000
Exercise price (in dollars per share)		$ 3.32
Weighted average grant date fair value (in dollars per share)		$ 1.64
The 2013 Stock Incentive Plan | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Number of shares available for grant (in shares)								495,000
Expiration period				10 years
Risk-free rate		1.21%
Annualized volatility		52.00%
The 2013 Stock Incentive Plan | Award vesting, period one | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		40.00%
The 2013 Stock Incentive Plan | Award vesting, period two | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
The 2013 Stock Incentive Plan | Award vesting, period three | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
The 2013 Stock Incentive Plan | Award vesting, period four | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
The 2013 Stock Incentive Plan | Award vesting, period five | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
The 2013 Stock Incentive Plan | Employee
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)		7,500
The 2013 Stock Incentive Plan | CFO | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)	12,500
Exercise price (in dollars per share)	$ 2.36
The 2013 Stock Incentive Plan | CFO | Award vesting, period one | Employee Stock Option | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	50.00%
Share price in excess (in dollars per share)	$ 7.50
The 2013 Stock Incentive Plan | CFO | Award vesting, period two | Employee Stock Option | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	50.00%
Share price in excess (in dollars per share)	$ 12.50
2014 Omnibus Performance Award Plan
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)			30,000
Exercise price (in dollars per share)		$ 3.32	$ 2.93
Weighted average grant date fair value (in dollars per share)		$ 1.64
Number of shares authorized (in shares)						450,000	250,000
2014 Omnibus Performance Award Plan | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Risk-free rate		1.21%
Annualized volatility		52.00%
2014 Omnibus Performance Award Plan | Employee Stock Option, Incentive
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Exercise price (in dollars per share)		$ 3.32
2014 Omnibus Performance Award Plan | Award vesting, period one | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		40.00%
2014 Omnibus Performance Award Plan | Award vesting, period one | Employee Stock Option, Incentive
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		50.00%
Share price in excess (in dollars per share)		$ 7.50
2014 Omnibus Performance Award Plan | Award vesting, period two | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
2014 Omnibus Performance Award Plan | Award vesting, period two | Employee Stock Option, Incentive
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		50.00%
Share price in excess (in dollars per share)		$ 12.50
2014 Omnibus Performance Award Plan | Award vesting, period three | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
2014 Omnibus Performance Award Plan | Award vesting, period four | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
2014 Omnibus Performance Award Plan | Award vesting, period five | Employee Stock Option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage		20.00%
2014 Omnibus Performance Award Plan | Employee
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)		7,500
2014 Omnibus Performance Award Plan | Employee | Employee Stock Option, Incentive
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)		15,000
2014 Omnibus Performance Award Plan | CFO | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)	25,000
Exercise price (in dollars per share)	$ 2.36
2014 Omnibus Performance Award Plan | CFO | Employee Stock Option, Incentive | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted (in shares)	12,500
Exercise price (in dollars per share)	$ 2.36
2014 Omnibus Performance Award Plan | CFO | Award vesting, period one | Employee Stock Option | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	40.00%
2014 Omnibus Performance Award Plan | CFO | Award vesting, period one | Employee Stock Option, Incentive | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	50.00%
Share price in excess (in dollars per share)	$ 7.50
2014 Omnibus Performance Award Plan | CFO | Award vesting, period two | Employee Stock Option | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	20.00%
2014 Omnibus Performance Award Plan | CFO | Award vesting, period two | Employee Stock Option, Incentive | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	50.00%
Share price in excess (in dollars per share)	$ 12.50
2014 Omnibus Performance Award Plan | CFO | Award vesting, period three | Employee Stock Option | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	20.00%
2014 Omnibus Performance Award Plan | CFO | Award vesting, period four | Employee Stock Option | Subsequent Event
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Award vesting rights, percentage	20.00%

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Leases - Additional Information (Details)	Mar. 31, 2020
Minimum
Lessee, Lease, Description [Line Items]
Renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Renewal term	5 years

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Nature of Business and Basis of Presentation - Customers' Net Sales as a Percentage of Total Net Sales (Details) - Sales revenue, net - Customer concentration risk	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
General Motors Company
Product Information [Line Items]
Concentration risk (percentage)	17.00%	18.00%
Fiat Chrysler Automobile
Product Information [Line Items]
Concentration risk (percentage)	14.00%	15.00%
Ford Motor Company
Product Information [Line Items]
Concentration risk (percentage)	10.00%	11.00%

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Stock Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Stock Option Valuation Assumptions

	February 25, 2020
Expected volatility	52.00	%
Dividend yield	—	%
Expected term (in years)	6
Risk-free rate	1.21	%

	February 25, 2020
Expected volatility	52.00	%
Dividend yield	—	%
Expected term (in years)	6
Risk-free rate	1.21	%

Schedule of Stock Options and Stock Appreciation Rights Award Activity

A summary of option activity under both plans is presented below:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value(1)
	(dollars in thousands, except share data and exercise price)
Outstanding at December 29, 2019	676,480	$	5.48	7.1	$	471,000
Granted	30,000	$	3.32	9.9
Exercised	—	$	—	0.0
Forfeited or expired(2)	95,000	$	6.91	0.0
Outstanding at March 31, 2020	611,480	$	5.15	7.3	$	—
Vested and exercisable at March 31, 2020	296,480	$	7.43	4.9	$	—

————————————

(1) The aggregate intrinsic value above is obtained by subtracting the weighted average exercise price from the estimated fair value of the underlying shares and multiplying this result by the related number of options outstanding and exercisable as of the period end date. As of March 31, 2020, there is no intrinsic value as the exercise prices are greater than the fair value. The estimated fair value of the shares is based on the closing price of the stock of $2.34 as of March 31, 2020 and $4.01 as of December 29, 2019.

(2)  Includes the 65,000 shares forfeited by the Company’s former Chief Financial Officer as a result of his October 2019 departure.

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Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 34,976	$ 39,467
Transportation
Disaggregation of Revenue [Line Items]
Net sales	32,012	34,015
Appliance
Disaggregation of Revenue [Line Items]
Net sales	2,779	3,754
Other
Disaggregation of Revenue [Line Items]
Net sales	$ 185	$ 1,698

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Long-term Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Long-term Debt

Long-term Debt

Credit Agreement

On April 29, 2016, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower”) and Citizens Bank, National Association (“Citizens”), acting as lender and Administrative Agent, and other lenders, entered into a credit agreement (the “Credit Agreement”) providing for borrowings of up to the aggregate principal amount of $62.0 million. The Credit Agreement was a senior secured credit facility and consisted of a revolving line of credit of up to $30.0 million (the “Revolver”) to the US Borrower, a $17.0 million principal amount term loan (the “US Term Loan”) to the US Borrower, and a $15.0 million principal amount term loan (the “CA Term Loan”) to the CA Borrower. At Closing, the US Term Loan and the CA Term Loan were fully funded and the US Borrower borrowed approximately $22.9 million under the Revolver.

On August 18, 2017, the US Borrower and the CA Borrower entered into the Second Amendment (the “Amendment”) to the Credit Agreement, with Citizens, acting as Administrative Agent, and other lenders. The Amendment converted $4.0 million of outstanding borrowings under the Revolver into an additional $4.0 million term loan to the US Borrower (the “US Term Loan II”). The conversion of a portion of the outstanding borrowings under the Revolver did not reduce the aggregate amount available to be borrowed under it.

On August 8, 2018, the US Borrower and the CA Borrower entered into the Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement, with Citizens, acting as Administrative Agent, and other lenders. The Fourth Amendment required the Company to use the net proceeds from the sale of the Ft. Smith, Arkansas building to reduce the outstanding borrowings under the Revolver. The application of the net proceeds did not permanently reduce the amounts that could be borrowed under the Revolver. The Fourth Amendment also eased, for the fiscal quarter ended September 30, 2018, the financial covenant ratio which determined the Company's ability to pay dividends.

On September 20, 2018, the US Borrower and the CA Borrower entered into the Fifth Amendment (the “Fifth Amendment”) to the Credit Agreement, with Citizens, acting as Administrative Agent, and other lenders. The Fifth Amendment temporarily increased the maximum amount that could be borrowed under the Revolver to $32.5 million from its then maximum of $30.0 million. This increase implemented by the Fifth Amendment was effective until October 31, 2018, at which point the maximum amount that could be borrowed under the Revolver reverted back to $30.0 million and was replaced by the Amended and Restated Credit Agreement described below.

Amended and Restated Credit Agreement

On November 8, 2018, the US Borrower and the CA Borrower entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), which amended and restated the existing Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders. The Amended and Restated Credit Agreement which is a five year agreement, among other things, increased the principal amount of US Term Loan borrowings to $26.0 million, created a two year line to fund capital expenditures of up to $2.5 million through November 8, 2019 and $5.0 million thereafter through November 8, 2020, and extended the maturity dates of all borrowings from April 28, 2021 to November 7, 2023. The Amended and Restated Credit Agreement provides for borrowings of up to $30.0 million under the Revolver, subject to availability under the terms of the Amended and Restated Credit Agreement, and left the principal amount on the CA Term Loan at approximately $12.0 million, the same as it was under the previous Credit Agreement. The Amended and Restated Credit Agreement combined the previous US Term Loan and US Term Loan II (the “New US Term Loan”), and increased the aggregate principal amount to $26.0 million from $15.9 million, in total, for the previous US Term Loan and Term Loan II. The increase in the principal amount effected by the New U.S. Term Loan replaced and termed-out outstanding borrowings under the Revolver. The Amended and Restated Credit Agreement changes the quarterly principal payments of the New US Term Loan to $337.5 thousand through September 30, 2020, $575.0 thousand thereafter through September 30, 2021, and $812.5 thousand thereafter with a lump sum due at maturity. Finally, the agreement made certain changes to the Company's covenants and financial covenant ratios.

The Revolver, New US Term Loan, and CA Term Loan all mature on November 7, 2023 and bear interest at the Company's election of either (i) the greater of the Prime Rate or the Federal Funds Effective Rate (the “Base Rate”) or (ii) the LIBOR rate, plus an applicable margin ranging from 1.75% to 3.25% per annum in the case of the Base Rate and 2.75% to 4.25% per annum in the case of the LIBOR rate, in each case, based on senior leverage ratio thresholds, measured quarterly, as increased by the Waiver and Fourth Amendment to the Amended and Restated Credit Agreement which is further described below. The fair value of debt at March 31, 2020 under the Revolver, New US Term Loan and CA Term Loan approximates book value based on the variable terms.

In addition, the Amended and Restated Credit Agreement allows for increases in the principal amount of the Revolver and the New US and CA Term Loans not to exceed a $10.0 million principal amount, in the aggregate, provided that before and after giving effect to the proposed increase (and any transactions to be consummated using proceeds of the increase), the total leverage and debt service coverage ratios do not exceed specified amounts. The Amended and Restated Credit Agreement also provides for the issuance of letters of credit with a face amount of up to a $2.0 million, in the aggregate, provided that any letter of credit that is issued will reduce availability under the Revolver.

As of March 31, 2020, $11.6 million was outstanding under the Revolver. This amount is gross of debt issuance costs which are further described in the next section. The Revolver had an effective interest rate of 5.92% percent per annum at March 31, 2020, and is secured by substantially all of the Company’s assets. At March 31, 2020, the maximum additional available borrowings under the Revolver was $11.7, million which includes a reduction for a $0.1 million letter of credit issued for the benefit of the landlord of one of the Company’s leased facilities. The maximum amount available was further subject to borrowing base restrictions, resulting in a net availability of $6.9 million.

Long term debt consists of the following (in thousands):

	March 31, 2020		December 29, 2019
New US Term Loan, payable to lenders in quarterly installments of $0.3 million through September 30, 2020, $0.6 million through September 30, 2021, and $0.8 million through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 5.853% per annum at March 31, 2020. At March 31, 2020, the balance of the New US Term Loan is presented net of a debt discount of $0.3 million from costs paid to or on behalf of the lenders.	$	23,725	$	24,383
CA Term Loan, payable to lenders in quarterly installments of $0.4 million through November 7, 2023, with a lump sum due at maturity. The effective interest rate was 5.853% per annum at March 31, 2020. At March 31, 2020, the balance of the CA Term Loan is presented net of a debt discount of $0.1 million from costs paid to or on behalf of the lenders.	$	9,641	$	10,384
Capital expenditure line payable to lenders in quarterly installments of 7.5% per annum of the outstanding principal balance commencing December 31, 2019 through September 30, 2020, 10% per annum through September 30, 2021, and 12.5% per annum through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 5.862% per annum at March 31, 2020.	1,300		1,300
Total debt excluding Revolver	34,666		36,067
Less current maturities	2,847		2,847
Long-term debt – Less current maturities	$	31,819	$	33,220

Debt Issuance Costs

Debt issuance costs represent legal, consulting, and other financial costs associated with debt financing and are reported netted against the related debt instrument. Amounts paid to or on behalf of lenders are presented as a debt discount and are also shown as a reduction of the associated debt instrument. Debt issuance costs on term debt are amortized using the straight line basis over the term of the related debt (which is immaterially different from the required effective interest method) while those related to revolving debt are amortized using a straight line basis over the term of the related debt.

At March 31, 2020 and December 29, 2019, debt issuance costs were $0.3 million and $0.3 million, respectively, while amounts paid to or on behalf of lenders presented as debt discounts were $0.4 million and $0.4 million, respectively. On November 8, 2018, the Company amended its Credit Agreement, to increase the Company's term loan debt. The Company reviewed this amendment for extinguishment accounting and concluded that there were no remaining debt issuance costs not amortized on the revolving debt facility qualified for extinguishment accounting and recognized a loss on extinguishment immediately. The remaining unamortized debt issuance costs not extinguished on the old revolving debt facility and all of the of remaining unamortized debt issuance costs on the term loans did not meet extinguishment accounting and therefore were carried forward to the new revolving debt facility and term loans.

Amortization expense of both debt issuance costs and debt discounts has been recognized as a component of interest expense in the amounts of $0.04 million for the three months ended March 31, 2020, and $0.04 million for the three months ended March 31, 2019, respectively.

Covenant Compliance

The Amended and Restated Credit Agreement contains customary negative covenants and requires that the Company comply with various financial covenants, including a total leverage ratio and debt service coverage ratio, as defined in the Amended and Restated Credit Agreement. As of December 29, 2019, the Company was in compliance with these financial covenants. Additionally, the New US Term Loan and CA Term Loan each contains a clause, effective December 30, 2018, that requires an excess cash flow payment to be made to the lenders to reduce the New US Term Loan and CA Term Loan if the Company’s cash flow exceeds certain thresholds as defined by the Amended and Restated Credit Agreement. No payments were required to be made in the three months ended March 31, 2020.

As of March 31, 2019, the Company was not in compliance with the total leverage ratio financial covenant. As a result of this non-compliance, on May 7, 2019, the US Borrower and the CA Borrower entered into the Waiver and First Amendment (the “First Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders. The First Amendment temporarily waived the default on the March 31, 2019 covenant violation until the earlier of June 15, 2019 and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers current and future financial condition. As a result of this waiver, the lenders did not accelerate the maturity of the debt.

On June 14, 2019, the Company entered into the Waiver and Second Amendment (the “Second Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Second Amendment revised the waiver period as defined with respect to the March 31, 2019 covenant violation and resulting default until the earlier of June 30, 2019 (which was June 15, 2019 under the First Amendment to the Amended and Restated Credit Agreement) and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers current and future financial condition.

On June 28, 2019, the Company entered into the Waiver and Third Amendment (the “Third Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Third Amendment revised the waiver period as defined with respect to the March 31, 2019 covenant violation and resulting default until the earlier of July 22, 2019 (which was June 30, 2019 under the Second Amendment to the Amended and Restated Credit Agreement) and the execution and delivery of a further amendment revising the calculation of the total leverage ratio and such other financial covenants as necessary taking into account the Borrowers current and future financial condition.

On July 16, 2019, the Company entered into the Waiver and Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Credit Agreement, with Citizens, acting as Administrative Agent, and the other lenders.  The Fourth Amendment provided a permanent waiver by the Lenders and Agent with respect to the Borrower's non-compliance with the total leverage ratio financial covenant, as defined as of March 31, 2019. The Fourth Amendment also revised the definition of consolidated EBITDA and certain financial covenants, including the maximum total leverage ratio and the minimum debt service coverage ratio, as well as adding the requirement that the Company maintain minimum liquidity and minimum unadjusted consolidated EBITDA, each as defined. The Fourth Amendment permits distributions as long as the Borrower is in compliance with specified conditions including that the Borrower's liquidity, as defined, is not less than $5 million after giving effect to the distribution, total leverage ratio is not more than 2.00 to 1.00, post distribution, debt service coverage ratio ("DSCR"), as defined, is not greater than 1.10 to 1.00, and Borrower is in compliance with financial covenants, before and after giving effect to the distributions.

On August 7, 2019, the Company entered into the Fifth Amendment to the Credit Agreement and Loan Documents (the “Fifth Amendment”). The Fifth Amendment amended the definition of unadjusted consolidated EBITDA to include consolidated net income plus the sum of interest expense, tax expense, depreciation and amortization expense, and non-cash impairment charges of goodwill. The Company is compliant with the covenants set forth in the Fifth Amendment as of March 31, 2020.

On April 3, 2020, the company entered into the Sixth Amendment to the Credit Agreement and Loan Documents (the “Sixth Amendment”). The Sixth Amendment, amended the definition of consolidated EBITDA to include, as an addition to consolidated net income, an amount equal to $0.6 million resulting from a non-cash inventory write-off taken during the third fiscal quarter in fiscal 2019, amended the definition of “fiscal year” to reflect that we changed our fiscal year to end on December 31, commencing with the 2020 fiscal year, eliminate the requirement for a monthly Covenant Compliance Report and provide for payment of the Capex Loan principal installment that was due December 31, 2019, but was not paid due to an internal system miscalculation by the Agent.

As of March 31, 2020, the Company was in compliance with its financial covenants. However, due to the impact of the COVID-19 pandemic on the Company and the global automotive industry, the Company anticipated that it was likely that the Bank EBITDA for the twelve months ended June 30, 2020 was likely to result in the Company not being in compliance with its

financial covenants. In response to the anticipated impact of COVID-19, on April 23, 2020, the US Borrower and the CA Borrower (together the “Borrowers”) entered into the Seventh Amendment (the “Seventh Amendment”) to the Credit Agreement and Loan Documents. The Seventh Amendment, among other things, (i) permits additional indebtedness in the form of unsecured loans authorized pursuant to and in compliance with the CARES Act under the Paycheck Protection Program of the U.S. Small Business Administration, in an aggregate amount not to exceed $6.0 million; (ii) defers the June 30, 2020 principal payments on the US Term Loan, CA Term Loan, and CAPEX Loan, with the deferred principal amounts payable at the existing maturity dates; (iii) waives the requirement to test Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the fiscal quarter ending June 30, 2020; (iv) allows the release of the lien on the Evansville, Indiana property and for the net cash proceeds from its sale to be applied against any outstanding balance on the Revolver, which will not permanently reduce the Revolving Credit Aggregate Commitment; (v) adds a weekly requirement for the Borrowers to deliver a 13-week cash flow forecast until September 30, 2020; and (vi) adds a 1.0% LIBOR Floor and 2.0% Base Rate Floor. Refer to Note 1 for discussion of future covenant compliance and consideration of our ability to continue as a going concern.

Maturities on the Company’s Amended and Restated Credit Agreement and other long term debt obligations for the remainder of the current fiscal year and future fiscal years are as follows (in thousands):

2020	$	1,506
2021	4,176
2022	4,912
2023	36,464
2024	—
Thereafter	—
Total	47,058
Discounts	(359)
Debt issuance costs	(284)
Total debt – Net	$	46,415

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For interim tax reporting we estimate our annual effective tax rate and apply it to our year to date income before income taxes. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effect of changes in tax laws or rates, are reported in the interim period in which they occur, if applicable.  

Income tax (benefit) expense for the three months ended March 31, 2020 was $(0.3) million, compared to $0.04 million for the three months ended March 31, 2019.

During the three months ended March 31, 2020 , the differences between the actual effective tax rate of 22.2% and the statutory rate of 21.0% was primarily due to benefit of tax crredits in the U.S. partially offset by earnings generated in Mexico and Canada, which both have higher statutory income tax rates than the U.S., and U.S. taxation of foreign earnings under the Global Intangible Low-Taxed Income (GILTI) provisions.

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Stock Incentive Plans - Valuation Assumptions (Details) - Employee Stock Option	Feb. 25, 2020
The 2013 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	52.00%
Dividend yield	0.00%
Expected term (in years)	6 years
Risk-free rate	1.21%
2014 Omnibus Performance Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	52.00%
Dividend yield	0.00%
Expected term (in years)	6 years
Risk-free rate	1.21%

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Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 29, 2019
Leases [Abstract]
Operating leases	$ 11,421	$ 0
Operating lease, liability, current	2,247
Operating lease, liability, non-current	10,046
Total lease liabilities	$ 12,293

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 29, 2019
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 0.8	$ 0.9
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	15,000,000	15,000,000
Common stock, shares issued (in shares)	9,779,147	9,779,147
Common stock, shares outstanding (in shares)	9,779,147	9,779,147

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Nature of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Nature of Business and Basis of Presentation

Nature of Business and Basis of Presentation

Nature of Business

Unique Fabricating, Inc. (the “Company”) engineers and manufactures multi-material foam, rubber, and plastic components utilized in noise, vibration and harshness, acoustical management, water and air sealing, decorative and other functional applications. The Company operates as one operating and reportable segment.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company, its results of operations, and its cash flows. The interim results for the periods presented may not be indicative of the Company's actual annual results. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2019.

Going Concern

The Company’s condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Refer to Note 6 for discussion of the Company’s financial covenant compliance.

As of March 31, 2020, the Company was in compliance with its financial covenants. However, due to the impact of the COVID-19 pandemic on the Company and the global automotive industry, the Company projected it would not be in compliance with its financial covenants related to the Bank EBITDA for the twelve months ended June 30, 2020. In response to the anticipated impact of COVID-19, on April 23, 2020, the US Borrower and the CA Borrower (together the “Borrowers”) entered into the Seventh Amendment (the “Seventh Amendment”) to the Credit Agreement and Loan Documents. The Seventh Amendment, among other things, (i) permits additional indebtedness in the form of unsecured loans authorized pursuant to and in compliance with the CARES Act under the Paycheck Protection Program of the U.S. Small Business Administration, in an aggregate amount not to exceed $6.0 million; (ii) defers the June 30, 2020 principal payments on the US Term Loan, CA Term Loan, and CAPEX Loan, with the deferred principal amounts payable at the existing maturity dates; (iii) waives the requirement to test Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the fiscal quarter ending June 30, 2020; (iv) allows the release of the lien on the Evansville, Indiana property and for the net cash proceeds from its sale to be applied against any outstanding balance on the Revolver, which will not permanently reduce the Revolving Credit Aggregate Commitment; (v) adds a weekly requirement for the Borrowers to deliver a 13-week cash flow forecast until September 30, 2020; and (vi) adds a 1.0% LIBOR Floor and 2.0% Base Rate Floor.

While the Seventh Amendment waives the requirement to test the Maximum Total Leverage Ratio, Minimum Debt Service Coverage Ratio and Minimum Unadjusted Consolidated EBITDA for the second quarter of 2020, it does not waive these requirements for periods after the second quarter of 2020. Bank EBITDA, as defined, for the twelve months ended September 30, 2020, December 31, 2020, and March 31, 2021 is likely to result in the Company not being in compliance with its financial covenants, as these periods will include the financial results of the second quarter of 2020 which will be materially impacted by the COVID-19 pandemic. Absent an amendment or waiver, failure to be in compliance with the Company’s financial covenants would constitute a default when reported. Such a default, if not cured or waived, would allow the lenders to accelerate the maturity of the debt, making it due and payable at that time. If the maturity of the debt were accelerated, the Company would not have sufficient available liquidity to repay such debt within one year after the date that the financial statements are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern.

The Company has been actively discussing the impact the COVID-19 pandemic is expected to have on the Company’s ability to meet its financial covenants with the Administrative Agent and the need to modify the covenant terms through the periods that the Company believes may be impacted. The Company believes it is probable that the Company will obtain an amendment modifying the covenant terms prior to triggering a default. As a result, the Company has concluded that it’s plans to obtain covenant relief are probable of being achieved, to alleviating substantial doubt about the Company’s ability to continue as a going concern.

Change in Quarter and Year-End

Historically, the Company’s quarterly periods ended on the Sunday closest to the end of the calendar quarterly period. For 2019, the quarters and year to date period, which were 13 weeks, respectively, ended on March 31, June 30, September 29, and December 29, 2019. On March 13, 2020, the Company’s board of directors approved changing our quarterly periods to match calendar quarterly periods. The Company expects the impact of this change on our 2020 result of operations to be immaterial. All year, quarter, and three month references prior to 2020 relate to the Company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, quarter and three months ended is used throughout this Quarterly Report on Form 10-Q to represent both the current year calendar quarterly periods and the prior year fiscal year periods.

Concentration Risks

The Company is exposed to significant concentration risks as follows:

Customer and Credit — During the three months ended March 31, 2020 and three months ended March 31, 2019, the Company’s net sales were derived from customers principally engaged in the North American automotive industry.  The following table presents the Company's sales directly and indirectly to General Motors Company (GM), Fiat Chrysler Automobiles (FCA), and Ford Motor Company (Ford) as a percentage of total net sales:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
General Motors Company	17	%	18	%
Fiat Chrysler Automobiles	14	%	15	%
Ford Motor Company	10	%	11	%

No customer represented more than 10 percent of direct Company sales for the three months ended March 31, 2020. GM accounted for 9 percent of direct Company sales for the three months ended March 31, 2020.

Labor Markets — At March 31, 2020, of the Company’s hourly plant employees working in the United States manufacturing facilities, 40 percent were covered under a collective bargaining agreement which expires in August 2022 while another 6 percent were covered under a separate collective bargaining agreement that expires in February 2023.

International Operations — The Company manufactures and sells products outside of the United States primarily in Mexico and Canada. Foreign operations are subject to various political, economic and other risks and uncertainties inherent in foreign countries. Among other risks, the Company’s operations may be subject to the risks of: restrictions on transfers of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; political conditions; and governmental regulations. The following table presents the percentage of the Company's total production in Mexico, Canada, and other foreign markets:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Mexico	23	%	19	%
Canada	9	%	8	%
Other	—	%	1	%

The following table presents the percentage of the Company's total net sales represented by net sales from customers located in Mexico, Canada, and other foreign countries:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Mexico	23	%	18	%
Canada	8	%	9	%
Other	—	%	1	%

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Leases - Cash Outflow Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Leases [Abstract]
Operating cash outflows from operating leases	$ 827

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New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 29, 2019
Lessee, Lease, Description [Line Items]
Operating leases	$ 11,421	$ 0
Present value of lease payments	$ 12,293
Accounting Standards Update 2014-09
Lessee, Lease, Description [Line Items]
Operating leases		12,100
Present value of lease payments		$ 12,800

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Nature of Business and Basis of Presentation - Narrative (Details) $ in Millions		3 Months Ended
	Apr. 23, 2020 USD ($)	Mar. 31, 2020 segment
Concentration Risk [Line Items]
Number of operating segments		1
Number of reportable segments		1
Amended And Restated Credit Agreement | Subsequent Event | PPP under CARES Act
Concentration Risk [Line Items]
Debt instrument, covenant, debt amount, maximum | $	$ 6.0
Minimum | Line of credit | Amended And Restated Credit Agreement | Secured debt | Subsequent Event | PPP under CARES Act | LIBOR
Concentration Risk [Line Items]
Basis spread on variable rate	1.00%
Minimum | Line of credit | Amended And Restated Credit Agreement | Secured debt | Subsequent Event | PPP under CARES Act | Base Rate
Concentration Risk [Line Items]
Basis spread on variable rate	2.00%
Customer concentration risk | Direct Company Sales | General Motors Company
Concentration Risk [Line Items]
Concentration risk (percentage)		9.00%
Labor force concentration risk | Workforce Subject to Collective Bargaining Arrangements | Collective Bargaining Arrangements Expiring August 2022
Concentration Risk [Line Items]
Concentration risk (percentage)		40.00%
Labor force concentration risk | Workforce Subject to Collective Bargaining Arrangements | Collective Bargaining Arrangements Expiring February 2023
Concentration Risk [Line Items]
Concentration risk (percentage)		6.00%

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Restructuring (Tables)

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Liability

The table below summarizes the activity in the restructuring liability for the three months ended March 31, 2020 (in thousands).

	Employee Termination Benefits Liability		Other Exit Costs Liability		Total
Accrual balance at December 29, 2019	$	438	$	116	$	554
Provision for estimated expenses to be incurred	—		920		920
Payments made during the year and asset write offs	333		684		1,017
Accrual balance at March 31, 2020	$	105	$	352	$	457

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Interest Rate Swap

The Company holds a derivative financial instrument, in the form of an interest rate swap, as required by its Credit Agreement and Amended and Restated Credit Agreement, for the purpose of hedging certain identifiable transactions in order to mitigate risks relating to the variability of future earnings and cash flows caused by interest rate fluctuations. The Company has elected not to apply hedge accounting for financial reporting purposes. The interest rate swap is recognized in the accompanying condensed consolidated balance sheets at its fair value. Monthly settlement payments due on the interest rate swap and changes in its fair value are recognized currently in net income as interest expense in the accompanying condensed consolidated statements of operations.

Effective June 30, 2016, as required under the Credit Agreement entered into during April 2016, the Company entered into an interest rate swap which requires the Company to pay a fixed rate of 1.055 percent per annum while receiving a variable rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount. The notional amount at the effective date was $16.7 million which decreased by $0.3 million each quarter until June 30, 2017, and thereafter decreased by $0.4 million each quarter until June 29, 2018, when it began decreasing by $0.5 million per quarter until it expired on June 28, 2019.

Effective October 2, 2017, as required under the Second Amendment to the Credit Agreement, the Company entered into another interest rate swap which requires the Company to pay a fixed rate of 1.093 percent per annum while receiving a variable interest rate per annum based on the one month LIBOR, for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $1.9 million which decreases by $0.1 million each quarter until it expires on September 30, 2020.

Effective November 30, 2018, as required under the Amended and Restated Credit Agreement, the Company entered into another interest rate swap that requires the Company to pay a fixed rate of 3.075 percent per annum while receiving a variable interest rate per annum based on the one month LIBOR for a net monthly settlement based on the notional amount in effect. The notional amount at the effective date was $5.0 million which increased by $0.4 million each quarter until June 28, 2019

when the notional amount increased to $17.5 million due to the interest rate swap from 2016 described above expiring. Since June 28, 2019, the notional amount then decreased each quarter by $0.2 million until September 30, 2020 when the notional amount increases to $17.5 million due to the interest rate swap from 2017 above expiring. The notional amount then decreases each quarter by $0.4 million until December 31, 2021, then decreases each subsequent quarter by $0.6 million until it expires on November 8, 2023

At March 31, 2020, the fair value of all swaps was in a net liability position of $1.5 million and is included in other accrued liabilities and other long term liabilities in the condensed consolidated balance sheets. The Company paid $0.8 million in net monthly settlements with respect to the interest rate swaps for the three months ended March 31, 2020. At March 31, 2019, the fair value of the swaps was a net liability of $0.6 million, of which $0.04 million was included in current assets in the condensed consolidated balance sheets and $0.6 million was included in other long-term liabilities in the condensed consolidated balance sheets. The Company received $0.05 million in net monthly settlements in respect to the interest rate swaps for the three months ended March 31, 2019. Both the change in fair value and the net monthly settlements were included in interest expense in the condensed consolidated statements of operations.

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Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Leases

The Company records a right-of-use (“ROU”) asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has no significant lease agreements in place for which the Company is a lessor. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.

The Company leases certain industrial spaces, office space, land, and equipment. Some leases include one or more options to renew, with renewal terms that can extend the lease term from generally one to 5 years. The exercise of lease renewal options is at the Company’s sole discretion, and are included in the lease term only to the extent such renewal options are reasonably certain of being exercised at lease commencement. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. New leased assets obtained in exchange for new operating lease liabilities during the three months ended March 31, 2020, were immaterial. As of March 31, 2020, leases that the Company has signed but have not yet commenced are immaterial.

Leased assets and liabilities included within the condensed consolidated balance sheets consist of the following (in thousands):

	Classification	March 31, 2020
Right-of-Use-Assets
Operating	Operating leases	$	11,421
Liabilities
Current
Operating	Other accrued liabilities	$	2,247
Non-current
Operating	Non-current liabilities	10,046
Total lease liabilities		$	12,293

Lease costs included in the condensed consolidated statements of operations consist of the following (in thousands):

	Classification	March 31, 2020
Lease cost	Cost of sales, selling expenses and general and administrative expense	$	795

Maturity of the Company’s lease liabilities as of March 31, 2020 is as follows (in thousands):

2020 (remainder)	$	2,191
2021	2,807
2022	1,887
2023	1,154
2024	1,116
Thereafter	6,458
Total lease payments	15,613
Less: interest	3,320
Present value of lease payments	$	12,293

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Remaining lease term and discount rates are as follows:

	March 31, 2020
Weighted average remaining lease term (years)	7.6
Weighted average discount rate	6.3%

Lease costs included in the condensed consolidated statements of cash flows are as follows (in thousands):

	Three months ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases	$	827

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Earnings Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing the net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed giving effect to all potentially weighted average dilutive shares including stock options and warrants. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the reconciliation of the numerator and the denominator of basic and diluted loss per share for the three months ended March 31, 2020 and 2019 (dollars in thousands, except per share amounts):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Numerator:
Net (loss) income	$	(1,137)	$	(189)
Denominator:
Weighted average shares outstanding, basic	9,779,147		9,779,147
Dilutive effect of stock-based awards	—		—
Weighted average share outstanding, diluted	9,779,147		9,779,147
Basic loss per share	$	(0.12)	$	(0.02)
Diluted loss per share	$	(0.12)	$	(0.02)

The effect of certain common stock equivalents were excluded from the computation of weighted average diluted shares outstanding for the three months ended March 31, 2020 and 2019, as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below:

	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Number of options	611,480	563,680
Exercise price of options	$2.89 - $12.50	$3.33 - $12.50
Warrants(1)	142,185	142,185
Exercise price of warrants	$3.33 - $11.88	$3.33 - $11.88

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(1) Includes warrants to purchase 141,000 shares of common stock issued to the underwriters of the Company's IPO in July 2015 with an exercise price of $11.88 per share of common stock and an expiration date of July 7, 2020.

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Nature of Business and Basis of Presentation (Tables)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Schedules of Concentration of Risk

The following table presents the Company's sales directly and indirectly to General Motors Company (GM), Fiat Chrysler Automobiles (FCA), and Ford Motor Company (Ford) as a percentage of total net sales:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
General Motors Company	17	%	18	%
Fiat Chrysler Automobiles	14	%	15	%
Ford Motor Company	10	%	11	%

The following table presents the percentage of the Company's total production in Mexico, Canada, and other foreign markets:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Mexico	23	%	19	%
Canada	9	%	8	%
Other	—	%	1	%

The following table presents the percentage of the Company's total net sales represented by net sales from customers located in Mexico, Canada, and other foreign countries:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Mexico	23	%	18	%
Canada	8	%	9	%
Other	—	%	1	%

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Long-term Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long term debt consists of the following (in thousands):

	March 31, 2020		December 29, 2019
New US Term Loan, payable to lenders in quarterly installments of $0.3 million through September 30, 2020, $0.6 million through September 30, 2021, and $0.8 million through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 5.853% per annum at March 31, 2020. At March 31, 2020, the balance of the New US Term Loan is presented net of a debt discount of $0.3 million from costs paid to or on behalf of the lenders.	$	23,725	$	24,383
CA Term Loan, payable to lenders in quarterly installments of $0.4 million through November 7, 2023, with a lump sum due at maturity. The effective interest rate was 5.853% per annum at March 31, 2020. At March 31, 2020, the balance of the CA Term Loan is presented net of a debt discount of $0.1 million from costs paid to or on behalf of the lenders.	$	9,641	$	10,384
Capital expenditure line payable to lenders in quarterly installments of 7.5% per annum of the outstanding principal balance commencing December 31, 2019 through September 30, 2020, 10% per annum through September 30, 2021, and 12.5% per annum through November 7, 2023 with a lump sum due at maturity. The effective interest rate was 5.862% per annum at March 31, 2020.	1,300		1,300
Total debt excluding Revolver	34,666		36,067
Less current maturities	2,847		2,847
Long-term debt – Less current maturities	$	31,819	$	33,220

Schedule of Maturities of Long-Term Debt

Maturities on the Company’s Amended and Restated Credit Agreement and other long term debt obligations for the remainder of the current fiscal year and future fiscal years are as follows (in thousands):

2020	$	1,506
2021	4,176
2022	4,912
2023	36,464
2024	—
Thereafter	—
Total	47,058
Discounts	(359)
Debt issuance costs	(284)
Total debt – Net	$	46,415

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Earnings Per Share - Anti-Dilutive Common Stock Equivalents Summary (Details) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of options (in shares)	611,480	563,680
Exercise price of options lower limit (in dollars per share)	$ 2.89	$ 3.33
Exercise price of options upper limit (in dollars per share)	$ 12.50	$ 12.50
Warrants (in shares)	142,185	142,185
Exercise price of warrants lower limit (in dollars per share)	$ 3.33	$ 3.33
Exercise price of warrants upper limit (in dollars per share)	$ 11.88	$ 11.88
Warrants for Underwriters
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)	141,000	141,000

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Restructuring - Narrative (Details) $ in Millions			3 Months Ended
	Nov. 07, 2019 employee	Jul. 16, 2019 employee	Mar. 31, 2020 USD ($)	Dec. 29, 2019 USD ($)
Bryan Restructuring
Restructuring Cost and Reserve [Line Items]
Number of position eliminations | employee	43
Bryan Restructuring | One-time Termination Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring costs incurred				$ 0.3
Bryan Restructuring | Other Exit Costs Liability
Restructuring Cost and Reserve [Line Items]
Restructuring costs incurred			$ 0.5
Evansville Restructuring
Restructuring Cost and Reserve [Line Items]
Number of position eliminations | employee		47
Remaining lease payments			1.0	$ 1.2
Evansville Restructuring | Other Exit Costs Liability
Restructuring Cost and Reserve [Line Items]
Restructuring costs incurred			$ 0.4

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Long-term Debt - Additional Information (Details)				3 Months Ended
	Apr. 23, 2020 USD ($)	Nov. 08, 2018 USD ($)	Apr. 29, 2016 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Apr. 03, 2020 USD ($)	Dec. 29, 2019 USD ($)	Jul. 16, 2019 USD ($)	Nov. 01, 2018 USD ($)	Sep. 20, 2018 USD ($)	Aug. 18, 2017 USD ($)
Debt Instrument [Line Items]
Outstanding principal amount				$ 34,666,000			$ 36,067,000
Debt issuance cost				300,000			300,000
Unamortized discount				359,000			400,000
Amortization expense of debt issuance costs				$ 40,000.00	$ 40,000.00
Credit agreement | Line of credit | Secured debt
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 62,000,000.0
Maximum increase to principal amount			10,000,000.0
Credit agreement | Line of credit | Secured debt | Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate				1.75%
Credit agreement | Line of credit | Secured debt | Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate				3.25%
Credit agreement | Line of credit | Secured debt | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate				2.75%
Credit agreement | Line of credit | Secured debt | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate				4.25%
Credit agreement | Letter of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity			2,000,000.0
New revolver | Revolving credit facility
Debt Instrument [Line Items]
Line of credit				$ 11,600,000
New revolver | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity			30,000,000.0	$ 6,900,000					$ 30,000,000.0	$ 32,500,000
Senior notes			22,900,000
Line of credit											$ 4,000,000.0
Effective interest rate				5.92%
Remaining borrowing capacity				$ 11,700,000
US Term loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount			17,000,000.0
CA term loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount			$ 15,000,000.0
Outstanding principal amount				$ 9,641,000			10,384,000
Effective interest rate				5.853%
Unamortized discount				$ 100,000
US Term Loan II | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount											$ 4,000,000.0
Amended And Restated Credit Agreement
Debt Instrument [Line Items]
Debt instrument, covenant, liquidity amount required, minimum								$ 5,000,000
Debt instrument, total covenant, leverage ratio								2.00
Debt instrument, covenant, leverage ratio after DSCR								1.10
Amended And Restated Credit Agreement | Subsequent Event
Debt Instrument [Line Items]
Debt Instrument, covenant, consolidated EBITDA						$ 600,000
Amended And Restated Credit Agreement | Subsequent Event | PPP under CARES Act
Debt Instrument [Line Items]
Debt instrument, covenant, debt amount, maximum	$ 6,000,000.0
Amended And Restated Credit Agreement | Line of credit | Secured debt | Base Rate | Minimum | Subsequent Event | PPP under CARES Act
Debt Instrument [Line Items]
Basis spread on variable rate	2.00%
Amended And Restated Credit Agreement | Line of credit | Secured debt | LIBOR | Minimum | Subsequent Event | PPP under CARES Act
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
New US Term Loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Outstanding principal amount				$ 23,725,000			$ 24,383,000
Effective interest rate				5.853%
Unamortized discount				$ 300,000
Senior credit facility, second amendment | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Letters of credit outstanding, amount				100,000
Senior Credit Facility [Member] | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Debt issuance cost				$ 0
US Borrower And CA Borrower | US Term loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Maximum increase to principal amount		$ 26,000,000.0
US Borrower And CA Borrower | CA term loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Outstanding principal amount		$ 12,000,000.0
US Borrower And CA Borrower | Amended And Restated Credit Agreement | Line of credit
Debt Instrument [Line Items]
Debt instrument, term		5 years
Debt instrument, term to fund capital expenditures		2 years
US Borrower And CA Borrower | Amended And Restated Credit Agreement | Line of credit | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 30,000,000.0
US Borrower And CA Borrower | New US Term Loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount		26,000,000.0
US Borrower And CA Borrower | US Term Loan And Term Loan II | Line of credit | Secured debt
Debt Instrument [Line Items]
Debt instrument, face amount		15,900,000
November 8, 2019 | US Borrower And CA Borrower | Amended And Restated Credit Agreement | Line of credit for capital expenditures
Debt Instrument [Line Items]
Maximum borrowing capacity		2,500,000
November 8, 2020 | US Borrower And CA Borrower | Amended And Restated Credit Agreement | Line of credit for capital expenditures
Debt Instrument [Line Items]
Maximum borrowing capacity		5,000,000.0
September 30, 2020 | US Borrower And CA Borrower | New US Term Loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Principal payment		337,500
September 30, 2021 | US Borrower And CA Borrower | New US Term Loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Principal payment		575,000.0
Thereafter though maturity | US Borrower And CA Borrower | New US Term Loan | Line of credit | Secured debt
Debt Instrument [Line Items]
Principal payment		$ 812,500

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Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 29, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 9,460	$ 7,963
Work in progress	618	129
Finished goods	5,181	4,955
Total inventory	$ 15,259	$ 13,047