NFI exceeded 2020 revised guidance and
continued its electric vehicle leadership position in North America and the UK
All figures quoted in US dollars unless otherwise noted:
Performance as follows:
- Fourth quarter sales of $711.5
million (1,230 equivalent units ("EUs") delivered). Full
year sales of $2.4 billion (4,371 EUs
delivered). Battery and fuel-cell electric vehicles (389 EUs) made
up 9% of 2020 deliveries.
- Ending backlog position (both firm and options) of 8,504 EUs
(valued at $4.3 billion) includes 632
EUs, or 6%, of battery and fuel-cell electric vehicles.
- Fourth quarter Adjusted EBITDA of $65.0 million; EPS of $0.14 and Adjusted EPS of $0.13. Full-year Adjusted EBITDA of $157.7 million; full year EPS of ($2.52) and Adjusted EPS of ($0.75).
- Year-end liquidity position of $233.5
million. Year-end 2020 position does not include gross
proceeds of C$250 million from
bought-deal equity financing completed on March 1, 2021.
- NFI Forward strategic cost reduction initiative on track,
achieving $18.0 million in cost
savings in 2020 with a clear path to reducing Overhead and SG&A
by 8% to 10% by the end of 2023 (from 2019 levels).
- Reaffirmed Fiscal 2021 Adjusted EBITDA guidance of
$220 million to $240 million, with potential for greater than 50%
improvement from Fiscal 2020. Electric vehicle production is
expected to more than double in Fiscal 2021, increasing to 20% to
25% of EUs delivered.
WINNIPEG, MB, March 4, 2021 /CNW/ - (TSX: NFI) NFI Group
Inc. ("NFI" or the "Company"), a leader in zero-emission electric
mobility, today announced its unaudited interim condensed financial
results for 2020 Q4 and the audited consolidated financial results
for Fiscal 2020.
Key financial metrics of the quarter are highlighted below:
|
|
|
|
|
(in millions except
deliveries and per Share amounts)
|
2020
Q4
|
Change(1)
|
Fiscal
2020
|
Change(1)
|
|
|
|
|
|
Deliveries
(EUs)
|
1,230
|
(615)
|
4,371
|
(944)
|
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenue
|
$711.5
|
$(206.2)
|
$2,419.2
|
$(474.2)
|
Net earnings
(loss)
|
8.5
|
(25.6)
|
(157.7)
|
(215.4)
|
Net earnings (loss)
per Share
|
0.14
|
(0.41)
|
(2.52)
|
(3.45)
|
|
|
|
|
|
Non-IFRS
Measures(2)
|
|
|
|
|
Adjusted
EBITDA
|
$65.0
|
$(38.9)
|
$157.7
|
$(164.5)
|
Adjusted Net Earnings
(Loss)
|
8.2
|
(22.7)
|
(47.2)
|
(148.9)
|
Adjusted Net Earnings
(Loss) per Share
|
0.13
|
(0.36)
|
(0.75)
|
(2.40)
|
Free Cash
Flow
|
29.0
|
(20.0)
|
27.5
|
(132.9)
|
Liquidity
|
$233.5
|
24.2
|
$233.5
|
24.2
|
(1)
|
Results noted herein
are for the 13-week period ("2020 Q4") and the 52-week period
("Fiscal 2020") ended December 27, 2020. The comparisons reported
in this press release compare 2020 Q4 to the 13-week period ("2019
Q4") and Fiscal 2020 to the 52-week period ("Fiscal 2019") ended
December 29, 2019. Comparisons and comments are also made to the
13-week period ("2020 Q3") ended September 27, 2020. Readers are
advised to view the audited consolidated financial statements (the
"Financial Statements") and the related Management's Discussion and
Analysis (the "MD&A") that are available at the Company's
website at:
https://www.nfigroup.com/investor-relations/performance-reports/
and under the Company's profile on www.sedar.com
|
(2)
|
Adjusted EBITDA,
Adjusted Net Earnings (Loss), Adjusted Net Earnings (Loss) per
Share and Free Cash Flow are not recognized earnings measures and
do not have standardized meanings prescribed by IFRS. Therefore,
they may not be comparable to similar measures presented by other
issuers. See "Non-IFRS Measures" and detailed reconciliations of
IFRS Measures to Non-IFRS Measures in the Appendix of this press
release.
|
"NFI has successfully transitioned from a vehicle manufacturer
to an electric mobility solutions provider with an offering that
includes zero-emission vehicles, charging infrastructure
installation, telematics, and full parts and service aftermarket
support. This approach best positions us to serve our customers and
drive growth as we lead the evolution, or
ZEvolutionTM, to an electric future. In
2021, we will continue to be innovators, with the introduction of
additional products and services to strengthen our battery-electric
and fuel-cell electric vehicle offerings and improve top-line
revenue and net earnings performance," said Paul Soubry, President and Chief Executive
Officer, NFI.
"We started 2021 with the launch of the Xcelsior AV,
North America's first fully
operational heavy-duty Level 4 automated transit bus, and we
unveiled the new MCI D45 Commuter Rapid Transit battery-electric
motor coach and ARBOC's Equess battery-electric CHARGE shuttle bus
to service the growing medium-duty market. NFI offers the
industry's broadest range of electric buses and coaches and has the
deepest customer relationships that will drive growth in 2021 and
beyond," Soubry added.
Segment Results
Manufacturing segment revenue for 2020 Q4 decreased
by $192.8 million, or 24.1%, compared
to 2019 Q4. The decrease is primarily driven by lower deliveries of
both transit buses and motor coaches, as the Company lowered
production volumes in response to public customer order deferrals
and private customer order delays, which were both attributable to
the economic impacts of the COVID-19 pandemic. 2020 Q4
Manufacturing Adjusted EBITDA decreased by $31.4 million, or 36.6% as a result of the volume
decrease year over year. The Company partially offset the volume
change by lowering variable overhead, continuing to drive NFI
Forward ($16.6 million of savings for
this segment), and receiving government grants ($11.3 million).
During 2020, NFI delivered 389 battery-electric and fuel-cell
electric vehicles, representing 9% of total deliveries, to
customers in the U.S., Canada, the
UK and New Zealand. This was a
year-over-year improvement of 35% from 2019. In addition, NFI
recorded $24.7 million in revenue
from its Infrastructure Solutions business that leads the
installation of electric charging infrastructure for transit
agencies.
Aftermarket segment revenue for 2020 Q4 decreased by
$13.4 million, or 11.4% compared to
2019 Q4. The decline in revenue was primarily driven by lower
private sector parts volumes within both the NFI aftermarket and
ADL aftermarket businesses. Offsetting some of this pressure was
increased sales to public customers for Clean and
ProtectTM products aimed at improving vehicle safety and
cleanliness. 2020 Q4 Aftermarket Adjusted EBITDA decreased by
$1.3 million, or 7.1%. The decline
was driven by lower volumes, offset by cost savings from headcount
reductions, a favourable product mix, and NFI Forward savings of
$0.4 million.
Net Earnings and Adjusted Net Earnings
2020 Q4 saw net earnings of $8.5
million, a decrease of $25.6
million from 2019 Q4, mainly driven by lower revenues and
the same factors that impacted Adjusted EBITDA. Net earnings were
also impacted by $4.7 million in
extraordinary costs related to COVID-19 and certain one-time,
non-recurring restructuring charges. The Company reported a net
loss of $157.7 million in Fiscal
2020, driven by lower production volumes, extraordinary COVID-19
costs, non-recurring restructuring costs associated with production
reductions and the NFI Forward initiative, plus a $50.8 million goodwill impairment within NFI's
private motor coach business.
2020 Q4 Adjusted Net Earnings of $8.2
million was primarily driven by the same factors relating to
net earnings, but adjusted for several normalizations, including
$0.7 million in one-time,
non-recurring restructuring charges and $3.7
million in COVID-19 related costs. Fiscal 2020 Adjusted Net
Loss of $47.2 million is normalized
for $19.0 million of one-time,
non-recurring restructuring charges and $32.7 million of COVID-19 related costs, as well
as the $50.8 million goodwill
impairment and $12.2 million of tax
affected mark-to-market losses on interest rate swaps.
Liquidity
NFI's liquidity position, which combines cash on-hand plus
available capacity under credit facilities, as at December 27, 2020 was $233.5 million, up $24.2
million from 2019 Q4. On December 23,
2020, NFI amended its existing $1.25
billion senior revolving credit facility (the "Revolver")
and its £50 million revolving UK credit facility (the "UK
Facility"). The amended facilities provide NFI with relaxed
covenants as it recovers from the impacts of the COVID-19
pandemic.
On March 1, 2021 NFI announced
that it had closed a bought-deal equity offering ( the "Offering")
with a syndicate of underwriters (the "Underwriters") pursuant to
which NFI issued 8,446,000 common shares at a price of C$29.60 per common share (a "Share") for gross
proceeds to the Company of C$250
million. The Company immediately used the proceeds of the
Offering to reduce the outstanding balances under its credit
facilities, which is expected to strengthen NFI's balance sheet,
reduce leverage and interest expense, and significantly increase
liquidity.
NFI believes that its existing liquidity combined with the
additional financial flexibility provided from the Offering and the
amendments to the credit facilities will permit it to pursue its
operational and strategic objectives, which include investments in
NFI's zero-emission products and electric propulsion technology,
investments required under the previously disclosed NFI Forward
cost-reduction initiative, and investigating other potential growth
opportunities, in addition to continuing to return capital to
shareholders through dividends.
Outlook
Management anticipates that NFI's end markets will continue to
be impacted by COVID-19 in 2021; however, the Company expects
improvement in its financial results as markets recover and the NFI
Forward initiative delivers improvements to operating metrics.
Management believes recent progress in COVID-19 vaccine
distribution and resulting economic responses are positive for
continued market recovery. NFI's end markets' recovery from
COVID-19 will be dependent upon several factors, including
government support, COVID-19 case rates, vaccine distribution, the
length of the pandemic, mutations of the virus, travel
restrictions, and economic reopening activity. These factors will
differ by product line and geography.
At its 2021 Investor Day, NFI unveiled its vision to drive the
increased adoption of zero-emission buses ("ZEBs"), what the
Company is calling the ZEvolutionTM. NFI
projects a growing adoption of zero-emission vehicles over the next
10 to 15 years as operators in North
America, the UK, Europe and
Asia Pacific markets transition
their fleets to zero emission vehicles. NFI has the broadest
offering of ZEBs, including battery-electric buses and coaches,
hydrogen fuel-cell buses and electric trolleys. Management
anticipates that based on the Company's leadership position in core
markets, broad product offering, historic experience and deep
customer relationships, it is well positioned to capitalize on the
long-term transition to ZEBs in both core and new markets. Based on
the factors noted above and the assumptions set out below under the
heading "Financial Outlook", management expects that 20% to 25% of
NFI's 2021 production will be battery-electric and hydrogen
fuel-cell buses, growing to 35% to 40% of production by 2025.
NFI continues to forge ahead with its transformative cost
reduction initiative, "NFI Forward," launched in July 2020, which is expected to drive
approximately $67.0 million in annual
Adjusted EBITDA savings by the end of 2023 from 2019 levels, plus
an additional $10.0 million in
annualized Free Cash Flow generation. In Fiscal 2020, NFI Forward
achieved approximately $17.0 million
in Adjusted EBITDA savings, and a further $1.0 million in Free Cash Flow savings. These
savings appear in NFI's gross margins and Adjusted EBITDA, as a
reduction to direct material costs, manufacturing overhead, and
SG&A. See "Forward-Looking Statements" below.
Financial Outlook
As previously disclosed on January 11,
2021, management expects that NFI will deliver revenue of
$2.8 billion to $2.9 billion and Adjusted EBITDA of $220 million to $240
million for Fiscal 2021. These expectations are based on the
Company's contractually obligated vehicle sales, current production
schedule, expected private market deliveries, expected NFI Forward
initiative savings, and anticipated aftermarket sales, and the
other expectations and assumptions described in NFI's press release
dated January 11, 2021.
This range could represent growth in Adjusted EBITDA of over 50%
on a year-over-year basis when compared to Fiscal 2020 results. The
Company also announced longer-term financial targets on
January 11, 2021, that include
$400 million to $450 million of Adjusted EBITDA in 2025, full
details on the expectations that drive those longer-term goals can
be found on the Company's website:
https://www.nfigroup.com/site-content/uploads/2021/01/NFI-IR-Day-2021-Presentation-Slides.pdf
Management cautions readers that the consolidated annual results
have an element of seasonality due to the nature of each unique
market segment and the varied annual production and vacation
schedule of each production facility. With the addition of ADL,
this has become even more pronounced with the third and fourth
quarters now being periods with higher delivery volumes. Management
anticipates that on a year-over-year basis the first quarter of
2021 results will be lower than the same period in 2020, while the
other three quarters of the year are expected to see improvement
from 2020 results. Management also advises readers that NFI's first
quarter, second and third quarters will be 13-week periods, while
the fourth quarter will be a 14-week period for a total 53-week
fiscal 2021 year.
"Although the COVID-19 pandemic continues to impact our
customers and NFI's operations, we are encouraged by improving
transit ridership and the deployment of vaccines. There is optimism
and a strong desire to safely get cities moving again," said
Soubry. "Recognizing the critical infrastructure role buses and
coaches play as connectors and economic enablers, governments
around the world have made unprecedented commitments to building
stronger transit infrastructure, and to assisting cities in making
the transition to zero-emission, electric transportation. We look
forward to helping drive this change and supporting our customers
to deliver the best experience for all the users of our vehicles
and solutions."
Corporate Social Responsibility
As one of the world's leading independent global bus and coach
manufacturers, a robust environmental, social and governance
("ESG") strategy is integral to how the Company conducts business,
and is crucial in the creation of long-term and sustainable value
for all NFI stakeholders. We are committed to continuing to
innovate in order to deliver smarter, safer, more sustainable, and
more connected public transportation. NFI's end products are a
key driver to enable cities to lower emissions, decrease congestion
and enable economic opportunity. NFI is committed to employees,
customers and shareholders, while also being responsible to the
environment and the communities in which we live and work.
"ESG will continue to drive our decision making in 2021 and
beyond, with NFI being extremely well positioned to capitalize on
both our internal initiatives, including an increase in the
diversity of our team and reduction of our carbon footprint, and
through the environmental and social benefits created by our
products," said Janice Harper,
Executive Vice President, People & Culture. "NFI's vehicles and
solutions will enable smart city development, reduce the harmful
impacts of climate change, traffic congestion and noise pollution,
and enable economic opportunity."
NFI's 2019 Environmental Social Governance Report can be
accessed on NFI's website at www.nfigroup.com. NFI's 2020
Environmental Social Governance Report will be released in
May 2021.
Fourth Quarter & Full-Year 2020 Results Conference
Call
A conference call for analysts and interested listeners will be
held on March 4, 2021 at 8:00 a.m. Eastern Time (ET). The call-in number
for listeners is 888-231-8191 or 647-427-7450. An accompanying
results presentation will be available prior to the call at:
https://www.nfigroup.com/investor-relations/events-presentations/
A live webcast of the call and slides will also be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1425813&tp_key=62306621ae
A replay of the call will be accessible from 11:00 a.m. ET on March 4,
2021 until 11:59 p.m. ET on
April 4, 2021. To access the replay,
call 855-859-2056 or 416-849-0833 and then enter passcode number
5763447. The replay will also be available on NFI's website
at www.nfigroup.com.
Annual General Meeting of Shareholders
NFI's Annual General Meeting of Shareholders will be held on
Thursday, May 6, 2021 at 1:00 p.m. (EST). Due to the restrictions imposed
in connection with the COVID-19 pandemic and in consideration of
the health and safety of our shareholders, team members and the
broader community, the meeting will be held in a virtual meeting
format only. Details on how to join the meeting will be posted on
NFI's website.
About NFI Group
Leveraging 450 years of combined experience, NFI is leading the
battery-electric transition of mass mobility around the world. With
zero-emission buses and coaches, infrastructure, and technology,
NFI meets today's urban demands for scalable smart mobility
solutions. Together, NFI is enabling more livable cities through
connected, clean, and sustainable transportation.
NFI is a leading independent global bus manufacturer providing a
comprehensive suite of mass transportation solutions in ten
countries under brands: New Flyer® (heavy-duty transit
buses), Alexander Dennis Limited (single and double-deck
buses), Plaxton (motor coaches), MCI® (motor
coaches), ARBOC® (low-floor cutaway and medium-duty
buses), and NFI Parts™. NFI vehicles incorporate the
widest range of drive systems available, including: clean diesel,
natural gas, diesel-electric hybrid, and zero-emission electric
(trolley, battery, and fuel cell). In total, NFI now supports
over 105,000 buses and coaches currently in service around the
world.
NFI Shares are traded on the Toronto Stock Exchange under the
symbol NFI. Further information is available at www.nfigroup.com,
www.newflyer.com, www.mcicoach.com, www.alexander-dennis.com,
www.nfi.parts, and www.carfaircomposites.com.
Appendix - Reconciliation Tables
Reconciliation of Net Earnings (Loss) to Adjusted
EBITDA
Management believes that Adjusted EBITDA is an important measure
in evaluating the historical operating performance of the Company.
However, Adjusted EBITDA is not a recognized earnings measure under
IFRS and does not have a standardized meaning prescribed by IFRS.
Accordingly, Adjusted EBITDA may not be comparable to similar
measures presented by other issuers. Readers of this press release
are cautioned that Adjusted EBITDA should not be construed as an
alternative to net earnings or loss determined in accordance with
IFRS as indicators of the Company's performance. See Non-IFRS
measures for the definition of Adjusted EBITDA. The following table
reconciles net earnings (loss) to Adjusted EBITDA based on the
historical Financial Statements of the Company for the
periods indicated.
(U.S. dollars in
thousands)
|
2020
Q4
|
2019
Q4
|
|
|
Fiscal
2020
|
Fiscal
2019
|
Net earnings
(loss)
|
$
|
8,465
|
|
$
|
34,127
|
|
|
|
$
|
(157,736)
|
|
$
|
57,698
|
|
Addback(1)
|
|
|
|
|
|
|
Income
taxes
|
12,987
|
|
26,118
|
|
|
|
1,644
|
|
41,997
|
|
Interest
expense
|
14,571
|
|
11,301
|
|
|
|
83,869
|
|
73,355
|
|
Amortization
|
26,126
|
|
31,134
|
|
|
|
110,784
|
|
104,570
|
|
Loss (gain) on
disposition of property, plant and equipment
|
(257)
|
|
52
|
|
|
|
(56)
|
|
(46)
|
|
Fair value adjustment
for total return swap(11)
|
(1,584)
|
|
273
|
|
|
|
118
|
|
949
|
|
Unrealized foreign
exchange loss (gain) on non-current monetary items and forward
foreign exchange contracts
|
(3,237)
|
|
(1,640)
|
|
|
|
(9,050)
|
|
60
|
|
Costs associated with
assessing strategic and corporate
initiatives(8)
|
165
|
|
(616)
|
|
|
|
1,396
|
|
13,069
|
|
Past service
costs(13) and other pension costs (recovery)
|
7
|
|
70
|
|
|
|
(408)
|
|
(1,601)
|
|
Non-recurring
restructuring costs (9)
|
—
|
|
364
|
|
|
|
—
|
|
365
|
|
Fair value adjustment
to acquired subsidiary company's inventory and deferred
revenue(10)
|
—
|
|
2,156
|
|
|
|
—
|
|
31,004
|
|
Proportion of the
total return swap realized(12)
|
641
|
|
(203)
|
|
|
|
(525)
|
|
(626)
|
|
Equity settled
stock-based compensation
|
608
|
|
437
|
|
|
|
1,770
|
|
1,566
|
|
Recovery on currency
transactions(15)
|
—
|
|
—
|
|
|
|
—
|
|
(4,287)
|
|
Prior year sales tax
provision (16)
|
37
|
|
300
|
|
|
|
184
|
|
4,094
|
|
COVID-19
costs(17)
|
5,413
|
|
—
|
|
|
|
47,362
|
|
—
|
|
Impairment loss on
goodwill(18)
|
—
|
|
—
|
|
|
|
50,790
|
|
—
|
|
Adjusted
EBITDA(1)
|
$
|
64,956
|
|
$
|
103,873
|
|
|
|
$
|
157,683
|
|
$
|
322,167
|
|
Adjusted EBITDA is
comprised of:
|
|
|
|
|
|
|
Manufacturing
|
$
|
54,263
|
|
$
|
85,715
|
|
|
|
$
|
101,964
|
|
$
|
256,097
|
|
Aftermarket
|
17,103
|
|
18,413
|
|
|
|
66,748
|
|
74,572
|
|
Corporate
|
(6,410)
|
|
(254)
|
|
|
|
(11,029)
|
|
(8,502)
|
|
(1)
|
Adjusted EBITDA is
not a recognized earnings measure and does not have standardized
meaning prescribed by IFRS. Therefore, Adjusted EBITDA may not be
comparable to similar measures presented by other issuers. See
"Definitions of Adjusted EBITDA, ROIC, Free Cash Flow, Adjusted Net
Earnings and Adjusted Net Earnings per Share" in Appendix A.
Management believes that Adjusted EBITDA is a useful supplemental
measure in evaluating performance of the Company.
|
(2)
|
Free Cash Flow is not
a recognized measure under IFRS and does not have a standardized
meaning prescribed by IFRS. Therefore, Free Cash Flow may not be
comparable to similar measures presented by other issuers. See
Appendix A for "Definitions of Adjusted EBITDA, ROIC, Free Cash
Flow, Adjusted Net Earnings and Adjusted Earnings per
Share"
|
(3)
|
U.S. exchange rate
(C$ per US$) is the weighted average exchange rate applicable to
dividends declared for the period.
|
(4)
|
Changes in non-cash
working capital are excluded from the calculation of Free Cash Flow
as these temporary fluctuations are managed through the credit
facilities which are available to fund general corporate
requirements, including working capital requirements, subject to
borrowing capacity restrictions. Changes in non-cash working
capital are presented on the consolidated statements of cash flows
net of interest and incomes taxes paid.
|
(5)
|
The cash effect of
the difference between the defined benefit expense and funding is
included in the determination of cash from operating activities.
This cash effect is excluded in the determination of Free Cash Flow
as management believes that the defined benefit expense amount
provides a more appropriate measure, as the defined benefit funding
can be impacted by special payments to reduce the unfunded pension
liability.
|
(6)
|
Foreign exchange loss
on cash held in foreign currency is excluded in the determination
of cash from operating activities under IFRS; however, because it
is a cash item, management believes it should be included in the
calculation of Free Cash Flow.
|
(7)
|
Per Share
calculations for Free Cash Flow (C$) are determined by dividing
Free Cash Flow by the total number of all issued and outstanding
Shares using the weighted average over the period. The weighted
average number of Shares outstanding for 2020 Q4 was 62,524,842 and
62,434,520 for 2019 Q4. The weighted average number of Shares
outstanding for Fiscal 2020 and Fiscal 2019 are 62,510,544 and
61,809,479, respectively. Per Share calculations for declared
dividends (C$) are determined by dividing the amount of declared
dividends by the number of outstanding Shares at the respective
period end date.
|
(8)
|
Normalized to exclude
non-recurring expenses and recoveries related to the costs of
assessing strategic and corporate initiatives.
|
(9)
|
Normalized to exclude
non-recurring restructuring costs. Free Cash Flow reconciling item
is net of right-of-use asset and property, plant and equipment
impairments. Fourth quarter costs relate to production reductions
and the NFI Forward initiative and include severance costs of $0.4
million (Fiscal 2020 - $19.8 million) and right-of-use asset
impairments of $0.6 million (Fiscal 2020 - $3.6 million). Fiscal
2020 costs also include severance expense of $19.8 million,
right-of-use asset impairments of $3.6 million, inventory
impairments of $1.8 million, property, plant and equipment
impairments of $1.7 million and other miscellaneous costs of $0.6
million.
|
(10)
|
The revaluation of
ADL's inventory included an adjustment of $31.0 million in Fiscal
2019. These revaluation adjustments relate to purchase
accounting as a result of the related acquisition.
|
(11)
|
The fair value
adjustment of the total return swap is a non-cash (gain) loss that
is deducted from the definition of Adjusted EBITDA.
|
(12)
|
A portion of the fair
value adjustment of the total return swap is added to Adjusted
EBITDA and Free Cash Flow to match the equivalent portion of the
related deferred compensation expense recognized.
|
(13)
|
In 2019 Q3, the
Company received $1.6 million recovery related to the closing of
one of its pension plans. An additional amount of $0.4 million was
received in 2020 Q1.
|
(14)
|
Recovery of prior
period banking fees related to foreign exchange
transactions.
|
(15)
|
Provision for sales
taxes as a result of an ongoing state sales tax review.
|
(16)
|
Normalized to exclude
non-recurring COVID-19 related costs. COVID-19 costs include asset
impairments of $4.6 million in 2020 Q4 (Fiscal 2020 - $43.6
million). Fourth quarter asset impairments included a parts
inventory impairment of $1.9 million, an ADL private coach
impairment of $1.7 million and an ADL pre-owned coach impairment of
$1.0 million. Fiscal 2020 asset impairments include pre-owned coach
write-downs of $36.6 million. Also included in COVID-19 costs are
other operating costs of $0.8 million in 2020 Q4 and $3.8 million
in Fiscal 2020 that include but are not limited to the purchase of
personal protective equipment and plant sanitation
activities. Management will continue to assess the costs for
COVID-19 and will make an assessment of whether they are deemed in
fact to be one time and non-recurring. As more information
becomes available, management may change its assessment.
|
(17)
|
Impairment charge
with respect to MCI's goodwill.
|
Reconciliation of Net Earnings (Loss) to Adjusted
Net Earnings (Loss)
Adjusted Net Earnings and Adjusted Earnings per Share are not
recognized measures under IFRS and do not have a standardized
meaning prescribed by IFRS. Accordingly, Adjusted Net Earnings and
Adjusted Earnings per Share may not be comparable to similar
measures presented by other issuers. Readers of this press release
are cautioned that Adjusted Net Earnings and Adjusted Earnings per
Share should not be construed as an alternative to net earnings, or
net earnings per Share, determined in accordance with IFRS as
indicators of the Company's performance. See Non-IFRS Measures for
the definition of Adjusted Net Earnings and Adjusted Earnings per
Share. The following tables reconcile net earnings to
Adjusted Net Earnings based on the historical Financial Statements
of the Company for the periods indicated.
(U.S. dollars in
thousands, except per Share figures)
|
2020
Q4
|
2019
Q4
|
|
|
Fiscal
2020
|
Fiscal
2019
|
Net earnings
(loss)
|
8,465
|
|
34,127
|
|
|
|
(157,736)
|
|
57,698
|
|
|
|
|
|
|
|
|
Adjustments, net of
tax (1) (8)
|
|
|
|
|
|
|
Fair value adjustments
of total return swap(5)
|
(1,093)
|
|
145
|
|
|
|
81
|
|
549
|
|
Unrealized foreign
exchange (gain) loss
|
(2,233)
|
|
(981)
|
|
|
|
(6,245)
|
|
35
|
|
Unrealized loss on
interest rate swap
|
(2,277)
|
|
(3,115)
|
|
|
|
12,199
|
|
12,721
|
|
Impairment loss on
goodwill(12)
|
—
|
|
—
|
|
|
|
50,790
|
|
—
|
|
Portion of the total
return swap realized(6)
|
443
|
|
(109)
|
|
|
|
(362)
|
|
(362)
|
|
Costs associated with
assessing strategic and corporate
initiatives(2)
|
165
|
|
(616)
|
|
|
|
1,396
|
|
13,069
|
|
Fair value adjustment
to acquired subsidiary company's inventory and deferred
revenue(4)
|
—
|
|
707
|
|
|
|
—
|
|
17,943
|
|
Equity settled
stock-based compensation
|
419
|
|
231
|
|
|
|
1,221
|
|
906
|
|
Gain on disposition of
property, plant and equipment
|
(178)
|
|
32
|
|
|
|
(39)
|
|
(27)
|
|
Past service
costs(7) and other pension costs (recovery)
|
4
|
|
71
|
|
|
|
(282)
|
|
(927)
|
|
Recovery on currency
transactions(10)
|
—
|
|
80
|
|
|
|
—
|
|
(2,481)
|
|
Prior year sales tax
provision (11)
|
26
|
|
102
|
|
|
|
127
|
|
2,369
|
|
COVID-19 costs
(13)
|
3,735
|
|
—
|
|
|
|
32,680
|
|
—
|
|
Non-recurring
restructuring costs (3)
|
700
|
|
—
|
|
|
|
19,003
|
|
—
|
|
Adjusted Net Earnings
(Loss)
|
$
|
8,176
|
|
30,885
|
|
|
|
$
|
(47,167)
|
|
101,704
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
Share (basic)
|
$
|
0.14
|
|
$
|
0.55
|
|
|
|
$
|
(2.52)
|
|
$
|
0.93
|
|
Earnings (Loss) per
Share (fully diluted)
|
$
|
0.14
|
|
$
|
0.55
|
|
|
|
$
|
(2.52)
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
Adjusted Earnings
(Loss) per Share (basic)
|
$
|
0.13
|
|
$
|
0.49
|
|
|
|
$
|
(0.75)
|
|
$
|
1.65
|
|
Adjusted Earnings
(Loss) per Share (fully diluted)
|
$
|
0.13
|
|
$
|
0.49
|
|
|
|
$
|
(0.75)
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
1.
|
Addback items are
derived from the historical Financial Statements of the
Company.
|
2.
|
Normalized to exclude
non-recurring expenses related to the costs of assessing strategic
and corporate initiatives.
|
3.
|
Normalized to exclude
non-recurring restructuring costs. Fourth quarter costs relate to
production reductions and the NFI Forward initiative and include
severance costs of $0.3 million and right-of-use asset impairments
of $0.4 million.
|
4.
|
The revaluation of
ADL's inventory included an adjustment of $31.0 million in Fiscal
2019. The after-tax value of the adjustment was $17.9
million. These revaluation adjustments relate to purchase
accounting as a result of the related acquisition.
|
5.
|
The fair value
adjustment of the total return swap is a non-cash (gain) loss that
is excluded from the definition of Adjusted Net Earnings
(Loss).
|
6.
|
A portion of the fair
value adjustment of the total return swap is excluded from Adjusted
Net Earnings (Loss) to match the equivalent portion of the related
deferred compensation expense recognized.
|
7.
|
In 2019 Q3, the
Company received $1.0 million recovery related to the closing of
one of its pension plans. An additional amount of $0.3 million was
received in 2020 Q1
|
8.
|
For 2020 Q4 and
Fiscal 2020, the Company has utilized a rate of 31% to tax effect
the adjustments.
|
9.
|
Recovery of prior
period banking fees related to foreign exchange
transactions.
|
10.
|
Provision for sales
taxes as a result of an ongoing state tax review.
|
11.
|
Impairment charge
with respect to MCI's goodwill.
|
12.
|
Normalized to exclude
non-recurring COVID-19 related costs. COVID-19 costs include asset
impairments of $3.2 million in 2020 Q4 (Fiscal 2020 - $30.1
million). Fourth quarter asset impairments included a parts
inventory impairment of $1.3 million, an ADL private coach
impairment of $1.2 million and an ADL pre-owned coach impairment of
$0.7 million. Fiscal 2020 asset impairments include pre-owned coach
write-downs of $25.1 million. Also included in COVID-19 costs are
other operating costs of $0.6 million in 2020 Q4 and $2.6 million
in Fiscal 2020 that include but are not limited to the purchase of
personal protective equipment and plant sanitation
activities. Management will continue to assess the costs for
COVID-19 and will make an assessment of whether they are deemed in
fact to be one time and non-recurring. As more information
becomes available, management may change its assessment.
|
Appendix - Non-IFRS Measures
References to "Adjusted EBITDA" are to earnings before interest,
income taxes, depreciation and amortization after adjusting for the
effects of certain non-recurring and/or non-operations related
items that do not reflect the current ongoing cash operations of
the Company. These adjustments include gains or losses on disposal
of property, plant and equipment, fair value adjustment for total
return swap, unrealized foreign exchange losses or gains on
non-current monetary items and forward foreign exchange contracts,
costs associated with assessing strategic and corporate
initiatives, past service costs and other pension costs or
recovery, non-recurring costs or recoveries related to business
acquisition, fair value adjustment to acquired subsidiary company's
inventory and deferred revenue, proportion of the total return swap
realized, equity settled stock-based compensation, recovery of
currency transactions, prior year sales tax provision, COVID-19
costs and impairment loss on goodwill and non-recurring
restructuring costs.
"Free Cash Flow" means net cash generated by or used in
operating activities adjusted for changes in non-cash working
capital items, interest paid, interest expense, income taxes paid,
current income tax expense, principal portion of finance lease
payments, cash capital expenditures, proceeds from disposition of
property, plant and equipment, costs associated with assessing
strategic and corporate initiatives, fair value adjustment to
acquired subsidiary company's inventory and deferred revenue,
defined benefit funding, defined benefit expense, past service
costs and other pension costs or recovery, proportion of total
return swap, recovery on currency transactions, prior year sales
tax provision, non-recurring restructuring costs, COVID-19 costs,
foreign exchange gain or loss on cash held in foreign
currency.
References to "ROIC" are to net operating profit after taxes
(calculated as Adjusted EBITDA less depreciation of plant and
equipment, depreciation of right-of-use assets and income taxes at
a rate of 31%) divided by average invested capital for the last
twelve month period (calculated as to shareholders' equity plus
long-term debt, obligations under leases, other long-term
liabilities and derivative financial instrument liabilities less
cash).
References to "Adjusted Net Earnings (Loss)" are to net earnings
(loss) after adjusting for the after tax effects of certain
non-recurring and/or non-operational related items that do not
reflect the current ongoing cash operations of the Company
including: fair value adjustments of total return swap, unrealized
foreign exchange loss or gain, unrealized gain or loss on the
interest rate swap, impairment loss on goodwill, portion of the
total return swap realized, costs associated with assessing
strategic and corporate initiatives, fair value adjustment to
acquired subsidiary company's inventory and deferred revenue,
equity settled stock-based compensation, gain or loss on disposal
of property, plant and equipment, past service costs and other
pension costs or recovery, recovery on currency transactions,
prior year sales tax provision, COVID-19 costs and non-recurring
restructuring costs .
References to "Adjusted Earnings (Loss) per Share" are to
Adjusted Net Earnings (Loss) divided by the average number of
Shares outstanding.
Management believes Adjusted EBITDA, ROIC, Free Cash Flow,
Adjusted Net Earnings and Adjusted Earnings per Share are useful
measures in evaluating the performance of the Company. However,
Adjusted EBITDA, ROIC, Free Cash Flow, Adjusted Net Earnings and
Adjusted Earnings per Share are not recognized earnings measures
under IFRS and do not have standardized meanings prescribed by
IFRS. Readers of this press release are cautioned that ROIC,
Adjusted Net Earnings and Adjusted EBITDA should not be construed
as an alternative to net earnings or loss or cash flows from
operating activities determined in accordance with IFRS as an
indicator of NFI's performance, and Free Cash Flow should not be
construed as an alternative to cash flows from operating, investing
and financing activities determined in accordance with IFRS as a
measure of liquidity and cash flows. A reconciliation of net
earnings to Adjusted EBITDA, based on the Financial Statements, has
been provided under the headings "Reconciliation of Net Earnings to
Adjusted EBITDA". A reconciliation of Free Cash Flow to cash flows
from operations is provided under the heading "Summary of Free Cash
Flow". A reconciliation of net earnings to Adjusted Net Earnings is
provided under the heading "Reconciliation of Net Earnings (Loss)
to Adjusted Net Earnings (Loss)".
NFI's method of calculating Adjusted EBITDA, ROIC, Free Cash
Flow, Adjusted Net Earnings and Adjusted Earnings per Share may
differ materially from the methods used by other issuers and,
accordingly, may not be comparable to similarly titled measures
used by other issuers. Dividends paid from Free Cash Flow are not
assured, and the actual amount of dividends received by holders of
Shares will depend on, among other things, the Company's financial
performance, debt covenants and obligations, working capital
requirements and future capital requirements, all of which are
susceptible to a number of risks, as described in NFI's public
filings available on SEDAR at www.sedar.com.
References to NFI's geographic regions for the purpose of
reporting global revenues are as follows: "North America" refers to
Canada, United States, and Mexico; United
Kingdom and Europe refer to
the United Kingdom and
Europe; "Asia Pacific" or "APAC"
refers to Hong Kong, Malaysia, Singapore, Australia, and New
Zealand; and the "Other" category includes any sales that do
not fall into the categories above.
Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements", within the meaning of applicable
Canadian securities laws, which reflect the expectations of
management regarding the Company's future growth, financial
performance and financial position and the Company's strategic
initiatives, plans, business prospects and opportunities, including
the duration, impact of and recovery from the COVID-19 pandemic.
The words "believes", "views", "anticipates", "plans", "expects",
"intends", "projects", "forecasts", "estimates", "guidance" and
"targets", "may", "will" and similar expressions are intended to
identify forward looking statements. These forward-looking
statements reflect management's current expectations regarding
future events (including the recovery of the Company's markets and
the expected benefits to be obtained through its "NFI Forward"
initiative) and the Company's financial and operating performance
and speak only as of the date of this press release.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future events,
performance or results, and will not necessarily be accurate
indications of whether or not or the times at or by which such
performance or results will be achieved.
A number of factors that may cause actual results to differ
materially from the results discussed in the forward-looking
statements include: the anticipated use of proceeds of the
Offering; the Company may not be able to achieve its targets for
sales growth; funding may not continue to be available to the
Company's customers at current levels or at all; the Company's
business is affected by economic factors and adverse developments
in economic conditions could have an adverse effect on the for the
Company's products and the results of its operations; currency
fluctuations could adversely affect the Company's financial results
or competitive position; interest rates could change substantially,
materially impacting the Company's revenue and profitability; an
active, liquid trading market for the Shares may cease to exist,
which may limit the ability of shareholders to trade Shares; the
market price for the Shares may be volatile; if securities or
industry analysts do not publish research or reports about the
Company and its business, if they adversely change their
recommendations regarding the Shares or if the Company's results of
operations do not meet their expectations, the common share price
and trading volume could decline; in addition, if securities or
industry analysts publish inaccurate or unfavorable research about
the Company or its business, the common share price and trading
volume of the Shares could decline; competition in the industry and
entrance of new competitors; current requirements under "Buy
America" regulations may change and/or become more onerous or
suppliers' "Buy America" content may change; failure of the Company
to comply with the U.S. Disadvantaged Business Enterprise
("DBE") program requirements or the failure to have its DBE
goals approved by the U.S. Federal Transit Administration; absence
of fixed term customer contracts, exercise of options and customer
suspension or termination for convenience; local content bidding
preferences in the United States
may create a competitive disadvantage; uncertainty resulting from
the exit of the UK from the European Union; requirements under
Canadian content policies may change and/or become more onerous;
operational risk resulting from inadequate or failed internal
processes, people and/or systems or from external events, including
fiduciary breaches, regulatory compliance failures, legal disputes,
business disruption, pandemics, floods, technology failures,
processing errors, business integration, damage to physical assets,
employee safety and insurance coverage; international operations
subject the Company to additional risks and costs and may cause
profitability to decline; compliance with international trade
regulations, tariffs and duties; dependence on limited sources or
unique sources of supply; a disruption of the supply of components
containing microprocessors and other computer chips could
materially adversely affect the production and sale of the
Company's vehicles and certain other products; dependence on supply
of engines that comply with emission regulations; a disruption,
termination or alteration of the supply of vehicle chassis or other
critical components from third-party suppliers could materially
adversely affect the sales of certain of the Company's products;
the Company's profitability can be adversely affected by increases
in raw material and component costs; the Company may incur material
losses and costs as a result of product warranty costs, recalls and
remediation of transit buses and motor coaches; production delays
may result in liquidated damages under the Company's contracts with
its customers; catastrophic events may lead to production
curtailments or shutdowns; the Company may not be able to
successfully renegotiate collective bargaining agreements when they
expire and may be adversely affected by labour disruptions and
shortages of labour; the Company's operations are subject to risks
and hazards that may result in monetary losses and liabilities not
covered by insurance or which exceed its insurance coverage; the
Company may be adversely affected by rising insurance costs; the
Company may not be able to maintain performance bonds or letters of
credit required by its contracts or obtain performance bonds and
letters of credit required for new contracts; the Company is
subject to litigation in the ordinary course of business and may
incur material losses and costs as a result of product liability
claims; the Company may have difficulty selling pre-owned coaches
and realizing expected resale values; the Company may incur costs
in connection with regulations relating to axle weight restrictions
and vehicle lengths; the Company may be subject to claims and
liabilities under environmental, health and safety laws; dependence
on management information systems and cyber security risks; the
Company's ability to execute its strategy and conduct operations is
dependent upon its ability to attract, train and retain qualified
personnel, including its ability to retain and attract executives,
senior management and key employees; the Company may be exposed to
liabilities under applicable anti-corruption laws and any
determination that it violated these laws could have a material
adverse effect on its business; the Company's risk management
policies and procedures may not be fully effective in achieving
their intended purposes; internal controls over financial
reporting, no matter how well designed, have inherent limitations;
there are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and
procedures; ability to successfully execute strategic plans and
maintain profitability; development of competitive or disruptive
products, services or technology; development and testing of new
products or model variants; acquisition risk; reliance on third
party manufacturers; third-party distribution/dealer agreements;
availability to the Company of future financing; the Company may
not be able to generate the necessary amount of cash to service its
existing debt, which may require the Company to refinance its debt;
the restrictive covenants in the credit facilities could impact the
Company's business and affect its ability to pursue its business
strategies; payment of dividends is not guaranteed; a significant
amount of the Company's cash is distributed, which may restrict
potential growth; the Company is dependent on its subsidiaries for
all cash available for distributions; future sales or the
possibility of future sales of a substantial number of Shares may
impact the price of the Shares and could result in dilution; if the
Company is required to write down goodwill or other intangible
assets, its financial condition and operating results would be
negatively affected; income tax risk due to the Company's
operations being complex and income tax interpretations,
regulations and legislation that pertain to its activities are
subject to continual change; investment eligibility and Canadian
federal income tax risks; certain U.S. tax rules may limit the
ability of New Flyer Holdings, Inc. and its U.S. subsidiaries (the
"NF Group") to deduct interest expense for U.S. federal income tax
purposes and may increase the NF Group's tax liability and certain
financing transactions could be characterized as "hybrid
transactions" for U.S. tax purposes, which could increase the NF
Group's tax liability.
Factors relating to the global COVID-19 pandemic include: the
magnitude and duration of the global, national and regional
economic and social disruption being caused as a result of the
pandemic; the impact of national, regional and local governmental
laws, regulations and "shelter in place" or similar orders relating
to the pandemic which may materially adversely impact the Company's
ability to continue operations; partial or complete closures of
one, more or all of the Company's facilities and work locations or
the reduction of production rates (including due to government
mandates and to protect the health and safety of the Company's
employees or as a result of employees being unable to come to work
due to COVID-19 infections with respect to them or their family
members); production rates may be further decreased as a result of
the pandemic; supply delays and shortages of parts and components
and disruption to labour supply as a result of the pandemic; the
pandemic will likely adversely affect operations of customers and
reduce and delay, for an unknown period, customers' purchases of
the Company's products; the anticipated recovery of the Company's
markets in the future may be delayed or increase in demand may be
lower than expected as a result of the continuing effects of the
pandemic; the Company's ability to obtain access to additional
capital if required; and the Company's financial performance and
condition, obligations, cash flow and liquidity and its ability to
maintain compliance with the covenants under its credit facilities,
which may also negatively impact the ability of the Company to pay
dividends. There can be no assurance that the Company will be able
to maintain sufficient liquidity for an extended period, obtain
future satisfactory covenant relief under its credit facilities, if
required, or access to additional capital or access to government
financial support or as to when production operations will return
to previous production rates. There is also no assurance that
governments will provide continued or adequate stimulus funding
during or after the pandemic for public transit agencies to
purchase transit vehicles or that public or private demand for the
Company's vehicles will return to pre-pandemic levels in the
anticipated period of time. The Company cautions that due to the
dynamic, fluid and highly unpredictable nature of the pandemic and
its impact on global and local economies, businesses and
individuals, it is impossible to predict the severity of the impact
on the Company's business, operating performance, financial
condition and ability to generate sufficient cash flow and maintain
adequate liquidity and any material adverse effects could very well
be rapid, unexpected and may continue for an extended and unknown
period of time.
Factors relating to the Company's "NFI Forward" initiative
include: the Company's ability to successfully execute the
initiative and to generate the planned savings in the expected time
frame or at all; management may have overestimated the amount of
savings and production efficiencies that can be generated or may
have underestimated the amount of costs to be expended; the
implementation of the initiative may take longer than planned to
achieve the expected savings; further restructuring and
cost-cutting may be required in order to achieve the objectives of
the initiative; the estimated amount of savings generated under the
initiative may not be sufficient to achieve the planned benefits;
combining business units and/or reducing the number of production
or parts facilities may not achieve the efficiencies anticipated;
and the impact of the continuing global COVID-19 pandemic. There
can be no assurance that the Company will be able to achieve the
anticipated financial and operational benefits, cost savings or
other benefits of the initiative.
Factors relating to the Company's January
11, 2021 financial guidance (the "Guidance") include the
degree to which actual future events accord with, or vary from, the
expectations of, and assumptions used by, NFI's management in
preparing the Guidance and the Company's ability to successfully
execute the "NFI Forward" initiative and to generate the planned
savings in the expected time frame or at all. Although the Company
has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in the Guidance, there may be other factors that could
cause actions, events or results not to be as anticipated,
estimated or intended. Specific reference is made to "Risk
Factors" in the Annual Information Form ("AIF") for a
discussion of the factors that may affect forward-looking
statements and information. Should one or more of these risks or
uncertainties materialize, or should any of the underlying
assumptions used by the Company in preparing any of the
forward-looking statements and information contained in the
Guidance prove incorrect, NFI's actual results may vary and any
such variations may be material. The Company disclaims any intent
or obligation to update any such forward-looking statements or
information except as required by law. The Company provides no
assurance that forward-looking statements and information contained
in the Guidance will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, investors should not place undue
reliance on such forward-looking statements and information.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that could cause actions, events or
results not to be as anticipated, estimated or intended. Specific
reference is made to "Risk Factors" in the AIF for a
discussion of the factors that may affect forward-looking
statements and information. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements and information. The forward-looking
statements and information contained herein are made as of the date
of this press release (or as otherwise indicated) and the Company
disclaims any intent or obligation to update forward-looking
statements or information except as required by law. The Company
provides no assurance that forward-looking statements and
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, investors should not place undue reliance
on forward-looking statements and information.
SOURCE NFI Group Inc.