Summary (U.S. dollars except as noted):
- Revenue of $247.4 million
increased by 8.7% compared to 2012 Q1 primarily due to the number
of EUs delivered in 2013 Q1 increased by 10.9% compared to 2012
Q1. Further there was $5.0
million of incremental revenue associated with the newly
acquired Orion aftermarket parts business.
- Consolidated Adjusted EBITDA of $15.4
million decreased by 3.5% compared to 2012 Q1, consistent
with management expectations when considering product margin mix in
the quarter.
- Net earnings were $3.5 million
in 2013 Q1 compared to $0.4 million
in 2012 Q1.
- Free Cash Flow was C$7.0
million and declared dividends were C$7.0 million compared to Free Cash Flow of
C$8.0 million and declared dividends
of C$9.5 million in 2012 Q1.
The current dividend rate is expected to be maintained.
- Book-to-Bill ratio for the last twelve months ending
March 31, 2013 was 211% as compared
to only 31% for the last twelve months ended April 1, 2012. As a result, total backlog at the
end of 2013 Q1 was 7,527 EUs ($3.3
billion), an increase of 19% from the backlog at the end of
2012 Q4.
WINNIPEG,
May 8, 2013 /CNW/ - New Flyer
Industries Inc. (TSX:NFI, TSX:NFI.DB.U) ("New Flyer" or
the "Company"), the leading manufacturer of heavy-duty transit
buses in Canada and the United States, today announced its results
for the 13-week period ended March 31,
2013 ("2013 Q1"). Full financial statements and Management's
Discussion and Analysis (the "MD&A") are available at the
Company's web site at: www.newflyer.com/index/financialreport.
Unless otherwise indicated all monetary amounts in this press
release are expressed in U.S. dollars.
|
|
|
|
Bus Deliveries |
2013 |
2012 |
|
(U.S. dollars in thousands) |
Q1 |
Q1 |
Change |
Number of equivalent units delivered (EUs) |
490 |
442 |
10.9% |
Average EU selling price |
$428.6 |
$444.0 |
-3.5% |
The increased deliveries were as result of the
Company being able to reduce the work in process ("WIP") levels by
22 equivalent units (or "EUs") by delivering buses that were
temporarily delayed at the end of 13-week period ended December 30, 2012 ("2012 Q4") due to a supplier
quality issue. This resulted in WIP at the end of 2013 Q1
totaling 203 EUs as compared to 225 EUs at the end of 2012 Q4. The
delivery increase was also impacted by a higher production rate
(468 EUs line entered in 2013 Q1 vs. 428 EUs line entered in the
first quarter of 2012) which had significant 60' articulated bus
content.
|
|
|
|
Consolidated Revenue |
2013
Q1 |
2012
Q1 |
|
(U.S. dollars in millions) |
change |
Bus |
$ 210.0 |
$ 196.2 |
7.0% |
Aftermarket |
37.3 |
31.4 |
18.9% |
Total Revenue |
247.4 |
$ 227.6 |
8.7%
|
- Bus manufacturing revenue increased in 2013 Q1 primarily from
the increase in deliveries. This was offset by a sales mix with a
lower than average bus selling price during the quarter.
- The increase in aftermarket operations revenue is primarily a
result of increased volumes including incremental revenue of
$5.0 million from the Orion parts
business subsequent to the March 1,
2013 acquisition date.
|
|
|
|
Consolidated Adjusted EBITDA |
2013 |
2012 |
|
(U.S. dollars in millions) |
Q1 |
Q1 |
change |
Bus |
9.9 |
10.2 |
-2.9% |
Aftermarket |
5.5 |
5.7 |
-4.7% |
Total Adjusted EBITDA |
15.4 |
15.9 |
-3.5%
|
- The decrease in 2013 Q1 bus manufacturing operations Adjusted
EBITDA as compared to the 13-week period ending April 1, 2012 ("2012 Q1") was anticipated and is
primarily due to a sales mix that included buses with lower than
average bus contract margins.
- 2013 Q1 aftermarket operations Adjusted EBITDA decreased by
4.7% primarily resulting from lower profit margins due to continued
pricing pressure. The 2013 Q1 aftermarket operations Adjusted
EBITDA normalized to exclude Orion parts business contribution was
$4.6 million, a decrease of 19.5%
from 2012 Q1. The 2013 Q1 aftermarket operations Adjusted EBITDA
included $0.8 million generated from
the first 30 days of operating the Orion parts business after
normalizing EBITDA for $0.2 million
of non-recurring transitional costs. Readers are cautioned that
March results may not be representative of every month and
therefore should not be linearly extrapolated to forecast the
entire year.
|
|
|
|
Net Earnings |
2013 |
2012 |
$ |
(U.S. dollars in millions) |
Q1 |
Q1 |
change |
Earnings from operations |
6.5 |
7.3 |
(0.8) |
Non-cash charges |
(0.2) |
(2.4) |
2.2 |
Finance costs |
(3.1) |
(3.7) |
0.6 |
Income tax (expense) recovered |
0.4 |
(0.8) |
1.2 |
Net earnings |
3.5 |
0.4 |
3.1 |
The Company reported net earnings of
$3.5 million in 2013 Q1 representing
an improvement compared to net earnings of $0.4 million in 2012 Q1, primarily as a result of
lower non-cash charges, decrease in income taxes and a decrease of
finance costs, offset by the decrease in earnings from
operations.
Liquidity
|
|
|
|
Free Cash Flow |
2013 |
2012 |
|
(CAD dollars in millions) |
Q1 |
Q1 |
Change |
Free Cash Flow |
7.0 |
8.0 |
-12.5% |
Declared dividends |
7.0 |
9.5 |
-26.3%
|
Management believes that sufficient Free Cash
Flow will be generated to maintain the current annual dividend rate
of C$0.585 per common share.
|
|
|
|
Liquidity Position |
March 31 |
December 30 |
$ |
(U.S. dollars in millions) |
2013 |
2012 |
change |
Cash |
6.6 |
11.2 |
(4.6) |
Available funds from revolving credit
facility |
26.8 |
35.8 |
(9.0) |
Total liquidity position |
33.4 |
47.0 |
(13.6) |
During 2013 Q1, cash decreased by $4.6 million primarily due to increased
investment in non-cash working capital items, such as increased
accounts receivable and income taxes recoverable, which offset the
net cash retained after investing in Orion's parts business with a
portion of the cash received from Marcopolo's investment in New
Flyer.
Backlog and Market Indicators
Management believes that the transit market
continues to show positive signs of recovery. A number of
large bids were awarded in 2013 Q1, as New Flyer was awarded new
orders of 2,004 EUs. As well, the total number of request for
proposals received and in process of review at New Flyer, and bids
or proposals submitted by New Flyer awaiting customer action at the
end of 2013 Q1 remains high at 7,318 EUs, compared to 5,497 EUs at
April 1, 2012 and 4,034 EUs at
January 1, 2012.
New Flyer's Book-to-Bill ratio (defined as new
order intake - both firm and options - divided by deliveries in the
quarter) for the last twelve months ("LTM") ending March 31, 2013 was 211% as compared to a
Book-to-Bill ratio of only 31% for the LTM ended April 1, 2012. This is the first time since the
third quarter of 2009 where the Book-to-Bill ratio was equal to or
greater than 100%.
The total backlog at the end of 2013 Q1 was
7,527 EUs, an increase of 19% from the backlog at the end of 2012
Q4. The firm portion of the total backlog at the end of 2013 Q1 is
made up of 1,899 EUs which has increased 14% compared with
1,672 EUs at the end of 2012 Q4. The total value of the order
backlog at the end of 2013 Q1 was $3.3
billion, compared with $2.7
billion at the end of 2012 Q4. This increase in total
backlog was not unexpected, nor inconsistent with current market
conditions or management's expectations.
Outlook
New Flyer plans for its average production line
entry rate in Fiscal 2013 to average approximately 36 EUs per week,
however, the actual production rate in any quarter will vary based
on the order mix between 40 foot and 60 foot buses and the timing
required to place orders into productions. Management currently
expects the line entry rate to be on average less than 36 EUs per
production week in the third quarter of 2013 due to a company-wide
planned vacation during the first week. Management estimates that
the level of WIP at each of the Fiscal 2013 reporting periods will
range between approximately 200 to 230 EUs.
As a result of the strategic investment and
working relationship that has been recently established with
Marcopolo, management has begun to explore activities that it hopes
will expand the Company's strength through the sourcing of new
products for the North American transit bus market, cost reduction
opportunities and possible further business acquisitions aimed at
achieving the Company's goal for diversification and growth. The
first tranche of the Marcopolo investment was used to acquire the
Orion aftermarket parts business in March
2013 from Daimler Bus North America.
The Company and the union of members of the
Communication Workers of America ("CWA") collective bargaining unit
at New Flyer's St. Cloud facility failed to ratify the negotiated
new four-year collective bargaining agreement on the first
vote. The current collective bargaining agreement expired on
March 31, 2013, and will continue in
effect as is unless terminated by action of either party.
Management and leadership representing these CWA production unit
employees continue to negotiate a new collective agreement. The St.
Cloud's unionized workforce represents approximately 19 percent of
New Flyer's total workforce.
Conference Call
A conference call for analysts and interested
listeners will be held on Friday May 10,
2013 at 11:00 a.m. (ET). The
call-in number for listeners is 888-231-8191 or 647-427-7450. A
live audio feed of the call will also be available at:
http://www.newswire.ca/en/webcast/detail/1154773/1260847
A replay of the call will be available from
2:00 p.m. (ET) on May 10, 2013 until 11:59
p.m. (ET) on May 17,
2013. To access the replay, call 416-849-0833 or
855-859-2056 and then enter pass code number 60352845. The replay
will also be available on New Flyer's web site at
www.newflyer.com.
Non-GAAP Measures
Adjusted EBITDA consists of earnings before
interest, income taxes, depreciation, amortization and other
non-cash charges, adjusted for certain costs related to offerings
and certain other non-recurring charges as set out in the MD&A.
"Free Cash Flow" means cash flows from operations adjusted for
changes in non-cash working capital items, effect of foreign
currency rate on cash, defined benefit funding, non-recurring costs
related to Orion parts business acquisition, costs associated with
assessing strategic and corporate initiatives, past service pension
costs, proceeds on sale of redundant assets and decreased for
defined benefit expense, capital expenditures and principal
payments on capital leases. Management believes Adjusted EBITDA and
Free Cash Flow are useful measures in evaluating the performance of
the Company and/or the Issuer. However, Adjusted EBITDA and Free
Cash Flow are not recognized earnings measures and do not have
standardized meanings prescribed by IFRS. Readers of this MD&A
are cautioned that Adjusted EBITDA and Free Cash Flow should not be
construed as an alternative to net earnings or loss determined in
accordance with IFRS as an indicator of the Company's and/or the
Issuer's performance or to cash flows from operating, investing and
financing activities as a measure of liquidity and cash flows. A
reconciliation of Adjusted EBITDA and Free Cash Flow to net
earnings and cash flow from operations, respectively, is provided
in the MD&A.
About New Flyer
New Flyer is the leading manufacturer of
heavy-duty transit buses in the United
States and Canada. The
Company's facilities are all ISO 9001, ISO 14001 and OHSAS 18001
certified. With a skilled workforce of over 2,200 employees, New
Flyer is a technology leader, offering the broadest product line in
the industry, including drive systems powered by clean diesel, LNG,
CNG and electric trolley as well as energy-efficient
diesel-electric hybrid vehicles. All products are supported with an
industry-leading, comprehensive parts and support network. The
common shares of the Company are traded on the Toronto Stock Exchange ("TSX") under the
symbol NFI and the IDSs of NFI and New Flyer Industries Canada ULC
("NFI ULC") are traded on the TSX under the symbol NFI.UN.
Forward-Looking Statements
Certain statements in this press release are
"forward-looking statements", which reflect the expectations of
management regarding the Company's future growth, results of
operations, performance and business prospects and opportunities.
The words "believes", "anticipates", "plans", "expects", "intends",
"projects", "estimates" and similar expressions are intended to
identify forward-looking statements. These forward-looking
statements reflect management's current expectations regarding
future events 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 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 could cause actual results to differ materially
from the results discussed in the forward-looking statements. Such
differences may be caused by factors which include, but are not
limited to, availability of funding to the Company's customers to
purchase buses and to exercise options and to purchase parts or
services at current levels or at all, aggressive competition and
reduced pricing in the industry, material losses and costs may be
incurred as a result of product warranty issues, material losses
and costs may be incurred as a result of product liability claims,
changes in Canadian or United
States tax legislation, the Company's success depends on a
limited number of key executives who the Company may not be able to
adequately replace in the event that they leave the Company, the
absence of fixed term customer contracts and the termination of
contracts by customers for convenience, the current U.S. federal
"Buy-America" legislation, certain states' U.S. content bidding
preferences and certain Canadian content purchasing policies may
change and/or become more onerous, production delays may result in
liquidated damages under the Company's contracts with its
customers, the Company's ability to execute its planned production
targets as required for current business and operational needs,
currency fluctuations could adversely affect the Company's
financial results or competitive position in the industry, the
Company may not be able to maintain performance bonds or letters of
credit required by its existing contracts or obtain performance
bonds and letters of credit required for new contracts, third party
debt service obligations may have important consequences to the
Company, the covenants contained in the Company's senior credit
facility and the indenture governing the Company's Debentures could
impact the ability of the Company to fund dividends and take
certain other actions, interest rates could change substantially
and materially impact the Company's profitability, the dependence
on limited sources of supply, the timely supply of materials from
suppliers, the possibility of fluctuations in the market prices of
the pension plan investments and discount rates used in the
actuarial calculations will impact pension expense and funding
requirements, the Company's profitability and performance can be
adversely affected by increases in raw material and component
costs, the availability of labour could have an impact on
production levels, new products must be tested and proven in
operating conditions and there may be no demand for such new
products from customers, the ability of the Company to successfully
execute strategic plans and maintain profitability, risks related
to acquisitions, joint ventures and other strategic relationships
with third parties and the ability to successfully integrate
acquired businesses and assets into the Company's existing business
and to generate accretive effects to income and cash flow as a
result of integrating these acquired businesses and assets. The
Company cautions that this list of factors is not exhaustive. These
factors and other risks and uncertainties are discussed in its
press releases and materials filed with the Canadian securities
regulatory authorities and are available on SEDAR at
www.sedar.com.
Although the forward-looking statements
contained in this press release are based upon what management
believes to be reasonable assumptions, investors cannot be assured
that actual results will be consistent with these forward-looking
statements, and the differences may be material. These
forward-looking statements are made as of the date of this press
release and the Company assumes no obligation to update or revise
them to reflect new events or circumstances, except as required by
applicable securities laws.
SOURCE New Flyer Industries Inc.