Summary (U.S. Dollars except as noted):
- 2013 Q3 consolidated revenue of $309.0 million increased by 48.2% compared to
2012 Q3 primarily due to incremental revenue associated with the
acquisition of the NABI bus and parts businesses and the Orion
parts business.
- 2013 Q3 consolidated Adjusted EBITDA of $24.4 million increased by $10.3 million or 73.5% compared to 2012 Q3 and
Net earnings of $7.8 million
increased by 420% compared to $1.5
million in 2012 Q3.
- 2013 Q3 Free Cash Flow was C$13.1
million and declared dividends were C$8.1 million during 2013 Q3. The current
dividend rate is expected to be maintained.
- Liquidity improved by $7.1
million during 2013 Q3 resulting in closing liquidity of
$90.5 million.
- Total bus order backlog at the end of 2013 Q3 was
$4.6 billion, representing an
increase of $0.9 billion during the
quarter. Book-to-bill ratio for the twelve month period ended
September 29, 2013 was 309%, which
represents the third consecutive quarter where the ratio exceeded
100%.
WINNIPEG,
Nov. 6, 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 September 29,
2013 ("2013 Q3"). 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.
Operating Results
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|
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|
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|
|
Bus Deliveries |
2013 |
2012 |
|
2013 |
2012 |
|
|
Q3 |
Q3 |
change |
YTD |
YTD |
change |
Number of equivalent units ("EUs")
delivered |
577 |
386 |
49.5% |
1,556 |
1,269 |
22.6% |
Average selling price per EU |
|
|
|
|
|
|
(U.S. dollars in thousands) |
$434.4 |
$464.6 |
-6.5% |
$435.7 |
$451.5 |
-3.5% |
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|
|
|
|
The increased deliveries were as a result of
including deliveries of buses by NABI Bus, LLC, the Company's newly
acquired business, effective June 21,
2013. The average selling price has decreased as a result of
sales mix when comparing the two periods.
The Company line-entered 592 EUs in 2013 Q3,
which, on a weekly basis, is less than management's planned average
weekly rate of 48 EUs. This was due to the Company-wide
planned summer vacation that decreased production during the first
week of 2013 Q3.
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|
|
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Consolidated Revenue |
2013 |
2012 |
|
2013 |
2012 |
|
(U.S. dollars in
millions) |
Q3 |
Q3 |
change |
YTD |
YTD |
change |
Bus |
$250.6 |
$179.3 |
39.8% |
$678.0 |
$572.9 |
18.3% |
Aftermarket |
58.3 |
29.1 |
100.6% |
147.0 |
90.1 |
63.2% |
Total Revenue |
$309.0 |
$208.4 |
48.2% |
$825.0 |
$663.0 |
24.4% |
|
|
|
|
|
|
|
- The increase in 2013 Q3 revenue primarily resulted from a 49.5%
increase in total bus deliveries compared to the 13-week period
ended September 30, 2012 ("2012 Q3")
deliveries offset by a sales mix with lower average selling
prices.
- The increase in revenue from aftermarket operations is
primarily a result of increased volumes including incremental
revenue from the Orion parts business and the recently acquired
parts business of NABI Parts, LLC.
- Revenue from bus manufacturing operations for the 39-week
period ended September 29, 2013
("2013 YTD") also increased compared to the 39-week period ended
September 30, 2012 ('2012 YTD"). The
2013 YTD increase is due to increased deliveries compared to 2012
YTD.
- Revenue from aftermarket operations for 2013 YTD increased
compared to 2012 YTD primarily as a result of increased volumes
resulting from incremental revenue from the Orion parts business
subsequent to the March 1, 2013
acquisition date and the NABI parts business subsequent to
June 21, 2013.
|
|
|
|
|
|
|
Consolidated Adjusted EBITDA |
2013 |
2012 |
|
2013 |
2012 |
|
(U.S. dollars in
millions) |
Q3 |
Q3 |
change |
YTD |
YTD |
change |
Bus |
$15.9 |
$9.6 |
65.4% |
$36.3 |
$31.1 |
16.9% |
Aftermarket |
8.5 |
4.5 |
91.0% |
21.5 |
15.3 |
40.8% |
Total Adjusted EBITDA |
$24.4 |
$14.1 |
73.5% |
$57.9 |
$46.4 |
24.8% |
|
|
|
|
|
|
|
- 2013 Q3 and 2013 YTD bus manufacturing operations Adjusted
EBITDA increased primarily due to the addition of the NABI bus
operations. Profit margins can vary significantly between orders
due to factors such as pricing, order size and product type.
Adjusted EBITDA from bus manufacturing operations per EU can be
volatile on a quarterly basis and therefore, management believes
that a longer term view should be taken when comparing bus
manufacturing operations margins.
- 2013 Q3 and 2013 YTD aftermarket operations Adjusted EBITDA
increased compared to their 2012 respective periods, primarily due
to the addition of the NABI parts and Orion parts businesses offset
by margin compression as a result of pricing pressure in the
market. The aftermarket operations Adjusted EBITDA for 2013 Q3 and
2013 YTD was normalized for non-recurring transitional costs of
$0.4 million and $1.2 million, respectively.
|
|
|
|
|
|
|
Net earnings |
2013 |
2012 |
$ |
2013 |
2012 |
$ |
(U.S. dollars in
millions) |
Q3 |
Q3 |
change |
YTD |
YTD |
change |
Earnings from operations |
$13.8 |
$7.8 |
$6.0 |
$27.1 |
$25.8 |
$1.3 |
Non-cash recoveries (charges) |
1.8 |
(0.9) |
2.7 |
(0.4) |
(8.1) |
7.7 |
Interest expense |
(3.6) |
(3.9) |
0.3 |
(11.1) |
(11.8) |
0.7 |
Income taxes expense |
(4.2) |
(1.5) |
-2.7 |
(2.6) |
(0.5) |
-2.1 |
Net earnings |
$7.8 |
$1.5 |
$6.3 |
$13.0 |
$5.4 |
$7.6 |
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|
|
The Company reported net earnings of
$7.8 million in 2013 Q3, an increase
compared to net earnings of $1.5
million in 2012 Q3, primarily as a result of a $6.0 million increase in earnings from operations
and the $2.7 million increase of the
non-cash recoveries caused by the favourable impact of foreign
currency translation resulting from the weakening Canadian dollar,
offset somewhat by increased income taxes.
2013 YTD net earnings of $13.0 million increased compared to 2012 YTD net
earnings of $5.4 million, primarily
due to significantly reduced non-cash charges, as 2012 YTD non-cash
charges included a $5.5 million loss
on exercise of the redemption right on the 14% subordinated notes
and a $1.4 million charge associated
with fair value change in the embedded derivative call option
included in the subordinated notes.
Liquidity
|
|
|
|
|
|
|
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|
|
|
|
|
|
Free Cash Flow |
2013 |
2012 |
|
2013 |
2012 |
|
(CAD dollars in
millions) |
Q3 |
Q3 |
change |
YTD |
YTD |
change |
Free Cash Flow |
C$13.1 |
C$5.9 |
121.8% |
C$29.4 |
C$19.6 |
50.0% |
Declared dividends |
8.1 |
7.5 |
8.0% |
22.6 |
26.6 |
-15.0% |
|
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|
|
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|
|
The amount of dividends declared increased in
2013 Q3 as a result of issuing 11.1 million common shares in 2013
YTD to strategic investor Marcopolo SA. The amount of dividends
declared in 2013 YTD is lower than 2012 YTD as a result of reducing
the annual dividend rate to C$0.585
per common share, effective for all dividends declared after
August 20, 2012. Management believes
that sufficient Free Cash Flow will be generated to maintain this
current annual dividend rate.
|
|
|
|
Liquidity Position |
September 29, |
June 30, |
$ |
(U.S. dollars in millions) |
2013 |
2013 |
change |
Cash |
$13.5 |
$16.5 |
-3.0 |
Available funds from revolving credit
facility |
77.0 |
66.9 |
10.1 |
Total liquidity position |
$90.5 |
$83.4 |
7.1 |
|
|
|
|
During 2013 Q3, the Company improved its
liquidity position by $7.1 million by
generating cash from operating activities of $16.4 million which offset the $11.9 million of cash used for investing and
financing activities and a $2.6
million reduction of letters of credit outstanding. The
$7.5 million repayment of the
Company's revolving credit facility during 2013 Q3 does not factor
into the change in liquidity position.
Bid Universe, Backlog and Book-to-Bill
Ratio
Management believes that the transit market
continues to show positive signs of recovery. A number of
large bids were awarded in 2013 Q3, as New Flyer won new orders
totaling 2,431 EUs. As well, the total New Flyer bid universe
remains high at 19,941 EUs, where the total number of active EUs
(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 Q3 was 8,117 EUs, compared to
5,876 EUs at September 30, 2012.
The total New Flyer backlog at the end of 2013
Q3 was 9,890 EUs, an increase of 15.9% from the backlog at the end
of the second quarter of 2013 ("2013 Q2"). The firm portion of the
total backlog at the end of 2013 Q3 is made up of 2,748 EUs which
has increased 22.0% compared with 2,252 EUs at the end of 2013
Q2. The total value of the order backlog at the end of 2013
Q3 was $4.6 billion, compared with
$3.7 billion at the end of 2013
Q2.
New Flyer's Book-to-Bill ratio (defined as new
order intake - both firm and options - divided by deliveries) for
the last twelve months ("LTM") ending September 29, 2013 was 309% as compared to only
33% for the LTM ended September 30,
2012. A ratio of above 100% implies that more orders were
received than filled, indicating strong demand.
Outlook
The Company has been very active over the last
few years as it continues to lead the heavy-duty transit bus
industry in Canada and
the United States, and is
executing on its the strategic plan by investing to pursue long
term stability, diversification and growth.
As has been highlighted many times over the past
few years, the number of active heavy-duty transit bus procurements
dropped noticeably since the financial crisis that began in
2008. In order to replenish decreasing backlogs in an
environment of fewer procurements, prices for new contracts
declined dramatically. A significant portion of New Flyer's
order backlog is comprised of orders obtained during this time
period and management expects that on average, margins on orders
planned for 2014 production will be lower than the average margins
achieved during the period of excess capacity.
Management does not yet feel an increase to the
average annual production rate is sustainable. Management currently
expects the average line entry rate to be approximately 51 EUs per
production week during the 12 available production weeks in the
fourth quarter of 2013, even though the Company does not plan to
line enter new buses into production during the winter holiday
period occurring the last week of this year. The result is an
expected average of 36 EUs line entered per production week at New
Flyer for fiscal 2013, and an expected average of 12 EUs line
entered per production week at NABI since its acquisition in
June 2013.
Management is very encouraged by its efforts to
grow the aftermarket parts business. The Company has
substantially completed the integration of the Orion aftermarket
parts business into the New Flyer parts business and is actively
engaged in a strategic review of the New Flyer and NABI parts
businesses.
Despite the pressure on margins, the Company
continues to pursue cost and overhead savings in daily operations
through its Operational Excellence initiatives and as part of the
long term NABI integration and platform strategy development and
management expects that the Company will remain in compliance with
all credit facility covenants and will be able to maintain
dividends at current levels.
Conference Call
A conference call for analysts and interested
listeners will be held on Thursday, November
7, 2013 at 2:00 pm (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/1231491/1356547
A replay of the call will be available from
4:00 pm (ET) on November 7, 2013 until 11:59 pm (ET) on November
14, 2013. To access the replay, call 416-849-0833 or
855-859-2056 and then enter pass code number 72612422. The replay
will also be available on New Flyer's web site at
www.newflyer.com.
Non-GAAP and Additional GAAP Measures
"Earnings from Operations" refer to earnings
before interest expense, income taxes, losses or gains on disposal
of property, plant and equipment, unrealized foreign exchange
losses or gains on non-current monetary items and fair value
adjustment to embedded derivatives. 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, business
acquisition related costs, 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 Earnings from Operations,
Adjusted EBITDA and Free Cash Flow are useful measures in
evaluating the performance of the Company. However, Earnings from
Operations, Adjusted EBITDA and Free Cash Flow are not recognized
earnings measures and do not have standardized meanings prescribed
by International Financial Reporting Standards ("IFRS"). Readers of
this MD&A are cautioned that Earnings from Operations, 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 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, with recently acquired NABI bus
operations, is the leading manufacturer of heavy-duty transit buses
in the United States and
Canada. The Company is the
industry technology leader and offers the broadest product line
including drive systems powered by: clean diesel, natural gas and
electric trolley as well as energy-efficient diesel-electric hybrid
vehicles. All buses are supported by an industry-leading
comprehensive warranty and support program, and service
network. New Flyer and its subsidiaries NABI Bus, LLC
and NABI Parts, LLC also operate the transit industry's most
sophisticated aftermarket parts organization, sourcing parts from
hundreds of different suppliers and providing support for all types
of heavy-duty transit buses.
The New Flyer group of companies employ over
3,000 team members with manufacturing, fabrication, parts
distribution and service centers in both Canada and the
United States. Further information is available on New
Flyer's web site at www.newflyer.com.
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", "forecasts", "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 convertible
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
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.