WINNIPEG,
Jan. 14, 2014 /CNW/ - (TSX:NFI;
TSX:NFI.DB.U) New Flyer Industries Inc. ("New Flyer" or the
"Company"), the leading manufacturer of heavy-duty transit buses in
Canada and the United States, announced its order
activity and backlog update for the fourth fiscal quarter ended
December 29, 2013 ("Q4 2013").
This order and delivery activity and backlog for
Q4 2013 reflects consolidated Company activity of New Flyer
including its NABI Bus, LLC ("NABI Bus") and NABI Parts, LLC ("NABI
Parts") subsidiaries, which were acquired on June 21, 2013.
Bus Deliveries, Order Activity, and Option
Expiry
New Flyer delivered 635 equivalent units
("EUs"), in Q4 2013, an increase of 248 EUs over the 387 EUs
delivered in the fourth fiscal quarter ended December 30, 2012 ("Q4 2012"). The work in
process ("WIP") for the Company at December
29, 2013 was 273 EUs which represents a decrease in WIP of
47 EUs during Q4 2013.
New bus orders (firm and options) for New Flyer
in Q4 2013 totaled 331 EUs. Order activity in Q4 2013 included:
- New firm orders were received for 220 EUs (valued at
$98.2 million)
- New option orders were received for 111 EUs (valued at
$57.5 million).
- Successful option conversion of 223 EUs (valued at $104.3 million).
|
New Orders
in Quarter
(Firm and
Option EUs) |
LTM New
Orders
(Firm and
Option EUs) |
Option EUs
Converted in
Quarter |
Option EUs
Converted
LTM |
Q4 2012 |
1,055 |
1,620 |
190 |
970 |
Q1 2013 |
2,004 |
3,596 |
224 |
1,046 |
Q2 2013 |
513 |
4,019 |
38 |
676 |
Q3 2013 |
2,431 |
6,003 |
116 |
568 |
Q4 2013 |
331 |
5,279 |
223 |
601 |
New Flyer's last twelve months ("LTM")
Book-to-Bill ratio (defined as new firm and option orders divided
by deliveries) was 241%, compared to 98% just one year ago.
In Q4 2013, a total of 1,628 option EUs expired,
relating to four US customer contracts which reached the end of
their respective contract terms. The maximum term for a
contract permitted by the US Federal Transit Administration ("FTA")
is five years.
Specifically in Q4 2013, 1,800 EUs were removed
from the New Flyer backlog relating to one US customer order that
was added to the backlog in 2008 and then deferred by the customer
in 2009. Since that deferred order has now reached five years
in duration with no activity, the Company has removed all 280 firm
EUs and options for 1,520 EUs from the New Flyer backlog. The
Company had not included this order in any of its production plans
since 2009.
Remaining options included in the New Flyer
backlog will expire, if not exercised, as follows:
Year of option expiry |
2014 |
2015 |
2016 |
2017 |
2018 |
Total Option
EUs |
Remaining Option (EUs) |
1,648 |
858 |
216 |
606 |
2,074 |
5,402 |
Total Backlog
At the end of Q4 2013, New Flyer's total backlog
was 7,678 EUs (for a total value of $3.66
billion) compared to 9,890 EUs at the end of the third
quarter of 2013 ("Q3 2013").
The total backlog includes 334 EUs of firm
orders and options awarded by eighteen different customers where
orders and contract documentation was received by New Flyer prior
to the end of Q4 2013, but announcements outlining the details of
these contracts are awaiting customer approval prior to
release.
The total New Flyer backlog combined with the recent order
intake is expected to enable the Company to continue to operate
during fiscal 2014 at a corporate average line entry rate of
approximately 48 EUs per production week from the New Flyer and
NABI Bus production facilities.
Total Backlog |
Firm Orders
(EUs) |
Options
(EUs) |
Total
(EUs) |
Ending backlog at Q3 2013
New orders in Q4 2013
Options exercised in Q4 2013
Deliveries in Q4 2013
Removal of deferred customer order
Cancelled/expired options in Q4 2013 |
2,748
220
223
(635)
(280)
- |
7,142
111
(223)
-
(1,520)
(108) |
9,890
331
-
(635)
(1,800)
(108) |
Ending Backlog at Q4 2013 |
2,276 |
5,402 |
7,678 |
New Flyer's backlog consists of the following
mix of bus lengths, with clean propulsion systems such as,
electric-hybrid, electric-trolley, natural gas and all-electric
representing approximately 72% of the total.
Total Backlog |
Firm Orders
(EUs) |
Options
(EUs) |
Total
(EUs) |
30,35 and 40 foot buses |
1,854 |
3,548 |
5,402 |
60 foot articulated buses |
422 |
1,854 |
2,276 |
Total Backlog at Q4
2013 |
2,276 |
5,402 |
7,678 |
At the end of the period, new firm and option
orders of 312 buses (312 EUs) were pending from customers where
approval of the award had been made by the customer's board,
council, or commission, as applicable, but purchase documentation
had not yet been received by the Company. These firm and
option orders are not yet included in the backlog.
New Flyer Bid Universe
The bid universe was created by New Flyer in
2008 as an indicator for overall transit bus market demand and
active bids in Canada and
the United States. The bid
universe is a point-in-time snapshot of the estimated EUs for: all
requests for proposals ("RFPs") received and in process of review
at New Flyer, bids or proposals submitted by New Flyer awaiting
customer action, and management's forecast of all expected EUs to
be placed out for competition over the next five years.
The number of EUs in the total Bid Universe at
the end of Q4 2013 was 18,592 EUs compared to 19,453 EUs at the end
of Q4 2012. The total number of Active EUs (defined as RFPs
received and in process of review at New Flyer, and bids or
proposals submitted by New Flyer awaiting customer action) at the
end of Q4 2013 was 6,238 EUs, compared to 8,117 EUs at the end of
Q3 2013.
|
RFPs
(EUs) in
Process at
NFI |
Bids or
Proposals
(EUs)
Submitted
by NFI |
Total
Active EUs |
Forecasted
New
Procurements
(EUs) over the
next 5 years |
Total EUs in
Bid Universe |
Q4 2012 |
4,214 |
4,626 |
8,840 |
10,613 |
19,453 |
Q1 2013 |
3,173 |
4,145 |
7,318 |
7,917 |
15,235 |
Q2 2013 |
3,620 |
4,869 |
8,489 |
9,608 |
18,097 |
Q3 2013 |
2,121 |
5,996 |
8,117 |
11,824 |
19,941 |
Q4 2013 |
909 |
5,329 |
6,238 |
12,354 |
18,592 |
While the Bid universe reduced slightly in Q4
2013, management anticipates that the amount of procurement
activity by public transit agencies throughout the United States and Canada will remain robust throughout 2014
based on expected customer fleet replacement plans and the expiry
of current customer contracts during the next two years.
Ridership and Funding Environment
The latest data from the American Public
Transportation Association's (APTA) ridership report indicated an
increase of 1.51% in all modes of U.S. transit ridership during the
third quarter of 2013 compared with the previous year; including an
increase in bus ridership of 0.7%. The same report indicates
Canadian ridership increased by 0.69% in all modes of transit
ridership during the third quarter of 2013 as compared to the
previous year, however, specific data on bus ridership is not
available.
Management remains encouraged with general
economic health improvement of the US states with preliminary data
from the Rockefeller Institute (Preliminary Report on December 18, 2013) reporting state tax
collections increasing in the third quarter of 2013 for the
15th consecutive quarter, with a 6.1% increase over the
prior year.
New Flyer Aftermarket
Gross parts orders received by New Flyer's
aftermarket business during Q4 2013 (inclusive of NABI Parts and
the integrated Orion parts business) increased 135% compared to Q4
2012. Parts shipments in Q4 2013 also increased 135% over Q4
2012.
Quarter-over-quarter Q4 2013 gross parts orders
rose 24.2% over Q3 2013, while parts shipments were up 16.3% over
Q3 2013 (inclusive of NABI Parts and the integrated Orion parts
business). The Company continues to experience a challenging
price environment in regular parts sales activity.
New Flyer Parts order intake and delivery
continues to be positively impacted by the ramp up for the
previously announced Chicago Transit Authority midlife overhaul
program for 1,047 buses, which is expected to run through 2015.
Business Outlook
Despite a healthy Bid Universe, improved total
backlog and Book-to-Bill ratio, management reiterates the
previously provided outlook for 2014 margins. As has been
highlighted several times, the number of active heavy-duty transit
bus procurements dropped noticeably during the financial crisis
between 2008 and 2012. In order to replenish a decreasing
backlog in an environment of fewer procurements, prices for new
contracts declined dramatically. A portion of New Flyer's
total backlog is comprised of orders obtained during this time
period and management expects that on average, margins on contracts
planned for 2014 production will be lower than the average margins
achieved during 2013.
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 plan and platform strategy
development. Management expects that the Company will remain
in compliance with all credit facility covenants and will be able
to maintain dividends at current levels.
NOTE: All dollar amounts are stated in US
currency based on an exchange rate of US $1.00 = CAD $1.0704
to calculate the value of the Canadian contracts in this
release.
About New Flyer
New Flyer, with its Subsidiary NABI Bus, LLC, 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 subsidiary 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.
The common shares and convertible unsecured
subordinated debentures of the Company are traded on the Toronto
Stock Exchange under the symbols NFI and NFI.DB.U,
respectively.
Forward-Looking Statements
This press release may contain forward-looking
statements relating to expected future events and financial and
operating results of the Company that involve risks and
uncertainties. Although the forward-looking statements
contained in this press release are based upon what management
believes to be reasonable assumptions, these forward-looking
statements should not be read as guarantees of future performance
or results and actual performance or results may not be consistent
with these forward-looking statements, and the differences may be
material. Actual performance or results may differ materially
from management expectations as projected in such forward-looking
statements for a variety of reasons, including market and general
economic conditions and economic conditions of and funding
availability for customers to purchase buses and to purchase parts
or services, customers may not exercise options to purchase
additional buses, aggressive competition and reduced pricing exist
in the industry, the ability of customers to terminate contracts
for convenience, the Company's ability to execute its planned
production targets as required for current business and operational
needs, 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, 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 the Company's press releases and
materials filed with the Canadian securities regulatory authorities
and available on SEDAR at www.sedar.com. Due to the potential
impact of these factors, the Company disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required by applicable law.
SOURCE New Flyer Industries Inc.