WINNIPEG,
July 15, 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 second fiscal quarter ended
June 29, 2014 ("Q2 2014").
Bus Deliveries, Order Activity, and Option
Expiry
New Flyer delivered 582 equivalent units ("EUs")
in Q2 2014, which is an increase of 93 EUs over deliveries in the
second fiscal quarter ended June 30,
2013 ("Q2 2013"). The total work in process ("WIP")
for the Company at June 29, 2014 was
366 EUs. The increase in WIP of 60 EUs during the quarter is
related to pace of customer inspection and acceptance on a few
current contracts. Management expects to recover deliveries
on these contracts by year end.
In May 2014, New
Flyer successfully delivered its first MiDi® to a
Canadian private bus operator. The MiDi® is a
medium sized bus, ideal for use in shuttle operations at
universities or airports, and fixed route transit service in
smaller towns and cities. During the period, the
MiDi® also successfully completed its New Model Bus
Testing program in Altoona, PA
("Altoona Testing"), and is now eligible for bus procurements using
FTA funding grants.
In June 2014, the
Company delivered its first two production battery-electric buses
to a public transit agency in the United
States, as part of a technology demonstration program.
The XE40® is New Flyer's battery-electric, zero emission
heavy duty transit bus based on the proven Xcelsior®
platform. Four additional battery-electric buses have been
manufactured and are in the process of completing a comprehensive
test protocol, including Altoona Testing. They are expected
to enter service with Winnipeg Transit in a few months.
New Flyer's new bus orders (firm and options) in
Q2 2014 totaled 476 EUs and included:
- New firm orders for 81 EUs (valued at $41.6 million)
- New option orders for 395 EUs (valued at $149.1 million).
In addition, the company had options for 121 EUs
(valued at $61.9 million) converted
to firm orders during the quarter.
|
New Orders
in Quarter
(Firm and
Option EUs) |
LTM New
Orders
(Firm and
Option EUs) |
Option EUs
Converted in
Quarter |
Option EUs
Converted
LTM |
Q2 2013 |
513 |
4,019 |
38 |
676 |
Q3 2013 |
2,431 |
6,003 |
116 |
568 |
Q4 2013 |
331 |
5,279 |
223 |
601 |
Q1 2014 |
559 |
3,834 |
506 |
883 |
Q2 2014 |
476 |
3,797 |
121 |
966 |
New Flyer's last twelve months ("LTM")
Book-to-Bill ratio (defined as new firm and option orders divided
by deliveries) was 162%, the sixth consecutive quarter above
100%.
In Q2 2014, New Flyer had 205 EUs expire.
Remaining options in backlog will expire if not exercised, as
follows:
Year of option expiry |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
Total Option
EUs |
Remaining Option
(EUs) |
1,152 |
957 |
326 |
570 |
1,797 |
342 |
5,144 |
Total Backlog
At the end of Q2 2014, New Flyer's total backlog
was 7,372 EUs (for a total value of $3.54
billion) compared to 7,683 EUs (for a total value of
$3.69 billion) at the end of the
first quarter of 2014 ("Q1 2014").
The total backlog includes 392 EUs of firm
orders and options awarded by three different customers where
contract documentation was received by New Flyer prior to the end
of Q2 2014, but announcements outlining the details of these
contracts are awaiting customer approval prior to release.
Total Backlog |
Firm Orders
(EUs) |
Options
(EUs) |
Total
(EUs) |
Ending backlog at Q1 2014
New orders in Q2 2014
Options exercised in Q2 2014
Deliveries in Q2 2014
Cancelled/expired options in Q2 2014 |
2,608
81
121
(582)
- |
5,075
395
(121)
-
(205) |
7,683
476
-
(582)
(205) |
Ending Backlog at Q2 2014 |
2,228 |
5,144 |
7,372 |
New Flyer's backlog consists of 30 foot, 35
foot, 40 foot and 60 foot bus lengths. Buses incorporating
clean propulsion systems (such as natural gas, diesel-electric
hybrid, electric-trolley, and battery-electric) represent
approximately 65% of the total.
Total Backlog |
Firm Orders
(EUs) |
Options
(EUs) |
Total
(EUs) |
30 and 35 foot MiDi® buses |
44 |
0 |
44 |
30,35 and 40 foot heavy duty buses |
1,734 |
3,208 |
4,942 |
60 foot articulated buses |
450 |
1,936 |
2,386 |
Total Backlog at Q2 2014 |
2,228 |
5,144 |
7,372 |
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 49 EUs per production week from the New Flyer
and NABI Bus facilities, including MiDi® production.
During Q2 2014, the Company announced plans to
focus on a single heavy-duty transit bus platform that features its
world-class Xcelsior®. Management believes that the
majority of the options for NABI buses will be manufactured prior
to the transition, or will be converted to the Xcelsior®
platform.
At the end of the period, new firm and option
orders of 239 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 New Flyer backlog.
Economic Environment and Ridership
Management remains encouraged with general
economic health improvement of the US states. Preliminary data from
the Rockefeller Institute (Preliminary Report on May 6, 2014) reports state tax collections
increasing slightly in the first quarter of 2014 for the
17th consecutive quarter, with a 0.7% increase over the
prior year. The US Bureau of Labor Statistics (Employment
Situation Summary on July 3, 2014)
reports US unemployment declined 0.6% during the quarter, ending
with a rate of 6.1% in June.
The latest data from the American Public
Transportation Association (APTA) indicates overall stable
ridership during the first quarter of 2014. The report indicated a
slight decrease of 0.67% in all modes of U.S. transit ridership
during the first quarter of 2014 compared with the previous year;
including a decrease in bus ridership of 2.86%. The same
report indicates Canadian ridership slightly increased by 0.66% in
all modes of transit ridership during the first quarter of 2014 as
compared to the previous year; however, specific data on bus
ridership is not available.
Transit Bus Demand
In 2008, New Flyer created the Bid Universe
metric 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 Q2 2014 was 19,728 EUs compared to 18,097 EUs at the end
of Q2 2013. 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 Q2 2014 was 4,698 EUs, compared to 5,671 EUs at the end of
Q1 2014.
|
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 |
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 |
Q1 2014 |
3,626 |
2,045 |
5,671 |
15,567 |
21,328 |
Q2 2014 |
2,772 |
1,926 |
4,698 |
15,030 |
19,728 |
A lag in procurement activity was experienced in
the first half of 2014 followed by the issuance of a volume of new
RFP's. Management anticipates that the amount of bus
procurement activity by public transit agencies throughout
the United States and Canada should remain robust throughout 2014
based on expected customer fleet replacement plans.
Funding Environment
The U.S. federal transit program is funded from
General Revenues of the government and from revenues credited to
the Mass Transit Account of the Highway Trust Fund. Each
year, new legislation must be passed to appropriate General
Revenues that will fund transit programs and set an obligation
limitation that allows expenditure of funds from the Mass Transit
Account for transit programs. MAP-21, the current funding
appropriation bill expires on September 30,
2014.
On March 4, 2014,
President Obama released a $90.9
billion budget for Department of Transportation in Fiscal
Year 2015 as part of a $302 billion,
four year surface transportation reauthorization ("The Grow America
Act"). The Grow America Act proposes $72.3 billion for public transportation over four
years, including $17.6 billion in FY
2015, a $6.8 billion increase over FY
2014. The budget recommendation proposes significant
increases in funding for the state-of-good repair and bus and bus
facilities accounts, which have historically been a source of
funding for bus replacement and bus maintenance activities for US
transit agencies. The recommendation also introduces a
$500 million discretionary program
aimed at establishing bus rapid transit (BRT) service in areas with
rapidly growing populations.
New Flyer has been very active with APTA and
CUTA on providing feedback and insights on The Grow America Act and
its various elements. On July 9,
2014 New Flyer President and CEO Paul Soubry participated in a closed door
roundtable on the US Administrations Transportation and
Infrastructure as proposed in The Grow America Act. The event
was hosted by Vice President Joe
Biden and Transportation Secretary Anthony Foxx at The White House Eisenhower
Executive Office Building.
On July 10, 2014
both the Senate Finance Committee and the House Ways and Means
Committee voted for legislation that provides a revised package of
offsets to provide a General Fund transfer and address the pending
insolvency of the Highway Trust Fund. The new package makes
approximately $10.8 billion available
for the Highway Account ($8.8
billion) and Mass Transit Account ($2
billion) of the Highway Trust Fund, effectively providing
sufficient funds to support highway and transit expenditures
through May 2015. The House bill is
scheduled to come to the floor the week of July 14, 2014.
On June 11, 2014,
the Grow America Act was introduced to the House of
Representatives. The bill has been referred to a number of
House committees and subcommittees, and is currently under
review.
New Flyer Aftermarket
Gross orders received by New Flyer's aftermarket
parts business during Q2 2014 increased 42% compared to Q2
2013. Parts shipments in Q2 2014 also increased 55% over Q2
2013.
Quarter-over-quarter Q2 2014 actual part
shipments were up 11% over Q1 2014, while gross parts orders fell
slightly by 1% over Q1 2014.
NOTE: All dollar amounts are stated in US
currency based on an exchange rate of US $1.00 = CAD $1.0661
to calculate the value of the Canadian contracts in this
release.
About New Flyer
New Flyer 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 of transit buses including drive systems
powered by: clean diesel, natural gas, diesel-electric hybrid,
electric trolley and now, battery-electric. All buses are
supported by an industry-leading comprehensive warranty and support
program, and service network. New Flyer also operates the
industry's most sophisticated aftermarket parts organization,
sourcing parts from hundreds of different suppliers and providing
support for all types of 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
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 and should not be read as guarantees of
future performance or results. Actual performance or results
may not be consistent with these forward-looking statements, and
the differences may be material 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, currency fluctuations could
adversely affect the Company`s financial results or competitive
condition and impact the amount of cash available for distribution,
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.