WINNIPEG, July 15, 2015 /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 28, 2015 ("Q2 2015").
Bus Deliveries, Order Activity, and Option Expiry
New Flyer delivered 594 equivalent units ("EUs") in Q2 2015, an
increase of 12 EUs compared to 582 EUs in the second fiscal quarter
ended June 29, 2014 ("Q2
2014").
New Flyer's new bus orders (firm and options) in Q2 2015 totaled
531 EUs. In addition, 1,238 EUs of new firm and option orders
were pending from customers at the end of the period, where
approval of the award to New Flyer had been made by the customer's
board, council, or commission, as applicable, but purchase
documentation had not yet been received by the Company and
therefore not yet included in the backlog.
New Flyer's last twelve months ("LTM") Book-to-Bill ratio
(defined as new firm and option orders divided by deliveries) was
121% and has been greater than 100% for nine of the last ten
quarters.
Order activity in the period included:
- New firm orders for 318 EUs (valued at $136.7 million)
- New option orders for 213 EUs (valued at $98.0 million)
- Options for 546 EUs (valued at $280.2
million) converted to firm orders
|
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
2014
|
476
|
3,797
|
121
|
966
|
Q3
2014
|
109
|
1,475
|
359
|
1,209
|
Q4
2014
|
1,325
|
2,469
|
163
|
1,149
|
Q1
2015
|
1,020
|
2,930
|
157
|
800
|
Q2
2015
|
531
|
2,985
|
546
|
1,225
|
The New Flyer master production schedule combined with current
backlog and orders anticipated to be awarded by customers under new
procurements is now expected to enable the Company to operate at a
corporate average line entry rate of approximately 50 EUs per
available production week for fiscal 2015 as a result of timing of
certain awards. Production rates vary from quarter to quarter
due to sales mix and the phased introduction of the Xcelsior
platform into the Anniston, AL
manufacturing facility in 2015. Work-in-process ("WIP") at
June 28, 2015 was 447 EUs, an
increase of 63 EUs from the previous quarter reflecting the
transition to the Xcelsior platform into the Anniston, AL facility, which will be reduced
as the project is completed in the second half of 2015.
In Q2 2015, 119 option EUs expired, compared to zero option EUs
expired in Q1 2015. Remaining options in the current backlog
will expire if not exercised, as follows:
Year
of
option
expiry
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
Total Option
EUs
|
Remaining Options
(EUs)
|
669
|
577
|
540
|
1,399
|
1,095
|
539
|
4,819
|
Total Backlog
At the end of Q2 2015, New Flyer's total backlog was 7,011 EUs
(valued at $3.49 billion) compared to
7,193 EUs (valued at $3.57 billion)
at the end of the first quarter of 2015 ("Q1 2015") and 7,372 EUs
(valued at $3.54 billion) at the end
of Q2 2014.
Total
Backlog
|
Firm
Orders
(EUs)
|
Options
(EUs)
|
Total
(EUs)
|
Ending backlog at Q1
2015
New orders in Q2
2015
Options exercised in Q2 2015
Deliveries in Q2
2015
Cancelled/expired
options in Q2 2015
|
1,922
318
546
(594)
-
|
5,271
213
(546)
-
(119)
|
7,193
531
-
(594)
(119)
|
Ending Backlog at
Q2 2015
|
2,192
|
4,819
|
7,011
|
New Flyer's backlog consists of 30', 35', 40' and 60-foot bus
lengths. Buses incorporating clean propulsion systems (such
as natural gas, diesel-electric hybrid, electric-trolley, and
battery-electric) represent approximately 72% of the total.
Total
Backlog
|
Firm
Orders
(EUs)
|
Options
(EUs)
|
Total
(EUs)
|
30, 35 and 40-foot
buses
|
1,142
|
2,691
|
3,833
|
60-foot articulated
buses
|
1,050
|
2,128
|
3,178
|
Total Backlog at
Q2 2015
|
2,192
|
4,819
|
7,011
|
US Funding Environment
On April 16, 2015 The Bridge to
Sustainable Infrastructure Act, was introduced into Congress
introducing legislation that provides a long-term solution to
ensure the Highway Trust Fund is sustainable. The bill allows
all transportation funding proposals to be considered, while
ensuring the trust fund remains solvent for no less than 10 years.
To help reach a long-term funding solution, the legislation would
create a Transportation Commission by September 1, 2015, who would be charged with
determining a path for sustainable funding, and would be advised to
consider all options. The bill was referred to committee and
remains under review in Congress.
The US Administration's proposed Grow America Act, the revised
multi-year surface transportation bill was introduced to Congress
on May 19, 2015 and continues to be
reviewed by various committees. As a result, on May 29, 2015, President Obama signed the Highway
and Transportation Funding Act of 2015 into law which extended
MAP-21 authorization from May 31,
2015 through to July 31,
2015.
On June 9, 2015, the
Transportation, Housing and Urban Development, and Related Agencies
Appropriations Act, 2016 passed in the House of Representatives to
provide FY 2016 appropriations. On June 25, 2015 this bill was approved by the
Senate Appropriations Committee and has been placed on the Senate
Legislative Calendar.
Finally, on July 13, 2015 another
bill was introduced in the House of Representatives to extend the
authorization of the Highway Trust Fund (HTF) programs through
December 18, 2015 at current spending
levels.
Given the uncertainty around negotiating a multi-year and
sustainable funding mechanism, Management anticipates additional
short term extensions to MAP-21.
Economic Environment and Ridership
Preliminary data from the Nelson Rockefeller Institute indicates
state tax collections increased in the fourth quarter of 2014 by
5.7 percent over the previous year. State tax collections include
personal income tax and sales tax, both of which have increased for
19 of the last 20 quarters, and corporate income taxes have
increased for the past six quarters. Although the data has not been
published, initial revenue reports indicate continued growth in
overall state tax collections as well as in major tax sources for
the first quarter of 2015.
Transit ridership in both Canada and the
United States remains stable. The American Public
Transportation Association's ("APTA") ridership report indicated
that as at March 31, 2015, ridership
decreased by 0.66% in all modes of U.S. transit ridership during
that period compared with the previous year, with a slight decrease
in bus ridership of 1.78%. The same report indicates Canadian
ridership increased by 0.01% in all modes of transit ridership
during the same period as compared to the previous year. Specific
data regarding Canadian bus ridership however, is not
available.
Transit Bus Demand
New Flyer's Bid Universe metric reports active bids in
Canada and the United States, and provides an overall
indicator of expected transit bus market demand. It is a
point-in-time snapshot of: i) EUs in active bids, defined as all
requests for proposals ("RFPs") received and in process of review
at New Flyer plus bids or proposals submitted by New Flyer awaiting
customer action, and ii) management's forecast of all expected EUs
to be placed out for competition over the next five
years.
The total number of active EUs at the end of Q2 2015 was 7,571
which is an increase of 504 EUs or 7% over the previous
quarter. The number of EUs in the total Bid Universe at the
end of Q2 2015 was 20,698 EUs and increase of 1,317 over the
previous quarter.
|
RFPs in
process at
New Flyer
(EUs)
|
Bids or
Proposals
submitted by
New Flyer
(EUs)
|
Total
Active
(EUs)
|
Forecasted
New
Procurements
over the next
5 years (EUs)
|
Total
Bid
Universe
EUs
|
Q2
2014
|
2,772
|
1,926
|
4,698
|
15,030
|
19,728
|
Q3
2014
|
2,864
|
3,419
|
6,283
|
15,490
|
21,773
|
Q4
2014
|
3,335
|
3,394
|
6,729
|
14,727
|
21,456
|
Q1
2015
|
4,177
|
2,890
|
7,067
|
12,314
|
19,381
|
Q2
2015
|
1,690
|
5,881
|
7,571
|
13,127
|
20,698
|
Management continues to anticipate that bus procurement activity
by public transit agencies throughout the U.S. and Canada should remain robust based on expected
customer fleet replacement plans and active procurements.
New Flyer Aftermarket
Gross orders received by New Flyer's aftermarket business during
Q2 2015 decreased 6.8% compared to Q2 2014 as a result of the wind
down of the Chicago Transit Authority mid-life bus upgrade
program. The upgrade program successfully delivered a total
of 1,028 refurbished buses to the customer over a term of 25 months
on budget and on schedule. Total aftermarket shipments in Q2 2015
increased 13.5% over Q2 2014.
Quarter-over-quarter gross aftermarket orders experienced a
slight decline of 0.7% over Q1 2015, while shipments increased 1.2%
over Q1 2015.
NOTE: All dollar amounts are stated in U.S. currency based on an
exchange rate of U.S. $1.00 = CAD
$ 1.23 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. Over 32,000 New
Flyer and NABI heavy-duty transit buses are in operation today.
Further information is available on New Flyer's website at
http://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, investors cannot be assured that actual results will
be consistent with these forward-looking statements, and the
differences may be material. Actual 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, the ability of customers to terminate contracts
for convenience and the other risks and uncertainties discussed in
the 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.