Summary (U.S. Dollars except as noted):
- 2016 results include the acquisition of Motor Coach
Industries ("MCI") effective December 18,
2015
- Revenue of $586.9 million
increased by 56.5% compared to 2015 Q2 revenue of $375.0 million.
- Adjusted EBITDA of $80.3
million increased by 104.8% compared to 2015 Q2 of
$39.2 million.
- Net earnings of $34.7 million
increased 180.9% compared to $12.4
million in 2015 Q2 and earnings per share of $0.58 increased from $0.22 in 2015 Q2.
- Liquidity improved by $45.9 million
to $242.8 million.
- Free Cash Flow of C$60.8
million increased 130.3% compared to $26.4 million in 2015 Q2 while dividends of
C$14.2 million were declared compared
to C$8.4 million during 2015
Q2.
- 2016 YTD Free Cash Flow payout ratio of 20.2% improved as
compared to 42.7% in 2015 YTD.
WINNIPEG, Aug. 10, 2016 /CNW/ -New Flyer Industries Inc.
(TSX:NFI) (TSX:NFI.DB.U) (the "Company"), the largest transit
bus and motor coach manufacturer and parts distributor in
North America, today announced its
results for the 13-week period ended July 3,
2016 ("2016 Q2"). The unaudited interim condensed
financial statements and Management's Discussion and Analysis (the
"MD&A") are available at the Company's web site at:
www.newflyer.com. Unless otherwise indicated all monetary amounts
in this press release are expressed in U.S. dollars.
Operating Results
|
|
|
|
|
|
|
Transit Bus and Coach
Deliveries
Equivalent Units
("EUs")
|
2016
Q2
|
2015
Q2
|
%
change
|
2016
YTD
|
2015
YTD
|
%
change
|
New transit bus and
coach
|
912
|
594
|
53.5%
|
1,741
|
1,166
|
49.3%
|
Pre-owned
coach
|
106
|
—
|
100.0%
|
210
|
—
|
100.0%
|
Number of Total EUs
delivered
|
1,018
|
594
|
71.4%
|
1,951
|
1,166
|
67.3%
|
New transit bus and coach average selling
price
|
$
|
513.0
|
$
|
481.1
|
6.6%
|
$
|
513.4
|
$
|
494.4
|
3.8%
|
Pre-owned coach average selling
price
|
123.6
|
—
|
100.0%
|
128.5
|
—
|
100.0%
|
Total average EU selling price ($US in
'000s)
|
$
|
472.4
|
$
|
481.1
|
(1.8)%
|
$
|
472.0
|
$
|
494.4
|
(4.5)%
|
|
|
|
|
|
|
|
Consolidated
Revenue
|
2016
Q2
|
2015
Q2
|
%
change
|
2016
YTD
|
2015
YTD
|
%
change
|
(U.S. dollars in
millions)
|
Transit Bus and Coach
Manufacturing
|
$
|
480.9
|
$
|
285.8
|
68.3%
|
$
|
920.9
|
$
|
576.5
|
59.7%
|
Aftermarket
|
106.0
|
89.2
|
18.8%
|
219.3
|
178.8
|
22.7%
|
Total
Revenue
|
$
|
586.9
|
$
|
375.0
|
56.5%
|
$
|
1,140.2
|
$
|
755.3
|
51.0%
|
Revenue from transit bus and coach manufacturing operations for
2016 Q2 increased by 68.3% compared to 2015 Q2, primarily resulting
from a 71.4% increase in total transit bus and coach deliveries
compared to the 13-week period ended June
28, 2015 ("2015 Q2") and a 6.6% increase in the average
selling price of new buses and coaches. The deliveries increased
primarily as a result of the inclusion of MCI's new and pre-owned
coaches. Similarly, bus and coach revenue for the 27-week
period ended July 3, 2016 ("2016
YTD") increased by 59.7% compared to the 26-week period ended
June 28, 2015 ("2015 YTD"), primarily
as a result of an increase in bus deliveries of 67.3% and an
increase in average selling price of new transit buses and
coaches.
Revenue from aftermarket operations increased by 18.8% compared
to 2015 Q2 and increased 22.7% in 2016 YTD compared to 2015 YTD,
primarily as a result of MCI's aftermarket revenues. The pro forma
aftermarket business revenue (which includes MCI) for 2015 Q2 was
$124.5 million and $107.7 million when excluding the revenue from
the mid-life overhaul program for Chicago Transit Authority
("CTA"). Therefore, the core aftermarket revenue in 2016 Q2
decreased 1.6% compared to the pro forma aftermarket revenue for
the core business in 2015 Q2, but increased 2.7% in 2016 YTD
compared to 2015 YTD. 2016 YTD also had an extra week compared to
2015 YTD.
|
|
|
|
|
|
|
Consolidated Adjusted
EBITDA
(U.S. dollars in
millions)
|
2016
Q2
|
2015
Q2
|
%
change
|
2016
YTD
|
2015
YTD
|
%
change
|
Transit Bus and Coach
Manufacturing
|
$
|
60.6
|
$
|
22.4
|
170.5%
|
$
|
106.0
|
$
|
37.1
|
185.7%
|
Aftermarket
|
|
19.7
|
|
16.8
|
17.3%
|
|
42.5
|
|
33.5
|
26.9%
|
Total Adjusted
EBITDA
|
$
|
80.3
|
$
|
39.2
|
104.8%
|
$
|
148.5
|
$
|
70.6
|
110.3%
|
Adjusted EBITDA % of
revenue
|
|
|
|
|
|
|
Transit Bus and Coach
Manufacturing
|
12.6%
|
7.8%
|
4.8%
|
11.5%
|
6.4%
|
5.1%
|
Aftermarket
|
18.6%
|
18.8%
|
-0.2%
|
19.4%
|
18.7%
|
0.7%
|
Total
|
13.7%
|
10.4%
|
3.3%
|
13.0%
|
9.3%
|
3.7%
|
Consolidated Adjusted EBITDA increased by 104.8% and 110.3%
during 2016 Q2 and 2016 YTD respectively, compared to their
corresponding periods in the previous year, which is primarily a
result of increased unit deliveries and improved margins.
Contributors to the increase in margin in the period is a very
favourable sales mix (experienced in the past few quarters),
combined with the full impact from the New Flyer and NABI product
rationalization.
Margins vary significantly between orders due to factors such as
pricing, order size, propulsion system, product type and components
specified by the customer. Management cautions readers that
quarterly transit bus and coach manufacturing Adjusted EBITDA can
be volatile and should be considered over a period of several
quarters.
The 2016 Q2 aftermarket operations Adjusted EBITDA increased
17.3% compared to 2015 Q2, primarily as a result of the addition of
MCI's aftermarket business. As well, the 2016 YTD aftermarket
Adjusted EBITDA increased 26.9% compared to 2015 YTD.
|
|
|
|
|
|
|
Net
earnings
(U.S. dollars in
millions)
|
2016
Q2
|
2015
Q2
|
$
change
|
2016
YTD
|
2015
YTD
|
$
change
|
Earnings from
operations
|
$
|
64.8
|
$
|
23.8
|
41.0
|
$
|
108.7
|
$
|
44.0
|
64.7
|
Non-cash (loss)
gain
|
|
(1.6)
|
|
0.9
|
(2.5)
|
|
1.0
|
|
(1.2)
|
2.2
|
Interest
expense
|
|
(10.2)
|
|
(3.1)
|
(7.1)
|
|
(21.7)
|
|
(7.2)
|
(14.5)
|
Income tax
expense
|
|
(18.3)
|
|
(9.2)
|
(9.1)
|
|
(30.6)
|
|
(12.4)
|
(18.2)
|
Net
earnings
|
$
|
34.7
|
$
|
12.4
|
22.3
|
$
|
57.4
|
$
|
23.2
|
34.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share
(basic)
|
$
|
0.58
|
$
|
0.22
|
$
|
0.36
|
$
|
0.99
|
$
|
0.42
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings increased by 180.9% compared to 2015 Q2, primarily
as a result of improved Earnings from Operations offset by the
increase in interest and income tax expense. This resulted in net
earnings per common share ("Share") of $0.58 compared to $0.22 per Share generated during 2015 Q2.
Similarly, net earnings for 2016 YTD increased by 146.9% compared
to 2015 YTD.
Liquidity
|
|
|
|
|
|
|
Free Cash
Flow
(CAD dollars in
millions)
|
2016
Q2
|
2015
Q2
|
%
change
|
2016
YTD
|
2015
YTD
|
%
change
|
Free Cash
Flow
|
$
|
60.8
|
$
|
26.4
|
130.3%
|
$
|
122.3
|
$
|
38.8
|
215.2%
|
Declared
dividends
|
$
|
14.2
|
$
|
8.4
|
69.0%
|
$
|
24.7
|
$
|
16.6
|
48.8%
|
The Company generated Free Cash Flow of C$60.8 million compared to C$26.4 million in 2015 Q2, primarily as a result
of improved Earnings from Operations. The Company declared
dividends of C$14.2 million increased
compared to C$8.4 million in 2015 Q2,
primarily as a result of conversion of Debentures to Shares and the
35.7% annual dividend rate increase announced in May 2016.
During the last twelve months ended July 3,
2016, there were 3.9 million Shares issued as a result of
Debenture conversions. As at July 3,
2016, approximately 60% of the original $65 million of Debentures issued had been
converted to Shares at a conversion price of $10 per Share. The current annual dividend rate
is C$0.95 per Share. The Company's
policy of paying dividends changed to a quarterly basis. The first
quarterly dividend on the Shares in the amount of C$0.2375 per Share (being C$0.95 per Share annually) was paid in
July 2016.
The Company generated Free Cash Flow of C$122.3 million during 2016 YTD compared to
C$38.8 million in 2015 YTD. The
Company declared dividends in 2016 YTD of C$24.7 million compared to C$16.6 million in 2015 YTD. The 2016 YTD
Free Cash Flow payout ratio of 20.2% improved compared to 42.7% in
2015 YTD.
The July 3, 2016 liquidity
position of $242.8 million is
comprised of available cash of $1.7
million and $241.1 million
available under the Revolver compared to a liquidity position of
$196.9 million at April 3, 2016. The liquidity has improved
$45.9 million or 23.3% during 2016 Q2
resulting from improved cash flow from operations. Management
believes these funds, together with equity and debt issuances,
other borrowings capacity and the cash generated from the Company's
operating activities, will provide the Company with sufficient
liquidity and capital resources to meet its current financial
obligations as they come due, as well as providing funds for its
financing requirements, capital expenditures, dividend payments and
other operational needs for the foreseeable future.
Outlook
The Company's Fiscal 2016 annual operating plan for the 53-weeks
ending January 1, 2017 is focused on
defending and growing its leading market position in the heavy-duty
transit bus and motor coach markets through enhanced
competitiveness and completing the integration of New Flyer and
NABI's aftermarket businesses (referred to as Project Convergence).
Management has now successfully completed the primary milestone for
Project Convergence, being the consolidation of all aftermarket
parts sales and operations functions to a single organization.
Management continues to gain knowledge and experience about the
motor coach business and is actively developing a long-term
integration/combination plan for operating the acquired MCI.
The focus has been on culture, facilities upgrades,
investigating information technology harmonization potential, coach
build quality and customer service. To date, MCI has
performed to the acquisition case, and management believes
approximately $5.0 million of the
initially targeted annual cost saving synergies of approximately
$10 million have been achieved
through the rationalization of corporate costs and the coordination
of basic sourcing and purchasing activities.
Management is taking the necessary time to evaluate and assess
the various scenarios before determining further strategic actions
to pursue longer term synergies and improved competitiveness. With
the customized nature of the public transit bus and coach market,
and the increasing U.S. content requirements resulting from the
FAST Act, procurement synergies resulting from sourcing leverage
are not easily attained. Further material changes must take into
consideration an evaluation from several lenses such as: current
supplier agreements, customer specified components, bus reliability
and performance, and aftermarket serviceability and spare parts
implications.
The current master production schedule combined with the backlog
and orders anticipated to be awarded by customers under new
procurements is expected to enable the Company to deliver
approximately 3,450 EUs for Fiscal 2016 which compares to 3,265 EUs
(New Flyer plus pro-forma MCI) in Fiscal 2015 (52-week period).
As previously reported on July 11,
2016, MCI received notice of an Executive Order by the
Governor of New Jersey that
required an immediate and orderly shutdown of all ongoing work
under a contract to build commuter coaches for New Jersey Transit
("NJT"). MCI currently has a contract with NJT to build 184
coaches in the first year, of which 142 were to be delivered in
2016, to replace older coaches that are now past their useful life
and are very expensive to maintain.
The Company is closely monitoring the situation and as part of
the orderly shutdown it will complete the NJT coaches already in
process.
In addition, the Company has adjusted its master production
schedule to bring other customers' units forward, into production,
allowing more time for an acceptable funding resolution in the
state of New Jersey to be
developed. At this time, the Company has insufficient information
to determine if its 2016 annual delivery expectation may drop below
the 3,450 EUs for which it had previously provided guidance, but
there is that risk. On July 18,
2016, MCI began its previously scheduled three week summer
shutdown and during this period there are no production line
entries.
Management maintains its guidance that the core aftermarket
business (excluding CTA mid-life overhaul revenue) is expected to
grow by approximately 5% in Fiscal 2016.
Conference Call
A conference call for analysts and interested listeners will be
held on Thursday August 11, 2016 at
8:00 a.m. (ET). The call-in number
for listeners is 888-231-8191, 647-427-7450 or 403-451-9838. A live
audio feed of the call will also be available at:
http://event.on24.com/r.htm?e=1226206&s=1&k=694C1F55AF4DB10A62E9202A22097AFF
A replay of the call will be available from 11:00 a.m. (ET) on August
11, 2016 until 11:59 p.m. (ET)
on August 18, 2016. To access the
replay, call 855-859-2056 or 416-849-0833 and then enter pass code
number 50533762. The replay will also be available on New Flyer's
web site at www.newflyer.com.
Non-IFRS Measures
"Earnings from Operations" refer to earnings before interest,
income taxes and unrealized foreign exchange losses or gains on
non-current monetary items. "Adjusted EBITDA" consists of earnings
before interest, income taxes, depreciation, amortization and other
non-cash charges and certain other non-recurring charges as set out
in the MD&A. "Free Cash Flow" means net cash generated by
operating activities adjusted for changes in non-cash working
capital items, interest paid, interest expense, income taxes paid,
current income tax expense, effect of foreign currency rate on
cash, past service costs, defined benefit funding, non-recurring
transitional costs relating to business acquisitions, costs
associated with assessing strategic and corporate initiatives,
product rationalization costs, defined benefit expense, cash
capital expenditures, realized investment tax credits, fair value
adjustment to MCI's inventory and deferred revenue,
proportion of the total return swap realized 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")
and may not be comparable to similarly titled measures used by
other issuers. Readers are cautioned that Earnings from Operations
and Adjusted EBITDA 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, and Free Cash Flow should
not be construed as an alternative to cash flows from operating,
investing and financing activities determined in accordance with
IFRS, 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 the Company
The Company is the largest transit bus and motor coach
manufacturer and parts distributor in North America with fabrication, manufacturing,
distribution and service centers in Canada and the
United States and employs approximately 5,000 team
members.
Through its Canadian and U.S. subsidiaries, NFI ULC and NFAI,
the Company is North America's
heavy-duty transit bus leader and offers a high quality transit bus
product line (Xcelsior® and MiDi® models),
incorporating the broadest range of drive systems available,
including: clean diesel, natural gas, diesel-electric hybrid,
electric-trolley and now battery-electric. New Flyer actively
supports over 42,000 heavy-duty transit buses (New Flyer, NABI and
Orion) currently in service.
Through its Canadian and U.S. subsidiaries, Motor Coach
Industries Limited and Motor Coach Industries, Inc., the Company is
the leader in motor coaches in Canada and the U.S., MCI offers a J-model
which is the industry's best-selling intercity coach for 11
consecutive years, and the D-model, the industry's best-selling
coach line in North American motor coach history. MCI is also
the exclusive distributor of the Setra S417 and S407 in
the United States and
Canada. MCI actively supports over 28,000 MCI motor coaches
currently in service and offers 24-hour roadside assistance 365
days a year.
The Company also operates North
America's most comprehensive aftermarket parts organization
providing support for all types of transit buses and motor
coaches. All New Flyer's transit buses and MCI's coaches are
supported by an industry-leading comprehensive warranty, service
and support network.
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. 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 transit buses and coaches 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
and product liability claims, changes in Canadian or United States tax legislation, the absence of
fixed term customer contracts and the suspension or 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 its 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 limited 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.