WINNIPEG, Oct. 17, 2016 /CNW/ - (TSX:NFI) (TSX:NFI.DB.U)
New Flyer Industries Inc. (the "Company"), the leading manufacturer
of heavy-duty transit buses, motor coaches and parts distribution
in Canada and the United States, announced its order
activity and backlog update for the third fiscal quarter ended
October 2, 2016 ("Q3 2016").
The order and delivery activity and backlog for Q3 2016 reported
in this release includes activity for heavy-duty transit buses
manufactured by the Company's subsidiaries, New Flyer Industries
Canada ULC and New Flyer of America Inc. (together, "New Flyer"),
and motor coaches manufactured by its subsidiaries, Motor Coach
Industries Limited and Motor Coach Industries Inc. (together,
"MCI").
The order and delivery activity and backlog as reported excludes
pre-owned transit buses and motor coaches.
Deliveries, Order Activity, and Option Expiry
The Company delivered 777 equivalent units ("EUs") in Q3 2016,
an increase of 152 EUs compared to 625 EUs in the third fiscal
quarter ended September 27, 2015 ("Q3
2015"). The Q3 2016 deliveries decreased 135 EUs compared to the
second fiscal quarter of 2016 ("Q2 2016"), primarily as a result of
MCI's three-week scheduled summer shutdown and the impact of New
Jersey Transit's contract suspension. Total bus and coach
inventory at October 2, 2016 was 632
EUs, an increase of 73 EUs from the previous quarter, also related
to the New Jersey Transit contract suspension with MCI.
The Company's new transit bus and coach orders (firm and
options) in Q3 2016 totaled 585 EUs. Order activity in the
period included:
- New firm orders for 274 EUs (valued at $115.8 million)
- New option orders for 311 EUs (valued at $126.1 million)
- Options for 288 EUs converted to firm orders (valued at
$148.3 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
|
Q3
2015
|
1,133
|
4,009
|
213
|
1,079
|
Q4
2015
|
1,245
|
3,929
|
423
|
1,339
|
Q1
2016
|
1,059
|
3,968
|
582
|
1,764
|
Q2
2016
|
1,428
|
4,865
|
597
|
1,815
|
Q3
2016
|
585
|
4,317
|
288
|
1,890
|
The last twelve months ("LTM") Book-to-Bill ratio (defined as
new firm and option orders divided by deliveries) was 135% and has
been greater than 100% for fourteen of the last fifteen quarters,
demonstrating overall growth in the Company's total backlog.
In addition, 800 EUs of new firm and option orders were pending
from customers at the end of the period, where approval of the
award to the Company 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 continues to work with customers
on pre-award audit and documentation requirements, however, certain
customers' vacation periods have delayed the formal award of a
number of contracts during Q3 2016.
In Q3 2016, only 10 option EUs expired, compared to 214 option
EUs that expired in Q2 2016. Remaining options in the current
backlog will expire if not exercised, as follows:
Year
of
option
expiry
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Total
Option
EUs
|
Remaining
Options (EUs)
|
264
|
569
|
1,139
|
1,394
|
1,358
|
2,264
|
6,988
|
Total Backlog
At the end of Q3 2016, the Company's total backlog was 9,808 EUs
(valued at $5.08 billion) compared to
10,010 EUs (valued at $5.24 billion)
at the end Q2 2016, and 7,290 EUs (valued at $3.59 billion) at the end of Q3 2015.
Total
Backlog
|
Firm
Orders
(EUs)
|
Options
(EUs)
|
Total
(EUs)
|
Ending backlog at Q2
2016
New orders in Q3
2016
Options exercised in Q3 2016
Deliveries in Q3
2016
Cancelled/expired
options in Q3 2016
|
3,035
274
288
(777)
(0)
|
6,975
311
(288)
-
(10)
|
10,010
585
-
(777)
(10)
|
Ending Backlog at
Q3 2016
|
2,820
|
6,988
|
9,808
|
The Company's backlog consists of 30', 35', 40' and 60-foot
medium and heavy duty transit buses, and 45' motor coaches.
Buses incorporating clean propulsion systems (such as natural gas,
diesel-electric hybrid, electric-trolley, and battery-electric)
represent approximately 49% of the total backlog.
Market Demand
The Company's Bid Universe metric reports active public sector
competitions in Canada and
the United States, and provides an
overall indicator of active bid activity and expected heavy-duty
transit bus and motor coach market demand. It is a
point-in-time snapshot of: (i) EUs in active competitions, defined
as all requests for proposals received and in process of review
plus bids submitted and awaiting customer action, and (ii)
management's forecast of all expected EUs to be placed out for
competition over the next five years.
Procurement of transit buses and motor coaches by the public
sector is typically accomplished through formal multi-year
contracts, while procurement by the private sector is typically
accomplished through transactional sales. As a result, the
Company is unable to develop longer range forecast metrics for
private sector buses and motor coaches.
The total number of active EUs at the end of Q3 2016 was 6,597
EUs,a significant increase of 2,399 EUs over the previous
quarter. The number of EUs in the total Bid Universe at the
end of Q3 2016 was 23,735 EUs, which is an increase of 4,403 EUs
over Q2 2016, attributed to both an overall increase in the number
of procurements issued by customers, and a longer time period
between proposal submittal and bid awards for the quarter.
|
Bids in
Process
(EUs)
|
Bids
Submitted (EUs)
|
Total Active
(EUs)
|
Forecasted New
Procurements
over the next
5 Years
(EUs)
|
Total Bid
Universe (EUs)
|
Q3
2015*
|
2,121
|
4,074
|
6,195
|
13,225
|
19,420
|
Q4
2015*
|
763
|
6,442
|
7,205
|
13,409
|
20,614
|
Q1
2016
|
1,750
|
5,536
|
7,286
|
15,632
|
22,918
|
Q2
2016
|
1,407
|
2,791
|
4,198
|
15,134
|
19,332
|
Q3
2016
|
3,474
|
3,123
|
6,597
|
17,138
|
23,735
|
* New Flyer Bid Universe Only (excludes MCI)
Management continues to anticipate that transit bus and motor
coach procurement activity by public transit agencies throughout
the U.S. and Canada should remain
robust based on an aging fleet, improved overall economic
conditions, expected customer fleet replacement plans and active or
anticipated procurements. Management also anticipates stable
private sector demand for motor coaches through 2016 given the
stability of market dynamics including the general economy, travel
trends and credit markets. The Company's master production
schedule combined with current backlog and orders anticipated to be
awarded by customers under new procurements is expected to enable
the Company to continue to deliver approximately 3,450 EUs in
fiscal 2016, and does not yet include additional New Jersey Transit
deliveries this year. Production rates will vary from quarter
to quarter due to sales mix and award timing.
New Jersey Transit Commuter Coach Contract
On October 2015, New Jersey
Transit (NJ TRANSIT) awarded a six year contract to MCI for 772
commuter coaches and options for an additional 450 coaches. In
April 2016, a purchase order was
issued for the first fiscal year's production of 184 coaches, of
which 142 were scheduled to be delivered in 2016.
On July 7, 2016, after the first
five coaches were accepted, NJ TRANSIT advised MCI that the
replenishment of the New Jersey Transportation Trust Fund Account
(the "TTFA") had been delayed and that the New Jersey Governor had issued an Executive
Order directing the immediate and orderly shutdown of all ongoing
work funded by the TTFA. On that date, MCI had 81 coaches
that were either in various stages of production or were completed
and in transit to NJ TRANSIT.
Following the passage of bi-partisan legislation by the New
Jersey Legislature and Senate to provide funding to the TTFA and to
amend laws concerning the future financing in the State, the bill
was signed into law by Governor Christie on October 14, 2016. This was immediately
followed by Governor Christie issuing an Executive Order lifting
the suspension of all work funded under the TTFA. The New
Jersey State Treasurer, the Director of the Division of Budget and
Accounting and the Commissioner of the Department of Transportation
("New Jersey DOT") were ordered to implement an interim funding
solution in order to permit the immediate recommencement of
transportation projects funded by the TTFA. MCI now awaits
instructions from NJ TRANSIT to have completed coaches inspected,
followed by an inspection by New Jersey DOT, and then delivery to
NJ TRANSIT. MCI is also waiting for instructions from NJ
TRANSIT to commence the manufacturing of the remaining coaches
under the first purchase order.
Aftermarket
Gross orders received by the Company's aftermarket business
increased by 40% in Q3 2016 compared to Q3 2015, and decreased
slightly by 0.9% over Q2 2016. Total shipments for the
quarter increased by 50% compared to Q3 2015 and decreased
marginally by 0.5% over Q2 2016. Year-over-year increases in
the aftermarket business are primarily related to the acquisition
of MCI.
Management is adjusting its previous guidance that the core
aftermarket parts business (excluding CTA mid-life overhaul
revenue) was expected to grow by approximately 5% in Fiscal
2016. Management now expects Fiscal 2016 core aftermarket
revenue to be essentially flat when compared to the previous year
(including MCI's pro forma aftermarket revenue). Management
believes that the increase in new bus and coach sales in recent
years leading to increased fleet replacement has had a short term
dampening effect on the aftermarket parts business.
NOTE: All dollar amounts are stated in U.S. currency based on an
exchange rate of U.S. $1.00 = CAD
$ 1.3117 to calculate the value of
the Canadian contracts in this release.
About the Company
The Company employs over 5,000 team members and 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.
Through its Canadian and U.S. subsidiaries, New Flyer Industries
Canada ULC and New Flyer of America Inc., the Company is
North America's heavy-duty transit
bus leader and offers the broadest 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., offering the MCI J4500,
which is the industry's best-selling intercity coach for 11
consecutive years, and the MCI D-Series, the industry's
best-selling coach line in North American motor coach history. MCI
is also the exclusive distributor of Setra S417 and S407 in
the United States and Canada. MCI actively supports over 28,000
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 buses and coaches are supported by an industry-leading
comprehensive warranty, service and support network.
Further information is available on the Company's websites at
www.newflyer.com and www.mcicoach.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 suspend or 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.