NFI NFI Group Inc

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)

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:

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.

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.

* 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.