- ARBOC is a pioneer and North American leader in low-floor
body-on-chassis (or "cutaway") buses.
- ARBOC has also introduced a medium-duty low-floor transit
and shuttle bus based on their own chassis design.
- $95 million cash purchase
price representing an implied purchase multiple of approximately
10.4 times forecasted 2017 adjusted EBITDA of $9.1 million.
- 2017 deliveries estimated to be 360 buses, with 2018
deliveries expected to be 40% higher (of which 65% are already firm
orders for 2018).
- Transaction is expected to be immediately accretive to
earnings per share and free cash flow per share (before
synergies).
ST. CLOUD, MN, Dec. 1, 2017 /PRNewswire/ - (TSX: NFI) Transit
Holdings, Inc., a U.S. subsidiary of New Flyer Industries Inc.
("NFI Group"), the largest transit bus and motor coach manufacturer
and parts distributor in North
America, announced today that it has acquired 100% of the
equity interests in ARBOC Specialty Vehicles, LLC ("ARBOC") for a
purchase price of $95 million,
subject to certain purchase price adjustments, including
satisfaction of debt. NFI Group is using available cash and its
existing credit facilities to finance the transaction. The
acquisition represents a continuation of NFI Group's growth and
diversification strategy and was not subject to any pre-closing
regulatory or antitrust requirements.
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Established in 2008, ARBOC is a North American pioneer and
leader in low-floor body-on-chassis (or "cutaway") bus technology.
These buses range between 21 and 35 feet in length, and operate in
transit, paratransit and shuttle applications. ARBOC buses
exceed US federal fuel economy standards, Buy America requirements,
and undergo safety testing beyond industry norms. ARBOC has raised
the industry standards for cutaway bus passenger accessibility and
comfort over traditional high-floor cutaway vehicles.
The North American cutaway bus market has an estimated annual
volume of between 16,000 to 18,000 units, which is more than three
times the current estimated size of the heavy-duty transit bus
market, and more than six times the current estimated motor coach
market, based on annual units produced. Today, the installed base
of cutaway buses is predominantly high-floor in configuration, with
low-floor buses comprising less than 5% of the total cutaway
market.
ARBOC is the leader in the low-floor cutaway bus market having
delivered more than 2,500 buses, or more than 70% of the estimated
total low-floor cutaways sold in Canada and the U.S. over the past five
years. As the U.S. population ages and ease of access becomes
more of a focus, management believes ARBOC is ideally positioned to
grow with the demand for low-floor cutaway and medium buses with
greater accessibility, following the migration that occurred in
heavy-duty transit space.
Management expects ARBOC to deliver approximately 360 buses in
2017 with a revenue mix comprising of $36.3
million for bus sales and $1.5
million for parts sales, and expected 2017 Adjusted EBITDA
of approximately $9.1 million.
In addition to its cutaway bus product portfolio, ARBOC has
introduced a medium-duty low-floor transit and shuttle bus based on
ARBOC's own chassis design. The bus is currently completing
testing at the Altoona Bus Research and Testing Center under the
Federal Transit Administration Model Bus Testing Program to
ten-year structural durability standards. The bus has received
favorable market response and ARBOC has already received initial
firm orders for deliveries in 2018.
Management expects ARBOC will deliver approximately 500 buses in
2018, representing significant growth over 2017. ARBOC's
current firm backlog for 2018 includes over 320 orders.
"The acquisition of ARBOC provides us with complementary product
lines and a unique opportunity to continue with growth and
diversification, as NFI Group now has a full suite of transit buses
and motor coaches to offer to North American public transit
agencies and private operators," said Paul
Soubry, NFI Group's President and Chief Executive Officer.
"ARBOC is a proven low-floor cutaway builder and provides us with
an entry point into both the cutaway and medium-duty transit bus
markets, with high quality, proven and competitively priced
products."
Located in Middlebury, Indiana,
ARBOC employs approximately 100 people from a 112,000 square foot
facility, producing Buy America compliant vehicles in accordance
with ISO 9001:2008 certified management systems. ARBOC has
extensive expertise with diesel and natural gas propulsion based on
General Motors, Chrysler, Ford and Freightliner chassis, and will
benefit from NFI Group's expertise in battery electric propulsion
and its beginning development of autonomous drive features from its
Vehicle Innovation Centre (VIC) in Anniston, Alabama.
"ARBOC will benefit from NFI Group's strong balance sheet,
broader bus market credibility, expertise in bus design and
manufacturing and strategic sourcing to support its growth," said
Wayne Joseph, President of New
Flyer's Transit Bus business. "We anticipate exciting
collaboration to scale this business and anticipate synergies such
as research and development and part fabrication, which have not
yet been fully quantified."
ARBOC's proven and experienced management team will remain in
place, with President and Chief Executive Officer Don Roberts reporting to Wayne Joseph. Don
Roberts said, "We are excited to continue ARBOC's growth
trajectory under the New Flyer umbrella. We believe that this
transaction is the right step for ARBOC to continue offering our
customers innovative and superior quality products."
Wells Fargo Securities acted as the exclusive financial advisor
to New Flyer on the transaction.
About NFI Group
NFI Group and its subsidiaries comprise the largest transit bus
and motor coach manufacturer and parts distributor in North America, now having 32 fabrication,
manufacturing, distribution, and service centers across
Canada and the United States and employing almost 6,000
team members.
It is North America's
heavy-duty transit bus leader and offers the largest transit bus
product line under the brand Xcelsior®, incorporating
the broadest range of drive systems available, including: clean
diesel, natural gas, diesel-electric hybrid, trolley-electric, and
battery-electric. NFI Group actively supports over 44,000
heavy-duty transit buses (New Flyer, NABI, and Orion) currently in
service, of which 6,400 are powered by electric and battery
propulsion.
NFI Group is also North
America's motor coach leader offering the Motor Coach
Industries Inc. (MCI) J-Series, the industry's best-selling
intercity coach for 11 consecutive years, and the MCI D-Series, the
industry's best-selling motor coach line in North American history.
MCI is also the exclusive distributor of Daimler's Setra S 417 and
S 407 motor coaches in the United
States and Canada. MCI
actively supports over 28,000 coaches currently in service.
NFI Group also operates North
America's most comprehensive parts organization, NFI Parts™,
providing parts, technical publications, training, and support for
its OEM product lines (transit buses and motor coaches). All buses
and coaches are also supported by an industry-leading comprehensive
warranty, service, and support network.
Further information is available on NFI Group websites at
www.newflyer.com and www.mcicoach.com. The common shares of the NFI
Group are traded on the Toronto Stock Exchange under the symbol
NFI.
Financial Terms and Information
All references to currency in this press release are stated in
US dollars. The financial information relating to ARBOC
provided in this press release is based on or derived from ARBOC's
unaudited financial statements prepared in accordance with U.S.
GAAP and estimates of ARBOC's management.
ARBOC's "Adjusted EBITDA" referred to in this press release has
been calculated by ARBOC's management and consists of earnings
before interest, income taxes, depreciation, amortization, product
development costs and other non-cash charges and certain
non-recurring charges. Management believes Adjusted EBITDA is
a useful measure in evaluating the performance of ARBOC. However,
Adjusted EBITDA is not a recognized earnings measure and does not
have a standardized meaning prescribed by U.S. GAAP or
International Financial Reporting Standards ("IFRS") and may not be
comparable to similarly titled measures used by other
issuers. Readers are cautioned that Adjusted EBITDA should
not be construed as an alternative to net earnings or loss
determined in accordance with IFRS or U.S. GAAP as an indicator of
ARBOC's performance or as an alternative to cash flows from
operating, investing and financing activities determined in
accordance with IFRS or U.S. GAAP, as a measure of liquidity and
cash flows.
In accordance with IFRS, NFI Group will consolidate the revenue,
earnings and other financial information of ARBOC with NFI Group's
financial information in its regularly reported financial
statements.
Forward-Looking Statements
This press release contains forward-looking statements relating
to expected future events, including, ARBOC's expected revenues for
2017, expected Adjusted EBITDA for 2017 and expected deliveries for
2017 and 2018, the integration of the acquired business into NFI
Group's existing business and expected synergies, the
diversification and growth of NFI Group's combined business, and
the accretive effects of the transaction to earnings and cash flow
of NFI Group. 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 reflected in such forward-looking statements for a
variety of reasons, including, risks relating to the achievement of
ARBOC's business plan and budget for the remainder of 2017 and
deliveries in 2018, the ability to implement the operational
changes necessary to achieve the intended synergies, acquisitions,
joint ventures and other strategic relationships with third parties
(including liabilities relating thereto), 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,
NFI Group 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.