WINNIPEG, Jan. 10, 2018 /CNW/ - (TSX: NFI) New Flyer
Industries Inc. ("NFI Group") the largest bus and motor coach
manufacturer and parts distributor in North America, today announced its order
activity and backlog update for the 13-week period ended
December 31, 2017 ("Q4
2017"). Year-over-year comparisons reported in this release
compare Q4 2017 to the 13-week period ended January 1, 2017 ("Q4 2016").
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The NFI Group order and delivery activity and backlog for Q4
2017 reported in this release includes activity for: transit buses
manufactured by New Flyer subsidiaries ( "New Flyer"), motor
coaches manufactured by its Motor Coach Industries subsidiaries (
"MCI") and aftermarket parts and services sold by its aftermarket
organization ("NFI Parts"). Also included for the first time
is activity for cutaway and medium-duty buses manufactured by its
ARBOC Specialty Vehicles, LLC subsidiary ("ARBOC"), since its
acquisition on December 1,
2017. Each ARBOC vehicle is considered to be one equivalent
unit ("EU").
The order and delivery activity and backlog as reported excludes
pre-owned motor coaches.
Deliveries, Order Activity, and Option Expiry
NFI Group delivered 1,068 EUs in Q4 2017, an increase of 75 EUs
compared to Q4 2016 and an increase of 191 EUs over the third
fiscal quarter of 2017 ("Q3 2017"). Total inventory at
December 31, 2017 was 482 EUs, a
decrease of 84 EUs from the previous quarter.
Q4 2017 Deliveries
(EUs)
|
Full Year
2017
|
Heavy-Duty
Transit
|
Motorcoach
|
Cutaway and
Medium-Duty
|
Total
|
695
|
346 EU
|
27 EU
|
1,068 EU
|
3,828 EU
|
NFI Group's new orders (both firm and options) in Q4 2017
totaled 2,520 EUs. Order activity in the period included:
- New firm orders for 901 EUs (valued at $434.0 million)
- New option orders for 1,619 EUs (valued at $748.3 million)
- 238 option EUs were converted to firm orders (valued at
$117.1 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
|
Q4
2016
|
1,522
|
4,594
|
597
|
2,064
|
Q1
2017
|
708
|
4,243
|
218
|
1,700
|
Q2
2017
|
958
|
3,773
|
389
|
1,492
|
Q3
2017
|
1,634
|
4,822
|
559
|
1,763
|
Q4
2017
|
2,520
|
5,820
|
238
|
1,404
|
NFI Group's last twelve months ("LTM") Book-to-Bill ratio
(defined as new firm and option orders divided by deliveries) was
152% and has been greater than 100% for 14 straight quarters,
demonstrating overall growth in total backlog.
In addition, 273 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 New Flyer and therefore not yet included in
the backlog.
The majority of public transit contracts have a term of five
years and include both firm orders and options. The table below
shows the number of option EUs that have either expired or been
exercised annually over the past five years, as well as the current
backlog of options that will expire each year if not exercised.
In
EUs
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
A) Options
Expired
|
1,094
|
965
|
504
|
550
|
331
|
|
|
|
|
|
B) Options
Exercised
|
601
|
1,149
|
1,339
|
2,064
|
1,404
|
|
|
|
|
|
C) Current Options
by
year of expiry
|
|
|
|
|
|
895
|
1,140
|
1,305
|
2,114
|
2,517
|
D) Conversion rate
%
= B / (A+B)
|
35%
|
54%
|
73%
|
79%
|
81%
|
|
|
|
|
|
Total Backlog
At the end of Q4 2017, NFI Group's total backlog was 12,157 EUs
(valued at $6.02 billion) compared to
10,537 EUs (valued at $5.39 billion)
at the end Q3 2017, and 10,187 EUs (valued at $5.23 billion) at the end of Q4 2016.
|
|
|
|
Total
Backlog
|
Firm Orders
(EUs)
|
Options
(EUs)
|
Total
(EUs)
|
Ending backlog at Q3
2017
|
3,806
|
6,731
|
10,537
|
ARBOC backlog
acquired Dec 1, 2017
|
315
|
-
|
315
|
New orders in Q4
2017
|
901
|
1,619
|
2,520
|
Options exercised in
Q4 2017
|
238
|
(238)
|
-
|
Deliveries in Q4
2017
|
(1,068)
|
-
|
(1,068)
|
Cancelled/expired
options in Q4 2017
|
(6)
|
(141)
|
(147)
|
Ending Backlog at
Q4 2017
|
4,186
|
7,971
|
12,157
|
NFI Group's total backlog consists of buses and motor coaches
primarily for public customers. Buses and motor coaches
incorporating clean propulsion systems (such as natural gas,
diesel-electric hybrid, electric-trolley, and battery-electric)
represent approximately 50% of the total backlog.
Zero-emission buses and motor coaches (battery-electric, fuel
cell-electric and electric-trolley) represent approximately 4.5% of
total backlog.
Total
Backlog
|
Firm Orders
(EUs)
|
Options
(EUs)
|
Total
(EUs)
|
$Billion
USD
|
Heavy-Duty Transit
Buses
|
3,542
|
6,622
|
10,164
|
5.13
|
Cutaway and
Medium-Duty Buses
|
322
|
-
|
322
|
0.03
|
Motor
Coaches
|
322
|
1,349
|
1,671
|
0.86
|
Ending Backlog at
Q4 2017
|
4,186
|
7,971
|
12,157
|
6.02
|
Market Demand
NFI Group'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 based on public customer projection of
expected EUs to be placed out for competition over the next five
years.
At the end of Q4 2017 the number of active EUs was 4,778 EUs and
total Bid Universe was 21,184 EUs.
|
Bids in
Process
(EUs)
|
Bids
Submitted
(EUs)
|
Total Active
(EUs)
|
Forecast New
Procurements
over next 5 Years
(EUs)
|
Total Bid
Universe
(EUs)
|
Q4
2016
|
1,984
|
4,616
|
6,600
|
14,538
|
21,138
|
Q1
2017
|
2,424
|
5,660
|
8,084
|
14,060
|
22,144
|
Q2
2017
|
1,253
|
6,852
|
8,105
|
14,166
|
22,271
|
Q3
2017
|
1,541
|
5,072
|
6,613
|
14,303
|
20,916
|
Q4
2017
|
3,091
|
1,687
|
4,778
|
16,406
|
21,184
|
Procurement of heavy-duty 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
through transactional sales. As a result, NFI Group does not
publish a Bid Universe metric for private sector buses and motor
coaches.
The sale of cutaway and medium-duty buses manufactured by ARBOC
are accomplished on a transactional purchase order basis through
third party dealers who hold contracts directly with the customers.
Bids are submitted by and agreements are held with a network
of dealers and therefore cutaway and medium-duty bus activity is
not included in the Bid Universe metric.
Parts Activity
Total parts shipments by NFI Parts for Q4 2017 increased by 5.1%
compared to the previous quarter, and increased by 7.5% compared to
Q4 2016.
Gross parts orders received by NFI Parts in Q4 2017 increased by
1.8% compared to the previous quarter, while increasing by 10.3%
over Q4 2016.
For 2017, ARBOC aftermarket parts orders and shipments were not
material and not included in these figures.
Outlook
Management continues to expect that transit bus, cutaway and
medium duty buses, and motor coach procurement activity by public
transit agencies throughout the U.S. and Canada to remain robust based on an aging
fleet, overall economic conditions, expected customer fleet
replacement plans, and active or anticipated
procurements.
Management continues to anticipate stable private sector demand
for motor coaches through 2018 given healthy market dynamics
including the economy, travel trends and credit markets.
As the population ages and ease of access becomes more of a
focus, management also believes the demand for low-floor cutaway
and medium-duty buses with greater accessibility will grow from
it's current level of 5% of the total market, following the
migration that occurred in heavy-duty transit bus
space.
NFI Group's master production schedule combined with current
backlog and orders anticipated to be awarded by customers under new
procurements is expected to enable NFI Group to deliver
approximately 4,350 EUs in fiscal 2018 with production rates
varying from quarter to quarter due to product mix and award
timing.
2018 deliveries are expected to comprise of the following
vehicle types:
Heavy-Duty
Transit
|
Motorcoach
|
Cutaway and
Medium-Duty
|
Total
|
2,750
EU
|
1,100
EU
|
500
EU
|
4,350
EU
|
Following Daimler's recent decision to terminate MCI's Setra
Distribution Rights Agreement (DRA), there are no sales of
new Setra motor coaches planned for 2018. The DRA was
established in 2012, and since then MCI has only sold a total of
282 new Setra coaches, of which 21 were sold in 2017.
With respect to parts, ongoing surveys and discussions with
large parts customers continue to indicate a number of market
effects including: inventory reduction strategies, budget
constraints and fleet modernization efforts. Although part
sales remain difficult to forecast, management expects that the
parts market will remain relatively stable in 2018, but may
experience quarter-to-quarter volatility as is typical for this
segment of the business. As a result of the Setra DRA termination
however, approximately $4 million of
parts sales have been removed from the budget for the second half
of 2018.
U.S. Tax Reform
As a result of U.S. tax reform in December 2017, NFI Group expects a reduction in
consolidated effective tax rate (ETR). NFI Group's
consolidated ETR prior to US tax reform ranged from 32% to 36%
reflecting benefits related to interest deductions and the domestic
production activities deduction which will no longer be
available. Although the US federal statutory tax rate
decreased from 35% to 21%, NFI Group's ETR for 2018 and subsequent
years is expected to be in the range of 29% to 31%.
This range includes US state taxes which brings the combined US
federal and state statutory tax rate to approximately 27% and the
impact related to the fact that NFI's most significant Canadian
operating entity (New Flyer Industries Canada ULC, an entity taxed
in both the US and Canada) will
not be able to fully utilize foreign tax credits as the Canadian
tax rate is now higher than the US Federal tax rate. The
expected ETR range can also be significantly impacted for
non-recurring items.
NAFTA
NFI Group's manufacturing facilities operate in an integrated
manner with parts and components shipping in both directions over
the Canadian/US border. NFI Group's supply chain has been
established to ensure compliance with the more stringent US Federal
Buy America requirements for rolling stock funded by FTA grants. In
the case of both New Flyer and MCI public customers, a certain
quantity of bus and motor coach shells are manufactured in
Canada and shipped for final
assembly in the United States. In the case of private sector
sales, all MCI motor coaches are manufactured in Canada.
Under the current NAFTA agreement, all shells and finished buses
and coaches move across the border free of any duties. Nearly all
the purchased components sourced in the NAFTA region meet the
current 62.5% regional content requirement and therefore also move
across the border free of any duties. NFI Group today pays
immaterial tariffs for non-NAFTA supply.
Any amendments that would impose duties on parts, shells and
finished bus and coach could have a financial impact given
materials comprise 70% of manufacturing costs and complete buses
and coaches are imported to each country on a regular basis.
Management continues to closely monitor NAFTA negotiations and is
developing contingency plans to mitigate should changes occur to
the current agreement.
NOTE: All dollar amounts are stated in U.S. currency based on an
exchange rate of U.S. $1.00 = CAD
$ 1.2545 to calculate the value of
the Canadian contracts in this release.
About NFI Group
NFI Group and its subsidiaries comprise the largest bus and
motor coach manufacturer and parts distributor in North America, with 32 fabrication,
manufacturing, distribution, and service centers located across
Canada and the United States and employing nearly 6,000
team members.
NFI Group provides a comprehensive suite of mass transportation
solutions under several brands: New Flyer® (heavy-duty
transit buses), ARBOC® (low-floor cutaway and
medium-duty buses), MCI® (motor coaches), and NFI Parts™
(bus and coach parts, support, and service). NFI Group's
vehicles incorporate the widest range of drive systems available
ranging from clean diesel, natural gas, diesel-electric hybrid,
trolley-electric, battery-electric and fuel cell.
- New Flyer is North America's
heavy-duty transit bus leader and offers the most advanced product
line under the Xcelsior® and Xcelsior CHARGE™ brands.
New Flyer 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.
- ARBOC is North America's
low-floor, body-on-chassis ("cutaway") bus leader serving transit,
paratransit, and shuttle applications. With more than 2,500 buses
in service, ARBOC leads the low-floor cutaway bus market providing
unsurpassed passenger accessibility and comfort over traditional
high-floor cutaway vehicles. ARBOC also offers a medium-duty bus
for transit and shuttle applications.
- MCI is North America's motor
coach leader offering the J-Series, the industry's best-selling
intercity coach for 11 consecutive years, and the D-Series, the
industry's best-selling motor coach line in North American history.
MCI actively supports over 28,000 coaches currently in
service.
- NFI Parts is North America's
most comprehensive bus and motor coach parts organization,
providing replacement parts, technical publications, training,
service, and support for NFI Group's product lines.
Further information is available at www.newflyer.com,
www.arbocsv.com, and www.mcicoach.com. The common shares of NFI
Group are traded on the Toronto Stock Exchange under the symbol
NFI.
Forward-Looking Statements
This press release may
contain forward-looking statements relating to expected future
events and financial and operating results of NFI Group 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, but not limited to changes in Canadian or
United States tax legislation,
trade policies in the United
States and Canada
(including NAFTA) may undergo significant change, potentially in a
manner materially adverse to NFI Group and those 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.