WINNIPEG, April 15, 2019 /CNW/ - (TSX: NFI) NFI Group Inc.
("NFI" or "the Company"), the leading bus and motor coach
manufacturer and parts distributor in North America, today announced its deliveries,
order activity and backlog update for the 13-week period ended
March 31, 2019 ("Q1 2019").
Year-over-year comparisons reported in this release compare Q1 2019
to the 13-week period ended April 1,
2018 ("Q1 2018") and previous quarter comparisons compare Q1
2019 to the 13-week period ended December
30, 2018 ("Q4 2018").
In its March 13, 2018 results
press release, NFI advised that Q1 2019 production throughput and
deliveries were negatively impacted by abnormal factors including:
adverse winter weather conditions which caused missed production
days and delayed customer inspections, new model launches, which
impacted production line efficiencies, and chassis supply
disruption for select ARBOC vehicles
Deliveries, Order Activity, and Option Expiry
NFI delivered 903 equivalent units ("EUs") in Q1 2019, a
decrease of 90 EUs compared to Q1 2018. For the 52-week period from
April 2, 2018 to March 31, 2019 ("LTM Q1 2019") NFI delivered
4,224 EUs, an increase of 294 EUs from the 52-week period
April 3, 2017 to April 1, 2018 ("LTM Q1 2018"). Total inventory at
March 31, 2019 increased 165 EUs from
the previous quarter to 688 EUs.
NFI Deliveries
(EUs)
|
|
Heavy-Duty
Transit
(New
Flyer)
|
Motor
Coaches
(MCI)
|
Cutaway and
Medium-Duty
(ARBOC)
|
Total
|
Q1 2018
|
671
|
187
|
135
|
993
|
Q1
2019
|
693
|
140
|
70
|
903
|
LTM Q1
2018
|
2,749
|
1,018
|
162
|
3,929
|
LTM Q1
2019
|
2,803
|
983
|
437
|
4,223
|
* Heavy-Duty Transit
Q1 2018 and LTM Q1 2018 deliveries include 17 EUs from MiDi bus
sales under the terminated joint venture with Alexander Dennis
Limited.
|
NFI's new orders in Q1 2019 totaled 909 EUs, which included firm
orders of 708 EUs (valued at $284.1
million) and option orders of 201 EUs (valued at
$78.4 million). In addition, 126
option EUs were converted to firm orders (valued at $53.7 million).
Total reported orders do not include 106 EUs of new firm and
option orders that were pending at the end of Q1 2019, where
approval of the award to NFI had been made by the customer's board,
council, or commission, as applicable, but purchase documentation
had not yet been received by NFI and are therefore not yet included
in the backlog.
NFI's LTM Q1 2019 Book-to-Bill ratio (defined as new firm and
option orders divided by deliveries) was 93%, an increase of 6%
from LTM Q4 2018.
|
New
Orders
in Quarter
(Firm
and Option EUs)
|
New
Orders
LTM (Firm
and Option EUs)
|
Option EUs
Converted in
Quarter to Firm
|
Option EUs
Converted LTM
to Firm
|
Q1
2018
|
736
|
5,848
|
441
|
1,627
|
Q2
2018
|
1,413
|
6,303
|
505
|
1,743
|
Q3
2018
|
757
|
5,426
|
274
|
1,458
|
Q4
2018
|
857
|
3,763
|
575
|
1,795
|
Q1
2019
|
909
|
3,936
|
126
|
1,480
|
Note: LTM
refers to the last twelve months ended at the end of the quarterly
period indicated
|
The majority of public transit contracts bid by both New Flyer
and MCI, have a term of five years and include both firm orders and
options. The following table shows the number of option EUs that
have been exercised or expired annually over the past five years,
as well as the current backlog of options that will expire each
year, if not exercised.
In
EUs
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
A. Options
Expired
|
965
|
504
|
550
|
331
|
741
|
248
|
|
|
|
|
B. Options
Exercised
|
1,149
|
1,339
|
2,064
|
1,404
|
1,795
|
126
|
|
|
|
|
C. Remaining
Options
by year of expiry
|
|
|
|
|
|
925
|
1,189
|
1,630
|
2,334
|
933
|
D. Conversion Rate
%
= B / (A+B)
|
54%
|
73%
|
79%
|
81%
|
71%
|
|
|
|
|
|
NFI's option conversion rate can vary significantly from
quarter-to-quarter and should be looked at on an annual or LTM
basis.
Backlog and Production
At the end of Q1 2019, NFI's total backlog was 10,587 EUs
(valued at $5.16 billion) compared to
10,833 EUs (valued at $5.35
billion) at the end of Q4 2018.
Total Backlog
(EUs)
|
Firm
Orders
|
Options
|
Total
|
Ending backlog at Q4
2018
New orders in Q1
2019
Options exercised in
Q1 2019
Deliveries in Q1
2019
Cancelled/expired in
Q1 2019
|
3,649
708
126
(903)
(4)
|
7,184
201
(126)
-
(248)
|
10,833
909
-
(903)
(252)
|
Ending Backlog at
Q1 2019
|
3,576
|
7,011
|
10,587
|
Total Backlog
(EUs)
|
Firm
Orders
|
Options
|
Total
|
$B
US
|
Heavy-Duty Transit
Buses
|
2,878
|
6,035
|
8,913
|
$4.34
|
Motor
Coaches
|
516
|
976
|
1,492
|
$0.79
|
Cutaway and
Medium-Duty Buses
|
182
|
-
|
182
|
$0.03
|
Ending Backlog at
Q1 2019
|
3,576
|
7,011
|
10,587
|
$5.16
|
The majority of NFI's backlog relates to New Flyer transit buses
for public clients with some of the backlog consisting of units
from MCI and ARBOC. Customer options for ARBOC vehicles are held by
dealers, and therefore are not included in the NFI backlog, but are
converted to firm backlog when vehicles are ordered by the
dealer.
Transit buses and motor coaches incorporating clean propulsion
systems, including compressed natural gas, diesel-electric hybrid,
and zero-emission buses and motor coaches ("ZEBs", which consist of
trolley-electric, fuel cell-electric and battery-electric buses),
represent approximately 40% of the total backlog. ZEBs alone
represent approximately 4% of total backlog.
Parts Activity
Total shipments by NFI Parts for Q1 2019 increased by 7.2%
compared to the previous quarter and decreased by 8.4% compared to
Q1 2018. The lower shipments in Q1 2019 compared to Q1 2018 was
largely due to lower bid activity during the period, primarily from
the motor coach market. ARBOC aftermarket parts orders and
shipments are not included in these figures as they are not
material.
Market Demand and Outlook
NFI's Bid Universe metric attempts to reflect active
public-sector competitions in Canada and the
United States and to provide an overall indicator of active
bid activity and anticipated 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 projections
of expected EUs to be placed out for competition over the next five
years.
At the end of Q1 2019, the total Bid Universe was 24,532 EUs, an
increase of 4.7% from Q4 2018, while the active Bid Universe
increased by 24.1% in the quarter. The Bid Universe EUs fluctuate
significantly from quarter-to-quarter based on public tender
activity procurement and award processes.
In
EUs
|
Bids in
Process
|
Bids
Submitted
|
Total
Active
|
Forecast New
Procurements
over next 5 Years
|
Total Bid
Universe
|
Q1
2018
|
2,974
|
3,479
|
6,453
|
17,186
|
23,639
|
Q2
2018
|
1,319
|
2,391
|
3,710
|
18,440
|
22,150
|
Q3
2018
|
955
|
2,323
|
3,278
|
18,084
|
21,362
|
Q4
2018
|
670
|
2,061
|
2,731
|
20,694
|
23,425
|
Q1
2019
|
1,350
|
2,039
|
3,389
|
21,143
|
24,532
|
The number of active bids in Q1 2019 and ongoing discussions
with public transit agencies throughout the U.S. and Canada supports management's belief that there
will be an increase in the number of requests for proposals and
public tenders issued in Fiscal 2019 and 2020, when compared to
2018 activity. While management anticipates increased bid
activity, it cautions that the individual awards may be smaller in
size with fewer options or shorter contract terms while transit
agencies develop plans for future battery-electric vehicle
adoption.
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
made on a transactional basis. As a result, NFI is unable to create
a Bid Universe metric for private sector buses or motor
coaches. Cutaway and medium-duty buses manufactured by ARBOC
are also typically sold on a transactional basis through third
party dealers who hold contracts directly with the operators.
Bids are submitted by and contracts are held with non-exclusive
dealers and therefore there is no NFI Bid Universe metric for
cutaways and medium-duty buses.
Management believes the significant investments the Company has
made in new product models, ZEBs, facility upgrades and LEAN
manufacturing processes, parts fabrication, and IT harmonization
will permit NFI to defend its leading positions in core
markets.
Based on the Q1 2019 chassis supply disruption for select ARBOC
low-floor cutaway vehicles, management is updating its Fiscal 2019
delivery guidance to reflect lower anticipated ARBOC deliveries.
ARBOC continues to focus on its higher medium-duty bus offering
which has been performing well with customers and is expected to
make-up 10% to 15% of ARBOC's total deliveries. The higher margin
medium-duty deliveries will help offset some of the impact felt
from decreased low-floor cutaway deliveries. No changes have been
made to heavy-duty transit or motor coach delivery guidance.
Management's Fiscal 2019 guidance is now revised to 4,410 EUs, a
decrease of 45 EUs from previously reported expected deliveries,
and is expected to comprise the following vehicle types:
Heavy-Duty
Transit
|
Motor
Coach
|
Cutaway and
Medium-Duty
|
Total
|
2,845
EU
|
1,065
EU
|
500
EU
|
4,410
EU
|
NFI Parts continues to focus on strategic initiatives to counter
competitive intensity including: additional focus on vendor managed
inventory ("VMI") programs, an enhanced product offering,
increasing parts sales for cutaway vehicles and capitalizing on the
implementation of a common IT platform. Due to the nature of the
aftermarket parts business, parts sales remain difficult to
forecast resulting in quarter-to-quarter volatility which at times
can be material.
NFI's Q1 2019 earnings are expected to continue to be negatively
impacted by several factors, including: the previously mentioned
abnormal factors impacting production and deliveries, ongoing
start-up expenses of KMG Fabrication, (NFI's new Shepherdsville, KY parts fabrication
facility), margin pressure in the private motor coach segment and
decreased overhead absorption from lower deliveries. The Company's
annual delivery schedule has an element of seasonality due to the
nature of each market segment and the annual production and
vacation shut-downs of each manufacturing facility. As a
result, deliveries are expected to trend higher in the second
quarter and the fourth quarter of the year as compared to the first
and third quarters.
As previously noted, extreme winter weather during Q1 2019
negatively impacted the timing of several New Flyer and MCI
deliveries. There is also the potential for spring flooding in
Manitoba, North Dakota and Minnesota in Q2 2019 that could impact
deliveries. Management is monitoring the potential flood risk
carefully and will advise the market if a material operational
impact occurs.
NFI's Commitment to Environmental Social Governance
As part of NFI's ongoing commitment to transparent reporting and
governance it recently published its inaugural Environmental Social
Governance report. The report provides details on numerous employee
programs at NFI as well as performance metrics related to health
and safety, diversity and inclusion and environmental impact. The
full report can be found at
https://www.nfigroup.com/site-content/uploads/2019/03/Environmental-Social-Governance-Report-2019-web.pdf
NFI's Q1 2019 Financial Results Announcement and Conference
Call Details
NFI intends to release its Q1 2019 financial results after
market close on May 8, 2019. A
conference call for analysts and interested listeners will be held
on May 9, 2019 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:
https://event.on24.com/wcc/r/1978226/70EB3F20598D871CFAC433424E608451
A replay of the call will be available from 11:00 a.m. (ET) on May 9,
2098 until 11:59 p.m. (ET) on
May 16, 2019. To access the replay,
call 855-859-2056 or 416-849-0833 and then enter pass code number
7840939. The replay will also be available on NFI Group's web site
at www.nfigroup.com.
NOTE: All dollar amounts in this release are stated in U.S.
currency. Canadian dollar amounts have been converted based on an
exchange rate of U.S. $1.00 = CAD
$1.3363 to calculate the value of the
Canadian contracts in this release. One EU represents one 30-foot,
35-foot or 40-foot heavy-duty transit bus, one medium-duty bus, one
low-floor cutaway bus or one motor coach. An articulated transit
bus, which is an extra long transit bus (approximately 60-feet in
length), composed of two passenger compartments connected by a
joint mechanism represents two EUs.
About NFI Group Inc.
With over 6,300 team members, operating from 31 facilities
across Canada and the United States, NFI is North America's largest bus manufacturer
providing a comprehensive suite of mass transportation solutions
under brands: New Flyer® (heavy-duty transit buses),
ARBOC® (low-floor cutaway and medium-duty buses),
MCI® (motor coaches), and NFI Parts™ (parts,
support, and service). NFI buses incorporate the widest range of
drive systems available including: clean diesel, natural gas,
diesel-electric hybrid, and zero-emission electric (trolley,
battery, and fuel cell) on proven bus platforms. It also supports
infrastructure development through New Flyer Infrastructure
Solutionsâ„¢, a service dedicated to providing safe and reliable
charging and mobility solutions. In total, NFI supports over 74,000
buses and coaches currently in service across North America. For the fiscal year ended
December 30, 2018, NFI posted
revenues of US $2.5 billion.
Further information is available at www.nfigroup.com,
www.newflyer.com, www.mcicoach.com and www.arbocsv.com. The
common shares of NFI are traded on the Toronto Stock Exchange under
the symbol NFI.
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 and the market outlook for the
Company's products and services. 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 release. Such forward-looking statements include
statements with respect to customer demand for buses, motor coaches
and parts; management's forecasted outlook for the bus, motor coach
and parts businesses; management's expectations regarding future
heavy-duty bus and motor coach procurement and bid activity.
Forward-looking statements involve significant risks and
uncertainties, and are not to 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,
customer demand and 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; the Company may have difficulty selling preowned coaches and
realizing expected resale values; aggressive competition and
reduced pricing in the industry; the absence of fixed term customer
contracts and the suspension or the termination of contracts by
customers for convenience; production delays may result in
liquidated damages under the Company's contracts with its
customers; inability of the Company 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;
inability of the Company to successfully execute strategic plans on
time and on budget and maintain profitability, development of
competitive products or technologies; a disruption, termination or
alteration of the supply of vehicle chassis or other critical
components from third-party suppliers; risks related to
acquisitions and other strategic relationships with third parties;
inability 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. NFI cautions that this list of
factors is not exhaustive. These factors and other risks and
uncertainties are discussed in NFI's press releases and materials
filed with the Canadian securities regulatory authorities which are
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 NFI assumes no
obligation to update or revise them to reflect new events or
circumstances, except as required by applicable securities
laws.
SOURCE NFI Group Inc.