Summary of 2019 Q1 results compared to 2018 Q1:
- Revenue of $567 million
decreased by 2%.
- Adjusted EBITDA of $60.3
million decreased by 18%.
- Net earnings of $16.1 million
decreased by 47%. Earnings per Share of $0.26 decreased by 46% and Adjusted Earnings per
Share of $0.26 decreased by 54%.
- Free Cash Flow of $32.4
million decreased by 20%.
- Dividends declared of C$25.9
million increased by 26%, representing a first
quarter payout ratio of 60%.
- During 2019 Q1, the Company repurchased 232,100 shares
through its Normal Course Issuer Bid ("NCIB") for a total cost of
C$7.4 million at an average price of
C$31.45.
- Overall Bid Universe increased by 5% from 2018 Q4 to 24,532
EUs, with active bids up by 24.1%.
WINNIPEG, May 8, 2019 /CNW/ - (TSX:NFI) NFI Group
Inc., ("NFI" or the "Company"), the leading transit bus
and motor coach manufacturer and parts distributor in North America, today announced its financial
results for 2019 Q1(1). Readers are strongly
advised to view the unaudited interim consolidated financial
statements (the "Financial Statements") and the Management's
Discussion and Analysis (the "MD&A") that are available at the
Company's website at:
https://www.nfigroup.com/investor-relations/performance-reports/ and
under the Company's profile on www.sedar.com
"The first quarter is typically NFI's slowest period and our
financial results reflected this seasonality," said Paul Soubry, President and Chief Executive
Officer of NFI. "While there were some unusual headwinds during the
first quarter related to adverse weather and chassis supply
disruption for certain ARBOC vehicles, there were also many
positives including an increase in active bids, significant new
vehicle awards, improvement in our book-to-bill ratio and the
successful launch of New Flyer Infrastructure Solutions. I am
encouraged by our performance in the second quarter and have a
positive outlook for the remainder 2019 as we expect to realize the
benefits of investments made in our business which will help us
enhance our competitiveness, maintain leadership positions, improve
margins, generate strong free cash flow and return capital to
shareholders."
(1) Results noted
herein are for the 13-week period ("2019 Q1") and the 52-week
period ("LTM 2019 Q1") ended March 31, 2019. Year-over-year
comparisons reported in this press release compare 2019 Q1 to the
13-week period ("2018 Q1") and the 52-week period ended April 1,
2018. Comparisons are also made to the 13-week period ("2018 Q4")
ended December 30, 2018. Unless otherwise indicated, all monetary
amounts in this press release are expressed in U.S.
dollars.
|
2019 Q1 Impact of the Transition to IFRS 16
Effective December 31, 2018, the
Company adopted IFRS 16, the accounting standard which specifies
how to recognize, present and disclose leases. This standard
provides a single lessee accounting model, requiring lessees to
recognize assets and liabilities for all major leases. On
transition, the Company has elected to use the following
practical expedients and policies:
- To utilize the modified retrospective approach to adopting the
standard, accordingly comparative information for 2018 has not been
restated
- To utilize the definition of a lease under International
Accounting Standard 17 to identify contracts that are, or contain,
leases
- To exclude the recognition of the right-of-use asset and lease
liability for leases with a term of twelve months or less
- To exclude the recognition of the right-of-use asset and lease
liability for leases of low-value assets
- To value the right-of-use asset as equal to the lease
liability, adjusting for related amounts prepaid or accrued
The impact of the adoption of IFRS 16 primarily impacts NFI's
Earnings from Operations, Adjusted EBITDA, Net earnings and
Adjusted Net Earnings, and the associated per common share
("Share") amounts, Return on Invested Capital ("ROIC") and several
balance sheet accounts as reported in the Financial Statements and
MD&A. The primary impacts of the transition on several of NFI's
key financial metrics are summarized in the table below.
|
|
|
|
|
|
Impact of IFRS 16
Transition on Consolidated Results
|
|
|
|
|
|
(Unaudited, U.S.
dollars in millions)
|
|
2019
Q1
|
2019
Q1
(excluding
IFRS 16)
|
|
2018
Q1
|
Adjusted
EBITDA
|
|
|
|
|
|
Manufacturing
|
|
$
|
42.4
|
$
|
40.5
|
|
$
|
53.9
|
Aftermarket
|
|
17.9
|
17.3
|
|
19.9
|
Total Adjusted
EBITDA
|
|
$
|
60.3
|
$
|
57.8
|
|
$
|
73.8
|
|
|
|
|
|
|
Earnings from
operations
|
|
$
|
40.9
|
$
|
40.5
|
|
$
|
51.8
|
Net
earnings
|
|
$
|
16.1
|
$
|
17.5
|
|
$
|
30.4
|
Adjusted net
earnings
|
|
$
|
15.8
|
$
|
17.2
|
|
$
|
36.1
|
|
|
|
|
|
|
Adjusted EBITDA % of
revenue
|
|
|
|
|
|
Manufacturing
|
|
8.9%
|
8.5%
|
|
11.2%
|
Aftermarket
|
|
19.8%
|
19.0%
|
|
19.9%
|
Total Adjusted
EBITDA as % of revenue
|
|
10.6%
|
10.2%
|
|
12.7%
|
Manufacturing Adjusted
EBITDA per new EU
|
|
$
|
47.0
|
$
|
44.9
|
|
$
|
54.3
|
|
|
|
|
|
|
Net earnings per
Share (basic)
|
|
$
|
0.26
|
$
|
0.29
|
|
$
|
0.48
|
Adjusted earnings
per Share (basic)
|
|
$
|
0.26
|
$
|
0.28
|
|
$
|
0.57
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,205.2
|
$
|
2,099.3
|
|
$
|
2,045.3
|
Total long-term
liabilities
|
|
972.3
|
863.3
|
|
814.4
|
ROIC (Last Twelve
Months ("LTM"))
|
|
12.5%
|
12.5%
|
|
16.2%
|
Management recommends that readers review the Company's
Financial statements and MD&A for 2019 Q1 that provides further
details on the impact of adoption of IFRS 16. All other financial
information provided for 2019 Q1 within this release is presented
with adoption for IFRS 16.
2019 Q1 Financial Results
|
|
|
|
|
|
|
Consolidated
Results
|
|
2019
Q1
|
2018
Q1
|
|
LTM
2019
Q1(1)
|
LTM
2018
Q1(1)
|
(Unaudited, U.S.
dollars in millions)
|
|
|
Deliveries
(Equivalent Units "EUs")
|
|
|
|
|
|
|
Transit bus
|
|
693
|
671
|
|
2,803
|
2,750
|
Motor coach
|
|
140
|
187
|
|
983
|
1,017
|
Medium-duty and
cutaway buses
|
|
70
|
135
|
|
437
|
162
|
New transit bus,
coach and cutaway deliveries
|
|
903
|
993
|
|
4,223
|
3,929
|
Pre-owned coach
deliveries
|
|
83
|
64
|
|
487
|
409
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Manufacturing
|
|
$
|
476.4
|
$
|
478.6
|
|
$
|
2,139.7
|
$
|
2,015.3
|
Aftermarket
|
|
90.6
|
100.1
|
|
367.7
|
373.1
|
Total
Revenue
|
|
$
|
567.0
|
$
|
578.7
|
|
$
|
2,507.4
|
$
|
2,388.3
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
Manufacturing
|
|
$
|
42.4
|
$
|
53.9
|
|
$
|
228.1
|
$
|
243.6
|
Aftermarket
|
|
17.9
|
19.9
|
|
73.7
|
76.8
|
Total Adjusted
EBITDA
|
|
$
|
60.3
|
$
|
73.8
|
|
$
|
301.8
|
$
|
320.4
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
Earnings from
operations
|
|
$
|
40.9
|
$
|
51.8
|
|
$
|
227.0
|
$
|
248.8
|
Non-cash gain
(loss)
|
|
0.9
|
(3.1)
|
|
4.5
|
(1.0)
|
Interest
expense
|
|
(18.1)
|
(3.8)
|
|
(42.0)
|
(17.8)
|
Income tax
expense
|
|
(7.7)
|
(14.5)
|
|
(43.9)
|
(46.1)
|
Net
earnings
|
|
$
|
16.1
|
$
|
30.4
|
|
$
|
145.7
|
$
|
183.8
|
Adjusted net
earnings
|
|
$
|
15.8
|
$
|
36.1
|
|
$
|
146.0
|
$
|
192.2
|
|
|
|
|
|
|
|
Free cash flow (U.S.
dollars)
|
|
$
|
32.4
|
$
|
40.7
|
|
$
|
151.3
|
$
|
161.5
|
Free cash flow (CAD
dollars)
|
|
$
|
43.2
|
$
|
52.4
|
|
$
|
201.3
|
$
|
205.7
|
Declared dividends
(CAD dollars)
|
|
$
|
25.9
|
$
|
20.5
|
|
$
|
95.7
|
$
|
81.8
|
|
|
|
|
|
|
|
Adjusted EBITDA % of
revenue
|
|
|
|
|
|
|
Manufacturing
|
|
8.9%
|
11.2%
|
|
10.7%
|
12.1%
|
Aftermarket
|
|
19.8%
|
19.9%
|
|
20.0%
|
20.6%
|
Total Adjusted
EBITDA as % of revenue
|
|
10.6%
|
12.7%
|
|
12.0%
|
13.4%
|
Manufacturing
Adjusted EBITDA per new EU
|
|
$
|
47.0
|
$
|
54.3
|
|
$
|
54.0
|
$
62.0
|
|
|
|
|
|
|
|
Net earnings per
Share (basic)(2)
|
|
$
|
0.26
|
$
|
0.48
|
|
$
|
2.33
|
$
|
2.96
|
Adjusted earnings
per Share (basic)
|
|
$
|
0.26
|
$
|
0.57
|
|
$
|
2.33
|
$
|
3.10
|
|
|
|
|
|
|
|
Average EU selling
price (dollars in thousands)
|
|
|
|
|
|
|
Transit
buses
|
|
$
|
552.6
|
$
|
533.4
|
|
$
|
544.8
|
$
|
509.3
|
Motor
coaches
|
|
529.5
|
522.2
|
|
522.5
|
534.1
|
Medium-duty and
cutaway buses
|
|
103.8
|
81.8
|
|
87.0
|
82.4
|
New transit bus,
coach and cutaway deliveries
|
|
$
|
500.3
|
$
|
469.9
|
|
$
|
492.3
|
$
|
498.1
|
Pre-owned
coach
|
|
$
|
120.6
|
$
|
127.1
|
|
$
|
98.9
|
$
|
125.8
|
|
(1) Within the LTM
2019 Q1 results only 2019 Q1 numbers include IFRS 16. LTM 2018 Q1
results do not include IFRS 16. Totals may not add due to
rounding.
|
Manufacturing revenue decreased by $2.2
million, or 0.5%, in comparison to 2018 Q1. Heavy-duty
transit revenues were up by $25.1
million quarter-over-quarter from sales mix and increased
volumes but were offset by a 24.1% decrease in motor coach volumes
and a $3.8 million decrease in medium
and low-floor cutaway revenues, which was driven by a chassis
supply disruption for certain ARBOC vehicles. The lower coach
volumes were driven by unfavorable weather, larger seasonality
impact than 2018 Q1 and new model launches impacting production
line efficiency. While heavy-duty transit volumes were higher than
the comparative period, they were negatively impacted by
unfavorable weather. Management expects the lost heavy-duty and
low-floor cutaway volumes will be recovered in future periods.
Aftermarket revenue decreased by $9.5
million, or 9.5%, compared to 2018 Q1, primarily due to the
impact from lost parts sales as a result of Daimler's termination
of MCI's Distribution Rights Agreement ("DRA") to sell and support
German made Setra motor coaches in the U.S. and Canada, market softness in the private motor
coach aftermarket segment and fewer fleet renewal programs. A
positive trend in the Aftermarket segment was 6% revenue growth in
2019 Q1 from 2018 Q4.
Manufacturing Adjusted EBITDA decreased by $11.5 million, or 21.3%, primarily due to lower
coach and medium-duty and low-floor cutaway delivery volumes and
the impact of adverse weather on the coach and heavy-duty transit
businesses. Unfavorable weather conditions resulted in lost
production days, overhead inefficiency and higher overtime costs,
in both the New Flyer and MCI businesses. Additionally,
increased production of new products and related learning curves
plus normal changes in margin due to sales mix contributed to the
overall reduction in Adjusted EBITDA. Continued startup losses
incurred in the Shepherdsville parts fabrication facility (operated
by NFI subsidiary, KMG Fabrication Inc. ("KMG")) of $2.0 million also negatively impacted 2019 Q1
results. The KMG startup loss in 2019 Q1 was an improvement from
the $3.4 million loss in 2018 Q4.
Aftermarket Adjusted EBITDA decreased by $2.0 million compared to 2018 Q1. The
decrease is primarily due to lower sales volumes driven by lost
parts sales from the Setra DRA, and softness in private motor coach
and fleet renewal programs.
Net earnings during 2019 Q1 decreased by $14.3 million, or 47.0%, compared to 2018 Q1, and
Net Earnings per Share decreased by $0.22. In addition to the factors that led to the
decrease in Adjusted EBITDA, interest expense increased by
$14.3 million, primarily from losses
on the Company's interest rate derivatives and higher average draw
under the Company's credit facility due to changes in working
capital, Share repurchases under the Company's NCIB and dividends
paid. Partially offsetting these items were lower income tax
expenses.
Adjusted Net Earnings during 2019 Q1 decreased by $20.3 million compared to 2018 Q1, primarily due
to the previously mentioned impacts on Net Earnings.
Liquidity
Free cash flow in 2019 Q1 decreased by $8.3 million, or 20.4%, when compared to 2018 Q1.
The decrease was primarily due to lower earnings from operations.
Dividends declared increased by 26.3% in 2019 Q1 as a result of
increases in the annual dividend rate, partially offset by the
impact of repurchases under the Company's NCIB program. The factors
noted above temporarily increased the payout ratio from 39.0% to
60.0%.
NFI's liquidity position as at March 31,
2019 was $301.5 million a
decrease from the position of $355.4
million at December 31, 2018.
The decrease in liquidity primarily relates to the amount of
capital returned to shareholders through dividends and repurchase
of shares under the NCIB as well as changes in non-cash working
capital, which are primarily seasonal in nature and expected to be
temporary. Management believes these funds, together with share and
debt issuances, other borrowings capacity and the cash generated
from NFI's operating activities, will provide the Company with
sufficient liquidity and capital resources to meet its current
financial obligations as they come due, as well as provide funds
for its financing requirements, capital expenditures, the increased
dividend payments and other operational needs for the foreseeable
future.
Outlook
Management's outlook for the heavy-duty transit bus market
remains healthy, while private motor coach is expected to continue
to experience some headwinds. Overall, demand for low-floor cutaway
and medium-duty buses is encouraging. Management believes the
significant investments the Company has made in new product models,
zero-emission buses (ZEBs), facility upgrades and LEAN
manufacturing processes, parts fabrication, and IT harmonization
will permit NFI to enhance competitiveness and maintain leading
positions in core markets.
As noted in NFI's April
15th deliveries, orders and backlog release ARBOC
experienced chassis supply disruption during the first quarter for
certain ARBOC low-floor cutaway vehicles which impacted NFI's
ability to deliver products. While ARBOC is now consistently
receiving chassis in order to reflect the 2019 Q1 impact of lower
cutaway deliveries, management has updated its Fiscal 2019 delivery
guidance. 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 low-floor cutaway EUs from
previously reported expected deliveries.
Management was encouraged by first quarter growth in NFI's Bid
Universe, which is a Company generated metric that reflects active
public-sector competitions in Canada and the
United States and a forecast of public customer projections
for expected EUs to be placed out for competition over the next
five years. At the end of 2019 Q1, the total Bid Universe was
24,532 EUs, an increase of 4.7% from 2018 Q4, while the active Bid
Universe, which includes all requests for proposals received and in
process of review plus bids submitted and awaiting customer action,
increased by 24.1%. The Bid Universe EUs fluctuate significantly
from quarter-to-quarter based on public tender activity procurement
and award processes.
ZEBs continue to be an area of growing focus for New Flyer
customers. ZEBs currently represent approximately 5% of New Flyer's
total backlog, with significant orders from major cities including:
Toronto, Boston, Minneapolis, San
Diego, New York,
Seattle, Portland, Oakland, and Vancouver. In August of 2018, New Flyer
received Canada's largest ever
battery-electric bus order from two Quebec operators. To further strengthen NFI's
ZEB offering, in 2019 Q1 the Company launched New Flyer
Infrastructure Solutionsâ„¢, a service aimed at providing
safe, reliable, smart and sustainable charging and mobility
solutions to public transit customers.
NFI Parts continues to focus on numerous strategic initiatives
to counter competitive intensity and deliver profit growth. These
initiatives include additional focus on vendor managed inventory
(VMI) programs, an enhanced product
offering, and capitalizing on the implementation of a common IT
platform across the aftermarket business.
With the addition of MCI and ARBOC, the Company's annual
delivery schedule now has an element of seasonality due to the
nature of each market segment and the annual production and
vacation schedule of each manufacturing facility. Overall,
management anticipates deliveries will tend to be higher in the
second and the fourth quarters of the year as compared to the first
and third quarters. This seasonality will be reflected in the
Company's financial results for those respective periods. Within
NFI Parts management expects there to be typical quarter-to-quarter
volatility.
While 2019 Q1 financial results were negatively impacted by
adverse weather, chassis supply disruption and lower seasonal
volumes in motor coach, management does not expect the same factors
to repeat in the second quarter. Management anticipates that a
significant portion of the missed heavy-duty transit deliveries
from 2019 Q1 should be made up during the remainder of the
year.
Management believes NFI's strong Free Cash Flow generation and
low leverage position it well to continue to purchase Shares under
its NCIB, while permitting it to maintain its current dividend
rate. The Company continues to consider strategic initiatives to
grow and diversify the business, including through investments in
its current operations and evaluation of strategic acquisition
opportunities.
Returning Capital to Shareholders
On June 11, 2018, the Company
announced that the Toronto Stock Exchange ("TSX") had accepted a
notice filed by the Company of its intention to implement the NCIB.
During 2019 Q1 the Company repurchased 232,100 Shares at an average
price of C$31.82 per Share for a
total repurchase cost of C$7.4
million.
On March 13, 2019, the Company's
board of directors (the "Board") approved an increase in the annual
dividend rate from C$1.50 per Share
to C$1.70 per Share, which
represented an increase of 13.3%. The dividend increase was
supported by continued expectations for strong Free Cash Flow
generation and lower expected capital expenditures in Fiscal 2019.
The new annual dividend rate of C$1.70 per Share became effective for dividends
declared after March 13, 2019.
Board Member Renewal
One of NFI's longest serving board member, Mr. V. James Sardo, has announced that he will not be
seeking re-election to NFI's board and he will be retiring
following the Company's 2019 Shareholders' Meeting to be held on
May 9, 2019. Mr. Sardo first joined
NFI's board in 2005 when the Company launched its initial public
offering and brought a wealth of corporate knowledge to NFI's Board
gained from his numerous leadership positions with leading North
American companies. Mr. Sardo chaired the Company's Human
Resources, Compensation and Corporate Governance Committee where he
championed the Company's rigorous Board governance frameworks.
NFI's Board and management would like to thank Mr. Sardo for his
outstanding contribution to NFI and wish him all the best in
retirement.
Ms. Katherine Winter is being
nominated for the Board for the first-time at the Company's 2019
Shareholders Meeting. Ms. Winter is the Vice President &
General Manager, Automated Driving Solutions Division of Intel
Corporation (Intel's global organization which delivers
comprehensive platforms for Advanced Driver Assist Systems and
Autonomous Driving solutions). Prior to joining Intel, Ms. Winter
was Vice President, Software & Services, Automated Driving for
Delphi Electronics & Safety, where she led automated driving
efforts, global new-growth strategies for embedded and aftermarket
software products, and cloud-based automotive and consumer
services. Ms. Winter holds a Bachelor of Science in Industrial
Engineering from University of
Illinois, a Master of Business Administration from The
University of Chicago and attended
Harvard's Board Governance Executive
Program. Should Ms. Winter be elected to the Board, the Board will
be comprised of nine directors.
Conference Call
A conference call for analysts and interested listeners will be
held on May 9, 2019 at 8 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,
2019 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's web site at
www.nfigroup.com.
About NFI Group
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 Partsâ„¢ (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.
Non-IFRS Measures
References to "Adjusted EBITDA" are to earnings before interest,
income taxes, depreciation and amortization after adjusting for the
effects of certain non-recurring and/or non-operations related
items that do not reflect the current ongoing cash operations of
the Company including: gains or losses on disposal of property,
plant and equipment, unrealized foreign exchange losses or gains on
non-current monetary items, fair value adjustment for total return
swap, non-recurring transitional costs or recoveries relating to
business acquisitions, equity settled stock-based compensation,
gain on bargain purchase of subsidiary company, fair value
adjustment to acquired subsidiary company's inventory and deferred
revenue, past service costs, costs associated with assessing
strategic and corporate initiatives and proportion of the total
return swap realized. "Free Cash Flow" means net cash generated by
operating activities adjusted for changes in non-cash working
capital items, interest paid, interest expense, income taxes paid,
current income tax expense, effect of foreign currency rate on
cash, defined benefit funding, non-recurring transitional costs
relating to business acquisitions, past service costs, costs
associated with assessing strategic and corporate initiatives,
defined benefit expense, cash capital expenditures, proportion of
the total return swap realized, proceeds on disposition of
property, plant and equipment, gain received on total return swap
settlement, fair value adjustment to acquired subsidiary company's
inventory and deferred revenue and principal payments on capital
leases. References to "ROIC" are to net operating profit after
taxes (calculated as Adjusted EBITDA less depreciation of plant and
equipment and income taxes at the expected effective tax rate)
divided by average invested capital for the last twelve month
period (calculated as to shareholders' equity plus long-term debt,
obligations under finance leases, other long-term liabilities,
convertible debentures and derivative financial instrument
liabilities less cash).References to "Adjusted Net Earnings" are to
net earnings after adjusting for the after tax effects of certain
non-recurring and/or non-operational related items that do not
reflect the current ongoing cash operations of the Company
including: gains or losses on disposal of property, plant and
equipment, unrealized foreign exchange losses or gains on
non-current monetary items, fair value adjustment for total return
swap, non-recurring transitional costs or recoveries relating to
business acquisitions, equity settled stock-based compensation,
gain on bargain purchase of subsidiary company, fair value
adjustment to acquired subsidiary company's inventory and deferred
revenue, past service costs, costs associated with assessing
strategic and corporate initiatives and proportion of the total
return swap realized. References to "Adjusted Net Earnings per
Share" are to Adjusted Net Earnings divided by the average number
of Shares outstanding.
Management believes Adjusted EBITDA, Free Cash Flow, ROIC,
Adjusted Net Earnings and Adjusted Earnings per Share are useful
measures in evaluating the performance of the Company. However,
Adjusted EBITDA, Free Cash Flow, ROIC, Adjusted Net Earnings and
Adjusted Earnings per Share are not recognized earnings measures
under IFRS and do not have standardized meanings prescribed by
IFRS. Readers of this press release are cautioned that ROIC,
Adjusted Net Earnings and Adjusted EBITDA should not be construed
as an alternative to net earnings or loss or cash flows from
operating activities determined in accordance with IFRS as an
indicator of NFI's performance, and Free Cash Flow should not be
construed as an alternative to cash flows from operating, investing
and financing activities determined in accordance with IFRS as a
measure of liquidity and cash flows. A reconciliation of net
earnings and cash flows to Adjusted EBITDA, based on the Financial
Statements, has been provided in the MD&A under the headings
"Reconciliation of Net Earnings to Adjusted EBITDA" and
"Reconciliation of Cash Flow to Adjusted EBITDA", respectively. A
reconciliation of Free Cash Flow to cash flows from operations is
provided under the heading "Summary of Free Cash Flow". A
reconciliation of net earnings to Adjusted Net Earnings is provided
under the heading "Reconciliation of Net Earnings to Adjusted Net
Earnings".
NFI's method of calculating Adjusted EBITDA, ROIC, Free Cash
Flow, Adjusted Net Earnings and Adjusted Earnings per Share may
differ materially from the methods used by other issuers and,
accordingly, may not be comparable to similarly titled measures
used by other issuers. Dividends paid from Free Cash Flow are not
assured, and the actual amount of dividends received by holders of
Shares will depend on, among other things, the Company's financial
performance, debt covenants and obligations, working capital
requirements and future capital requirements, all of which are
susceptible to a number of risks, as described in NFI's public
filings available on SEDAR at www.sedar.com.
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. 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. Forward-looking statements involve
significant risks and uncertainties, should not 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, funding may not continue to be available to the
Company's customers at current levels or at all, the Company's
business is affected by economic factors and adverse developments
in economic conditions which could have an adverse effect on the
demand for the Company's products and the results of its
operations, currency fluctuations could adversely affect the
Company's financial results or competitive position, interest rates
could change substantially, materially impacting the Company's
revenue and profitability, an active, liquid trading market for the
Shares may cease to exist, which may limit the ability of
shareholders to trade Shares, the market price for the Shares may
be volatile, if securities or industry analysts do not publish
research or reports about the Company and its business, if they
adversely change their recommendations regarding the Shares or if
the Company's results of operations do not meet their expectations,
the Share price and trading volume could decline. In
addition, if securities or industry analysts publish inaccurate or
unfavorable research about the Company or its business, the Share
price and trading volume of the Shares could decline, competition
in the industry and entrance of new competitors, failure of the
ratification of the Unites States-Mexico-Canada Agreement (USMCA)
could be materially adverse to NFI, current requirements under "Buy
America" regulations may change and/or become more onerous or
suppliers' "Buy America" content may change, failure of the Company
to comply with the DBE program requirements or the failure to have
its DBE goals approved by the FTA, absence of fixed term customer
contracts, exercise of options and customer suspension or
termination for convenience, united States content bidding
preference rules may create a competitive disadvantage, local
content bidding preferences in the United
States may create a competitive disadvantage, requirements
under Canadian content policies may change and/or become more
onerous, operational risk, dependence on limited sources or unique
sources of supply, dependence on supply of engines that comply with
emission regulations, a disruption, termination or alteration of
the supply of vehicle chassis or other critical components from
third-party suppliers could materially adversely affect the sales
of certain of the Company's products, the Company's profitability
can be adversely affected by increases in raw material and
component costs as well as the imposition of tariffs and surtaxes
on material imports, the Company may incur material losses and
costs as a result of product warranty costs, recalls and
remediation of transit buses and motor coaches, production delays
may result in liquidated damages under the Company's contracts with
its customers, catastrophic events may lead to production
curtailments or shutdowns, the Company may not be able to
successfully renegotiate collective bargaining agreements when they
expire and may be adversely affected by labour disruptions and
shortages of labour, the Company's operations are subject to risks
and hazards that may result in monetary losses and liabilities not
covered by insurance or which exceed its insurance coverage, the
Company may be adversely affected by rising insurance costs, the
Company may not be able to maintain performance bonds or letters of
credit required by its contracts or obtain performance bonds and
letters of credit required for new contracts, the Company is
subject to litigation in the ordinary course of business and may
incur material losses and costs as a result of product liability
claims, the Company may have difficulty selling pre-owned coaches
and realizing expected resale values, the Company may incur costs
in connection with provincial, state or federal regulations
relating to axle weight restrictions and vehicle lengths, the
Company may be subject to claims and liabilities under
environmental, health and safety laws, dependence on management
information systems and cyber security risks, the Company's ability
to execute its strategy and conduct operations is dependent upon
its ability to attract, train and retain qualified personnel,
including its ability to retain and attract executives, senior
management and key employees, the Company may be exposed to
liabilities under applicable anti-corruption laws and any
determination that it violated these laws could have a material
adverse effect on its business, the Company's risk management
policies and procedures may not be fully effective in achieving
their intended purposes, internal controls over financial
reporting, disclosure controls and procedures, ability to
successfully execute strategic plans and maintain profitability,
development of competitive or disruptive products, services or
technology, development and testing of new products, acquisition
risk, third-party distribution/dealer agreements, availability to
the Company of future financing, the Company may not be able to
generate the necessary amount of cash to service its existing debt,
which may require the Company to refinance its debt, the Company's
substantial consolidated indebtedness could negatively impact the
business, the restrictive covenants in the Credit Facility could
impact the Company's business and affect its ability to pursue its
business strategies, payment of dividends is not guaranteed, a
significant amount of the Company's cash is distributed, which may
restrict potential growth, NFI is dependent on its subsidiaries for
all cash available for distributions, future sales or the
possibility of future sales of a substantial number of Shares may
impact the price of the Shares and could result in dilution, if the
Company is required to write down goodwill or other intangible
assets, its financial condition and operating results would be
negatively affected, income tax risk, investment eligibility and
Canadian Federal Income Tax risks, the effect of comprehensive U.S.
tax reform legislation on the NF Group, whether adverse or
favorable, is uncertain, certain U.S. tax rules may limit the
ability of NF Holdings and its U.S. subsidiaries (the "NF Group")
to deduct interest expense for U.S. federal income tax purposes and
may increase the NF Group's tax liability, certain financing
transactions could be characterized as "hybrid transactions" for
U.S. tax purposes, which could increase the NF Group's tax
liability. NFI cautions that this list of factors is not
exhaustive. These factors and other risks and uncertainties are
discussed in NFI's press releases, Annual Information Form 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.