NFI Group Inc., ("NFI") is North
America's largest and most diversified bus and coach
manufacturer providing market leading transportation solutions
under the brands: New Flyer®, MCI®,
ARBOC® and NFI Parts™. Tracing its roots back to 1930,
NFI has over 74,000 vehicles in service in
Canada and the United
States.
Alexander Dennis Limited, ("ADL") is one of the world's
leading independent bus and coach
manufacturers and the number one global producer of double deck
buses. With a long history spanning more than a
century, ADL has over 31,000 vehicles in
service in the UK, Europe, Hong
Kong, Singapore,
New Zealand,
Mexico, Canada and
the United States sold under
the Alexander Dennis and Plaxton brands.
- NFI has acquired ADL for £320 million (approximately U.S.
$405 million) representing an implied
purchase multiple of 7.3x ADL's fiscal year 2018 Adjusted
EBITDA(1). Transaction is expected to be
immediately accretive (before potential synergies) to NFI earnings
per share and cash flow per share
- The transaction was funded through NFI's existing credit
facility, a new US$300 million credit
facility and the issuance from treasury, of 1.47 million common
shares of NFI, in lieu of cash, to ADL's primary
shareholders, including ADL's CEO and CFO
- The combined business creates an independent global bus OEM
with market leading positions in the United Kingdom, Hong
Kong, North America and a
growing footprint in Asia Pacific,
Latin America and Europe.
- The acquisition complements NFI's product offering,
diversifies its business model and creates a platform for
international growth
- ADL's proven products and successful track record of
entering and growing in new markets, underpinned by NFI's broad
expertise, product offering and strong appetite to invest, is
expected to accelerate technology and innovation sharing and
development
- NFI maintains a conservative balance sheet with pro forma
total debt to estimated combined Adjusted EBITDA(1) of
approximately 2.9x (as at December 30,
2018)
(1)
|
All financial
information regarding ADL contained in this presentation has been
derived from ADL's financial statements which are prepared in
accordance with UK Generally Accepted Accounting Principles
("GAAP"). NFI prepares its financial statements in accordance with
International Financial Reporting Standards ("IFRS"). UK GAAP
differs in certain material respects from IFRS. Adjusted EBITDA is
a non-IFRS and non-UK GAAP measure. See "Non-IFRS measures" at the
end of this press release.
|
WINNIPEG, May 28, 2019 /PRNewswire/ - (TSX:NFI) NFI
Group Inc. ("NFI" or the "Company") today announced that it has
acquired Alexander Dennis Limited ("ADL") for a total transaction
value of £320 million on a cash-free, debt-free basis, subject to
certain adjustments. All amounts in this press release are in
US dollars unless otherwise stated. British pounds sterling have
been converted to US dollars using an exchange rate of
£1.00=US$1.2663; 2018 actual figures
have been converted at an exchange rate of £1.00=US$1.3355.
In 2018, ADL generated annual consolidated revenue of £631
million (US$843 million), from
delivering 2,533 buses for manufacturing revenue of £559 million
(US$747 million) and £71 million
(US$95 million) in aftermarket parts
and service revenue. During 2018, approximately 49% of ADL's
consolidated revenue was generated from the UK, 27% from
Asia Pacific markets, 12% from
North America with the remaining
12% coming from aftermarket and developing markets. In addition,
ADL generated free cash flow of £18 million (US$24 million). From 2010 to 2018, ADL achieved a
compound annual revenue growth rate of 10.5%.
"This is a transformational acquisition for NFI to become a
global bus manufacturer," said Paul
Soubry, NFI's President and Chief Executive Officer. "ADL is
the UK's number one bus manufacturer and the number one global
producer of double-deck buses, with an established international
presence and is recognized as a leader known for innovative
products and a commitment to quality and service. We're
thrilled to have ADL join the NFI family in a transaction that we
believe will drive our business forward by combining joint
strengths in engineering, sales, new product development and
manufacturing with NFI's expertise in Operational Excellence,
insourcing, fabrication and systems management."
NFI Board Chairman, the Honourable Brian Tobin, P.C. O.C. added,
"ADL is a company we know very well, and this acquisition presents
a compelling opportunity to make NFI a more diversified and robust
business while creating immediate value for our shareholders. NFI's
management team has a track record of delivering accretive
acquisitions and prudent capital management which we expect to
continue through the addition of ADL."
NFI has entered into an agreement with Colin Robertson, ADL's Chief Executive Officer,
and Michael Stewart, ADL's Chief
Financial Officer, to continue leading ADL. They will also be
tasked with leading NFI's international growth ambitions. ADL's
primary shareholders along with Messrs. Robertson and Stewart have
elected to roll approximately 10% of their transaction
consideration into NFI shares ensuring strong ongoing alignment
with NFI's existing shareholders.
"We are incredibly proud of the growth and success we've had
building Alexander Dennis over the past 15 years, and I'm excited
to have the ADL team join NFI – one great bus company joining
another", said Colin Robertson.
"We believe our consolidated businesses will enhance NFI's
market leading position in North
America, while improving NFI's offering through combined
engineering expertise, supplier partnerships, electric vehicle
know-how and aftermarket platforms. Mr. Robertson added, "I look
forward to continuing our solid progress at ADL and also
championing further international growth for NFI in coordination
with Paul and his leadership team".
The transaction presents a number of attractive opportunities
for NFI, including:
- Market Leadership, International Diversification and a
Growth Platform for NFI: ADL is the number one global producer
of double deck buses with an established presence across multiple
continents, over 50% market share in the UK, and a growing presence
in continental Europe,
Asia Pacific and North America. ADL's recent contract win in
Berlin, Germany provides a
platform for further European expansion while its existing presence
in Mexico establishes a model for
further Latin American growth.
- Enhanced Product Portfolio: ADL adds to NFI's product
portfolio through its class leading, internationally proven line-up
of single and double deck buses, and motor coaches. ADL enhances
NFI's technical competencies on lightweight chassis and bodies.
NFI's electric vehicle ("EV") experience will enhance ADL's
international EV offering and ensure both companies drive the
future of clean transportation. The combined NFI and ADL business
creates the strongest customer offering in North America with the widest range of buses
and unrivalled aftermarket support.
- Cost Effective Platform: ADL's flexible operating model
enables the business to enhance competitiveness in existing markets
while entering new regions. ADL successfully operates in highly
competitive markets through its ability to effectively and
efficiently develop innovative new products, leverage local
sourcing, create flexible assembly partnerships and establish
dedicated aftermarket service.
- Financially Compelling: The transaction is expected
to be immediately accretive (before potential synergies) to both
earnings per share and free cash flow per share. NFI expects the
combined financial results will enable it to de-lever quickly and
return to its target of 2.0x to 2.5x total debt to EBITDA within
approximately 18 months of closing without impact on the Company's
dividend policy. NFI expects to capture synergies over time and to
capitalize on further growth opportunities through a combined
approach. The combined NFI and ADL business will explore North
American manufacturing, sales, service, and supply chain
optimization as well as part fabrication opportunities that may
provide additional benefits over time.
- Strong Cultural Fit with Commitment to Safety and the
Environment: Through NFI's longstanding dialogue and prior
joint venture with ADL, it became clear that the two companies
shared similar cultures and values regarding quality and customer
experience. Further, there is a clear alignment with management
strategy, market outlook, and EV adoption expectations which should
allow for a smooth transition. ADL's management team remains in
place to drive performance and international growth.
The transaction, including related expenses, is being funded
through NFI's existing credit facility capacity, a new US$300 million credit facility with substantially
the same terms as the existing credit facility, and the issuance,
from treasury, of 1.47 million NFI common shares, in lieu of cash,
to certain primary ADL shareholders, representing approximately 2%
of NFI's outstanding shares following completion of the
transaction. At close of the transaction, NFI drew an aggregate of
approximately US$420 million on its
credit facilities, resulting in pro forma total debt to pro forma
Adjusted EBITDA as of December 30,
2018 of approximately 2.9x.
BMO Capital Markets and HSBC Securities (Canada) Inc. acted as financial advisors and
Torys LLP and Eversheds Sutherland (International) LLP acted as
legal counsel to NFI in connection with the transaction. BMO
Capital Markets and HSBC Bank Canada acted as co-lead arrangers and
joint-bookrunners on the new credit facility.
Conference Call and Webcast
NFI will host a conference call at 10:00
AM (ET) on May 28, 2019 to
discuss the transaction. The call-in number for listeners is
888-231-8191 or 647-427-7450, or United
Kingdom, 0-800-051-7107 or 203-966-2922. During the
call, management will be referring to a presentation which will be
posted on the NFI website at www.nfigroup.com in the Events and
Presentations page of the Investor Relations page.
A live audio feed of the call will also be available at:
https://event.on24.com/wcc/r/2017074/E6283E15F5FDAD0EDE24494743570492.
A replay of the call will be available from 1:00 p.m. (ET) on May 28,
2019 until 11:59 p.m. (ET) on
June 4, 2019. To access the replay,
call 1-855-859-2056 or 416-849-0833 and then enter pass code number
9797743. The replay will also be available on NFI's web site at
www.nfigroup.com.
About NFI Group
Now with over 8,900 team members operating from more than 50
facilities across ten countries, NFI is a leading independent
global bus manufacturer providing a comprehensive suite of mass
transportation solutions under brands: New Flyer®
(heavy-duty transit buses), Alexander Dennis Limited (single and
double-deck buses), Plaxton (motor coaches), MCI® (motor
coaches), ARBOC® (low-floor cutaway and medium-duty
buses) and NFI Parts™. NFI buses and motor coaches
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). It also
supports infrastructure development through New Flyer
Infrastructure Solutions™, a service dedicated to providing safe
and reliable charging and mobility solutions. In total, NFI
now supports over 105,000 buses and coaches currently in service
around the world. For the fiscal year ended December 30, 2018, NFI posted revenues of
US$2.5 billion (and pro-forma with
ADL of approximately US$3.3
billion).
NFI common shares are traded on the Toronto Stock Exchange under
the symbol NFI. News and information are available at
www.nfigroup.com, www.newflyer.com, www.mcicoach.com,
www.arbocsv.com, www.alexander-dennis.com and www.nfi.parts.
Non-IFRS measures
All financial information regarding ADL contained in this press
release has been derived from ADL's financial statements which are
prepared in accordance with UK Generally Accepted Accounting
Principles ("GAAP"). NFI prepares its financial statements in
accordance with International Financial Reporting Standards
("IFRS"). UK GAAP differs in certain material respects from
IFRS.
ADL's "Adjusted EBITDA" referred to in this press release has
been calculated by ADL'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. 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 as referred to in
the Company's public filings plus estimated adjustments to ADL's
Adjusted EBITDA for conversion from UK GAAP to IFRS. NFI's free
cash flow means net cash generated by operating activities adjusted
as referred to in the Company's public filings. References to ADL's
free cash flow means net cash generated by operating activities
with certain adjustments, prepared on a UK GAAP basis. Management
believes Adjusted EBITDA and free cash flow are useful measures in
evaluating the performance of the Company. However, these terms are
not recognized earnings measures under UK GAAP or IFRS and do not
have standardized meanings prescribed by UK GAAP or IFRS. Readers
are cautioned that these terms should not be construed as an
alternative to net earnings or loss or cash flows from operating
activities determined in accordance with UK GAAP or IFRS. NFI's and
ADL's method of calculating Adjusted EBITDA and free cash flow may
differ materially from the methods used by other issuers and,
accordingly, may not be comparable to similarly titled measures
used by other issuers.
In accordance with IFRS, NFI Group will consolidate the revenue,
earnings and other financial information of ADL 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 and results, including plans for the
combination and integration of the acquired business into NFI's
existing business and expected synergies, the diversification and
growth of the combined businesses, the accretive effects of the
transaction to revenue, earnings and cash flow of NFI and expected
future financial deleveraging. Actual events and results may differ
materially from management expectations as projected in such
forward-looking statements for a variety of reasons, including
risks related to acquisitions, joint ventures and other strategic
relationships with third parties, risks related to operations in
existing, new and emerging markets, the ability to implement the
operational changes necessary to achieve expected or potential
synergies, market and general economic conditions, political
developments in the countries where the Company operates and
funding availability for customers to purchase buses and coaches
and to purchase parts or services, the covenants contained under
NFI's credit facilities could impact the ability of NFI to make
strategic investments and fund dividends 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.
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SOURCE NFI Group Inc.