New Flyer Announces Fourth Quarter 2013 Orders and Backlog
WINNIPEG, Jan. 14, 2014 /CNW/ - (TSX:NFI; TSX:NFI.DB.U) New Flyer Industries Inc. ("New Flyer" or the "Company"), the leading manufacturer of heavy-duty transit buses in Canada and the United States, announced its order activity and backlog update for the fourth fiscal quarter ended December 29, 2013 ("Q4 2013").
This order and delivery activity and backlog for Q4 2013 reflects consolidated Company activity of New Flyer including its NABI Bus, LLC ("NABI Bus") and NABI Parts, LLC ("NABI Parts") subsidiaries, which were acquired on June 21, 2013.
Bus Deliveries, Order Activity, and Option Expiry
New Flyer delivered 635 equivalent units ("EUs"), in Q4 2013, an increase of 248 EUs over the 387 EUs delivered in the fourth fiscal quarter ended December 30, 2012 ("Q4 2012"). The work in process ("WIP") for the Company at December 29, 2013 was 273 EUs which represents a decrease in WIP of 47 EUs during Q4 2013.
New bus orders (firm and options) for New Flyer in Q4 2013 totaled 331 EUs. Order activity in Q4 2013 included:
- New firm orders were received for 220 EUs (valued at $98.2 million)
- New option orders were received for 111 EUs (valued at $57.5 million).
- Successful option conversion of 223 EUs (valued at $104.3 million).
New Flyer's last twelve months ("LTM") Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 241%, compared to 98% just one year ago.
In Q4 2013, a total of 1,628 option EUs expired, relating to four US customer contracts which reached the end of their respective contract terms. The maximum term for a contract permitted by the US Federal Transit Administration ("FTA") is five years.
Specifically in Q4 2013, 1,800 EUs were removed from the New Flyer backlog relating to one US customer order that was added to the backlog in 2008 and then deferred by the customer in 2009. Since that deferred order has now reached five years in duration with no activity, the Company has removed all 280 firm EUs and options for 1,520 EUs from the New Flyer backlog. The Company had not included this order in any of its production plans since 2009.
Remaining options included in the New Flyer backlog will expire, if not
exercised, as follows:
|Year of option expiry||2014||2015||2016||2017||2018||
|Remaining Option (EUs)||1,648||858||216||606||2,074||5,402|
At the end of Q4 2013, New Flyer's total backlog was 7,678 EUs (for a total value of $3.66 billion) compared to 9,890 EUs at the end of the third quarter of 2013 ("Q3 2013").
The total backlog includes 334 EUs of firm orders and options awarded by eighteen different customers where orders and contract documentation was received by New Flyer prior to the end of Q4 2013, but announcements outlining the details of these contracts are awaiting customer approval prior to release.
The total New Flyer backlog combined with the recent order intake is
expected to enable the Company to continue to operate during fiscal
2014 at a corporate average line entry rate of approximately 48 EUs per
production week from the New Flyer and NABI Bus production facilities.
Ending backlog at Q3 2013
New orders in Q4 2013
Options exercised in Q4 2013
Deliveries in Q4 2013
Removal of deferred customer order
Cancelled/expired options in Q4 2013
|Ending Backlog at Q4 2013||2,276||5,402||7,678|
New Flyer's backlog consists of the following mix of bus lengths, with
clean propulsion systems such as, electric-hybrid, electric-trolley,
natural gas and all-electric representing approximately 72% of the
|30,35 and 40 foot buses||1,854||3,548||5,402|
|60 foot articulated buses||422||1,854||2,276|
|Total Backlog at Q4 2013||2,276||5,402||7,678|
At the end of the period, new firm and option orders of 312 buses (312 EUs) were pending from customers where approval of the award had been made by the customer's board, council, or commission, as applicable, but purchase documentation had not yet been received by the Company. These firm and option orders are not yet included in the backlog.
New Flyer Bid Universe
The bid universe was created by New Flyer in 2008 as an indicator for overall transit bus market demand and active bids in Canada and the United States. The bid universe is a point-in-time snapshot of the estimated EUs for: all requests for proposals ("RFPs") received and in process of review at New Flyer, bids or proposals submitted by New Flyer awaiting customer action, and management's forecast of all expected EUs to be placed out for competition over the next five years.
The number of EUs in the total Bid Universe at the end of Q4 2013 was
18,592 EUs compared to 19,453 EUs at the end of Q4 2012. The total
number of Active EUs (defined as RFPs received and in process of review
at New Flyer, and bids or proposals submitted by New Flyer awaiting
customer action) at the end of Q4 2013 was 6,238 EUs, compared to 8,117
EUs at the end of Q3 2013.
(EUs) over the
next 5 years
Total EUs in
While the Bid universe reduced slightly in Q4 2013, management anticipates that the amount of procurement activity by public transit agencies throughout the United States and Canada will remain robust throughout 2014 based on expected customer fleet replacement plans and the expiry of current customer contracts during the next two years.
Ridership and Funding Environment
The latest data from the American Public Transportation Association's (APTA) ridership report indicated an increase of 1.51% in all modes of U.S. transit ridership during the third quarter of 2013 compared with the previous year; including an increase in bus ridership of 0.7%. The same report indicates Canadian ridership increased by 0.69% in all modes of transit ridership during the third quarter of 2013 as compared to the previous year, however, specific data on bus ridership is not available.
Management remains encouraged with general economic health improvement of the US states with preliminary data from the Rockefeller Institute (Preliminary Report on December 18, 2013) reporting state tax collections increasing in the third quarter of 2013 for the 15th consecutive quarter, with a 6.1% increase over the prior year.
New Flyer Aftermarket
Gross parts orders received by New Flyer's aftermarket business during Q4 2013 (inclusive of NABI Parts and the integrated Orion parts business) increased 135% compared to Q4 2012. Parts shipments in Q4 2013 also increased 135% over Q4 2012.
Quarter-over-quarter Q4 2013 gross parts orders rose 24.2% over Q3 2013, while parts shipments were up 16.3% over Q3 2013 (inclusive of NABI Parts and the integrated Orion parts business). The Company continues to experience a challenging price environment in regular parts sales activity.
New Flyer Parts order intake and delivery continues to be positively impacted by the ramp up for the previously announced Chicago Transit Authority midlife overhaul program for 1,047 buses, which is expected to run through 2015.
Despite a healthy Bid Universe, improved total backlog and Book-to-Bill ratio, management reiterates the previously provided outlook for 2014 margins. As has been highlighted several times, the number of active heavy-duty transit bus procurements dropped noticeably during the financial crisis between 2008 and 2012. In order to replenish a decreasing backlog in an environment of fewer procurements, prices for new contracts declined dramatically. A portion of New Flyer's total backlog is comprised of orders obtained during this time period and management expects that on average, margins on contracts planned for 2014 production will be lower than the average margins achieved during 2013.
Despite the pressure on margins, the Company continues to pursue cost and overhead savings in daily operations through its Operational Excellence initiatives and as part of the long term NABI integration plan and platform strategy development. Management expects that the Company will remain in compliance with all credit facility covenants and will be able to maintain dividends at current levels.
NOTE: All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $1.0704 to calculate the value of the Canadian contracts in this release.
About New Flyer
New Flyer, with its Subsidiary NABI Bus, LLC, is the leading manufacturer of heavy-duty transit buses in the United States and Canada. The Company is the industry technology leader and offers the broadest product line including drive systems powered by: clean diesel, natural gas and electric trolley as well as energy-efficient diesel-electric hybrid vehicles. All buses are supported by an industry-leading comprehensive warranty and support program, and service network. New Flyer and its subsidiary NABI Parts, LLC also operate the transit industry's most sophisticated aftermarket parts organization, sourcing parts from hundreds of different suppliers and providing support for all types of heavy-duty transit buses.
The New Flyer group of companies employ over 3,000 team members with manufacturing, fabrication, parts distribution and service centers in both Canada and the United States. Further information is available on New Flyer's web site at www.newflyer.com.
The common shares and convertible unsecured subordinated debentures of the Company are traded on the Toronto Stock Exchange under the symbols NFI and NFI.DB.U, respectively.
This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Company 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, these forward-looking statements should not be read as guarantees of future performance or results and actual performance or results may not be consistent with these forward-looking statements, and the differences may be material. Actual performance or results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including 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, aggressive competition and reduced pricing exist in the industry, the ability of customers to terminate contracts for convenience, the Company's ability to execute its planned production targets as required for current business and operational needs, the covenants contained in the Company's senior credit facility and the indenture governing the Company's convertible debentures could impact the ability of the Company to fund dividends and take certain other actions, the ability 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. The Company cautions that this list of factors is not exhaustive. These factors and other risks and uncertainties are discussed in the Company's press releases and 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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