WINNIPEG, Jan. 17, 2012 /CNW/ - (TSX:NFI) (TSX:NFI.UN) New Flyer
Industries Inc. ("New Flyer" or the "Company"), the leading
manufacturer of heavy-duty transit buses in Canada and the United
States, announced order activity for the fourth fiscal quarter of 2011
ended January 1, 2012 ("Q4 2011") of 161 buses or 161 equivalent
production units, ("EUs"). The order activity for this quarter
consisted primarily of conversions of options into firm orders that
totaled 152 buses or 152 EUs, having an aggregate value of $64.4
million. Total order activity for the year ended January 1, 2012
("Fiscal 2011") was 1,867 EUs consisting of new firm and new option
orders of 659 EUs and exercised options of 1,208 EUs.
The low order activity for both Q4 2011 and Fiscal 2011 resulted mainly
from the reduction in industry orders for heavy-duty buses due to
transit agencies experiencing budget constraints and deferring
purchases of new buses. Management estimates that the industry as a
whole initiated new order solicitations for approximately 5,700 EUs
during 2011, however, less than 25% of these solicitations resulted in
awards being made in the year. As stated over the past 24 months, new
order activity has been down due primarily to the US economic
challenges and management estimates that the volume of new industry
orders in 2011 was approximately 30% of the 2010 industry orders.
The American Public Transit Association ("APTA") has reported that the
average age for US heavy-duty buses has risen from six to eight years,
which management believes should create demand for replacement buses in
the near future. The Canadian Urban Transit Association ("CUTA") has
reported the average age of heavy-duty buses has reduced from 10 years
to eight years, maintaining a relatively flat replacement cycle.
Canadian transit agencies continue to maintain and replace fleets and
are expected to continue.
New bus orders from U.S. transit agencies are dependent on both federal
government funding and the state and local capital and operating
U.S. federal funding has remained unchanged over the past two years as
the funding bill has been extended since 2009. The current extension
expires in March 31, 2012 and while Congress will work through January
and February on a new reauthorization bill, APTA believes that it is
highly likely the current bill will be extended once again and at
current funding levels. The broader debate continues among Congress,
the Senate and the Department of Transportation regarding the funding
size and term for a new bill.
While state and local budgets remain challenged, there have been some
positive signs recently. According to the Nelson Rockefeller
Institute, preliminary data indicates that state tax collections for
the third quarter of 2011 increased 7.3% over the previous year. State
tax collections comprise of personal income tax and sales tax, both of
which have increased for seven quarters, and corporate income taxes
have increased for the past five quarters. Overall state tax revenues
have recovered to pre-recession levels. Although these budgets are
driven by tax revenue, there is a lag before any improved economic
activity translates into new bus orders.
Also on a positive note, ridership in both Canada and the United States
has also begun to improve. CUTA reported that ridership for all modes
of public transportation increased by 4.9% in the first half of 2011
compared to the first half of 2010. In addition, eight of the nine
Canadian transit agencies that are members of APTA reported increased
ridership in the third quarter of 2011 compared to the same period in
2010. In the United States, APTA reported that overall transit
ridership in 2011 increased by 2.03% compared to the prior year and
that bus ridership specifically increased by 1.43%. While the largest
increases were experienced by the smaller cities, the fourth quarter of
2011 was the first quarter since 2008 in which cities with populations
greater than two million people experienced an increase in bus
At the end of Q4 2011, there were approximately 13,300 EUs in New
Flyer's new potential pipeline or bid universe for heavy-duty transit
buses, a healthy increase from the approximately 11,400 EUs reported at
the end of the third quarter of 2011 ("Q3 2011"). The pipeline is
expected to remain volatile as customers manage through fleet
replacement planning and deal with budget uncertainty. The pipeline
consists of bids in process, bids submitted and solicitations expected
to be released by transit agencies. In 2011, there was an increase of
in-house bid activity of roughly 50% in the second half of the year
compared to bid activity in the first half of the year. This increase
is a result of expected solicitations being released in the period by
some large transit agencies seeking replacement and expansion buses,
but have not yet been awarded.
New Flyer's aftermarket business experienced growth in order in-take
(customer purchase orders) in Q4 2011 compared to both Q3 2011 and the
fourth quarter of 2010 ("Q4 2010"). Aftermarket order in-take has
increased by approximately 18% and 22% compared to Q3 2011 and Q4 2010,
respectively. Fiscal 2011 order in-take has increased by approximately
7% compared to total order activity in the fiscal year 2010.
During Fiscal 2011, New Flyer sold 190 of the 226 used buses taken in
trade under the City of Ottawa bus purchase contract in 2010. The first
20 buses were sold to private and public transit operators and during
Q4 2011 the Company sold 170 of the used buses to a bus
remanufacturer/distributor at slightly above book value. The remaining
used buses have been retained, as New Flyer is currently negotiating
the sale of the buses to certain interested parties. Management decided
to sell the 170 buses to avoid further maintenance and storage costs as
the market for used buses proved to be very limited. The international
market did express considerable interest, but differences in
specifications, emissions, fuel standards and restrictive import laws
are some of the issues that created barriers to international sales.
The U.S. and Canadian markets proved not to be an active market for the
sale of used buses.
The total backlog at the end of Q4 2011 was 7,097 EUs, a decrease of
8.1% from the backlog at the end of Q3 2011. The firm portion of the
total backlog at the end of Q4 2011 was 1,476 EUs, compared with 1,785
EUs at the end of Q3 2011. The value of the order backlog at the end
of Q4 2011 was $3.0 billion, compared with $3.3 billion at the end of
Q3 2011. This reduction in total backlog was not unexpected, nor
inconsistent with current market conditions or management's
New Flyer's current backlog consists of the following mix of products,
with clean propulsion vehicles representing approximately 68% of the
40 foot and under buses
60 foot buses
At the beginning of Fiscal 2011 the backlog included options for 1,294
EUs that would have expired in 2011 if not exercised. The actual number
of options that expired in Fiscal 2011 was 463 EUs, the remaining
options either being exercised by customers or extended to future
years. The options included in the total backlog will expire, if not
exercised, as follows:
Remaining Option EUs
Deliveries in Q4 2011 were 470 EUs, an improvement of 28 EUs from the
previous quarter. Fiscal 2011 deliveries of 1,811 EUs have decreased
from the 2,023 EUs delivered during the prior year. The Company's
backlog permitted New Flyer to sustain production at an average rate of
36 EUs per production week in 2011 and, based on current forecasts,
management expects to remain at this average rate per production week
in fiscal 2012.
Having reviewed last year's data, management now estimates that
heavy-duty bus manufacturers delivered approximately 5,150 EUs in 2011,
which improves New Flyer's market share for 2011 to approximately 35%,
or an increase of 1% from its estimated market share of 34% for 2010.
NOTE: All dollar amounts are stated in US currency based on an exchange
rate of US $1.00 = CAD $1.017 to calculate the value of the Canadian
contracts in this release.
About New Flyer
New Flyer is the leading manufacturer of heavy-duty transit buses in
Canada and the United States. The Company's three manufacturing
facilities - in Winnipeg, MB; St. Cloud, MN; and Crookston, MN - are
all ISO 9001, ISO 14001 and OHSAS 18001 certified. The Company
currently operates a parts fabrication facility in Elkhart, IN and four
parts distribution centers in Winnipeg, MB; Erlanger, KY; Fresno, CA
and Brampton, ON.
With a skilled workforce of over 2,000 employees, New Flyer is a
technology leader, offering the broadest product line in the industry,
including drive systems powered by clean diesel, LNG, CNG and electric
trolley as well as energy-efficient diesel-electric hybrid vehicles.
All products are supported with an industry-leading, comprehensive
parts and service network. Further information is available on New
Flyer's web site at www.newflyer.com.
The common shares of New Flyer are traded on the Toronto Stock Exchange
("TSX") under the symbol NFI and the income deposit securities are
traded on the TSX under the symbol NFI.UN.
This press release may contain forward-looking statements relating to
expected future events and financial and operating results of New Flyer
and New Flyer Industries Canada ULC ("NFI ULC") 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 market and general economic
conditions and economic conditions of and funding availability for
transit agencies to purchase buses, parts and services and exercise
options 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, New Flyer and NFI ULC
disclaim 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.
For further information:
New Flyer Industries Inc.
Chief Financial Officer