New Flyer Announces Record Results for the Fourth Quarter and 2007 Fiscal Year



    
    Highlights:

    -   Record Fiscal 2007 revenue of $887.1 million and Adjusted EBITDA of
        $95.9 million increased by 46.0% and 61.3%, respectively compared to
        Fiscal 2006.
    -   Ramp-up of bus manufacturing operations and continued growth of
        aftermarket operations resulted in highest quarterly and annual
        revenue and Adjusted EBITDA reported in the history of the Company.
    -   Continued growth of aftermarket operations resulted in Fiscal 2007
        revenue and Adjusted EBITDA increase of 22.7% and 25.0%,
        respectively, compared to Fiscal 2006.
    -   Fiscal 2007 Distributable Cash of C$66.1 million resulted in excess
        of C$15.2 million over distributions declared in Fiscal 2007.
    -   Total order backlog of $2.8 billion (representing 6,916 equivalent
        units) increased by 54.5% compared to December 31, 2006 total order
        backlog of $1.8 billion (representing 5,313 equivalent units).
    

    WINNIPEG, March 17 /CNW/ - New Flyer Industries Inc. (TSX:NFI.UN) ("New
Flyer" or the "Company"), the leading manufacturer of heavy-duty transit buses
in Canada and the United States, today announced its results for the 13-week
period ("2007 Q4") and for the 52-week period ended December 30, 2007 ("Fiscal
2007"). Full financial statements and Management's Discussion and Analysis
(the "MD&A") are available at the Company's web site at:
www.newflyer.com/index/financialreport. Unless otherwise indicated all
monetary amounts in this press release are expressed in U.S. dollars.
    Higher bus production and delivery levels in response to the Company's
growing bus order backlog and continued strong growth in aftermarket
operations resulted in record highs in consolidated revenue and Adjusted
EBITDA both for 2007 Q4 and Fiscal 2007. During 2007 Q4 the Company recorded
revenue of $235.2 million which represents an increase of 34.7% compared to
consolidated revenue for the fourth quarter of 2006 ("2006 Q4") of
$174.6 million. 2007 Q4 Adjusted EBITDA of $25.9 million increased by 30.7%
compared to $19.8 million in 2006 Q4.
    During Fiscal 2007, the Company's consolidated revenue of $887.1 million
increased by 46.0% compared to consolidated revenue for the 52-week period
ended December 31, 2006 ("Fiscal 2006") of $607.7 million. Fiscal 2007 bus
manufacturing revenue contributed to the majority of this increase as a result
of higher production levels in Fiscal 2007 compared to Fiscal 2006 and the
negative impact of the labour strike at the Winnipeg production plant on
Fiscal 2006 results. Bus manufacturing revenue during Fiscal 2007 totaled
$804.4 million compared to $540.3 million in Fiscal 2006, representing an
increase in bus manufacturing revenue of 48.9%. Bus deliveries in Fiscal 2007
were 2,003 equivalent units, which represents an increase of 38.9% compared to
Fiscal 2006 bus deliveries of 1,442 equivalent units. This increase in
delivery volumes is due to the significant improvement in firm order position
throughout 2006 and 2007, which resulted in the Company increasing production
rates. The remainder of the increase in Fiscal 2007 bus manufacturing revenue
is attributable to higher selling prices as a result of changes in product
sales mix and passing cost increases through to customers. The average selling
price during Fiscal 2007 of $401.6 thousand per equivalent unit represents an
increase of 7.2% compared to the average selling price of $374.7 thousand
during Fiscal 2006. Similar to the results for 2007 Q4, Fiscal 2007
aftermarket revenue of $82.7 million increased by 22.7% compared to Fiscal
2006 aftermarket revenue of $67.4 million. The continued strong growth in
aftermarket operations is a result of an increase in market share as New Flyer
buses continue to represent a larger share of the active installed fleet in
the combined United States and Canadian market.
    Fiscal 2007 consolidated Adjusted EBITDA of $95.9 million increased by
61.3% compared to Fiscal 2006 consolidated Adjusted EBITDA of $59.4 million.
This increase in consolidated Adjusted EBITDA is a result of sustaining higher
production and delivery levels in Fiscal 2007 due to the improved bus order
backlog position, favourable bus manufacturing operations sales mix and
continued growth of the Company's aftermarket operations. Bus manufacturing
operations Adjusted EBITDA of $86.9 million for Fiscal 2007 increased 92.0%
compared to $45.3 million for Fiscal 2006 bus manufacturing operations
Adjusted EBITDA. This improvement is a result of increased delivery levels in
Fiscal 2007 to meet the increased customer demand and the negative impact of a
strike included in Fiscal 2006 results. Aftermarket operations Adjusted EBITDA
for Fiscal 2007 of $17.4 million represents an increase of 25.0% over Fiscal
2006 aftermarket operations Adjusted EBITDA of $14.0 million, which exceeds
the increase in aftermarket sales as a result of increasing gross profit
margins. Unallocated Adjusted EBITDA is comprised primarily of realized
foreign exchange losses of $8.5 million in Fiscal 2007 compared to a realized
gain of $0.2 million in Fiscal 2006. The Fiscal 2007 loss relates primarily to
realized losses on settlement of forward foreign exchange contracts for U.S.
dollars which offsets gains included in bus manufacturing and aftermarket
operations resulting from the Company generating excess Canadian dollars. This
resulted in no material impact to Adjusted EBITDA as the Company effectively
hedged its foreign exchange exposure.
    Fiscal 2007 net loss of $130.7 million increased compared to Fiscal 2006
net loss of $5.2 million. The increase in net loss is attributable to improved
consolidated Adjusted EBITDA of $36.5 million for Fiscal 2007, offset by
increased non-cash charges of $130.9 million, increased interest of
$5.5 million and increased income tax provisions of $25.4 million. Fiscal 2007
results include non-cash charges to earnings of $145.9 million compared to
non-cash charges of $15.0 million included in Fiscal 2006 earnings. The
increase in non-cash charges is primarily attributable to a fair value
adjustment to other liabilities, Class B and Class C common shares, the impact
of the fair value adjustments to assets and liabilities resulting from the
July 12, 2007 transaction, and unrealized foreign exchange losses. Fair value
adjustments to other liabilities for Class B and Class C common shares
resulted in a charge to earnings of $90.2 million in Fiscal 2007 compared to a
gain of $8.1 million in Fiscal 2006. Losses charged to earnings for the fair
value adjustment to other liabilities for Class B and Class C common shares
reflect the increase in the value of those shares, which has increased
together with the market value of the Income Deposit Securities ("IDSs") of
New Flyer and New Flyer Industries ULC (together, the "Issuer") during 2007.
The Class B and Class C common shares in NFI's subsidiary, New Flyer Holdings,
Inc. are held indirectly by the former owners of the business and management.
Unrealized foreign exchange losses charged to earnings in Fiscal 2007 were
$26.5 million, which are comprised primarily of unrealized losses on long-term
debt that matures in 2020, compared to a gain of $0.2 million in Fiscal 2006.
    During Fiscal 2007 the Company generated Distributable Cash of
C$66.1 million and the Issuer declared distributions of C$50.9 million, which
represents a Fiscal 2007 payout ratio of 77.0%. As previously reported on
February 25, 2008, the Company's calculation of Distributable Cash for 2007 Q4
was adversely affected by increased provisions for withholding taxes and
current income taxes. During 2007 Q4 the Company incurred withholding taxes of
$2.1 million related to an inter-company dividend, of which $1.7 million
represents a non-recurring charge and the remaining $0.4 million charge is
expected to continue on a quarterly basis, based on current distribution
levels. In addition, current income taxes during 2007 Q4 included a charge of
$2.2 million which reverses the current income tax benefits accrued during the
second and third quarter of 2007 related to unrealized losses on forward
foreign exchange contracts. During Fiscal 2006, the Company generated
Distributable Cash of C$52.6 million and the Issuer declared Distributions of
C$48.6 million, resulting in a payout ratio of 92.3%. The 16.6% improvement in
Fiscal 2007 payout ratio includes an increase in distributions of 4.8%
compared to Fiscal 2006 distributions.
    Cumulatively, since the Issuer's initial public offering on August 19,
2005, the Company has generated Distributable Cash of C$139.0 million and the
Issuer has declared distributions of $117.8 million, resulting in a cumulative
surplus of C$21.2 million.
    The Company's positive cash flow from operations and the reduction in
working capital has resulted in a net cash inflow of $21.1 million during
Fiscal 2007. As a result, the Company's liquidity position as at December 30,
2007 totaled $65.3 million comprised of cash balances of $25.3 million and a
$40.0 million revolving credit facility, which was undrawn as at December 30,
2007. In comparison, the Company began Fiscal 2007 with total liquidity of
$44.0 million.
    In the event that there is any excess cash as determined pursuant to the
provisions of the Company's senior credit agreement and IDS note indenture,
the board of directors of the Company will consider utilizing such excess cash
for future redemptions of Class B and Class C common shares as such
redemptions are expected to be accretive to the after-tax cash flow of the
Company.
    The total order backlog (including firm orders and options) of
approximately $2.8 billion (representing 6,916 equivalent units) as at
December 30, 2007 increased by 54.5% compared to the total order backlog of
approximately $1.8 billion (representing 5,313 equivalent units) as at
December 31, 2006. Based on the significant increase in order activity in 2006
and 2007, and the current strong bid activity in the U.S. heavy-duty transit
bus market, management believes that the U.S. market demand is continuing to
improve following a period of reduced demand from 2004 to early 2006.
    During 2007 Q4 our customers awarded New Flyer firm orders of
$339.6 million (Fiscal 2007 - $1.1 billion) compared to 2006 Q4 awarded firm
orders of $210.0 million (Fiscal 2006 - $771.9 million), which represents an
increase of 61.8% (Fiscal 2007 increase of 47.1%). Included in 2007 Q4 total
firm bus orders are exercised options of $36.7 million compared to exercised
options of $169.4 million in 2006 Q4. As a result of new order activity and
deliveries during 2007 Q4, the firm order backlog as of December 30, 2007 is
$1.2 billion, which represents 43.9% of the total backlog. The firm order
backlog, which represents 2,844 equivalent units of production, provides the
order visibility to allow the Company to efficiently plan the production
schedule, thereby minimizing expenses and working capital requirements and is
supportive of the current levels of production.

    Conference Call

    A conference call for analysts and interested listeners will be held on
Tuesday, March 18th, 2008 at 4:30 p.m. (Toronto time). The call-in number for
listeners is 800-732-9307. A live audio feed of the call will also be
available at:
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2179100.
    A replay of the call will be available from 6:30 p.m. (ET) on March 18th,
2008 to 11:59 p.m. on March 25th, 2008. To access the replay, call
416-640-1917 or 877-289-8525, enter the pass code number 21264187, and then
press the pound number sign. The replay will also be available on the
Company's website at www.newflyer.com.

    Non-GAAP Measures

    Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization and other non-cash charges, adjusted for certain
costs related to the July 12, 2007 transaction and certain other non-recurring
charges as set out in the MD&A. Management believes Adjusted EBITDA and
Distributable Cash (as defined below) are useful measures in evaluating the
performance of the Company. "Distributable Cash" means cash flows from
operations adjusted for changes in non-cash working capital items, and effect
of foreign currency rate on cash and cash equivalents and increased for
withholding taxes related to capital transactions, defined benefit funding,
distributions on Class B and Class C common shares, follow-on offering related
costs, fair market value adjustment to inventory, fair market value adjustment
to prepaid expenses, proceeds on sale of redundant assets, and interest on
subordinated notes forming part of IDSs and decreased for defined benefit
expense, maintenance capital expenditures, fair market value adjustment to
deferred revenue, fair market value adjustment to accounts payable and accrued
liabilities and principal payments on capital leases. Adjusted EBITDA and
Distributable Cash are not earnings measures recognized under GAAP and do not
have standardized meanings as prescribed by GAAP. Therefore, Adjusted EBITDA
and Distributable Cash may not be comparable to similar measures presented by
other entities. Investors are cautioned that Adjusted EBITDA and Distributable
Cash should not be construed as an alternative to net income or loss
determined in accordance with GAAP as an indicator of New Flyer's performance
or to cash flows from operating, investing and financing activities as
measures of liquidity and cash flows.

    About New Flyer

    New Flyer is the leading manufacturer of heavy-duty transit buses in
Canada and the United States. The Company's three facilities - in Winnipeg,
MB, St. Cloud, MN and Crookston, MN - are all ISO 9001, ISO 14001 and OHSAS
18001 certified. With a skilled workforce of approximately 2,200 employees,
New Flyer is a technology leader in the heavy-duty transit market, 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
gasoline-electric and diesel-electric hybrid vehicles. All of New Flyer's
products are supported by an industry-leading, comprehensive parts and service
network. New Flyer's Income Deposit Securities are listed on the Toronto Stock
Exchange under the symbol NFI.UN.

    Forward-Looking Statements

    Certain statements in this press release are "forward-looking
statements", which reflect the expectations of management regarding the
Issuer's and the Company's future growth, results of operations, performance
and business prospects and opportunities. The words "believes", "anticipates",
"plans", "expects", "intends", "projects", "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 press 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, competition in the heavy-duty transit bus
industry, availability of funding to the Company's customers at current levels
or at all, material losses and costs may be incurred as a result of product
warranty issues, material losses and costs may be incurred as a result of
product liability claims, changes in Canadian or United States tax
legislation, the Company's success depends on a limited number of key
executives who the Company may not be able to adequately replace in the event
that they leave the Company, the absence of fixed term customer contracts and
the termination of contracts by customers for convenience, the current
"Buy-America" legislation may change and/or become more onerous, production
delays may result in liquidated damages under the Company's contracts with its
customers, currency fluctuations could adversely affect the Company's
financial results or competitive position in the industry, the Company may not
be able to maintain performance bonds or letters of credit required by its
existing contracts or obtain performance bonds and letters of credit required
for new contracts, third party debt service obligations may have important
consequences to the Company, interest rates could change substantially and
materially impact the Company's profitability, the dependence on limited
sources of supply, the Company's profitability and performance can be
adversely affected by increases in raw material and component costs and the
availability of labour could have an impact on production levels. The Issuer
cautions that this list of factors is not exhaustive. These factors and other
risks and uncertainties are discussed in the Issuer's materials filed with the
Canadian securities regulatory authorities and 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
the Issuer and the Company assume no obligation to update or revise them to
reflect new events or circumstances, except as required by applicable
securities laws.





For further information:

For further information: Glenn Asham, Chief Financial Officer, Tel:
(204) 224-1251, E-mail: investor@newflyer.com


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