New Flyer Announces Fourth Quarter 2014 Orders and Backlog
WINNIPEG, Jan. 13, 2015 /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 28, 2014 ("Q4 2014").
Bus Deliveries, Order Activity, and Option Expiry
New Flyer delivered 606 equivalent units ("EUs") in Q4 2014, compared to 635 deliveries in the fourth fiscal quarter ended December 29, 2013 ("Q4 2013"). The total work-in -process ("WIP") for the Company at December 28, 2014 was 358 EUs, a reduction of 41 EU's from the previous quarter which can be attributed primarily to the recovery of deliveries on a contract where the customer had delayed inspection and acceptance. All but two of the buses under this contract have now been delivered.
New Flyer's new bus orders (firm and options) in Q4 2014 totaled 1,325 EUs. Three major contracts were executed in December 2014, and are included in backlog. Details regarding contracts with San Francisco Municipal Railway and Orange County Transportation Authority were disclosed in separate press releases. A third contract for 195 EUs has been awarded, however the formal press release containing details of the order is currently awaiting customer approval prior to issuance.
At the end of the period, an additional 278 EUs for new firm and option orders 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 and therefore not yet included in the backlog.
During Q4 2014, New Flyer also executed contracts with two U.S. states, which added New Flyer buses to their respective purchasing schedules of eligible transit vehicles. These "State" contracts do not have specific firm or option quantities, and therefore are not added to backlog, but as options are exercised off these agreements by eligible purchasers they will be added as new firm orders.
Order activity in the period included:
- New firm orders for 596 EUs (valued at $290.6 million)
- New option orders for 729 EUs (valued at $404.4 million)
- Options for 163 EUs (valued at $81.9 million) converted to firm orders
| New Orders in Quarter (Firm and Option EUs) |
LTM New Orders (Firm and Option EUs) |
Option EUs Converted in Quarter |
Option EUs Converted LTM |
|
| Q4 2013 |
331 |
5,279 |
223 |
601 |
| Q1 2014 |
559 |
3,834 |
506 |
883 |
| Q2 2014 |
476 |
3,797 |
121 |
966 |
| Q3 2014 |
109 |
1,475 |
359 |
1,209 |
| Q4 2014 |
1,325 |
2,469 |
163 |
1,149 |
New Flyer's last twelve months ("LTM") Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 104% and has been greater than 100% for seven of the last eight quarters.
The New Flyer backlog and orders anticipated to be awarded by customers under new procurements are expected to enable the Company to continue to operate at a corporate average line entry rate of approximately 51 EUs (including MiDi®) per production week for fiscal 2015. Management expects the corporate average line-entry rate to remain stable at this level for 2015 as the Company executes on the rationalization of the NABI bus product lines to the Xcelsior® platform. Production rates may vary from quarter to quarter due to sales mix and the introduction of the Xcelsior into the Anniston, AL facility.
In Q4 2014, 139 option EUs expired. Approximately 40% of the options as at January 1, 2014 that were scheduled to expire in 2014 were successfully converted to firm orders, compared to a conversion rate of just 33% in 2013. This year-over-year improvement in option conversion excludes the significant deferred customer order which was removed from the backlog in Q4 2013.
Remaining options in the current backlog will expire if not exercised, as follows:
| Year of option expiry |
2015 |
2016 |
2017 |
2018 |
2019 |
Total Option EUs |
| Remaining Options (EUs) |
946 |
596 |
560 |
1,625 |
916 |
4,643 |
Total Backlog
At the end of Q4 2014, New Flyer's total backlog was 6,819 EUs (valued at $3.43 billion) compared to 6,239 EUs (valued at $3.07 billion) at the end of the third quarter of 2014 ("Q3 2014") and 7,678 EU's (valued at $3.66 billion) at the end of Q4 2013.
| Total Backlog |
Firm Orders (EUs) |
Options (EUs) |
Total (EUs) |
| Ending backlog at Q3 2014 New orders in Q4 2014 Deliveries in Q4 2014 Cancelled/expired options in Q4 2014 |
2,023 596 163 (606) - |
4,216 729 (163) - (139) |
6,239 1,325 - (606) (139) |
| Ending Backlog at Q4 2014 |
2,176 |
4,643 |
6,819 |
New Flyer's backlog consists of 30', 35', 40' and 60-foot bus lengths. Buses incorporating clean propulsion systems (such as natural gas, diesel-electric hybrid, electric-trolley, and battery-electric) represent approximately 73% of the total.
| Total Backlog |
Firm Orders (EUs) |
Options (EUs) |
Total (EUs) |
| 30, 35 and 40-foot buses |
1,508 |
2,741 |
4,249 |
| 60-foot articulated buses |
668 |
1,902 |
2,570 |
| Total Backlog at Q4 2014 |
2,176 |
4,643 |
6,819 |
Funding Environment
On December 16, 2014, President Obama signed the combined Omnibus Appropriations and Continuing Resolution that will fund the U.S. federal government through the end of fiscal year 2015. The resolution extends transit funding to September 30, 2015, and results in full-year funding levels under MAP-21 of $10.743 billion, which is $167 million more than the prior year.
On June 11, 2014, a $302 billion, four-year surface transportation reauthorization (GROW AMERICA Act) was introduced in the House of Representatives. The bill was referred to a number of House committees and subcommittees, and remains under review with no imminent action anticipated.
Economic Environment and Ridership
Preliminary data from the Rockefeller Institute (Preliminary Report on December 12, 2014) reports state tax collections increased in the third quarter of 2014 by 4% over the prior year. The U.S. Bureau of Labor Statistics (Labor Force Statistics on January 9, 2015) reports U.S. unemployment reduced further in the quarter, ending with a rate of 5.6% in December 2014 as compared to a 6.7% unemployment rate at December 2013.
The latest data from the American Public Transportation Association (APTA) indicates overall stable ridership during the third quarter of 2014. The report indicated an increase of 1.8% in all modes of U.S. transit ridership during the third quarter of 2014 compared with the previous year, with a marginal decrease in bus ridership of 0.4%. The same report indicates Canadian ridership increased by 2.2% in all modes of transit ridership during the third quarter of 2014 as compared to the previous year; however, specific data on bus ridership is not available.
Transit Bus Demand
In 2008, New Flyer created the Bid Universe metric 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 2014 was 23,068 EUs, a substantial increase to the 18,592 EUs at the end of Q4 2013. 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 2014 was 6,729 EUs which is an increase of 446 EUs or 7% from the previous quarter.
| RFPs (EUs) in process at New Flyer |
Bids or Proposals (EUs) submitted by New Flyer |
Total Active EUs |
Forecasted New Procurements (EUs) over the next 5 years |
Total EUs in Bid Universe |
|
| Q4 2013 |
909 |
5,329 |
6,238 |
12,354 |
18,592 |
| Q1 2014 |
3,626 |
2,045 |
5,671 |
15,567 |
21,328 |
| Q2 2014 |
2,772 |
1,926 |
4,698 |
15,030 |
19,728 |
| Q3 2014 |
2,864 |
3,419 |
6,283 |
15,490 |
21,773 |
| Q4 2014 |
3,335 |
3,394 |
6,729 |
16,339 |
23,068 |
Management anticipates that the amount of bus procurement activity by public transit agencies throughout the U.S. and Canada should remain robust based on expected customer fleet replacement plans and active procurements.
New Flyer Aftermarket
Gross parts orders received by New Flyer's aftermarket business during Q4 2014 increased 24.1% compared to Q4 2013. Parts shipments in Q4 2014 also increased 23.6% over Q4 2013.
Quarter-over-quarter gross parts orders grew 2.8% over Q3 2014, while parts shipments were up 2.3% over Q3 2014.
Orders for the New Flyer prime contract portion of the Chicago Transit Authority mid-life upgrade program continue to be received as the program enters its final year, with approximately 70% of the buses having been completed at the end of 2014.
NOTE: All dollar amounts are stated in U.S. currency based on an exchange rate of U.S. $1.00 = CAD $ 1.1623 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 the United States and Canada. The Company is the industry technology leader and offers the broadest product line of transit buses including drive systems powered by: clean diesel, natural gas, diesel-electric hybrid, electric trolley and now, battery-electric. All buses are supported by an industry-leading comprehensive warranty and support program, and service network. New Flyer also operates the industry's most sophisticated aftermarket parts organization, sourcing parts from hundreds of different suppliers and providing support for all types of 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. Over 32,000 New Flyer and NABI heavy-duty transit buses are in operation today. Further information is available on New Flyer's website at http://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.
Forward-Looking Statements
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, 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 customers to purchase buses and to purchase parts or services, customers may not exercise options to purchase additional buses, the ability of customers to terminate contracts for convenience 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.
SOURCE New Flyer Industries Inc.
For further information: Jon Koffman, Investor Relations, Tel: 204-224-6672
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