Summary (U.S. Dollars except as noted):
- 2013 Q4 consolidated revenue of $381.2 million increased by 83.2% compared to 2012 Q4 primarily due to incremental revenue associated with the acquisition of the Orion parts business and the NABI bus and parts businesses.
- 2013 Q4 consolidated Adjusted EBITDA of $36.8 million increased by 154.9% compared to 2012 Q4 and net earnings of $13.7 million increased by 251% compared to 2012 Q4.
- Fiscal 2013 revenue, Adjusted EBITDA and net earnings were $1.2 billion, $95 million and $27 million, respectively, compared to the same measures in Fiscal 2012 of $865 million, $61 million and $9.3 million, respectively.
- 2013 Q4 Free Cash Flow was C$15.7 million and declared dividends were C$8.1 million during 2013 Q4. The current dividend rate is expected to be maintained.
- 2013 Q4 liquidity was $69.2 million, a decrease of $21.3 million from 2013 Q3 liquidity of $90.5 million as a result of increased year-end working capital.
- Estimated bus market share of EUs delivered in Canada and the United States for Fiscal 2013 was approximately 43%, an increase from 32% for Fiscal 2012. For the aftermarket parts segment, estimated market share in Fiscal 2013 increased over Fiscal 2012 from 18% to approximately 28%.
- 2013 Q4 was an exceptionally strong quarter with 635 EUs delivered, strong margins and $4.9 million of investment tax credits realized.
- Management currently anticipates that 2014 Q1 Adjusted EBITDA will be significantly less than 2013 Q4 and is likely to be lower than 2013 Q1 Adjusted EBITDA (as further discussed below).
WINNIPEG, March 19, 2014 /CNW/ - New Flyer Industries Inc. (TSX:NFI, TSX:NFI.DB.U), ("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 ended December 29, 2013 ("2013 Q4") and the 52-week period ended December 29, 2013 ("Fiscal 2013"). 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.
|(U.S. dollars in thousands)||Q4||Q4||change||Fiscal||Fiscal||change|
|Number of equivalent units ("EUs") delivered||635||387||64.1%||2,191||1,656||32.3%|
|Average selling price per EU||$493.3||$463.0||6.5%||$449.3||$450.6||-0.3%|
|(U.S. dollars in millions)||Q4||Q4||change||Fiscal||Fiscal||change|
- The increase in 2013 Q4 revenue primarily resulted from a 64.1% increase in total bus deliveries compared to the 13-week period ended December 30, 2012 ("2012 Q4") deliveries and a sales mix with higher average selling prices. Bus deliveries during 2013 Q4 were positively impacted by the reduction of 47 EUs from the previous quarter's work in process ("WIP") total.
- The increase in 2013 Q4 revenue from aftermarket operations is primarily a result of increased volumes including: the Chicago Transit Authority ("CTA") midlife overhaul program, and incremental revenue from the Orion parts business and NABI Parts, LLC ("NABI Parts").
- Revenue from bus manufacturing operations for Fiscal 2013 also increased compared to the 52-week period ended December 30, 2012 ("Fiscal 2012"). The Fiscal 2013 increase is due to increased deliveries compared to Fiscal 2012.
- Revenue from aftermarket operations for Fiscal 2013 increased compared to Fiscal 2012 primarily as a result of increased volumes resulting from incremental revenue from the Orion parts business subsequent to the March 1, 2013 acquisition date and NABI Parts subsequent to June 21, 2013.
- For Fiscal 2013,The Company generated consolidated revenue of $1.2 billion, an increase of 38.6% from consolidated revenue for Fiscal 2012 of $865.3 million.
|Consolidated Adjusted EBITDA||2013||2012||2013||2012|
|(U.S. dollars in millions)||Q4||Q4||change||Fiscal||Fiscal||Change|
|Total Adjusted EBITDA||$36.8||$14.5||154.9%|| $94.7
- 2013 Q4 and Fiscal 2013 bus manufacturing operations Adjusted EBITDA increased primarily due to increased bus deliveries as a result of a successful effort to reduce year-end WIP, the addition of the NABI bus operations and an increase of $4.9 million of investment tax credits ("ITCs") realized when compared to their 2012 respective periods. Management does expect to realize the remaining $13.7 million in ITCs over the next two to three years; however, the amount realized on a quarterly basis is volatile. Profit margins can vary significantly between orders due to factors such as pricing, order size and product type. Adjusted EBITDA from bus manufacturing operations per EU can be volatile on a quarterly basis and therefore, management believes that a longer term view should be taken when comparing bus manufacturing operations margins.
- 2013 Q4 and Fiscal 2013 aftermarket operations Adjusted EBITDA increased compared to their 2012 respective periods, primarily due to the additional Adjusted EBITDA generated by the CTA midlife overhaul program and the acquisition of NABI Parts and the Orion parts businesses. The percentage of revenue was negatively impacted by the expected lower than average margins relating to the CTA midlife overhaul program.
- Fiscal 2013 consolidated Adjusted EBITDA of $94.7 million (7.9% of revenue) increased by 55.7% compared to Fiscal 2012 consolidated Adjusted EBITDA of $60.8 million (7.0% of revenue).
|(U.S. dollars in millions)||Q4||Q4||change||Fiscal||Fiscal||change|
|Earnings from operations||$24.0||$7.7||16.3||$51.1||$33.5||17.6|
|Income tax expense||(5.3)||(0.2)||-5.1||(7.9)||(0.7)||-7.2|
The Company reported net earnings of $13.7 million in 2013 Q4, an increase compared to net earnings of $3.9 million in 2012 Q4, primarily as a result of a $16.3 million increase in earnings from operations offset by increased income taxes. Similarly, Fiscal 2013 net earnings of $26.8 million increased compared to Fiscal 2012 net earnings of $9.3 million.
|Free Cash Flow||2013||2012||2013||2012|
|(CAD dollars in millions)||Q4||Q4||change||Fiscal||Fiscal||change|
|Free Cash Flow||$15.7||$7.5||109.7%||$45.1||$ 27.1||66.5%|
The amount of dividends declared increased in 2013 Q4 compared to 2102 Q4 as a result of issuing 11.1 million common shares in Fiscal 2013 to strategic investor Marcopolo SA.
However, the total dividends declared in Fiscal 2013 is lower than Fiscal 2012 as a result of reducing the annual dividend rate to C$0.585 per common share, effective for all dividends declared after August 20, 2012. For Fiscal 2013 the payout ratio was 68.1% compared to 122.1% for Fiscal 2012.
|Liquidity Position||December 29||September 29||$|
|(U.S. dollars in millions)||2013||2013||change|
|Available funds from revolving credit facility||57.3||77.0||-19.7|
|Total liquidity position||69.2||90.5||-21.3|
As at December 29, 2013, there were $35.0 million of direct borrowings and $22.7 million of outstanding letters of credit related to the $115.0 million revolving credit facility ("Revolver").
During 2013 Q4, the Company decreased its liquidity position by $21.3 million primarily as a result of increased non-cash working capital, primarily made up of accounts receivables relating to increased bus deliveries at the end of 2013 Q4. The $23.0 million proceeds borrowed from the Revolver during 2013 Q4 were primarily used for working capital needs. Due to the contract solicitation process in the bus manufacturing industry, bus purchase contracts are customer specific and contain varied terms and conditions, including terms relating to the timing of payments made under such contracts. As such, the timing of the payments of the Company's accounts receivable is not always consistent or predictable, which may result in the Company drawing on its Revolver in order to meet its working capital requirements.
Market Size and Share
Management estimates that heavy-duty bus manufacturers delivered approximately 5,083 EUs in 2013 to Canadian and US transit operators, which is similar to the total number of estimated EUs delivered in 2012.
Management estimates that New Flyer's market share of EUs delivered in 2013 was approximately 43%, an increase from its estimated market share of 32% for 2012. The increase was primarily as a result of the acquisition of NABI in June 2013 and the assignment of the remaining Orion bus sales contracts prior to its departure in December 2012..
With respect to the aftermarket segment, the acquisition of the Orion parts business on March 1, 2013 and the NABI Parts acquisition on June 21, 2013, have increased the Company's share of this segment. As a result, management estimates that New Flyer grew its market share in Fiscal 2013 compared to Fiscal 2012 from 18% to approximately 28%. The Company has completed the integration of the Orion aftermarket parts business into the New Flyer parts business and is actively engaged in a strategic review of the NABI Parts businesses.
Market and Business Outlook
As has been highlighted by the Company previously, the number of active heavy-duty transit bus procurements dropped noticeably in the period from 2009 to 2011. In order to fill production slots and to stabilize facilities and operations, the Company built buses from a few new contracts awarded and under the existing contracts which reduced the total backlog. In order to replenish decreasing backlogs in an environment of fewer procurements, prices offered from all builders for new contracts declined dramatically. As a result, management expects that on average, margins on orders planned for production in 2014 will be lower than the average margins achieved during Fiscal 2013.
While the active competitions in the bid universe showed a slight decrease in 2013 Q4, management believes a number of competitions are to be released in 2014. Notwithstanding the recent growth in backlog, management does not currently anticipate increasing the yearly average weekly line entry rate of 48 EUs or the delivery rates in 2014. Management reiterates its previous advice that the performance of the Company is subject to significant quarterly volatility with margins being affected by factors such as: bus type and length, propulsion system, contract rates and unique customizations required by customers.
2013 Q4 was an exceptionally strong quarter as a result of a high number of EU deliveries, strong margin on specific EUs delivered, the reversal of the long-term incentive plan provision, and material ITCs realized in 2013 Q4 (which represented more than 50% of the ITCs realized for the entire Fiscal 2013). Based on its current projections, management anticipates that 2014 Q1 Adjusted EBITDA will be significantly less than 2013 Q4 (and is likely to be lower than 2013 Q1 Adjusted EBITDA) as a result of several factors, including the number of deliveries in the quarter is expected to be approximately 100 EUs lower than the 635 EUs delivered in 2013 Q4 and the impact of lower margins due to the competitive bidding environment discussed above. Also, management currently anticipates that 2014 Q1 Adjusted EBITDA will include a reduction of realized ITCs as compared to the $4.9 million of ITCs realized in 2013 Q4. Management does expect to realize the remaining $13.7 million in ITCs over the next two to three years; however, the amount realized on a quarterly basis is volatile.
Management believes it is more meaningful to evaluate performance of the Company by comparing the last twelve months ("LTM") results at the end of the current period against the previous period's LTM results. Management forecasts that even with factoring in the expected lower results for 2014 Q1, the Company's LTM at the end of 2014 Q1 is expected to approximate the LTM at the end of 2013 Q4.
Going forward and with the departure from the industry of Orion in 2012, management anticipates industry capacity to be more aligned with demand. Despite the ongoing pressure on margins, management believes pricing in certain types of bus competitions has begun to normalize. In addition, management continues to pursue cost and overhead savings in daily operations through its Operational Excellence initiatives. Management currently plans to increase the average production line entry rate to approximately 49 EUs per production week for the last three quarters of fiscal 2014 to offset the expected reduced deliveries in 2014 Q1 in order to maintain the yearly average line entry rate of 48 EUs per production week.
Management continues to expect that the Company will remain in compliance with all credit facility covenants and will be able to maintain dividends at current levels.
A conference call for analysts and interested listeners will be held on Friday March 21, 2014 at 9:00 a.m. (ET). The call-in number for listeners is 888-231-8191 or 647-427-7450. A live audio feed of the call will also be available at:
A replay of the call will be available from 12:00 p.m. (ET) on March 21, 2014 until 11:59 p.m. (ET) on March 28, 2014. To access the replay, call 416-849-0833 or 855-859-2056 and then enter pass code number 57168652. The replay will also be available on New Flyer's web site at www.newflyer.com.
"Earnings from Operations" refer to earnings before finance costs, income taxes, losses or gains on disposal of property, plant and equipment, unrealized foreign exchange losses or gains on non-current monetary items and fair value adjustment to embedded derivatives. Adjusted EBITDA consists of earnings before finance cost, income taxes, depreciation, amortization and other non-cash charges and certain other non-recurring charges as set out in the MD&A. "Free Cash Flow" means cash flows from operations adjusted for changes in non-cash working capital items, effect of foreign currency rate on cash, defined benefit funding, non-recurring transitional costs relating to business acquisition, costs associated with assessing strategic and corporate initiatives, past service pension costs and decreased for defined benefit expense, capital expenditures and principal payments on capital leases. Management believes Earnings from Operations, Adjusted EBITDA and Free Cash Flow are useful measures in evaluating the performance of the Company. However, Earnings from Operations, Adjusted EBITDA and Free Cash Flow are not recognized earnings measures and do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS") and may not be comparable to similarly titled measures used by other issuers. Readers are cautioned that Earnings from Operations, Adjusted EBITDA and Free Cash Flow should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the Company's performance or to cash flows from operating, investing and financing activities determined in accordance with IFRS, as a measure of liquidity and cash flows. A reconciliation of Adjusted EBITDA and Free Cash Flow to net earnings and cash flow from operations, respectively, is provided in the MD&A.
About New Flyer
New Flyer, with its recently acquired NABI Bus, LLC subsidiary, 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 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.
Certain statements in this press release are "forward-looking statements", which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. The words "believes", "anticipates", "plans", "expects", "intends", "projects", "forecasts", "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, availability of funding to the Company's customers to purchase buses and to exercise options and to purchase parts or services at current levels or at all, aggressive competition and reduced pricing in the industry, 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 U.S. federal "Buy-America" legislation, certain states' U.S. content bidding preferences and certain Canadian content purchasing policies may change and/or become more onerous, production delays may result in liquidated damages under the Company's contracts with its customers, the Company's ability to execute its planned production targets as required for current business and operational needs, 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, 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, interest rates could change substantially and materially impact the Company's profitability, the dependence on limited sources of supply, the timely supply of materials from suppliers, the possibility of fluctuations in the market prices of the pension plan investments and discount rates used in the actuarial calculations will impact pension expense and funding requirements, the Company's profitability and performance can be adversely affected by increases in raw material and component costs, the availability of labour could have an impact on production levels, new products must be tested and proven in operating conditions and there may be no demand for such new products from customers, the ability of the Company to successfully execute strategic plans and maintain profitability, risks related to acquisitions, joint ventures and other strategic relationships with third parties and 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 its press releases and 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 Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws.
SOURCE: New Flyer Industries Inc.
For further information:
Tel: (204) 224-6672
E-mail: [email protected]