WINNIPEG, July 15, 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 second fiscal quarter ended June 29, 2014 ("Q2 2014").
Bus Deliveries, Order Activity, and Option Expiry
New Flyer delivered 582 equivalent units ("EUs") in Q2 2014, which is an increase of 93 EUs over deliveries in the second fiscal quarter ended June 30, 2013 ("Q2 2013"). The total work in process ("WIP") for the Company at June 29, 2014 was 366 EUs. The increase in WIP of 60 EUs during the quarter is related to pace of customer inspection and acceptance on a few current contracts. Management expects to recover deliveries on these contracts by year end.
In May 2014, New Flyer successfully delivered its first MiDi® to a Canadian private bus operator. The MiDi® is a medium sized bus, ideal for use in shuttle operations at universities or airports, and fixed route transit service in smaller towns and cities. During the period, the MiDi® also successfully completed its New Model Bus Testing program in Altoona, PA ("Altoona Testing"), and is now eligible for bus procurements using FTA funding grants.
In June 2014, the Company delivered its first two production battery-electric buses to a public transit agency in the United States, as part of a technology demonstration program. The XE40® is New Flyer's battery-electric, zero emission heavy duty transit bus based on the proven Xcelsior® platform. Four additional battery-electric buses have been manufactured and are in the process of completing a comprehensive test protocol, including Altoona Testing. They are expected to enter service with Winnipeg Transit in a few months.
New Flyer's new bus orders (firm and options) in Q2 2014 totaled 476 EUs and included:
- New firm orders for 81 EUs (valued at $41.6 million)
- New option orders for 395 EUs (valued at $149.1 million).
In addition, the company had options for 121 EUs (valued at $61.9 million) converted to firm orders during the quarter.
| New Orders
| LTM New
| Option EUs
| Option EUs
New Flyer's last twelve months ("LTM") Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 162%, the sixth consecutive quarter above 100%.
In Q2 2014, New Flyer had 205 EUs expire. Remaining options in backlog will expire if not exercised, as follows:
|Year of option expiry||2014||2015||2016||2017||2018||2019|| Total Option
| Remaining Option
At the end of Q2 2014, New Flyer's total backlog was 7,372 EUs (for a total value of $3.54 billion) compared to 7,683 EUs (for a total value of $3.69 billion) at the end of the first quarter of 2014 ("Q1 2014").
The total backlog includes 392 EUs of firm orders and options awarded by three different customers where contract documentation was received by New Flyer prior to the end of Q2 2014, but announcements outlining the details of these contracts are awaiting customer approval prior to release.
|Total Backlog|| Firm Orders
| Ending backlog at Q1 2014
New orders in Q2 2014
Options exercised in Q2 2014
Deliveries in Q2 2014
Cancelled/expired options in Q2 2014
|Ending Backlog at Q2 2014||2,228||5,144||7,372|
New Flyer's backlog consists of 30 foot, 35 foot, 40 foot and 60 foot bus lengths. Buses incorporating clean propulsion systems (such as natural gas, diesel-electric hybrid, electric-trolley, and battery-electric) represent approximately 65% of the total.
|Total Backlog|| Firm Orders
|30 and 35 foot MiDi® buses||44||0||44|
|30,35 and 40 foot heavy duty buses||1,734||3,208||4,942|
|60 foot articulated buses||450||1,936||2,386|
|Total Backlog at Q2 2014||2,228||5,144||7,372|
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 49 EUs per production week from the New Flyer and NABI Bus facilities, including MiDi® production.
During Q2 2014, the Company announced plans to focus on a single heavy-duty transit bus platform that features its world-class Xcelsior®. Management believes that the majority of the options for NABI buses will be manufactured prior to the transition, or will be converted to the Xcelsior® platform.
At the end of the period, new firm and option orders of 239 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 New Flyer backlog.
Economic Environment and Ridership
Management remains encouraged with general economic health improvement of the US states. Preliminary data from the Rockefeller Institute (Preliminary Report on May 6, 2014) reports state tax collections increasing slightly in the first quarter of 2014 for the 17th consecutive quarter, with a 0.7% increase over the prior year. The US Bureau of Labor Statistics (Employment Situation Summary on July 3, 2014) reports US unemployment declined 0.6% during the quarter, ending with a rate of 6.1% in June.
The latest data from the American Public Transportation Association (APTA) indicates overall stable ridership during the first quarter of 2014. The report indicated a slight decrease of 0.67% in all modes of U.S. transit ridership during the first quarter of 2014 compared with the previous year; including a decrease in bus ridership of 2.86%. The same report indicates Canadian ridership slightly increased by 0.66% in all modes of transit ridership during the first 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 Q2 2014 was 19,728 EUs compared to 18,097 EUs at the end of Q2 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 Q2 2014 was 4,698 EUs, compared to 5,671 EUs at the end of Q1 2014.
| Bids or
(EUs) over the
next 5 years
| Total EUs in
A lag in procurement activity was experienced in the first half of 2014 followed by the issuance of a volume of new RFP's. Management anticipates that the amount of bus procurement activity by public transit agencies throughout the United States and Canada should remain robust throughout 2014 based on expected customer fleet replacement plans.
The U.S. federal transit program is funded from General Revenues of the government and from revenues credited to the Mass Transit Account of the Highway Trust Fund. Each year, new legislation must be passed to appropriate General Revenues that will fund transit programs and set an obligation limitation that allows expenditure of funds from the Mass Transit Account for transit programs. MAP-21, the current funding appropriation bill expires on September 30, 2014.
On March 4, 2014, President Obama released a $90.9 billion budget for Department of Transportation in Fiscal Year 2015 as part of a $302 billion, four year surface transportation reauthorization ("The Grow America Act"). The Grow America Act proposes $72.3 billion for public transportation over four years, including $17.6 billion in FY 2015, a $6.8 billion increase over FY 2014. The budget recommendation proposes significant increases in funding for the state-of-good repair and bus and bus facilities accounts, which have historically been a source of funding for bus replacement and bus maintenance activities for US transit agencies. The recommendation also introduces a $500 million discretionary program aimed at establishing bus rapid transit (BRT) service in areas with rapidly growing populations.
New Flyer has been very active with APTA and CUTA on providing feedback and insights on The Grow America Act and its various elements. On July 9, 2014 New Flyer President and CEO Paul Soubry participated in a closed door roundtable on the US Administrations Transportation and Infrastructure as proposed in The Grow America Act. The event was hosted by Vice President Joe Biden and Transportation Secretary Anthony Foxx at The White House Eisenhower Executive Office Building.
On July 10, 2014 both the Senate Finance Committee and the House Ways and Means Committee voted for legislation that provides a revised package of offsets to provide a General Fund transfer and address the pending insolvency of the Highway Trust Fund. The new package makes approximately $10.8 billion available for the Highway Account ($8.8 billion) and Mass Transit Account ($2 billion) of the Highway Trust Fund, effectively providing sufficient funds to support highway and transit expenditures through May 2015. The House bill is scheduled to come to the floor the week of July 14, 2014.
On June 11, 2014, the Grow America Act was introduced to the House of Representatives. The bill has been referred to a number of House committees and subcommittees, and is currently under review.
New Flyer Aftermarket
Gross orders received by New Flyer's aftermarket parts business during Q2 2014 increased 42% compared to Q2 2013. Parts shipments in Q2 2014 also increased 55% over Q2 2013.
Quarter-over-quarter Q2 2014 actual part shipments were up 11% over Q1 2014, while gross parts orders fell slightly by 1% over Q1 2014.
NOTE: All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $1.0661 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. 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 and should not be read as guarantees of future performance or results. Actual performance or results may not be consistent with these forward-looking statements, and the differences may be material 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, currency fluctuations could adversely affect the Company`s financial results or competitive condition and impact the amount of cash available for distribution, 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.
SOURCE: New Flyer Industries Inc.
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