Highlights:

  • 2007 Q1 Consolidated Adjusted EBITDA of $21.2 million increases by 39.9% compared to 2006 Q1.
  • Bus manufacturing operations Adjusted EBITDA of  $17.1 million increases 50.1% over 2006 Q1 due to completion of ramp-up of bus production resulting in 491 equivalent units delivered in 2007 Q1 compared to 319 equivalent units delivered in 2006 Q1.
  • Continued growth of aftermarket operations results in 2007 Q1 revenue and Adjusted EBITDA increase of 11.4% and 15.8%, respectively, compared to 2006 Q1.
  • 2007 Q1 Distributable Cash of C$14.9 million increases by 25% compared to 2006 Q1 and results in excess of C$2.6 million compared to distributions declared in 2007 Q1.
  • Total order backlog of $2.3 billion increased by 22.9% compared to December 31, 2006

WINNIPEG, May 9, 2007 - New Flyer Industries Inc. (TSX:NFI.UN), the leading manufacturer of heavy-duty transit buses in Canada and the United States, today announced its results and those of its subsidiary, New Flyer Holdings, Inc. ("New Flyer" or the "Company") for the 13-week period ended April 1, 2007 ("2007 Q1"). 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.

For the second quarter in a row the Company realized both revenue and Adjusted EBITDA that were the highest reported quarterly results in the Company’s history. Consolidated revenue for 2007 Q1 of $220.6 million increased by 62.4% compared to consolidated revenue for the first quarter of 2006 (“2006 Q1”) of $135.8 million.  Bus manufacturing revenue in 2007 Q1 of $201.2 million increased by 69.9% compared to bus manufacturing revenue of $118.5 million in 2006 Q1. Total bus deliveries in 2007 Q1 were 491 equivalent units, which represents a volume increase of 53.9% compared to 2006 Q1 deliveries of 319 equivalent units. The increase in bus manufacturing operations revenue is primarily attributable to increased bus delivery volumes. This increase in delivery volumes is due to the significant improvement in firm order position throughout 2006 which resulted in the Company increasing production rates. The Company completed the ramp-up of production to 40 equivalent units per week during 2007 Q1. The average price per equivalent unit delivered in 2007 Q1 was $409.9 thousand compared to $371.3 thousand in 2006 Q1 representing an increase of 10.4%. This increase is primarily attributable to product sales mix. 2007 Q1 aftermarket operations revenue of $19.4 million increased by 11.4% compared to $17.4 million in 2006 Q1.

Consolidated Adjusted EBITDA for 2007 Q1 totaled $21.2 million, which represents an increase of 39.9% compared to consolidated Adjusted EBITDA for 2006 Q1 of $15.2 million. 2007 Q1 bus manufacturing operations Adjusted EBITDA of $17.1 million increased by 50.1% compared to $11.4 million in 2006 Q1.  Bus manufacturing operations Adjusted EBITDA margin for 2007 Q1 was 8.5% compared to 9.6% in the same quarter of 2006. A primary factor for the decrease in margin is the provision for the incentive compensation program of $1.9 million. In 2006 Q1 there were no costs incurred related to incentive compensation programs. With the improved operating results in 2007 Q1, the provision for incentive compensation has been recorded, which decreased earnings as a percentage of revenue by 0.9% as compared to 2006 Q1. Adjusted EBITDA from aftermarket operations in 2007 Q1 increased by 15.8% to $4.2 million from $3.6 million in the same quarter of 2006 as a result of higher sales from aftermarket operations, and stronger order margins resulted in a higher Adjusted EBITDA margin of 21.7% in 2007 Q1 compared to 20.9% in 2006 Q1.  

The Company reported a net loss of $2.9 million in 2007 Q1 and net earnings $10.9 million in 2006 Q1. With 2007 Q1 earnings from operations increasing by $7.8 million and interest expense remaining stable, the decrease in net earnings compared to 2006 Q1 is primarily attributable to non-cash charges related to the fair value adjustment to other liabilities for class B shares and class C shares and increased income tax compared to 2006 Q1. Charges to earnings for the fair value adjustment to other liabilities for class B shares and class C shares reflects the increase in the value of the underlying shares, which has risen together with the value of the Issuer’s IDSs.

During 2007 Q1 the Company generated Distributable Cash of C$14.9 million and declared total distributions of C$12.3 million resulting in Distributable Cash exceeding total distributions by C$2.6 million. In comparison, 2006 Q1 Distributable Cash totaled C$11.9 million and the Company declared total distributions of C$12.3 million resulting in a shortfall of C$0.4 million. The Company revised the method of calculating Distributable Cash during 2007 Q1 and has restated previously reported Distributable Cash to be consistent with the revised method. Previously, the Company had deducted income taxes paid (“Cash Taxes”) in determining Distributable Cash.  For 2007 Q1, the Company has deducted the current income tax expense in determining Distributable Cash. This change in methodology has been made as the current income tax expense matches the income tax obligation for the period to the earnings recorded and  therefore, in management’s opinion, Distributable Cash based on Cash Taxes, as previously presented, does not result in a representative illustration of the Distributable Cash generated by the Company.

The Company has restated the Distributable Cash for Fiscal 2006 (52-week period ended December 31, 2006) and Fiscal 2005 (19-week period ended January 1, 2006) to reflect the change in the method of calculating Distributable Cash from using Cash Taxes to using the current income tax expense. This restatement resulted in a cumulative increase of C$6.1 million in Distributable Cash from amounts previously reported in Fiscal 2005 and Fiscal 2006. After giving effect to this restatement, Distributable Cash for the cumulative period beginning August 19, 2005 and ending on April 1, 2007 is C$87.5 million. During this period, the Company declared total distributions of C$79.2 million, which represents 90.5% of Distributable Cash for the period.

The Company generated $3.9 million operating cash before the impact of working capital changes. Working capital investments of $6.2 million were required during 2007 Q1 as the Company completed the production ramp-up. As a result, the Company’s overall cash position decreased $4.4 million during 2007 Q1. The Company's current liquidity requirements have been met with cash on-hand and a revolving credit facility of $40.0 million of which $39.7 million was unutilized as at April 1, 2007.

The total order backlog of approximately $2.3 billion as at April 1, 2007 increased by 22.9% compared to the total order backlog of approximately $1.8 billion as at December 31, 2006. The Company saw a significant increase of 1,484 equivalent units in options awarded which contributed to an increase in the total bus manufacturing order backlog during 2007 Q1. Based on the recent increase in order activity and the general 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 Q1 our customers awarded New Flyer firm orders of $101.2 million comprised of 286 equivalent units of production. This compares to awarded firm orders of $228.9 million comprised of 622 equivalent units of production during 2006 Q1. Included in 2007 Q1 total firm bus orders are exercised options of $51.1 million compared to exercised options of $164.1 million in 2006 Q1. As a result of new order activity and deliveries during 2007 Q1, the firm order backlog is $765.1 million, which represents 33.9% of the total backlog.  The firm order backlog, which represents 1,978 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.

Conference Call

A conference call for analysts and interested listeners will be held Thursday, May 10, at 11:00 a.m. (ET). The call-in number for listeners is 800-762-8779. A live audio feed of the call will also be available at:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1855040

A replay of the call will be available from 1:00 p.m. (ET) on May 10, 2007 until 11:59 p.m. (ET) on May 17, 2007. To access the replay, call 416-640-1917 or 877-289-8525, enter pass code number 21231830, and then press the pound (#) sign. The replay will also be available on the Company's web site 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 IPO related costs 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. Specifically, management believes that Adjusted EBITDA is the appropriate measure from which to make adjustments to determine "Distributable Cash" (being Adjusted EBITDA decreased for maintenance capital expenditures, principal payments on capital leases, interest on the Company's credit facility and capital leases, interest on New Flyer Industries Canada ULC's subordinated notes (not forming part of IDSs) and current income tax expense). 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 2,100 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 New Flyer Industries Inc.'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 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 Company cautions that this list of factors is not exhaustive. These factors and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities and are 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 neither New Flyer Industries Inc. nor the Company assumes any obligation to update or revise them to reflect new events or circumstances.

For further information:

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