New Flyer Annouces 2006 Third Quarter Results

New Flyer Announces 2006 Third Quarter Results

Highlights:

WINNIPEG, November 6, 2006 - 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 ("2006 Q3") and the 39-week period ended October 1, 2006 ("2006 YTD"). Full financial statements and Management’s Discussion and Analysis (the "MD&A") are available at the Company's web site at: www.newflyer.com.

New Flyer completed its initial public offering ("IPO") of income deposit securities and the associated acquisition of its operating business on August 19, 2005. In order to provide investors with a meaningful assessment of its recent performance, New Flyer also provided results for the comparable 39-week period ended October 2, 2005 ("2005 YTD") consisting of the combined results of the Company for the 6-weeks ended October 2, 2005 and the results for the 33-weeks ended August 18, 2005 of its predecessor company, Transit Holdings, Inc., as described in the MD&A. Note that all figures are in United States dollars unless stated otherwise.

During 2006 Q3, the Company generated revenue and Adjusted EBITDA of 160.5 million and $17.0 million, respectively. Revenue during 2006 Q3 increased 1.7% from $157.8 in the 13-week period ended October 2, 2005 ("2005 Q3") and Adjusted EBITDA was down 12.2% from $19.4 million in 2005 Q3. The decrease in Adjusted EBITDA is primarily the result of the lower Adjusted EBITDA from bus Manufacturing operations driven by changes to sales mix and increased production inefficiencies as the production ramp-up is being executed.

2006 Q3 resulted in a significant improvement in the operating results in comparison to both the 13-week period ("2006 Q2") and the first half of 2006 ("2006 H1"), both of which were negatively impacted by a strike by the Company’s unionized workforce at its Winnipeg facility. Revenue in 2006 Q3 was $160.5 million compared to $136.7 million in 2006 Q2, representing an increase of 17.4%. Adjusted EBITDA for 2006 Q3 increased 129.7% to $17.0 million from Adjusted EBITDA of $7.4 million reported in 2006 Q2. In total, revenue and Adjusted EBITDA for 2006 Q3 accounts for 37.1% and 43.0% of the 2006 YTD revenue and Adjusted EBITDA, respectively.

Revenue from aftermarket operations continued to be strong in 2006 YTD as revenue increased 27.1% to $50.6 million from $39.8 million in the corresponding period of last year. On a quarterly basis, revenue for aftermarket operations for 2006 Q3 increased 34.3% to $17.4 million from $13.0 million in the 13-week period ended October 2, 2005 (" 2005 Q3"). This growth rate exceeds the growth in prior years as New Flyer buses continue to represent a larger share of the active installed fleet in the combined United States and Canadian market. In addition, the reduction of new bus deliveries experienced in the U.S. market in 2004, 2005 and in early 2006 has contributed to higher demand in the aftermarket business as customers maintain older fleets.

Adjusted EBITDA of 3.5 million for aftermarket operations in 2006 Q3 increased 47.7% from $2.4 million in the corresponding period of last year. The increase in Adjusted EBITDA is primarily the result of increased sales volumes. In addition to revenue growth, profit margins for aftermarket operations have also contributed to the increase for aftermarket operations as Adjusted EBITDA margin of 20.2% for 2006 Q3 increased from 18.4% in 2005 Q3. Adjusted EBITDA from aftermarket operations of $10.5 million for 2006 YTD increased 33.4% from $7.9 million.

New Flyer generated Distributable Cash of $13.3 million, or C$14.9 million, in 2006 Q3 with total cash distributions being C$12.1 million for this period. This represents a payout ratio of 81.3%. For 2006 YTD, Distributable Cash totaled $23.7 million, or C$26.8 million, with total cash distributions of C$36.4 million resulting in a 2006 YTD payout ratio of 135.9%. The year-to-date shortfall of C$9.6 million was primarily attributable to the strike and was funded by cash balances.

Further recovery of the shortfall in Distributable Cash which occurred in 2006 H1, is expected as the production ramp-up is completed and operations are stabilized at higher production levels. Management believes that the unfavourable financial impact of the strike will not affect the Company’s ability to maintain the current distribution levels for the remainder of 2006.

Management’s expectations relating to the Company’s ability to achieve the production, EBITDA, Adjusted EBITDA and distribution results referred to above are based on the assumption that the Company will be able to successfully execute the planned increased levels of production in the fourth quarter of 2006 and to do so on schedule and within the planned costs and that the U.S. heavy-duty transit bus market will continue to improve. See also "Forward-Looking Statements" below.

"After a difficult first half of 2006, which was negatively impacted by the strike and related delayed delivery of higher-margin buses, the third quarter of 2006 has seen our operations’ performance moving towards pre-strike levels. Management expects further improvements as the Company completes its production ramp-up in the fourth quarter of 2006 and sales mix shifts to higher margin products. Based on continued ramp-up of production, management continues to believe that the Company should achieve Adjusted EBITDA for the 2006 fiscal year as a whole substantially similar to the level reported for the 12-months ended April 2, 2006," said John Marinucci, President and Chief Executive Officer of New Flyer. "More importantly, as evidenced by the significant increase in year-to-date firm orders, we believe the US heavy-duty transit bus market is improving. As a result of this increase in demand, management anticipates maintaining the higher production levels into 2007."

The Company’s order backlog at October 1, 2006 remained stable at approximately $1.9 billion (comprised of $0.8 billion of firm bus orders and $1.1 billion of options for buses). The backlog has remained stable relative to the $2.0 billion level at the end of the last fiscal year on January 1, 2006 and to the $2.0 billion level at the time of the Company’s IPO. Importantly, the firm order component of the order backlog has increased by 28.1% or $176.5 million since January 1, 2006.

During 2006 YTD, the Company was awarded firm bus orders totaling $561.9 million compared to $340.1 million awarded during 2005 YTD, which represents an increase of 65.2%. Included in awarded firm bus orders are exercised options of $364.2 million (representing 64.8% of the firm orders awarded) in 2006 YTD compared to $183.4 million (representing 53.9% of the firm bus orders awarded) for 2005 YTD. Based on the recent increase in firm order activity and the general bid activity in the U.S. heavy-duty transit bus market, management believes that the U.S. market is reflecting pent-up demand related to aging transit fleets and increased ridership.

On October 31, 2006, the federal government announced proposed changes to the tax treatment of most publicly-traded trusts and partnerships. The proposed changes include the imposition of significant new taxes on these entities beginning in 2011 for existing issuers. Since New Flyer Industries Inc. and New Flyer Industries Canada ULC are corporate issuers of income deposit securities (consisting of a common share of New Flyer Industries Inc. and a subordinated note of New Flyer Industries Canada ULC) rather than an income trust or partnership, the proposed tax changes, as announced, do not apply to them. However, there can be no assurance that the provisions of the proposals once enacted will not be broad enough to apply to the New Flyer entities and other issuers of income deposit securities.

Conference Call

A conference call for analysts and interested listeners will be held Tuesday, November 7, at 4:00 p.m. (ET). The call-in numbers for listeners are 416-644-3421 or 866-250-4907. A live audio feed of the call will also be available at:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1639880

A replay of the call will be available from 6:00 p.m. (ET) on November 7, 2006 until 1:59 p.m. (ET) on November 14, 2006. To access the replay, call 416-640-1917 or 877-289-8525, enter pass code number 21207639, 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 cash taxes). 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 2,000 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 include estimated results for the balance of 2006 and expectations regarding production levels into 2007. 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, changes in Canadian or United States tax legislation, 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 costs, material losses and costs may be incurred as a result of product liability claims, 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 and 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