NEW FLYER BUSINESS UPDATE
Winnipeg, Manitoba, Canada – February 8, 2013: (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, provides an update regarding financial performance for the fourth quarter of 2012 (“Q4 2012”) and an update on recent order activity.
In the Company’s third quarter earnings release issued on November 12, 2012, management advised that anticipated Adjusted EBITDA for Q4 2012 was expected to be stronger than the Adjusted EBITDA realized in the third quarter of 2012 (“Q3 2012”). Although the Company has not yet completed the preparation of its financial results for the year ended December 30, 2012, based on the information available to date, management now believes that Adjusted EBITDA for Q4 2012 will be approximately equal to Adjusted EBITDA of Q3 2012. This is primarily the result of an unanticipated delay in deliveries under a contract due to a supplier quality issue which is in the process of being rectified, a delay in deliveries from the previously announced deferred award and production of 90 60-foot Xcelsior buses (180 equivalent units or “EUs”) under the New York City Transit Authority contract and additional provisions in warranty reserve. Final year-end results may vary from management’s current expectations referred to in this release as the Company completes its year-end accounting process and audit, including its assessment of the tax provision. The Company will announce definitive results and issue its financial statements for the year ended December 30, 2012 on or prior to March 31, 2013.
On January 9, 2013, New Flyer issued its quarterly order and backlog update for Q4 2012, with a total backlog comprised of 6,325 EUs, having a total value of $2.67 billion.
- The total backlog at that date included firm orders received from five customers in Q4 2012 for 509 EUs, but approval from the customer to issue press releases had not yet been granted. The Company has since received customer approval to issue the details regarding these orders and press releases have been issued for the following customers: San Diego, Baltimore, Orange County, New York and Milwaukee.
So far in 2013, new contract awards of 1,009 EUs (consisting of 659 firm orders and 350 options) have been received by New Flyer from the following customers: Los Angeles, Rochester, Phoenix and Edmonton. New Flyer issued a press release regarding the Los Angeles award on February 7, 2012.
- Firm orders and options totaling 801 EUs were pending from a number of customers where approval had been granted by the customer’s board, council, or commission, as applicable, but purchase documentation had not yet been received by New Flyer and therefore not included in the backlog. Purchase documentation has since been received from Birmingham for a total of 50 EUs of the 801 EUs and a press release has been issued.
Management continues to expect that the total backlog, combined with the recent order intake, will allow New Flyer to maintain an average weekly line entry production rate of approximately 36 EUs for fiscal 2013. Management also believes the current dividend rate is sustainable. New Flyer has now paid dividends to shareholders for 88 consecutive months since the Company’s initial public offering in August 2005.
NOTE: All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $0.9965 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 Canada and the United States. The Company’s three manufacturing facilities – in Winnipeg, MB; St. Cloud, MN and Crookston, MN – are all ISO 9001, ISO 14001 and OHSAS 18001 certified. The Company currently operates a parts fabrication facility in Elkhart, IN and four parts distribution centers in Winnipeg, MB; Brampton, ON; Erlanger, KY and Fresno, CA. The Company also operates a service center in Arnprior, ON.
With a skilled workforce of over 2,200 employees, New Flyer is a technology leader, 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 diesel-electric hybrid vehicles. New Flyer has delivered over 32,000 heavy-duty buses in Canada and the United States. All products are supported with an industry-leading, comprehensive parts and service network. Further information is available on New Flyer’s web site at www.newflyer.com.
The common shares and convertible unsecured subordinated debentures of New Flyer are traded on the Toronto Stock Exchange under the symbols NFI and NFI.DB.U, respectively.
Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization and other non-cash charges, adjusted for certain costs related to offerings and certain other nonrecurring charges as set out in the Company’s management discussion and analysis dated November 12, 2012 (“MD&A”). Management believes Adjusted EBITDA is a useful measure in evaluating the performance of the Company. However, Adjusted EBITDA is not a recognized earnings measure and does not have standardized meanings prescribed by International Financial Reporting Standards (“IFRS”). Readers of this press release are cautioned that Adjusted EBITDA 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.
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”, “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 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 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, battery-electric propulsion on transit buses is still largely unproven technology and there is no assurance that such technology will result in a product desired by customers, prototype buses must be tested and proven in operating conditions, a commercialized product must be marketed and sold to potential customers and there may be no significant demand for an all-electric bus from customers, the ability of the Company to successfully execute strategic plans and maintain profitability and risks related to acquisitions, joint ventures and other strategic relationships with third parties. 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 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 the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws.
For further information, please contact:
Chief Financial Officer