New Flyer Announces Bus Purchase by The City of Ottawa for OC Transpo
Winnipeg, Manitoba, Canada, April 28, 2010; New Flyer Industries Inc. (TSX:NFI.UN) (“New Flyer” or the “Company”), the leading manufacturer of heavy-duty transit buses in Canada and the United States, was advised today that Ottawa’s City Council has approved the purchase of 306 new articulated clean diesel buses for approximately C$190 million. This approval includes the exercising of 80 options plus an additional 226 articulated buses under the existing bus procurement contract between Ottawa and New Flyer. These additional 226 buses are not recorded in New Flyer’s backlog as the buses have been added by Ottawa to the contract. The new buses will have the latest D60LFR enhanced design and will be outfitted with: a 2010 EPA compliant Cummins engine, a mini-hybrid cooling package, an anti-graffiti package, smart bus technology for reliability monitoring and an extended industry-leading warranty program.
This purchase allows the City of Ottawa to replace its older articulated bus fleet with modern and fuel efficient D60LFR buses via an innovative arrangement where New Flyer has provided incentive pricing and has agreed to take in trade, OC Transpo’s existing fleet of 226 articulated buses. This fleet was originally built and sold by New Flyer to The City of Ottawa and the current average age of these buses is approximately nine years.
Key benefits of this agreement for Ottawa include: an estimated 26% reduction in fuel consumption and an estimated 15% reduction in maintenance costs, in addition to being an entirely new 60’ articulated bus fleet for the citizens of Ottawa. Further, the upgraded propulsion system saves approximately 1.98M Kgs of NOx and approximately 51.4K Kgs of particulate over the next nine years. This is an estimated reduction to the environmental footprint left by the buses of over 90%.
“This arrangement encompasses a number of groundbreaking commercial features, and aligns very well with our strategy to provide Best Bus Value and Support for Life” said New Flyer’s President and Chief Executive Officer, Paul Soubry. “The new buses will be sold with an extended warranty and will be equipped with smart bus technology (or an advanced vehicle health monitoring system) which will allow New Flyer to assist OC Transpo in optimizing fleet performance and reliability”. While the price for the new buses offered to OC Transpo has been reduced from previous orders, management anticipates that profitability through bus sales, parts sales and used bus sales will provide an appropriate total return to the Company through the life of the bus contract.
New Flyer plans to refurbish the buses that are traded in at its Arnprior, Ontario Service Center and will market the buses for re-sale in both domestic and international markets. New Flyer will provide OC Transpo with a trade-in credit for the used buses that can be applied to New Flyer spare parts and service programs. “This allows the Company to develop key intelligence on the maintenance, monitoring and operation of New Flyer buses from the ground up, while operating in a very close partnership with a substantial operator like OC Transpo”, said Mr. Soubry.
The first buses are expected to enter production in July 2010, with delivery of the new fleet anticipated to start in August 2010, and completed delivery to occur within approximately one year. Management does not anticipate increasing the Company’s production rate at its facilities in Manitoba or Minnesota as a result of this award, “but rather, it permits the Company to level load production” said Mr. Soubry. “Timing of the deal will allow New Flyer to respond to the significant U.S. order deferral that was experienced in 2009. This award also presents the Company with the opportunity to reverse the recent trend of a reduced average number of buses per customer order, largely caused by the previously announced U.S. customer order deferral and to pursue operational excellence goals and ensure the highest quality”.
About New Flyer
New Flyer is the leading manufacturer of heavy-duty transit buses in the United States and Canada. 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 over 2,000 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 gasoline-electric and diesel-electric hybrid vehicles. All products are supported with an industry-leading, comprehensive parts and service network. The Company’s income deposit securities are traded on the Toronto Stock Exchange under the symbol NFI.UN. Further information is available on Company’s web site at www.www.newflyer.com.
This press release may contain forward-looking statements relating to expected future events and financial and operating results of New Flyer and New Flyer Industries Canada ULC (“NFI ULC”) that involve risks and uncertainties. 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. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the other risks and uncertainties discussed in the materials filed with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com. Due to the potential impact of these factors, New Flyer and NFI ULC disclaim 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.
For further information, please contact:
New Flyer Industries Inc.
Glenn Asham, Chief Financial Officer