Press Releases

New Flyer announces 2010 Fiscal Year and Fourth Quarter Results

Summary (U.S. dollars except as noted):

  • Fiscal 2010 revenue of $983.8 million decreased by 10.6% compared to Fiscal 2009 revenue of $1.1 billion as full year bus deliveries decreased by 10.4%. However, Fiscal 2010 consolidated Adjusted EBITDA of $97.1 million decreased only 2.9% compared to Fiscal % 2009.
  • Fiscal 2010 Aftermarket revenue decreased 2.3% compared to Fiscal 2009, yet Aftermarket Adjusted EBITDA increase increased 0.9% in Fiscal 2010.
  • Total order backlog consisting of firm orders and options was $3.7 billion (representing 8,712 equivalent units) compared to January 3, 2010 total order backlog of $3.9 billion (representing 8,990 equivalent units).
  • Liquidity of $123.5 million as a at January 2, 2011, improved $42.8 million during Fiscal 2010 due to positive cash flows from a large contract.
  • Fiscal 2010 Distributable Cash of C$73.3 million (C$1.48 per unit) exceeds Cash Distributions by C$15.7 million (C$0.32 per unit) resulting in a Payout Ratio of 78.5% compared to Fiscal 2009 payout ratio of 72.8%. Payout Ratio since IPO in 2005 has averaged 79.9%.

WINNIPEG, March 21, 2011 – 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, today announced its results for the 52-week period ended January 2, 2011 (“Fiscal 2010”). Full financial statements and Management’s Discussion and Analysis (the “MD&A”) are available at the Company’s web site at: www.www.newflyer.com/index/financialreport. Unless otherwise indicated all monetary amounts in this press release are expressed in U.S. dollars.

Bus Deliveries
(U.S. dollars in thousands)
2010 Q4 2009 Q4 Change 2010 Fiscal 2009 Fiscal Change
Number of units 499 490 1.8% 2,023 2,257 -10.4%
Average EU selling price $361.1 $455.3 -20.7% $434.0 $439.4 -1.2%

The Company experienced decreased volume in Fiscal 2010 due to: a decline in market demand resulting from the downturn in the U.S. economy which caused funding issues with State and local governments, a 3% decline in New Flyer’s market share and one less week of deliveries compared to the 53-week period ended January 3, 2010 (“Fiscal 2009”). The reduced market share in Fiscal 2010 is primarily due to the Company focusing on converting options with historical pricing rather than solely competing for short term business with low price bidders. The Company’s total order backlog position allowed management to respond to new bids in a rational manner as opposed to some competitors with much smaller order books.

Consolidated Revenue
(U.S. dollars in millions)
2010 Q4 2009 Q4 Change 2010 Fiscal 2009 Fiscal Change
Total Revenue $204.8 $249.4 -17.9% $983.8 $1,099.9 -10.6%


  • Revenue from bus manufacturing operations for the 13-week period ended January 2, 2011 (“2010 Q4”) decreased 19.2% compared to the 13-week period ended October 3, 2010 (“2009 Q4”). The decrease resulted primarily from lower average bus selling price during 2010 Q4 as the sales mix was comprised of a very high percentage of diesel articulated buses while 2009 Q4 sales were comprised of mostly hybrid buses and hydrogen fuel cell buses launched at the Vancouver Winter Olympic Games. A normalized average selling price without hydrogen fuel cell buses would have been $425.0 thousand per equivalent unit during 2009 Q4.
  • Revenue from aftermarket operations in 2010 Q4 decreased 6.3% compared to 2009 Q4.
  • Revenue from bus manufacturing operations for Fiscal 2010 decreased 11.5% from Fiscal 2009. The Fiscal 2010 decrease is due to lower volumes, increased price pressure and one less week of deliveries during the 13-week period ended April 4, 2010 (“2010 Q1”), as compared to the 14-week period ended April 5, 2009 (“2009 Q1”).
  • Revenue from aftermarket operations for Fiscal 2010 decreased 2.3% compared to Fiscal 2009. The decrease in Fiscal 2010 aftermarket operations revenue is primarily a result of lower volumes during 2010 Q1 due to one less week in this quarter compared to 2009 Q1. During Fiscal 2010, aftermarket operations revenue has increased in the Canadian market, while experiencing some reduction in sales in the U.S. market throughout Fiscal 2010. Management believes that the Company has increased its market share by 1% to 16% in the aftermarket segment during a time when the current U.S. parts aftermarket contracted approximately 7%.
Consolidated Adjusted EBITDA
(U.S. dollars in millions)
2010 Q4 2009 Q4 Change 2010 Fiscal 2009 Fiscal Change
Total Adjusted EBITDA 17.7 25.0 -29.2% 97.1 100.1 -2.9%

The decrease in 2010 Q4 consolidated Adjusted EBITDA is primarily due to a sales mix that included a significant contract at lower average bus margins and a decrease in aftermarket earnings, offset somewhat by production efficiencies generated from Operational Excellence (“OpEx”) efforts and the appreciation in the value of the Canadian dollar compared to the U.S. dollar. Profit margins can vary significantly between orders due to factors such as pricing pressure, order size and product type. Adjusted EBITDA from bus manufacturing operations per EU can be volatile on a quarterly basis and therefore, management believes that a longer term view should be taken when comparing bus manufacturing operations margins.

  • This 34.3% decrease in Adjusted EBITDA from bus manufacturing operations is primarily the result of lower average contract margins during 2010 Q4 as compared to 2009 Q4, as 2010 Q4 bus deliveries were primarily to OC Transpo (the transit agency for the City of Ottawa, Canada). Although the price for these new buses had been reduced from previous orders, management anticipates that combined profitability through the bus sales, parts sales and future used bus sales will provide an appropriate total return to the Company once all revenue related to this contract is realized.
  • 2010 Q4 aftermarket operations Adjusted EBITDA of $5.2 million (21.3% of revenue) decreased 13.4% compared to $6.1 million (23.0% of revenue) in 2009 Q4. This decrease in aftermarket operations Adjusted EBITDA is primarily due to a decrease in sales volume with lower profit margins in the current period as 2009 Q4 Adjusted EBITDA benefited from a positive foreign exchange impact.

Fiscal 2010 consolidated Adjusted EBITDA decreased by 2.9% compared to Fiscal 2009 consolidated Adjusted EBITDA, due to a number of factors, including: reduced deliveries, tighter margins due to competitive pricing pressures, which were partially offset by foreign exchange gains and productivity gains resulting from OpEx activities and cost cutting measures.

  • This decrease of $3.2 million in Fiscal 2010 Adjusted EBITDA from bus manufacturing operations is a result of $11.4 million of decreased bus sales (10.4% decrease in deliveries), $5.9 million due to a less favourable sales margin mix offset by a $14.1 million positive foreign exchange impact from increased Canadian bus deliveries.
  • Aftermarket operations Adjusted EBITDA for Fiscal 2010 increased 0.9% over Fiscal 2009 primarily due to the appreciation in the value of the Canadian dollar against the U.S. dollar, which was partially offset by the slight decrease in sales volume during Fiscal 2010.
Net earnings (loss)
(U.S. dollars in millions)
2010 Q4 2009 Q4 $ Change 2010 Fiscal 2009 Fiscal $ Change
Earnings from operations
Non-cash charges
Interest expense
Income tax (expense) recovery
Net earnings (loss) (15.9) (11.4) (4.5) 3.9 (30.4) 34.3

On January 12, 2011, ISE Corporation (“ISE”), the Company’s supplier of gasoline hybrid propulsion systems, received approval from the United States Bankruptcy Court to sell substantially all of ISE’s assets to Bluways USA, Inc. (“Bluways”), a subsidiary of a Belgian company. The sale did not include the warranty obligations related to certain buses previously sold by New Flyer. As a result, the Company has assumed certain warranty obligations for ISE components relating to such buses and has recorded a provision of $8.7 million which is included in non-cash charges in 2010 Q4. To assist the Company in supporting its customer’s buses, New Flyer has acquired a license from Bluways for certain intellectual property. New Flyer’s current order backlog does not contain any orders for buses incorporating ISE’s hybrid propulsion

The Company increased its net loss in 2010 Q4 compared to 2009 Q4 by $4.5 million, primarily as a result of a $7.8 million decrease in earnings from operations, $4.7 million increase in noncash charges offset by a decrease in incomes taxes of $8.4 million when comparing the two periods. The change in non-cash charges included in earnings relate primarily to unrealized foreign exchange, and the one-time charge of $8.7 million of warranty expense assumed as a result of ISE’s bankruptcy, fair value adjustments to assets and liabilities and amortization. The unrealized foreign exchange losses relate to the Subordinated Notes, both forming part of the IDSs and issued separately from the IDSs. Realization of these losses/gains is dependent on the exchange rate on the maturity date (August 2020) of the Canadian dollar denominated Subordinated Notes. The Fiscal 2010 net earnings increased significantly compared to Fiscal 2009, primarily due to decreases in non-cash charges included in earnings and decrease in income taxes.

Distributable cash
(CAD dollars in millions)
2010 Q4 2009 Q4 Change 2010 Fiscal 2009 Fiscal Change
Distributable cash
Cash distributions
Excess of distributable cash (3.9) 3.7 -205.6% 21.5 21.5 -26.8%
Payout ratio 137.3% 79.5% 72.7% 78.5% 72.8% 7.8%

The Fiscal 2010 Distributable Cash was negatively impacted by the appreciation in the value of the Canadian dollar against the U.S. dollar and increase in maintenance capital expenditures by $0.8 million. The Company has made monthly distributions of $0.0975 per IDS since July, 2007 and currently management does not have plans to change the monthly distribution.

In addition to the above results, cumulatively, since the initial public offering on August 19, 2005, the Company has generated Distributable Cash of C$360.6 million and has declared distributions of $288.2 million, resulting in a cumulative surplus of C$72.4 million and a payout ratio of 79.9%.

Liquidity Position 
(U.S. dollars in millions)
January 2
January 3
$ Change
Available funds from revolving credit facility
Total liquidity position 123.5 80.7 42.8

During Fiscal 2010, the Company also reduced its investment in non-cash working capital by $36.7 million, primarily as a result of reduced accounts receivable related to the favourable milestone billing associated with the delivery of 203 Ottawa buses (406 equivalent units, or “EUs”) and reduced inventory levels resulting from continued OpEx efforts in the bus manufacturing operation. The number of units in work in process inventory (“WIP”) reduced from a high point of 299 EUs at the end of 2010 Q1 to 209 EUs at January 2, 2011. The $73.5 million of cash on hand at January 2, 2011 will decrease in the first quarter of 2011 as the Company delivers the remaining Ottawa buses.

Industry Outlook

As a result of the recent economic downturn and increased unemployment levels, transit ridership has declined in recent periods. According to APTA statistics, U.S. transit bus ridership declined 1.9% in the 4th quarter year over year and declined 2.4% in 2010 over 2009. Overall, funding for 2011 in the U.S. market is expected to be as tough or tougher than 2010. However, U.S. funding concerns are more real and immediate at the state and local levels, and with no reliable data available to predict the impact on the amount of new buses that may be purchased in 2011. Given the fundamentally different funding and operating models, management expects the Canadian market to remain relatively stable in 2011. Based on a bottom-up customer forecast, management forecasts total 2011 deliveries to the overall Canada/US market to decline by 13.5% to approximately 5,100 EUs.

With several competitors scrambling to fill open production slots in 2011, two competitors allegedly operating on reduced or alternating work weeks, and one competitor announcing an extended spring/summer shutdown at their bus shell manufacturing facility, management expects significant pricing pressure will continue in 2011. New Flyer now anticipates rationalization and consolidation in the Canadian and United States bus manufacturing industry to occur in the coming years and is committed to continue as the leading market player.

Management estimates there are approximately 13,000 EUs in New Flyer’s current new potential order pipeline or bid universe for heavy-duty transit buses. However, management believes that while the pipeline remains strong in the near term, many customers are deferring new procurements and as a result, management expects further price pressure on future business in the near and medium term.

Business Outlook

Order Backlog
(U.S. dollars in millions)
Jan 2
Jan 3
% Change Jan 2
Jan 3
% Change
Dollar Value Equivalent Units
Firm orders
Total Backlog 3,678.2 3,848.1 (4.4) 8,712 8,990 (3.1)


Order Activity
(U.S. dollars in millions)
2010 Fiscal 2009 Fiscal $ Change 2010 Fiscal 2009 Fiscal $ Change
Dollar Value Equivalent Units
New firm orders
New options
Total new awards
Exercised options
Total activity 1,094.6 1,379.7 (285.1) 2,752 3,243 (491)
Expired Options 90.8 59.2 31.6 182 130 52

During Fiscal 2010 the Company received awards of 2,752 EUs, for a total value of $1.1 billion during a challenging and competitive market. This order activity is made up of new firm and new option orders of 1,927 EUs and exercised options of 825 EUs.

Based on the current state of the combined United States and Canadian transit industry, management expects the average production rate for Fiscal 2011 will average approximately 36 EUs per week. Management is anticipating smaller order sizes in 2011 which could impact WIP levels, as smaller orders increase design, supply and manufacturing complexities. Management estimates that the level of equivalent units in WIP will vary in the range of 200 to 220 EUs for the year.

Management plans for continued OpEx efforts to further reduce the direct cost of bus manufacturing and to reduce overhead to allow for better price competitiveness. On March 18, 2011, the Company eliminated 26 current vacancies and reduced 78 salary and indirect hourly positions – largely from its Winnipeg based facilities. These reductions follow from the 24 positions that were eliminated in December 2010. Management also remains committed to its product development and control plan to fully migrate to the Xcelsior next generation bus platform by 2013. Further, the Company will maintain its approach to selling part and service solutions in an effort to assist customers in reducing their total costs of bus operation and ownership.

New Flyer will bid aggressively to maintain its industry leading backlog, but will also continue its focus on converting options that were priced in previous years. Management expects New Flyer’s bus delivery market share to increase in 2011.

Conference Call

A conference call for analysts and interested listeners will be held on Tuesday, March 22nd, at 4:30 p.m. (ET). The call-in number for listeners is 888-231-8191 or 647-427-7450. A live audio feed of the call will also be available at:


A replay of the call will be available from 7:00 p.m. (ET) on March 22nd until 11:59 p.m. (ET) on March 29th. To access the replay, call 416-849-0833 or 800-642-1687 and then enter pass code number 50487193. The replay will also be available on New Flyer’s web site at www.www.newflyer.com.

Non-GAAP Measures

Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization and other non-cash charges, adjusted for certain costs related to offerings, business acquisition related costs, warranty expense assumed from the ISE bankruptcy and certain other nonrecurring charges as set out in the MD&A. Management believes Adjusted EBITDA and Distributable Cash (as defined below) and Distributable Cash Per Unit are useful measures in evaluating the performance of the Company. “Distributable Cash” means cash flows from operations adjusted for changes in non-cash working capital items, and effect of foreign currency rate on cash and increased for withholding taxes related to capital transactions, defined benefit funding, distributions on the former Class B and Class C common shares of New Flyer Holdings, Inc., costs related to offerings, business acquisition related costs, warranty expense assumed from the ISE bankruptcy, fair market value adjustment to inventory, fair market value adjustment to prepaid expenses, proceeds on sale of redundant assets, and interest on subordinated notes forming part of the IDSs and decreased for defined benefit expense, maintenance capital expenditures, fair market value adjustment to deferred revenue, fair market value adjustment to accounts payable and accrued liabilities and principal payments on capital leases. 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, Distributable Cash and Distributable Cash Per Unit 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 the United States and Canada. The Company’s facilities 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 diesel-electric hybrid vehicles. All products are supported with an industry-leading, comprehensive parts and support network. The Company’s IDSs are traded 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 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 and aftermarket parts industry, availability of funding to the Company’s customers at current levels or at all, competition and aggressive 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 “Buy-America” legislation and the Ontario government’s “Buy Canadian” purchasing policy 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 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 senior credit facility and subordinated note indenture of New Flyer Industries Canada ULC could impact the ability of the Company to fund distributions 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 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, the ability of the Company to successfully execute strategic plans and maintain profitability and risks related to acquisitions. 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 the Company assume no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws.

For further information:
Glenn Asham
Chief Financial Officer
Tel: (204) 224-1251
E-mail: [email protected]