New Flyer Announces the Award of Two Vendor-Managed Inventory Contracts
Winnipeg, Manitoba, Canada, August 5, 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, announced today the award of two new contracts to provide Vendor-Managed Inventory (“VMI”) services to the Washington Metropolitan Area Transit Authority (“WMATA”) and to the Maryland Transit Administration (“MTA”). Both transit agencies are existing New Flyer customers for the provision of new buses and spare parts. Both contracts were competitively bid, and are incremental to New Flyer’s current parts sales to these customers.
Washington Metropolitan Area Transit Authority (WMATA)
After an extensive tender and evaluation process, WMATA has awarded New Flyer a contract to provide VMI services for an assortment of transit bus spare parts. WMATA has approximately 1,500 heavy-duty transit buses in their fleet, of which 48% are manufactured by New Flyer. The VMI contract is for a one-year term, with two additional one-year option terms, and the base contract is valued at approximately US$2.1 million annually. This program consists of three strategic elements:
- New Flyer will provide inventory planning and automated supply and replenishment of select spare parts under a strict performance program requiring defined response times and fill rates,
- Augmenting this service, New Flyer will provide maintenance engineering support to analyze material usage and to provide recommendations through the use of reliability engineering, and
- Finally, New Flyer will assist WMATA in the analysis of the data that is being generated by the automatic vehicle monitoring systems installed on WMATA’s buses. The objective is to integrate the results from this analysis into the development of reliability improvement strategies to support WMATA’s maintenance program.
Maryland Transit Administration (MTA)
New Flyer has also been awarded a contract with MTA to supply point-of-use brake kits for transit buses built by a variety of original equipment manufacturers, including New Flyer. MTA has approximately 800 heavy-duty transit buses in their fleet, of which 52% are manufactured by New Flyer. The contract is for five years and is valued at approximately US$1.7 million annually. This award represents a strategic win for New Flyer, confirming the Company’s ability to be competitive in these types of specialized maintenance areas of the bus, and demonstrates New Flyer’s leadership role in the development of customer brake programs which the Company provides to other agencies.
“We believe that these contract awards are a reflection of the long-term relationship between New Flyer and our customers, and shows the confidence that both WMATA and the MTA have in our ability to support their efforts to increase bus up-time while reducing their operating costs” said Paul Soubry, New Flyer’s President and Chief Executive Officer. Soubry went on to explain, “As the leading heavy duty transit bus manufacturer in the US and Canada, one of New Flyer’s primary strategies is to provide the Best Bus Value for Life and to support our customers’ focus on total operating cost reduction. This is a major step in moving New Flyer from reacting to quotes, to planning and supporting our customer’s needs. These contract awards also recognize New Flyer’s ability to provide tailor-made material supply solutions in response to the dramatic funding pressure our customers currently face”.
These VMI contract awards are similar to programs that New Flyer is now establishing with other transit operators in the US and Canada. In particular, New Flyer has had a point-of-use brake contract with OC Transpo in Ottawa, Canada since 2010, which the parties intend to augment with a unique consignment program under development by New Flyer, as part of its delivery to OC Transpo earlier this year of 306 new articulated buses.
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 three parts distribution centers in Winnipeg, MB, Erlanger, KY and Fresno, CA.
New Flyer also operates service centers in Arnprior, Ontario and in New York City as the Company’s Customer Services group worked to enhance revenue in keeping with corporate strategic plans. New Flyer has recently announced its intention to open a fourth parts distribution centre in southern Ontario, Canada in the fall of 2011.
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 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 New Flyer’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 economic conditions of and funding availability for transit agencies to purchase buses, parts and services 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.
Chief Financial Officer