New Flyer Announces First Quarter 2012 Orders and Backlog
Winnipeg, Manitoba, Canada, April 17, 2012: (TSX:NFI, TSX:NFI.UN) New Flyer Industries Inc. (“New Flyer” or the “Company”), the leading manufacturer of heavy-duty transit buses in Canada and the United States, announced order activity for the first fiscal quarter of 2012 ended April 1, 2012 (“Q1 2012”).
Q1 2012 order activity was for 176 buses or 176 equivalent production units (“EUs”), with a total value of $77.8 million. The Q1 2012 order activity comprises new firm and new option orders of 28 buses (28 EUs) and exercised options of 148 buses (148 EUs) with approximately 34% of the EUs for clean-propulsion vehicles (i.e., hybrid or CNG). All order activity in Q1 2012 was from repeat New Flyer customers reflecting the high quality product and strong customer loyalty.
Several of the orders received in Q1 2012, comprising 39 EUs, were from the Ontario Metrolinx consortium contract awarded to New Flyer in May 2011. In total, 354 EUs have been ordered under this Metrolinx contract and the previous Metrolinx contract awarded in 2008.
Also during Q1 2012, New Flyer was awarded, for a third consecutive time, an umbrella contract with the procurement department of a US state that enables the assignment of up to 500 options to any US transit agency throughout 2012. As with the previous contracts with this state procurement department, this contract is a ‘standing offer’ open to public transit agencies across the United States, and as a result, New Flyer does not record any firm orders or options as part of its backlog. Management is unable to predict how many firm orders might result from these types of contracts.
Total industry award activity in Q1 2012 continues to be low and while a significant number of EUs have been tendered, they have not yet been awarded. In fact, management is only aware of 19 EUs awarded in Q1 2012.
New Flyer’s existing backlog position combined with the order intake over the last 12 months is expected to allow the Company to maintain the current production line entry rate of approximately 36 EUs per week. Deliveries in Q1 2012 were 442 EUs compared to 468 in the first quarter of 2011 as a result of there being one less work week due to the holiday period schedule straddling the beginning of the 2012 year.
The sale of the New Flyer fleet of used articulated buses previously owned by OC Transpo continued during the first quarter. Firm orders were received for 10 of the remaining used buses, of which five were shipped in Q1 2012. A further order is pending for 20 additional buses from a current New Flyer customer. Several inquiries have been made from potential transit operators interested in the remaining 10 used buses.
The total backlog at the end of Q1 2012 was 6,678 EUs with a total value of $2.83 billion, a decrease of 5.9% from the EU backlog at the end of the fourth fiscal quarter of 2011 (“Q4 2011”). The firm portion of the total backlog at the end of Q1 2012 was 1,210 EUs, compared with 1,476 EUs at the end of Q4 2011. This reduction in total backlog was not unexpected, nor inconsistent with management’s expectations or with the current market conditions. New Flyer’s industry leading backlog includes the widest available range of bus models, lengths, and propulsion options for prospective customers allowing flexibility to maintain current production levels, flexibility that management believes most other transit bus manufacturers in the industry do not enjoy.
New Flyer’s current backlog consists of the following mix of products, with clean propulsion vehicles representing approximately 69% of the total:
|Firm EUs||Option EUs||Total|
|40 foot and under buses||724||2,544||3,268|
|60 foot buses||486||2,924||3,410|
Year-to-date 2012, only five option EUs have expired or less than 0.1% of the total backlog. Remaining options included in the total backlog will expire, if not exercised, as follows:
|Expiry Year||Remaining Option EUs|
At the end of Q1 2012, there were approximately 15,100 EUs in New Flyer’s new potential pipeline or bid universe for heavy-duty transit buses, an increase from the approximately 13,300 EUs reported at the end of Q4 2011. The increase was expected as many transit agencies awarded multiyear contracts in 2007 and 2008 which are set to expire. While this is the highest amount of EUs in the bid universe since New Flyer began tracking it in March 2008, the pipeline is expected to remain volatile for the next few years as customers manage through fleet replacement planning and deal with funding uncertainty.
The U.S. Congress approved a 90-day extension on March 29, 2012 of current surface transportation law governing federal transit and highway programs to allow federally funded transit authorities access to funding to purchase buses at the same funding as previous levels. The bill extends SAFETEA-LU and the collection of motor fuels taxes that are deposited in the Highway Trust Fund through June 30, 2012.
Latest data from the American Public Transportation Association (APTA) indicate an increase of 3.65% in US transit ridership during the fourth quarter of 2011 compared with the previous year, with bus ridership increasing by 3.29% over the same period. Overall transit ridership for the full year of 2011 was up 2.31% over 2010, and bus ridership increased by 1.32% year-over-year. Numerous agencies reported ridership gains as being driven by high gasoline prices. In Canada, the Canadian Urban Transit Association (CUTA) reported that transit ridership also rose, with a 3.32% increase reported for the 2011 full year over 2010.
Gross orders received for core aftermarket parts sales during Q1 2012 exceeded the average of gross orders received in the previous four quarters by 3.7%. The Company’s aftermarket parts gross order backlog for core sales activity as at the end of Q1 2012 increased by 7.5% over the same period in 2011.
NOTE: All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $1.00 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 PDCs in Winnipeg, MB; Erlanger, KY; Fresno, CA and since the beginning of October, 2011, in Brampton, ON.
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.
Further information is available on New Flyer’s web site at www.www.newflyer.com. The common shares and income deposit securities of New Flyer are traded on the Toronto
Stock Exchange under the symbols NFI and NFI.UN, respectively.
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 customers to purchase buses and to exercise options and to purchase parts or 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
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