New Flyer Industries Inc. Provides Business Update Q2 2012
Winnipeg, Manitoba, Canada − September 17, 2012 − (TSX:NFI; TSX:NFI.DB.U) New Flyer Industries Inc. (“New Flyer” or the “Company”) today announced that its second-half 2012 (“H2 2012”) production schedule has been adjusted as a result of a delay in receiving a notice to proceed (“NTP”) from a large US customer for an order of 90 Xcelsior 60-foot articulated buses or 180 equivalent units (“EUs”). New Flyer has been advised that the contract is fully funded and was approved by the agency’s board of directors nearly three months ago, but has been delayed as a result of the State’s requirement that sole-sourced procurements be independently reviewed.
Management has previously advised that New Flyer’s order backlog combined with the order intake was expected to enable the Company to maintain the average line entry rate of approximately 36 EUs per production week. If the NTP is received in early October as expected, the 2012 line entry rate is projected to average 34 EUs per production week. Accordingly, management now anticipates that Adjusted EBITDA in H2 2012 will approximate the Adjusted EBITDA in the first half of 2012. Notwithstanding the delay in receiving the NTP for this contract, the Company currently expects to maintain its dividend policy.
Paul Soubry, New Flyer’s President and Chief Executive Officer commented, “We are thrilled to be working with, and committed to support, this important customer to whom we are currently selling buses and who is already operating our next generation Xcelsior buses. We are however disappointed that this delay has an impact on both the Company’s near-term production plan and anticipated results.”
“Despite transit industry and government funding headwinds, management believes that New Flyer is well positioned to lever its industry leading position and the significant strategic investments it has made in ‘operational excellence’. New Flyer continues to win new bus orders and has successfully transitioned from its former income deposit security structure to a common share company.” Soubry explained further, “Management estimates the bid universe of anticipated heavy-duty transit bus order activity is now at its highest levels since early 2008 and is over 17,000 EUs, compared to just 11,000 EUs one year ago. New Flyer currently has proposals submitted or being developed for nearly 7,000 EUs in total, compared to just over 2,500 EUs this time last year.”
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 operates a parts fabrication facility in Elkhart, IN and four parts distribution centers in Winnipeg, MB; Erlanger, KY; Fresno, CA and 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. New Flyer has delivered over 31,000 heavy-duty buses in the United States and Canada. 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 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 non-recurring charges as set out in New Flyer’s recently filed management discussion and analysis. 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 a standardized meaning 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 or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows.
Certain statements in this press release are “forward looking statements”, which reflect the expectations of management regarding the Issuer’s and 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, customers may not issue contracts or notices to proceed when anticipated or may defer the issuance of contracts or notices to proceed for a material length of time, indefinitely or not issue them at all, aggressive competition and reduced pricing in the industry, material losses and costs may be incurred as a result of product warranty issues and recalls, 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 (including as a result of the facts discussed in this press release), the Company’s ability to generate cash from the planned reduction in the production rate, 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 of New Flyer Industries Canada ULC (“NFI ULC”) 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, 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 and NFI ULC caution that this list of factors is not exhaustive. These factors and other risks and uncertainties are discussed in their 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:
New Flyer Industries Inc.
Glenn Asham, Chief Financial Officer