New Flyer Announces Fourth Quarter 2012 Orders and Backlog
Winnipeg, Manitoba, Canada, January 9, 2013: (TSX:NFI; TSX:NFI.DB.U) 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 fourth fiscal quarter ended December 30, 2012 (“Q4 2012”).
Order Activity, Option Expiry and Deliveries
The total order activity in the second half of 2012 has improved significantly relative to the previous four quarters and represents the third consecutive quarter of improved order intake. The new orders (firm and options) for Q4 2012 totaled 1,055 equivalent units (“EUs”), which represents the highest level of order intake by New Flyer in a quarter since the fourth quarter of 2008.
- New firm orders were received for 407 EUs with a total value of $191.6 million, a significant increase compared to firm orders of just nine EUs valued at $3.8 million in the fourth fiscal quarter ended January 1, 2012 (“Q4 2011”).
- New options in Q4 2012 were received for 648 EUs worth $273.1 million, compared to no new options awarded in Q4 2011.
In addition, New Flyer was successful at converting options for 190 EUs with a total value of $74.6 million in Q4 2012, as compared to 152 EUs with a total value of $64.4 million converted in Q4 2011.
(Firm and Option)
|New Orders (Firm and Option)
in Last 4 Quarters
|Option Conversions||Option Conversions in
Last 4 Quarters
In Q4 2012 a total of 549 option EUs expired, 547 EUs of which related to the expiration of a five-year contract with one US based customer whose fleet plan required no additional buses of the type specified in the expiring contract. The maximum term for a contract permitted by the US Federal Transit Administration is five years. This customer has recently issued a request for proposals for a subsequent five-year contract for buses.
In December 2012, New Flyer executed a contract with a certain US state which is a standing offer under which any US transit agency may purchase buses. Due to the nature of this standing offer, New Flyer does not record any options in its backlog calculation. 216 EUs were ordered under the 2012 version of this contract during fiscal year 2012, as compared to 36 EUs under the 2011 contract.
New Flyer delivered 387 EUs in Q4 2012, compared to 470 EUs in Q4 2011. The reduced deliveries were caused by a delay in receiving the notice to proceed (“NTP”) for an order of 90 Xcelsior 60-foot articulated buses (180 EUs) in the third fiscal quarter of 2012 (“Q3 2012”) and approximately 30 EUs relating to late completions due to a supplier quality issue which is being rectified. This resulted in work-in-process (WIP) at the end of 2012 totaling 225 EUs, or 42 EUs more than at the end of the third fiscal quarter of 2012 (“Q3 2012”).
The total backlog combined with the recent order intake is expected to enable New Flyer to continue to average a production line entry rate of approximately 36 EUs per week for fiscal 2013.
At the end of Q4 2012, the total backlog was comprised of 6,325 EUs, having a total value of $2.67 billion. Orders and contract documentation for 509 EUs with five different customers were received just prior to the end of 2012. The Company is now preparing announcements outlining the details of these contracts (which were already included in the backlog), but first requires customer approval to issue the announcements.
|Order Backlog||2012 (Current Year)||2011 (Prior Year)|
|Ending Backlog – Q3 2012
New Orders in Q4 2012
|Ending Backlog – Q4||1,672||4,653||1,476||5,621|
The total backlog at Q4 2012 increased by 1.9% from the backlog at the end of Q3 2012, resulting from an increase in firm order backlog of 210 EUs which was offset by a reduction of 91 EUs in the option backlog. New Flyer’s backlog consists of the following mix of products, with clean propulsion vehicles (such as, hybrid, CNG, LNG and electric trolley), representing approximately 61% of the total:
|Firm EUs||Option EUs||Total|
|35 and 40 foot buses||640||2,141||2,781|
|60 foot buses||1,032||2,512||3,544|
In fiscal year 2012, a total of 736 option EUs expired or 10.4% of the total New Flyer backlog, compared to 463 options that expired in fiscal year 2011. Remaining options included in the total backlog will expire, if not exercised, as follows:
|Option Year of Expiry||Remaining Options (Eus)|
At the end of the period, firm and option orders of 630 new buses (801 EUs) for New Flyer were pending from a number of customers where approval had been granted in Q4 2012 by the customer’s board, council, or commission, as applicable, but purchase documentation had not yet been received by the Company and therefore not yet included in the backlog.
In addition to these pending orders, the Company was just advised by a major US public transit agency that New Flyer had been selected to provide up to 900 40’ CNG Xcelsior buses (900 EUs) of which 550 are firm orders and 350 are options which may be exercised over the next five years. The agency has issued New Flyer a letter of Intent to Award and has advised that it will present its recommendation for award to its Systems and Safety Operations Committee and then to its board of directors for approval by the end of January 2013. An NTP would be issued if the award is approved by its board of directors, at which time New Flyer would then add the 900 EUs to the backlog.
New Flyer Bid Universe
The bid universe was created by New Flyer in 2008 as an indicator of the forecast for overall transit bus market demand and active bids. The bid universe is a point-in-time snapshot of the estimated EUs for: all bids received and in process of review at New Flyer, bids submitted by New Flyer awaiting customer action, and management’s forecast of all expected EUs to be placed out for bid over the next five years.
For next 5 Years
Procurement activity has increased significantly throughout fiscal 2012, as evidenced by the total bid universe now at 19,453 EUs, representing an increase of 46% compared to Q4 2011. The bid universe is now at its highest level since New Flyer began tracking it in 2008.
In addition to the increase in the bid universe, management believes the overall transit market continues to show other positive signs of recovery. Preliminary data from the data alert issued by the Rockefeller Institute on December 13, 2012 regarding U.S. state tax collections shows an increase in the third quarter of 2012 for the 11th consecutive quarter, with a reported 2.1% increase over the prior year.
The latest data from the American Public Transportation Association’s (APTA) ridership report indicated an increase of 1.14% in all modes of U.S. transit ridership during the third quarter of 2012 compared with the previous year, with specific bus ridership essentially flat. At September 30, 2012, the report indicates a year-to-date increase in ridership of 2.60% in 2012 as compared to 2011, with bus ridership up by 1.76% during the same period. The same report indicates Canadian ridership increased by 1.44% in all modes of transit ridership during the third quarter of 2012, and increased 2.27% year-to-date as compared to the previous year.
New Flyer Aftermarket
Gross orders received by New Flyer’s aftermarket business during Q4 2012 for core parts sales increased 1% compared to Q4 2011. Full year 2012 gross orders however were $118.6 million, an increase of 3.7% compared to full year 2011.
In Q4 2012, a major US public transit agency advised that its board of directors had approved the award of contracts for an overhaul and upgrade program for over 1,000 New Flyer buses that were delivered between 2006 and 2009. This type of program is not unusual as many transit agencies conduct a significant mid-life program to ensure that transit buses operate efficiently throughout their intended life. New Flyer bid certain elements of the program directly and bid other elements in cooperation with local US based partners. Once the contact is formally awarded, management expects to supply parts and services to the customer totalling approximately $80 million over the next three years in support of the customer’s mid-life program. Management expects to receive the NTP in the coming months.
NOTE: All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $0.9965 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 parts distribution centers in Winnipeg, MB; Brampton, ON; Erlanger, KY and Fresno, CA. The Company also operates a New Product Development center in Winnipeg, MB and a service center in Arnprior, 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, electric trolley as well as energy-efficient diesel-electric hybrid vehicles. New Flyer has delivered over 32,000 heavy-duty buses in Canada and the United States. 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.
This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Company 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 purchase parts or services, customers may not exercise options to purchase additional buses, the ability of customers to terminate contracts for convenience 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, the Company disclaims 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.
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