New Flyer Announces Second Quarter 2016 Orders and Backlog
Winnipeg, Manitoba, Canada, July 15, 2016: (TSX:NFI) (TSX:NFI.DB.U) New Flyer Industries Inc. (the “Company”), the leading manufacturer of heavy-duty transit buses, motor coaches and parts distribution in Canada and the United States, announced its order activity and backlog update for the second fiscal quarter ended July 3, 2016 (“Q2 2016”).
The order and delivery activity and backlog for Q2 2016 reported in this release includes activity for heavy-duty transit buses manufactured by the Company’s subsidiaries, New Flyer Industries Canada ULC and New Flyer of America Inc (together, “New Flyer”), and motor coaches manufactured by its subsidiaries, Motor Coach Industries Limited and Motor Coach Industries International, Inc (together, “MCI”).
The order and delivery activity and backlog as reported excludes pre-owned coaches and transit buses.
Deliveries, Order Activity, and Option Expiry
The Company delivered 912 equivalent units (“EUs”) in Q2 2016, an increase of 318 EUs compared to 594 EUs in the second fiscal quarter ended June 28, 2015 (“Q2 2015”). Total bus and coach inventory at July 3, 2016 was 559 EUs, a decrease of 12 EUs from the previous quarter.
The Company’s new transit bus and coach orders (firm and options) in Q2 2016 totaled 1,428 EUs. Order activity in the period included:
- New firm orders for 247 EUs (valued at $147.6 million)
- New option orders for 1,181 EUs (valued at $666.9 million)
- Options for 597 EUs converted to firm orders (valued at $274.6 million)
(Firm and Option EUs)
|LTM New Orders
(Firm and Option EUs)
|Option EUs Converted in Quarter||Option EUs Converted LTM|
In addition, 1,071 EUs of new firm and option orders were pending from customers at the end of the period, where approval of the award to the Company had been made 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.
The last twelve months (“LTM”) Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 159% and has been greater than 100% for thirteen of the last fourteen quarters, demonstrating overall growth in the Company’s total backlog.
In Q2 2016, 214 option EUs expired, compared to 176 option EUs that expired in the first fiscal quarter of 2016 (“Q1 2016”). Remaining options in the current backlog will expire if not exercised, as follows:
|2016||2017||2018||2019||2020||2021||Total Option EUs|
|Remaining Options (EUs)||403||438||1,276||1,310||1,412||2,136||6,975|
At the end of Q2 2016, the Company’s total backlog was 10,010 EUs (valued at $5.24 billion) compared to 9,718 EUs (valued at $5.00 billion) at the end Q1 2016 and 7,011 EUs (valued at $3.49 billion) at the end of Q2 2015.
|Total Backlog||Firm Orders
|Ending backlog at Q1 2016
New orders in Q2 2016
Options exercised in Q2 2016
Deliveries in Q2 2016
Cancelled/expired options in Q2 2016
|Ending Backlog at Q2 2016||3,035||6,975||10,010|
The Company’s backlog consists of 30’, 35’, 40’ and 60-foot heavy duty transit buses, and 45’ motor coaches. Buses incorporating clean propulsion systems (such as natural gas, diesel-electric hybrid, electric-trolley, and battery-electric) represent approximately 64% of the total backlog.
The Company’s Bid Universe metric reports active public sector competitions in Canada and the United States, and provides an overall indicator of expected heavy duty transit bus and motor coach market demand. It is a point-in-time snapshot of: (i) EUs in active competitions, defined as all requests for proposals received and in process of review plus bids submitted and awaiting customer action, and (ii) management’s forecast of all expected EUs to be placed out for competition over the next five years.
Procurement of transit buses and coaches by the public sector is typically accomplished through formal multi-year contracts, while procurement of transit buses and coaches by the private sector is typically accomplished through transactional sales of small orders of vehicles. As a result, the Company is unable to develop longer range forecasts for private sector buses and coaches.
The total number of active EUs at the end of Q2 2016 was 4,198 EUs which is a decrease of 3,088 EUs over the previous quarter, largely as a result of orders awarded during the quarter. The number of EUs in the total Bid Universe at the end of Q2 2016 was 19,332 EUs, which is a decrease of 3,586 EUs over Q1 2016.
|Bids in Process
|Bids Submitted (EUs)||Total Active (EUs)||Forecasted New Procurements over the next 5 Years (EUs)||Total Bid Universe (EUs)|
* New Flyer Bid Universe Only (excludes MCI)
Management continues to anticipate that bus procurement activity by public transit agencies throughout the U.S. and Canada should remain robust based on an aging fleet, improved overall economic conditions, expected customer fleet replacement plans and active or anticipated procurements. Management also anticipates stable private sector demand for motor coaches through 2016 given the stability of market dynamics including the general economy, travel trends and credit markets. The master production schedule combined with current backlog and orders anticipated to be awarded by customers under new procurements is now expected to enable the Company to continue to deliver approximately 3,450 EUs in fiscal 2016. Production rates will vary from quarter to quarter due to sales mix and award timing.
On July 11, 2016, MCI received notice that required an immediate and orderly shutdown of all ongoing work under a contract to build commuter coaches for New Jersey Transit (NJT), however the Company has insufficient information to determine if the Company needs to adjust its annual delivery guidance.
Gross orders received by the Company’s aftermarket business in Q2 2016 decreased 5% compared to Q1 2016, primarily due to the impact of five fewer workdays in the fiscal calendar in Q2. Gross orders increased 52% in Q2 2016 compared to the same quarter in 2015. The increase in year over year gross orders is attributed to the acquisition of MCI.
Q2 2016 total shipments decreased 5% compared to Q1 2016, primarily due to the impact of five fewer workdays in the fiscal calendar in Q2. Total shipments increased by 16% compared to the same quarter in 2015. The increase in total shipments year over year due is primarily attributed to the acquisition of MCI, offset by the completion of the CTA midlife program.
NOTE: All dollar amounts are stated in U.S. currency based on an exchange rate of U.S. $1.00 = CAD $ 1.2917 to calculate the value of the Canadian contracts in this release.
About the Company
The Company employs over 5,000 team members and is the largest transit bus and motor coach
manufacturer and parts distributor in North America with fabrication, manufacturing, distribution and service centers in Canada and the United States.
Through its Canadian and U.S. subsidiaries, New Flyer Industries Canada ULC and New Flyer of
America Inc., the Company is North America’s heavy-duty transit bus leader and offers the broadest transit bus product line (Xcelsior® and MiDi® models), incorporating the broadest range of drive systems available, including: clean diesel, natural gas, diesel-electric hybrid, electric-trolley and now battery-electric. New Flyer actively supports over 42,000 heavy-duty transit buses (New Flyer, NABI and Orion) currently in service.
Through its Canadian and U.S. subsidiaries, Motor Coach Industries Limited and Motor Coach Industries, Inc., the Company is the leader in motor coaches in Canada and the U.S., offering the MCI J4500, which is the industry’s best-selling intercity coach for 11 consecutive years, and the MCI D-Series, the industry`s best-selling coach line in North American motor coach history. MCI is also the exclusive distributor of Setra S417 and S407 in the United States and Canada. MCI actively supports over 28,000 motor coaches currently in service and offers 24-hour roadside assistance 365 days a year.
The Company also operates North America’s most comprehensive aftermarket parts organization providing support for all types of transit buses and motor coaches. All buses and coaches are supported by an industry-leading comprehensive warranty, service and support network.
The common shares and convertible unsecured subordinated debentures of the Company 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.
For further information, please contact: