New Flyer Announces that the Suspension of the MCI Commuter Coach Contract with New Jersey Transit has been Lifted
Winnipeg, Manitoba, Canada, October 24, 2016: (TSX:NFI) (TSX:NFI.DB.U) Motor Coach Industries (“MCI”), a subsidiary of New Flyer Industries Inc. (the “Company”), the largest transit bus and motor coach manufacturer and parts distributor in North America, announced that MCI’s commuter coach contract with New Jersey Transit (“NJ Transit”) has been reinstated.
On October 2015, NJ Transit awarded a six-year contract to MCI for 772 commuter coaches and options for an additional 450 coaches. In April 2016, a purchase order was issued for the first fiscal year’s production of 184 coaches, of which 142 were scheduled to be delivered in 2016.
On July 7, 2016, after the first five coaches were accepted, NJ Transit advised MCI that the replenishment of the New Jersey Transportation Trust Fund Account (the “TTFA”) had been delayed and that New Jersey Governor Christie had issued Executive Order No. 210 directing the immediate and orderly shutdown of all ongoing work funded under the TTFA.
Following the enactment of legislation on October 14, 2016 to provide funding to the TTFA, the New Jersey Governor issued Executive Order No. 216 lifting the suspension of all work funded under the TTFA.
MCI Contract Suspension with NJ Transit formally lifted
As a result of the end of the suspension of all work funded under the TTFA, NJ Transit has formally advised MCI to commence delivery of the completed coaches and to start inducting new coaches into production.
MCI has 89 completed coaches, ten of which were inspected by NJ Transit in the State of New Jersey prior to the suspension of the contract. There are an additional 29 coaches located in Pembina, ND that have already been inspected by New Jersey Transit and which will be transported to the transit agency in the coming weeks. An additional 50 completed coaches are also located in Pembina, ND and are waiting inspection by New Jersey Transit, following which they will also be delivered to the agency.
As schedules for the inspections by NJ Transit at MCI’s facility and by the New Jersey Department of Transportation upon arrival of the coaches in New Jersey are variable, management anticipates that approximately 50 completed coaches will be sold in 2016, with the remaining coaches being sold in the first quarter of 2017. As a result of these 50 coaches being delivered in 2016, management now expects the Company to deliver approximately 3,500 equivalent units in fiscal 2016.
NJ Transit has advised that the milestone payments that were suspended in July will recommence immediately. NJ Transit has further advised MCI to proceed with manufacturing the additional 90 commuter coaches included in the purchase order for the first production tranche of 184 units. As a result of the commencement of manufacturing the additional coaches, the advance layoff notifications that MCI had provided to the Governments of Manitoba and North Dakota and to affected employees will be cancelled and management anticipates that no layoffs will occur.
Paul Soubry, President and Chief Executive Officer of the Company and MCI said, “We are relieved the New Jersey funding crisis has come to an end and that the Company can return to building coaches for the State of New Jersey. We carefully weighed the risks and made measured decisions when the contract was suspended with the objective of balancing the impact on our key stakeholders: our employees, our customers and suppliers and our shareholders”. Soubry continued, “We are grateful for the open communication between MCI and NJ Transit during the contract suspension and look forward to manufacturing the next coaches starting on October 24, 2016.”
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 suspend or 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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