Summary (U.S. Dollars except as noted):
-- Bus revenue of $180.9 million decreased by 20.5% compared to
2011 Q4. The number of EUs delivered decreased by 17.7%
primarily as a result of a supplier quality issue that has been
subsequently rectified and the temporary delay in receiving a
notice to proceed from a large U.S. customer.
-- Aftermarket revenue of $28.9 million decreased by 1.6% compared
to 2011 Q4, due to discontinuation of used bus sales.
-- Consolidated Adjusted EBITDA of $14.5 million decreased by 8.8%
compared to 2011 Q4.
-- Net earnings of $3.9 million in 2012 Q4 decreased compared to
net earnings of $15.6 million in 2011 Q4 as a result of a
one-time recognition of investment tax credits.
-- Free Cash Flow was C$7.5 million and declared dividends of
C$6.5 million compared to negative Free Cash Flow of C$3.2
million and declared dividends of C$9.5 million in 2011 Q4. The
current dividend rate is expected to be maintained.
-- The industry bid universe increased 46% during Fiscal 2012.
-- A number of strategic growth transactions have been completed;
such as, investment by Marcopolo, worldwide license to sell
aftermarket treated brakes under New Flyer's Xtended
Life™ brand and acquisition of Orion's aftermarket parts
WINNIPEG, March 20, 2013 /CNW/ - New Flyer Industries Inc. (TSX:NFI),
(TSX:NFI.DB.U), ("New Flyer" or the "Company"), the leading manufacturer of
heavy-duty transit buses in Canada and the United States, today announced its
results for the 13-week period ended December 30, 2012 ("2012 Q4") and the
52-week period ended December 30, 2012 ("Fiscal 2012"). Full financial
statements and Management's Discussion and Analysis (the "MD&A") are available
at the Company's web site at: www.newflyer.com/index/financialreport. Unless
otherwise indicated, all monetary amounts in this press release are expressed
in U.S. dollars.
Bus Deliveries 2012 2011 2012 2011
(in thousands) Q4 Q4 change Fiscal Fiscal change
Number of units delivered 387 470 -17.7% 1,656 1,811 -8.6%
Average EU selling price $467.5 $484.0 -3.4% $455.2 $447.5 1.7%
Consolidated Revenue 2012 2011 2012 2011
(in millions) Q4 Q4 change Fiscal Fiscal change
Bus $180.9 $227.5 -20.5% $753.9 $810.4 -7.0%
Aftermarket 28.9 29.4 -1.6% 119.1 116.0 2.6%
Total Revenue $209.9 $256.9 -18.3% $872.9 $926.4 -5.8%
-- The decrease in 2012 Q4 revenue primarily resulted from a 17.7%
decrease in total bus deliveries and a 3.4% decrease in average
selling price per equivalent unit ("EU"). The decrease in
deliveries is primarily a result of a supplier quality issue
that has been subsequently rectified and the temporary delay in
receiving the notice to proceed ("NTP") for the order of 90
60-foot Xcelsior™ buses (180 EUs) from New York City
Transit Authority, which caused the buses to be removed from
the third fiscal quarter of 2012 ("2012 Q3") production
schedule. This resulted in WIP at the end of 2012 Q4 totaling
225 EUs, or 42 EUs more than at the end of 2012 Q3. This is the
first time WIP has exceeded 200 EUs at a reporting period since
the third fiscal quarter of 2011 ("2011 Q3").
-- The decrease in revenue from aftermarket operations when
comparing the periods is due to a decrease in used bus sales.
Management does not expect used bus sales to continue in the
-- Revenue from bus manufacturing operations for Fiscal 2012
decreased by 7.0% compared to the 52-week period ended January
1, 2012 ("Fiscal 2011"). The Fiscal 2012 decrease is due
primarily to decreased deliveries resulting from lower
production rates in Fiscal 2012 offset by higher average
selling price per EU in Fiscal 2012 compared to Fiscal 2011.
-- Revenue from aftermarket operations for Fiscal 2012 increased
2.6% compared to Fiscal 2011 as a result of higher parts
volumes in the U.S. offset by a decrease in used bus sales.
Consolidated Adjusted EBITDA 2012 2011 2012 2011
(in millions) Q4 Q4 change Fiscal Fiscal change
Bus $10.2 $10.8 -5.7% $42.0 $56.6 -25.8%
Aftermarket 4.3 5.1 -15.5% 19.6 23.5 -16.6%
Total Adjusted EBITDA $14.5 $15.9 -8.8% $61.6 $80.1 -23.1%
-- 2012 Q4 bus manufacturing operations' Adjusted EBITDA decreased
slightly primarily as a result of fewer bus deliveries and the
decrease of investment tax credits ("ITCs") realized in the
quarter, which was offset partially by higher average contract
margins due to sales mix and increased efficiencies resulting
from the Company's Operational Excellence initiatives.
-- The Fiscal 2012 decrease in bus manufacturing operations'
Adjusted EBITDA when comparing the two periods is primarily a
result of a sales mix with lower average margins, decreased bus
deliveries and decreased ITCs realized, offset partially by an
increase in realized foreign exchange gains.
-- 2012 Q4 and Fiscal 2012 aftermarket operations' Adjusted EBITDA
decreased compared to the comparable 2011 periods, primarily
due to lower profit margins resulting from industry price
pressure, the operating costs of the newer parts distribution
centers required to achieve future revenue growth and decreased
Adjusted EBITDA from the sale of used buses in Fiscal 2011.
Net earnings 2012 2011 $ 2012 2011 $
(in millions) Q4 Q4 change Fiscal Fiscal change
Earnings from $7.7 $30.1 -22.4 $34.2 $73.6 -39.4
Non-cash (charges) (0.3) 1.8 -2.1 (8.3) (5.0) -3.3
Interest expense (3.3) (5.0) 1.7 (15.1) (42.0) 26.9
Income tax expense (0.2) (11.3) 11.1 (1.0) (10.7) 9.7
Net earnings 3.9 15.6 -11.7 9.8 15.9 -6.1
The Company reported net earnings of $3.9 million in 2012 Q4 which decreased
compared to net earnings of $15.6 million during the 13-week period ended
January 1, 2012 ("2011 Q4"), primarily as a result of lower earnings from
operations and higher non-cash charges offset by a decrease in income tax
expense and finance costs. The decrease in earnings from operations in 2012 Q4
primarily relates to the one-time recognition of $29.3 million of ITCs in 2011
Q4 which also results in a corresponding decrease in income taxes when
comparing the two periods.
Fiscal 2012 net earnings of $9.8 million decreased compared to Fiscal 2011 net
earnings of $15.9 million, primarily due to a similar decrease in earnings
from operations as a result of the one-time recognition of ITCs in Fiscal 2011
offset partially by a significant reduction in finance costs during Fiscal
Free Cash Flow 2012 2011 2012 2011
(CAD dollars in Q4 Q4 change Fiscal Fiscal change
Free Cash Flow 7.5 -3.2 1000% 27.8 7.8 256.4%
Declared dividends 6.5 9.5 -32.0% 33.1 26.0 27.0%
(*) Current income taxes Fiscal 2011 and 2011 Q4 have been restated to correct
the previous recording of the benefit associated with utilizing loss carry
forwards and deducting historical share issuance costs as a reduction of
current income taxes. In order to conform to the Fiscal 2012 presentation and
the requirements under IFRS, the Fiscal 2011 current income taxes have been
increased by approximately $3.2 million instead of being credited directly
through deficit. The correction of this immaterial error did not have an
impact on Fiscal 2011 assets, liabilities or ending deficit of the Company.
However, as a result of this correction, net earnings for Fiscal 2011
decreased from approximately $19 million to approximately $16 million and
earnings per share decreased from $0.98 to $0.81.For details, see footnote 10
on page 15 of the MD&A and Note 7 of the Financial Statements.
The Fiscal 2011 Free Cash Flow was negatively impacted by the income tax
charge of $13.4 million (C$13.1 million) that occurred in 2011 Q3, and as a
result of a $6.8 million one-time tax expense on the realization of the ITC
pool in 2011 Q4. The benefit of the $23.3 million of unused ITCs is expected
to be realized as cash inflows in the future.
Liquidity Position December 30 January 1 $
(in millions) 2012 2012 change
Cash 11.2 10.1 1.1
Available funds from revolving credit 35.8 81.0 -45.2
Total liquidity position 47.0 91.1 -44.1
As at December 30, 2012, there were $40.0 million of direct borrowings and
$14.2 million of outstanding letters of credits related to the $90.0 million
of secured revolving credit (the "Revolver"). The Revolver increased by $22.0
million during 2012 Q4 which funded working capital needs.
Backlog and Market Indicators
The total backlog at the end of 2012 Q4 was 6,325 EUs, an increase of 1.9%
from the backlog at the end of 2012 Q3. The firm portion of the total backlog
at the end of 2012 Q4 was 1,672 EUs, compared with 1,462 EUs at the end of
2012 Q3. The value of the order backlog at the end of 2012 Q4 was $2.7
billion, compared with $2.6 billion at the end of 2011 Q3.
The total backlog combined with the recent order intake is expected to allow
New Flyer to average a production line entry rate of approximately 36 EUs per
week during the 52-week period ended December 29, 2013; however, as always,
management cautions that this rate will vary quarter to quarter due to the mix
of 40-foot and 60-foot buses.
Procurement activity has increased significantly throughout Fiscal 2012, as
evidenced by the total "pipeline" or "bid universe" of 19,453 EUs at December
30, 2012, representing an increase of 46% compared to at January 1, 2012.
This increase is a result of solicitations being released in the period by
some large transit agencies seeking replacement and expansion buses, but not
yet been awarded. The bid universe as at December 30, 2012 was at its highest
level since New Flyer began tracking it in 2008.
Diversification and Growth
Recently New Flyer completed the following strategic transactions that
management believes are critical to achieving the objective of continued
long-term growth and diversification:
1. On December 31, 2012, the Company signed a license and service
agreement with Power Brake, LLC. The worldwide license grants New
Flyer the exclusive right to sell brakes and brake components for
transit bus aftermarket application that have been treated with
Power Brake's technology designed to extend brake life and reduce
maintenance costs. Brakes and brake components treated with the
Power Brake technology will be sold by New Flyer under its Xtended
Life™ branded product line.
2. On January 23, 2013, the Company announced that Marcopolo S.A.
("Marcopolo") agreed to make a strategic investment of C$116.0
million to acquire a 19.99% stake in the Company. 4,925,530 common
shares of the Company (the "Shares") were issued to Marcopolo on
February 15, 2013 for aggregate consideration of C$51.7 million.
The remainder of the Shares will be issued at the same price per
Share in one tranche over a 12-month period.
The two companies also signed a Memorandum of Understanding to
explore strategic and commercial opportunities to cooperate on
engineering, technical, purchasing and operational matters, with a
focus on reducing the Company's bus manufacturing and aftermarket
part costs and enhancing the Company's competitiveness. The
companies further agreed to assess Marcopolo's technology and
products for possible introduction into the Canadian and U.S.
markets through the Company, as well as the Company's technology
and products for potential distribution into global markets.
3. On March 1, 2013, the Company announced that its Canadian
subsidiary acquired from Daimler Buses North America, Inc. certain
assets and assumed customer and supplier contracts relating to the
Orion aftermarket parts business for heavy-duty transit buses. The
cash acquisition price was approximately $26.5 million (including
an estimated $5.9 million for the purchase of accounts receivable)
which reflects the post-closing working capital adjustments.
A conference call for analysts and interested listeners will be held on Friday
March 22, 2013 at 9:00 a.m. (ET). The call-in number for listeners is
888-231-8191 or 647-427-7450. A live audio feed of the call will also be
A replay of the call will be available from 10:00 a.m. (ET) on March 22, 2013
until 11:59 p.m. (ET) on March 29, 2013. To access the replay, call
416-849-0833 or 855-859-2056 and then enter pass code number 15763503. The
replay will also be available on New Flyer's web site at www.newflyer.com.
"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 the MD&A. "Free Cash Flow" means cash flows from operations adjusted for
changes in non-cash working capital items, effect of foreign currency rate on
cash, defined benefit funding, business acquisition related costs, costs
associated with assessing strategic and corporate initiatives, past service
pension costs, proceeds on sale of redundant assets and decreased for defined
benefit expense, capital expenditures and principal payments on capital
leases. Management believes Adjusted EBITDA and Free Cash Flow are useful
measures in evaluating the performance of the Company. However, Adjusted
EBITDA and Free Cash Flow are not recognized earnings measures and do not have
standardized meanings prescribed by International Financial Reporting
Standards ("IFRS"). Readers of this press release are cautioned that Adjusted
EBITDA and Free Cash Flow 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. A reconciliation of
Adjusted EBITDA and Free Cash Flow to net earnings and cash flow from
operations, respectively, is provided in the MD&A.
About New Flyer
New Flyer is the leading manufacturer of heavy-duty transit buses in the
United States and Canada. The Company's facilities are all ISO 9001, ISO 14001
and OHSAS 18001 certified. With a skilled workforce of over 2,200 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
support network. The Shares of the Company are traded on the TSX under the
symbol "NFI" and the Debentures are traded under the symbol "NFI.DB.U".
Certain statements in this press release are "forward-looking statements",
which reflect the expectations of management regarding 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, aggressive competition and reduced pricing in the industry, material
losses and costs may be incurred as a result of product warranty issues,
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, 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 Company's senior credit facility and the indenture
governing the Company's Debentures 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, battery-electric propulsion on transit buses is still largely unproven
technology and there is no assurance that such technology will result in a
product desired by customers, prototype buses must be tested and proven in
operating conditions, a commercialized product must be marketed and sold to
potential customers and there may be no significant demand for an all-electric
bus from customers, the ability of the Company to successfully execute
strategic plans and maintain profitability, risks related to acquisitions,
joint ventures and other strategic relationships with third parties and the
ability to successfully integrate acquired businesses and assets into the
Company's existing business and to generate accretive effects to income and
cash flow as a result of integrating these acquired businesses and assets. The
Company cautions that this list of factors is not exhaustive. These factors
and other risks and uncertainties are discussed in its 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.
Jon Koffman Investor Relations Tel: (204) 224-6672
SOURCE: New Flyer Industries Inc.
To view this news release in HTML formatting, please use the following URL:
CO: New Flyer Industries Inc.
NI: TRN ERN CONF
-0- Mar/21/2013 01:56 GMT
Press spacebar to pause and continue. Press esc to stop.