New Flyer announces 2012 Fiscal Year and Fourth Quarter Results

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
        business.

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.

Operating Results
                                                                    

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%
(EUs)

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
        future.
    --  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
                          (*restated)               (*restated)       

Earnings from        $7.7       $30.1  -22.4  $34.2       $73.6  -39.4
operations

Non-cash (charges)  (0.3)         1.8   -2.1  (8.3)       (5.0)   -3.3
recovered

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
(*restated)

Net earnings          3.9        15.6  -11.7    9.8        15.9   -6.1
(*restated)

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 
2012.

Liquidity
                                                               

Free Cash Flow     2012      2011            2012      2011         

(CAD dollars in     Q4        Q4    change Fiscal    Fiscal   change
millions)
                        (*restated)               (*restated)       

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
facility

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.

Conference Call

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 
available at:

http://www.newswire.ca/en/webcast/detail/1119277/1220377

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.

Non-GAAP Measures

"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".

Forward-Looking Statements

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 
E-mail:investor@newflyer.com

SOURCE: New Flyer Industries Inc.

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CO: New Flyer Industries Inc.
ST: Manitoba
NI: TRN ERN CONF 

-0- Mar/21/2013 01:56 GMT


 
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