Summary (U.S. Dollars except as noted):
- 2013 Q3 consolidated revenue of $309.0 million increased by 48.2%
compared to 2012 Q3 primarily due to incremental revenue associated
with the acquisition of the NABI bus and parts businesses and the Orion
parts business.
- 2013 Q3 consolidated Adjusted EBITDA of $24.4 million increased by $10.3
million or 73.5% compared to 2012 Q3 and Net earnings of $7.8 million
increased by 420% compared to $1.5 million in 2012 Q3.
- 2013 Q3 Free Cash Flow was C$13.1 million and declared dividends were
C$8.1 million during 2013 Q3. The current dividend rate is expected to
be maintained.
- Liquidity improved by $7.1 million during 2013 Q3 resulting in closing
liquidity of $90.5 million.
- Total bus order backlog at the end of 2013 Q3 was $4.6 billion,
representing an increase of $0.9 billion during the quarter.
Book-to-bill ratio for the twelve month period ended September 29, 2013
was 309%, which represents the third consecutive quarter where the
ratio exceeded 100%.
WINNIPEG, Nov. 6, 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 September 29, 2013
("2013 Q3"). 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
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Bus Deliveries | 2013 | 2012 |
| 2013 | 2012 |
|
| Q3 | Q3 | change | YTD | YTD | change |
Number of equivalent units ("EUs") delivered |
577
|
386
|
49.5%
|
1,556
|
1,269
|
22.6%
|
Average selling price per EU |
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|
|
|
|
(U.S. dollars in thousands)
|
$434.4
|
$464.6
|
-6.5%
|
$435.7
|
$451.5
|
-3.5%
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|
The increased deliveries were as a result of including deliveries of
buses by NABI Bus, LLC, the Company's newly acquired business,
effective June 21, 2013. The average selling price has decreased as a
result of sales mix when comparing the two periods.
The Company line-entered 592 EUs in 2013 Q3, which, on a weekly basis,
is less than management's planned average weekly rate of 48 EUs. This
was due to the Company-wide planned summer vacation that decreased
production during the first week of 2013 Q3.
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Consolidated Revenue | 2013 | 2012 |
| 2013 | 2012 |
|
(U.S. dollars in millions) | Q3 | Q3 | change | YTD | YTD | change |
Bus |
$250.6
|
$179.3
|
39.8%
|
$678.0
|
$572.9
|
18.3%
|
Aftermarket |
58.3
|
29.1
|
100.6%
|
147.0
|
90.1
|
63.2%
|
Total Revenue |
$309.0
|
$208.4
|
48.2%
|
$825.0
|
$663.0
|
24.4%
|
|
|
|
|
|
|
|
-
The increase in 2013 Q3 revenue primarily resulted from a 49.5% increase
in total bus deliveries compared to the 13-week period ended September
30, 2012 ("2012 Q3") deliveries offset by a sales mix with lower
average selling prices.
-
The increase in revenue from aftermarket operations is primarily a
result of increased volumes including incremental revenue from the
Orion parts business and the recently acquired parts business of NABI
Parts, LLC.
-
Revenue from bus manufacturing operations for the 39-week period ended
September 29, 2013 ("2013 YTD") also increased compared to the 39-week
period ended September 30, 2012 ('2012 YTD"). The 2013 YTD increase is
due to increased deliveries compared to 2012 YTD.
-
Revenue from aftermarket operations for 2013 YTD increased compared to
2012 YTD primarily as a result of increased volumes resulting from
incremental revenue from the Orion parts business subsequent to the
March 1, 2013 acquisition date and the NABI parts business subsequent
to June 21, 2013.
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Consolidated Adjusted EBITDA | 2013 | 2012 |
| 2013 | 2012 |
|
(U.S. dollars in millions) | Q3 | Q3 | change | YTD | YTD | change |
Bus |
$15.9
|
$9.6
|
65.4%
|
$36.3
|
$31.1
|
16.9%
|
Aftermarket |
8.5
|
4.5
|
91.0%
|
21.5
|
15.3
|
40.8%
|
Total Adjusted EBITDA |
$24.4
|
$14.1
|
73.5%
|
$57.9
|
$46.4
|
24.8%
|
|
|
|
|
|
|
|
-
2013 Q3 and 2013 YTD bus manufacturing operations Adjusted EBITDA
increased primarily due to the addition of the NABI bus operations.
Profit margins can vary significantly between orders due to factors
such as pricing, order size and product type. Adjusted EBITDA from bus
manufacturing operations per EU can be volatile on a quarterly basis
and therefore, management believes that a longer term view should be
taken when comparing bus manufacturing operations margins.
-
2013 Q3 and 2013 YTD aftermarket operations Adjusted EBITDA increased
compared to their 2012 respective periods, primarily due to the
addition of the NABI parts and Orion parts businesses offset by margin
compression as a result of pricing pressure in the market. The
aftermarket operations Adjusted EBITDA for 2013 Q3 and 2013 YTD was
normalized for non-recurring transitional costs of $0.4 million and
$1.2 million, respectively.
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|
Net earnings | 2013 | 2012 | $ | 2013 | 2012 | $ |
(U.S. dollars in millions) | Q3 | Q3 | change | YTD | YTD | change |
Earnings from operations |
$13.8
|
$7.8
|
$6.0
|
$27.1
|
$25.8
|
$1.3
|
Non-cash recoveries (charges) |
1.8
|
(0.9)
|
2.7
|
(0.4)
|
(8.1)
|
7.7
|
Interest expense |
(3.6)
|
(3.9)
|
0.3
|
(11.1)
|
(11.8)
|
0.7
|
Income taxes expense |
(4.2)
|
(1.5)
|
-2.7
|
(2.6)
|
(0.5)
|
-2.1
|
Net earnings |
$7.8
|
$1.5
|
$6.3
|
$13.0
|
$5.4
|
$7.6
|
|
|
|
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|
The Company reported net earnings of $7.8 million in 2013 Q3, an
increase compared to net earnings of $1.5 million in 2012 Q3, primarily
as a result of a $6.0 million increase in earnings from operations and
the $2.7 million increase of the non-cash recoveries caused by the
favourable impact of foreign currency translation resulting from the
weakening Canadian dollar, offset somewhat by increased income taxes.
2013 YTD net earnings of $13.0 million increased compared to 2012 YTD
net earnings of $5.4 million, primarily due to significantly reduced
non-cash charges, as 2012 YTD non-cash charges included a $5.5 million
loss on exercise of the redemption right on the 14% subordinated notes
and a $1.4 million charge associated with fair value change in the
embedded derivative call option included in the subordinated notes.
Liquidity
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Free Cash Flow | 2013 | 2012 |
| 2013 | 2012 |
|
(CAD dollars in millions) | Q3 | Q3 | change | YTD | YTD | change |
Free Cash Flow |
C$13.1
|
C$5.9
|
121.8%
|
C$29.4
|
C$19.6
|
50.0%
|
Declared dividends |
8.1
|
7.5
|
8.0%
|
22.6
|
26.6
|
-15.0%
|
|
|
|
|
|
|
|
The amount of dividends declared increased in 2013 Q3 as a result of
issuing 11.1 million common shares in 2013 YTD to strategic investor
Marcopolo SA. The amount of dividends declared in 2013 YTD is lower
than 2012 YTD as a result of reducing the annual dividend rate to
C$0.585 per common share, effective for all dividends declared after
August 20, 2012. Management believes that sufficient Free Cash Flow
will be generated to maintain this current annual dividend rate.
|
|
|
|
Liquidity Position | September 29, | June 30, | $ |
(U.S. dollars in millions) | 2013 | 2013 | change |
Cash |
$13.5
|
$16.5
|
-3.0
|
Available funds from revolving credit facility |
77.0
|
66.9
|
10.1
|
Total liquidity position |
$90.5
|
$83.4
|
7.1
|
|
|
|
|
During 2013 Q3, the Company improved its liquidity position by $7.1
million by generating cash from operating activities of $16.4 million
which offset the $11.9 million of cash used for investing and financing
activities and a $2.6 million reduction of letters of credit
outstanding. The $7.5 million repayment of the Company's revolving
credit facility during 2013 Q3 does not factor into the change in
liquidity position.
Bid Universe, Backlog and Book-to-Bill Ratio
Management believes that the transit market continues to show positive
signs of recovery. A number of large bids were awarded in 2013 Q3, as
New Flyer won new orders totaling 2,431 EUs. As well, the total New
Flyer bid universe remains high at 19,941 EUs, where the total number
of active EUs (request for proposals received and in process of review
at New Flyer, and bids or proposals submitted by New Flyer awaiting
customer action) at the end of 2013 Q3 was 8,117 EUs, compared to 5,876
EUs at September 30, 2012.
The total New Flyer backlog at the end of 2013 Q3 was 9,890 EUs, an
increase of 15.9% from the backlog at the end of the second quarter of
2013 ("2013 Q2"). The firm portion of the total backlog at the end of
2013 Q3 is made up of 2,748 EUs which has increased 22.0% compared with
2,252 EUs at the end of 2013 Q2. The total value of the order backlog
at the end of 2013 Q3 was $4.6 billion, compared with $3.7 billion at
the end of 2013 Q2.
New Flyer's Book-to-Bill ratio (defined as new order intake - both firm
and options - divided by deliveries) for the last twelve months ("LTM")
ending September 29, 2013 was 309% as compared to only 33% for the LTM
ended September 30, 2012. A ratio of above 100% implies that more
orders were received than filled, indicating strong demand.
Outlook
The Company has been very active over the last few years as it continues
to lead the heavy-duty transit bus industry in Canada and the United
States, and is executing on its the strategic plan by investing to
pursue long term stability, diversification and growth.
As has been highlighted many times over the past few years, the number
of active heavy-duty transit bus procurements dropped noticeably since
the financial crisis that began in 2008. In order to replenish
decreasing backlogs in an environment of fewer procurements, prices for
new contracts declined dramatically. A significant portion of New
Flyer's order backlog is comprised of orders obtained during this time
period and management expects that on average, margins on orders
planned for 2014 production will be lower than the average margins
achieved during the period of excess capacity.
Management does not yet feel an increase to the average annual
production rate is sustainable. Management currently expects the
average line entry rate to be approximately 51 EUs per production week
during the 12 available production weeks in the fourth quarter of 2013,
even though the Company does not plan to line enter new buses into
production during the winter holiday period occurring the last week of
this year. The result is an expected average of 36 EUs line entered
per production week at New Flyer for fiscal 2013, and an expected
average of 12 EUs line entered per production week at NABI since its
acquisition in June 2013.
Management is very encouraged by its efforts to grow the aftermarket
parts business. The Company has substantially completed the
integration of the Orion aftermarket parts business into the New Flyer
parts business and is actively engaged in a strategic review of the New
Flyer and NABI parts businesses.
Despite the pressure on margins, the Company continues to pursue cost
and overhead savings in daily operations through its Operational
Excellence initiatives and as part of the long term NABI integration
and platform strategy development and management expects that the
Company will remain in compliance with all credit facility covenants
and will be able to maintain dividends at current levels.
Conference Call
A conference call for analysts and interested listeners will be held on
Thursday, November 7, 2013 at 2:00 pm (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/1231491/1356547
A replay of the call will be available from 4:00 pm (ET) on November 7,
2013 until 11:59 pm (ET) on November 14, 2013. To access the replay,
call 416-849-0833 or 855-859-2056 and then enter pass code number
72612422. The replay will also be available on New Flyer's web site at www.newflyer.com.
Non-GAAP and Additional GAAP Measures
"Earnings from Operations" refer to earnings before interest expense,
income taxes, losses or gains on disposal of property, plant and
equipment, unrealized foreign exchange losses or gains on non-current
monetary items and fair value adjustment to embedded derivatives.
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 Earnings from Operations, Adjusted EBITDA and Free
Cash Flow are useful measures in evaluating the performance of the
Company. However, Earnings from Operations, 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 MD&A are cautioned that Earnings
from Operations, 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, with recently acquired NABI bus operations, is the leading
manufacturer of heavy-duty transit buses in the United States and
Canada. The Company is the industry technology leader and offers the
broadest product line including drive systems powered by: clean diesel,
natural gas and electric trolley as well as energy-efficient
diesel-electric hybrid vehicles. All buses are supported by an
industry-leading comprehensive warranty and support program, and
service network. New Flyer and its subsidiaries NABI Bus, LLC and
NABI Parts, LLC also operate the transit industry's most sophisticated
aftermarket parts organization, sourcing parts from hundreds of
different suppliers and providing support for all types of heavy-duty
transit buses.
The New Flyer group of companies employ over 3,000 team members with
manufacturing, fabrication, parts distribution and service centers in
both Canada and the United States. Further information is available on
New Flyer's web site at www.newflyer.com.
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", "forecasts",
"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, 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 convertible 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, new products must be tested and proven
in operating conditions and there may be no demand for such new
products 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
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.
SOURCE New Flyer Industries Inc.
<p> Jon Koffman<br/> Investor Relations<br/> Tel: (204) 224-6672<br/> E-mail: <a href="mailto:investor@newflyer.com">investor@newflyer.com</a> </p>