Related Links

New Flyer Announces Second Quarter 2011 Orders and Backlog

Winnipeg, Manitoba, Canada, July 18, 2011: New Flyer Industries Inc. (TSX:NFI.UN) (“New Flyer” or the “Company”), the leading manufacturer of heavy-duty transit buses in Canada and the United States, announced order activity for the second fiscal quarter of 2011 ended July 3, 2011 (“Q2 2011”) of 952 buses or 1,040 equivalent production units (“EUs”), with a total value of US $466 million.  This order activity comprises new firm and new option orders of 381 buses (398 EUs) and exercised options of 571 buses (642 EUs). The order intake level was 304% higher than the intake level in the first fiscal quarter of 2011 (“Q1 2011”), but was 47% lower than in the second fiscal quarter of 2010.

Q2 2011 order activity is from both current and new customers and for a variety of vehicle configurations and propulsion systems, including 35-, 40- and 60-foot buses with clean diesel, diesel-electric hybrid, and compressed natural gas (“CNG”) propulsion systems.  Approximately 52% of the EUs in these orders are for clean-propulsion (i.e., hybrid or CNG) vehicles. 

With 701 EUs added to the firm backlog, the Company is positioned to continue its line entry operating plan of 36 EUs per week for the balance of 2011 and into the first quarter of 2012.  The order activity during Q2 2011 included:

  • The Metropolitan Transportation Authority, which operates New York City Transit, the largest transit agency in North America, converted existing options into firm orders for 250 additional CNG-powered 40’ buses.  A total of 385 buses have now been ordered by New York City Transit under this contract.
  • As announced on June 16, 2011, Metrolinx, the regional transportation and public transit agency of the Ontario government, awarded New Flyer its third consecutive umbrella contract for the supply of up to 287 – 40’ diesel and diesel-hybrid buses to various Ontario transit agencies.  This is the first Metrolinx contract to be based on New Flyer’s state-of-the-art Xcelsior bus model.
  • La Régie de la Gare de Sorel of Sorel, Quebec selected New Flyer to provide up to 27 – 40’ diesel Xcelsior buses.  As announced on June 21, 2011, this marks the first order from the Province of Quebec for New Flyer in over 40 years.  New Flyer’s recently announced appointment of A. Girardin Inc. of Drummondville, Quebec to represent the Company in Quebec was instrumental in securing this award.
  • Brampton Transit of Brampton, Ontario has converted further options of 58 EUs to firm orders.  Brampton will receive 18 additional 40’ Xcelsior buses as well as 20 buses (40 EUs) as the launch customer for the new 60’ articulated Xcelsior bus.  Brampton was the Company’s first customer to operate the new Xcelsior 40 model, and these follow-on orders represent the fourth and fifth Xcelsior orders released by Brampton Transit.
  • City Bus, the transit agency in Culver City, California, has converted options to order 20  - 40’ CNG-powered Xcelsior buses.  Culver City is a long-time New Flyer customer, with this order for their first Xcelsior buses.
  • Valley Metro, the regional operator in the Phoenix, Arizona area has exercised options to acquire 17 articulated diesel hybrids and 22 – 40’ CNG buses.  Valley Metro is another long-time New Flyer customer.
In addition, the Commonwealth of Virginia awarded an umbrella contract to New Flyer for the provision of buses to any Virginia public transit agency, as well as to certain agencies in neighbouring states.  As with other previously announced umbrella contracts, no EUs have been added to New Flyer’s backlog. This award however, enables procurements to proceed quickly and management anticipates orders under this contract in the coming quarters.

Deliveries in Q2 2011 were 431 EUs and, as a result, new firm orders and options received in the quarter of 398 EUs represent 92% of buses delivered during the quarter.  Management advises that order activity is not consistent on a quarterly basis and therefore believes the ratio of orders received to deliveries is more meaningful when compared on an annual basis. Over the past four quarters the company has delivered 1,924 EUs and received new orders (firm and options) totaling 1,591 EUs. This ratio of new orders received to deliveries, at 0.83 to 1, trails the approximately 1.0 to 1.0 ratio seen over the previous three quarters. In comparison, the annual ratio of new orders received to deliveries was approximately 0.75 to 1 in the first half of fiscal 2010.

New Flyer’s option backlog includes the widest available range of bus models, lengths, and propulsion options for prospective customers.  The total backlog at the end of Q2 2011 was 8,271 EUs, a decrease of less than 1% from the backlog at the end of Q1 2011.  The firm portion of the total backlog is 1,887 EUs, compared with 1,617 EUs at the end of Q1 2011.  The value of the order backlog at the end of Q2 2011 was $3.52 billion, compared with $3.54 billion at the end of Q1 2011. 

New Flyer’s current backlog consists of the following mix of products, with clean propulsion vehicles represent approximately 66% of the total: 


Firm EUs
Option EUs
Total
40 foot and under buses
1,307
3,250
4,557
60 foot buses
580 3,134 3,714
Total 1,887 6,384 8,271

During Q2 2011, options to purchase 54 EUs expired compared to options for 36 EUs expiring in Q1 2011.  Options included in the backlog expire, if not exercised, as follows:

Expiry year
Remaining Option EUs
2011
439
2012
1,963
2013
2,885
2014
526
2015
528
2016 43
Total Options
6,384

At the end of Q2 2011, there were approximately 11,800 EUs in New Flyer’s new potential pipeline or bid universe for heavy-duty transit buses, a decrease from the approximately 12,900 EUs reported at the end of Q1 2011.  The pipeline is expected to continue to grow or shrink as programs are launched or completed, and in Q2 2011 a number of large programs were concluded.  Management considers a pipeline of this magnitude to provide adequate market demand for the industry.

Government funding levels for transit agencies constitute another essential ingredient for an orderly market, and the current economic and political climate in the United States continue to have an impact on funding challenges faced by transit agencies.  The Chair of the House Transportation and Infrastructure Committee recently released the six-year authorization proposal.  This legislation covers funding for many transportation programs and activities, the impact of which on transit rolling stock procurements is not yet known.  This proposal represents a one-third cut from current 2011 funding levels and represents a 19.5 percent cut from the $286 billion authorized over six years under the current authorizing legislation.  In a separate proposal, the Senate Environment and Public Works Committee has proposed a two-year surface transportation authorization bill that would authorize funding for federal fiscal years 2012 and 2013 at current levels, adjusted for inflation.  Management believes it is too early to predict the outcome on transit funding, with considerably more debate on spending, deficits and taxation expected.  

Following ridership declines in the United States since the peak in 2008, the American Public Transportation Association (APTA) reports that U.S. transit bus ridership appears to be stabilizing and was virtually flat (-0.02%) in the first quarter of 2011 compared to the previous year.   For the same period, eleven key Canadian transit systems reported total ridership for all modes of transit was up slightly (0.12%), and nine of the eleven transit systems reported increases in bus ridership specifically.

During Q2 2011, New Flyer completed shipment of its first order of ten pre-owned articulated buses, following refurbishing activities undertaken in the Company’s Arnprior Service Centre.  As previously stated, revenue from the sale of these used buses is recorded in the results of Company aftermarket operations and accordingly, the used buses are not reflected in the bus order backlog.  The delivery of these first ten pre-owned buses had a favourable impact on the contribution margin of the Company’s aftermarket operations.

The Company’s aftermarket parts gross order backlog for core sales activity as at the end of Q2 2011 has remained consistent with the level at the end of Q1 2011. Gross orders received for core aftermarket parts sales during Q2 2011 exceeded the average of gross orders received in the previous 4 quarters by 7.7%.

NOTE: All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $0.96 to calculate the value of the Canadian contracts in this release.

About New Flyer

New Flyer is the leading manufacturer of heavy-duty transit buses in the United States and Canada. The Company’s three manufacturing facilities -- in Winnipeg, MB, St. Cloud, MN and Crookston, MN - are all ISO 9001, ISO 14001 and OHSAS 18001 certified.

During 2010, New Flyer’s footprint expanded in three key locations.  Service centers were added in Arnprior, Ontario and in New York City as the Company’s Customer Services group worked to enhance revenue in keeping with corporate strategic plans.  In addition, New Flyer acquired TCB Enterprises, LLC of Elkhart, IN.  TCB is now operated as an indirect subsidiary of New Flyer and is a high quality manufacturer and supplier of transit interior lighting, stanchions, and seating.  New Flyer has recently announced its intention to open a fourth Parts Distribution Centre in southern Ontario, Canada in the fall of 2011.

With a skilled workforce of over 2,000 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 service network. The Company’s income deposit securities are traded on the Toronto Stock Exchange under the symbol NFI.UN. Further information is available on New Flyer’s web site at www.newflyer.com. 

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of New Flyer and New Flyer Industries Canada ULC (“NFI ULC”) 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 transit agencies to purchase buses, parts and services 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, New Flyer and NFI ULC disclaim 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:
New Flyer Industries Inc.
Glenn Asham
Chief Financial Officer
Tel: 204-224-1251