New Flyer Announces Third Quarter 2017 Orders and Backlog

WINNIPEG, Oct. 16, 2017 /CNW/ - (TSX: NFI) New Flyer Industries Inc. ("New Flyer" or the "Company"), the largest transit bus and motor coach manufacturer and parts distributor in North America, today announced its order activity and backlog update for the 13-week period ended October 1, 2017 ("Q3 2017").

The order and delivery activity and backlog for Q3 2017 reported in this release includes activity for heavy-duty transit buses manufactured by the Company's subsidiaries, New Flyer Industries Canada ULC and New Flyer of America Inc. (together, "New Flyer"), and motor coaches manufactured by its subsidiaries, Motor Coach Industries Limited and Motor Coach Industries,  Inc. (together, "MCI").

The order and delivery activity and backlog as reported excludes pre-owned motor coaches.  Year-over-year comparisons reported in this release, compare Q3 2017 to the period ended October 2, 2016 ("Q3 2016"). 

Deliveries, Order Activity, and Option Expiry

The Company delivered 877 equivalent units ("EUs") in Q3 2017, an increase of 100 EUs compared to Q3 2016 and a decrease of 114 EUs over the second fiscal quarter of 2017 ("Q2 2017"). Total bus and coach inventory at October 1, 2017 was 566 EUs, an increase of 32 EUs from the previous quarter.

The Company's new transit bus and coach orders (firm and options) in Qsa3 2017 totaled 1,634 EUs.  Order activity in the period included:

• New firm orders for 536 EUs (valued at $276.2 million)
• New option orders for 1,098 EUs (valued at $518.1 million)
• 559 EUs of Options were converted to firm orders (valued at $406.8 million)

The Company's last twelve months ("LTM") Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 128% and has been greater than 100% for 18 of the last 19 quarters, demonstrating overall growth in the Company's total backlog.

In addition, 1,969 EUs of new firm and option orders were pending from customers at the end of the period, where approval of the award to the Company had been made by the customer's board, council, or commission, as applicable, but purchase documentation had not yet been received by the Company and therefore not yet included in the backlog. 

The majority of public transit contracts have a term of five years. The table below shows the number of option EUs that have either expired or been exercised annually over the past five years, as well as the current backlog of options that will expire each year if not exercised. 

Total Backlog and 2017 Production

At the end of Q3 2017, the Company's total backlog was 10,537 EUs (valued at $5.39 billion) compared to 9,901 EUs (valued at $5.04 billion) at the end Q2 2017, and 9,808 EUs (valued at $5.08 billion) at the end of Q3 2016.

The Company's backlog consists of transit buses, and motor coaches primarily for public customers.  Buses incorporating clean propulsion systems (such as natural gas, diesel-electric hybrid, electric-trolley, and battery-electric) represent approximately 43% of the total backlog.  Zero-emission buses (battery-electric, fuel-cell and electric-trolley) represent approximately 3% of total backlog.

The Company's master production schedule combined with current backlog and orders anticipated to be awarded by customers under new procurements is expected to enable the Company to deliver approximately 3,800 EUs in fiscal 2017. Production rates vary from quarter to quarter due to product mix and award timing.

Market Demand

The Company's Bid Universe metric reports active public sector competitions in Canada and the United States, and provides an overall indicator of active bid activity and expected heavy-duty transit bus and motor coach market demand.  It is a point-in-time snapshot of: (i) EUs in active competitions, defined as all requests for proposals received and in process of review plus bids submitted and awaiting customer action, and (ii) management's forecast based on public customer projection of expected EUs to be placed out for competition over the next five years.

At the end of Q3 2017 the number of active EUs was 6,613 EUs and total Bid Universe was 20,916 EUs. 

Procurement of transit buses and motor coaches by the public sector is typically accomplished through formal multi-year contracts, while procurement by the private sector is typically through transactional sales.  As a result, the Company does not publish a Bid Universe metric for private sector buses and motor coaches.

Management continues to expect that transit bus and motor coach procurement activity by public transit agencies throughout the U.S. and Canada should remain robust based on an aging fleet, improved overall economic conditions, expected customer fleet replacement plans and active or anticipated procurements.  Management also expects stable private sector demand for motor coaches through 2017 given healthy market dynamics including the economy, travel trends and credit markets. 

Aftermarket

Total shipments by the Company's aftermarket business for Q3 2017 decreased by 6.6% compared to the previous quarter, and decreased by 4.9% compared to Q2 2016.

New gross orders received in Q3 2017 decreased by 1.6% compared to the previous quarter, while increasing by 2.3% compared to Q3 2016.

Surveys and interviews with a number of large customers indicate a combination of parts orders and sales effects ranging from: inventory reduction objectives, budgetary constraints and fleet modernization impacts.

NOTE: All dollar amounts are stated in U.S. currency based on an exchange rate of U.S. $1.00 = CAD $ 1.2480 to calculate the value of the Canadian contracts in this release.

About The Company

The Company 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 and employs approximately 5,800 team members.

New Flyer is the industry leader in electric propulsion, with over 6,400 transit buses delivered with electric motors and batteries. New Flyer is the only manufacturer offering three types of zero-emission solutions including battery-electric, fuel cell electric, and trolley-electric.  

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 under the brand Xcelsior^®, 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 44,000 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 North America's leader in motor coaches, 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.

Further information is available on the Company's websites at www.newflyer.com and www.mcicoach.com. The common shares of the Company are traded on the Toronto Stock Exchange under the symbol NFI.

Forward-Looking Statements

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.

SOURCE New Flyer Industries Inc.