Q2 2012 order activity was for 367 buses or 498 equivalent production units (“EUs”), with a total value of $222.5 million, an increase from $77 million at the first fiscal quarter of 2011 (“Q1 2011”). The Q2 2012 order activity comprises new firm and new option orders of 78 buses (90 EUs) and exercised options of 289 buses (408 EUs). Included in this order activity are a mix of new and repeat customers, with approximately 56% of the EUs for clean-propulsion vehicles (i.e., hybrid or CNG), reflecting diversification of New Flyer’s portfolio of products and customers.
At the end of the period, orders for 483 new buses (613 EUs) and options for 40 buses (60 EUs) for New Flyer were pending from a number of customers where approval had been granted by the customer’s board, council, or commission, as appropriate, but purchase documentation had not yet been received by the Company and therefore not yet included in the backlog.
The most significant order in the period was previously announced in May 2012, where New Flyer was awarded an order for 100 60’ articulated buses (200 EUs) for the Chicago Transit Authority (CTA) in support of their fleet renewal and customer enhancement strategies. The order was placed using options from another US transit agency, and is worth US $80.1M.
The 67 clean-diesel buses (D60LFR) and 33 hybrid diesel-electric buses (DE60LFR) are ideal for high-capacity, high-frequency routes and assist with reducing road congestion.
In addition to the 60’ articulated bus order, the CTA awarded a second contract to New Flyer in June 2012 for two 40’ all-electric battery heavy-duty transit buses - New Flyer’s first commercial contract for the all-electric battery powered bus. Earlier that month, New Flyer unveiled a prototype bus, developed in partnership with the Manitoba Government, Mitsubishi Heavy Industries, Manitoba Hydro and Red River College. New Flyer President and Chief Executive Officer, Paul Soubry commented “We’re very excited to partner with CTA on this project and fortunate to have secured this order so soon after completing our all-electric prototype. We are excited about having these buses operated by a progressive organization such as CTA to validate this clean propulsion approach.”
Deliveries in Q2 2012 increased to 441 EUs compared to 431 EUs in Q2 2011. New Flyer’s existing backlog position combined with the order intake over the last 12 months is expected to allow the Company to maintain the current production line entry rate of approximately 36 EUs per week consistent with the Company’s annual operating plan.
The total backlog at the end of Q2 2012 was 6,213 EUs with a total value of $2.65 billion, a decrease of 6.2% from the EU backlog at the end of the first fiscal quarter of 2012 (“Q1 2012”). The firm portion of the total backlog at the end of Q2 2012 was 1,267 EUs, a slight increase over the 1,210 EUs at the end of Q1 2012. This decrease in total backlog is consistent with management’s expectations for the current market conditions and upcoming procurements.
New Flyer’s current backlog consists of the following mix of products, with clean propulsion vehicles representing approximately 66% of the total:
Firm EUs - Option EUs - Total
40 foot and under buses: 627 2,322 2,949
60 foot buses 640 2,624 3,264
Total 1,267 4,946 6,213
So far year-to-date in 2012, 282 option EUs have expired or less than 0.5% of the total New Flyer backlog. Remaining options included in the total backlog will expire, if not exercised, as follows:
Expiry Year Remaining Option EUs
Total Options 4,418
At the end of Q2 2012, there were approximately 15,184 EUs in New Flyer’s new potential pipeline or bid universe for heavy-duty transit buses, up slightly from the approximately 15,100 EUs reported at the end of Q1 2012.
Overall the market continues to see some positive signs. U.S. state tax collections increased in Q2 2012 for the 9th consecutive quarter, with a reported 4.1% increase over the prior year.
The latest data from the American Public Transportation Association (APTA) indicated an increase of 4.98% in US transit ridership during the Q1 2012 compared with the previous year, with bus ridership increasing by 4.48%. North of the border, the Canadian Urban Transit Association (CUTA) reported that transit ridership also rose, with a 4.56% increase reported for the 2011 full year compared to 2010. Both organizations highlight increasing fuel prices and improving unemployment rates as key contributors to the increase in ridership.
On June 27, 2012, both the U.S. House of Representatives and the U.S. Senate voted to pass the conference report for the surface transportation bill (MAP-21/H.R. 4348), followed by President Obama signing the bill on July 6, 2012, at the White House. The President’s signature comes 1,010 days after the last surface transportation bill, SAFETEA-LU, expired.
The bill provides for a limited increase in Federal Transit Programs, as well as extensions of authorizations for FY 2012 based on current law and is in place until September 2014. New Flyer’s President Paul Soubry explained “While we would have preferred a longer term bill, we are pleased that the chapter is closed for now and removes for a few years some of the uncertainty Transit Agencies have had on federal funding”.
In the aftermarket, gross orders received during Q2 2012 for New Flyer core parts sales were down by 6.5% compared to Q2 2011. Year-to-date 2012 gross orders however were up slightly at $56.9M compared to $56.2M for the same period in 2011.
All dollar amounts are stated in US currency based on an exchange rate of US $1.00 = CAD $1.02 to calculate the value of the Canadian contracts in this release.
About New Flyer
New Flyer (newflyer.com) is the leading manufacturer of heavy-duty transit buses in Canada and the United States. 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. The Company currently operates a parts fabrication facility in Elkhart, IN and four PDCs in Winnipeg, MB; Erlanger, KY; Fresno, CA and since the beginning of October, 2011, in Brampton, ON.
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 common shares, income deposit securities and convertible unsecured subordinated debentures of New Flyer are traded on the Toronto Stock Exchange under the symbols NFI, NFI.UN and NFI.DB.U, respectively.
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 customers to purchase buses and to exercise options and to purchase parts or services and the other risks and uncertainties discussed in the materials filed with the Canadian securities regulatory authorities and available on SEDAR at 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 forwardlooking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.