WINNIPEG, Jan. 13, 2016 /CNW/ - (TSX:NFI) (TSX:NFI.DB.U) New Flyer Industries Inc. ("New Flyer" or the "Company"), the leading manufacturer of heavy-duty transit buses in Canada and the United States, announced its order activity and backlog update for the fourth fiscal quarter ended December 27, 2015 ("Q4 2015").

The order and delivery activity and backlog for Q4 2015 reported herein does not include any activity from Motor Coach Industries International, Inc. ("MCI"), a manufacturer of motor coaches in Canada and the United States, which was acquired by New Flyer on December 18, 2015. The Company is currently reviewing all active contracts held by MCI.  The Company will synchronize and ensure consistent classification and reporting practices for the combined backlog.

Bus Deliveries, Order Activity, and Option Expiry

New Flyer delivered 660 equivalent units ("EUs") in Q4 2015, a decrease of twenty EUs compared to 680 EUs in the fourth fiscal quarter ended December 28, 2014 ("Q4 2014"). 

New Flyer's new bus orders (firm and options) in Q4 2015 totaled 1,239 EUs.  Order activity in the period included:

• New firm orders for 474 EUs (valued at $280.8 million)
• New option orders for 765 EUs (valued at $432.4 million)
• Options for 423 EUs converted to firm orders (valued at $208.3 million)

In addition, 564 EUs of new firm and option orders were pending from customers at the end of the period, where approval of the award to New Flyer 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.

New Flyer's last twelve months ("LTM") Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 160% and has been greater than 100% for eleven of the last twelve quarters, demonstrating overall growth in New Flyer's total backlog.

The New Flyer master production schedule combined with current backlog and orders anticipated to be awarded by customers under new procurements is now expected to enable the Company to continue to operate at a corporate average line entry rate of approximately 50 EUs per available production week through fiscal 2016.  Production rates will vary from quarter to quarter due to sales mix.  Work-in-process ("WIP") at December 27, 2015 was 350 EUs, a decrease of 67 EUs from the previous quarter, reflecting the completion of New Flyer's transition to the Xcelsior platform into the Anniston, AL facility.

In Q4 2015, 309 option EUs expired, compared to 76 option EUs that expired in the third fiscal quarter of 2015 ("Q3 2015").  Remaining options in the current backlog will expire if not exercised, as follows:

In 2015 option backlog was reduced by a total of 504 EU due to expired options.

Total Backlog

At the end of Q4 2015, New Flyer's total backlog was 7,560 EUs (valued at $3.85 billion) compared to 7,290 EUs (valued at $3.59 billion) at the end Q3 2015 and 6,745 EUs (valued at $3.39 billion) at the end of Q4 2014.

New Flyer's backlog consists of 30', 35', 40' and 60-foot bus lengths.  Buses incorporating clean propulsion systems (such as natural gas, diesel-electric hybrid, electric-trolley, and battery-electric) represent approximately 71% of the total backlog.

Economic Environment and Ridership

Public transit bus procurements in the US are eligible for 80% of the capital to be paid for by the Federal Transit Administration, and each city, municipality and state have unique tax mechanisms to pay for the remaining 20% of the capital as well as bus operating costs.  As a result, New Flyer carefully monitors federal and local funding.

On December 4, 2015, the Fixing America's Surface Transportation Act ("FAST") was approved and signed into law by the U.S. President Barack Obama. FAST authorizes the funding for U.S. federal surface transportation programs through to September 30, 2020.  Areas of FAST primarily impacting rolling stock procurement include:

• FAST increases the current annual public transportation funding from $10.7 billion to $12.6 billion by 2020. FAST also includes increased funding for "clean technology" and low or zero emission buses as demonstrated by the creation of $55 million of annual "low or no emission" competitive grants.
  
  
• The U.S. federal government period carryover is decreased to three years from the current five year limit. Management believes this carryover reduction may result in the continued increase in the number of procurements issued by agencies, but with a lower number of total options included under each procurement.
  
  
• FAST also includes a provision that creates a pilot program to allow up to three nonprofit agencies to host co-operative procurement contracts that can be interstate in nature. Management believes this should provide another opportunity for public transportation systems of all sizes to enhance their purchasing options as well as take advantage of cost reductions through larger procurements.
  
  
• FAST increases the "Buy America" content requirement for transit rolling stock from the current level of 60 percent to 65 percent in 2018 and to 70 percent in 2020, while maintaining the rules relating to final assembly. New Flyer expects to remain in compliance with these phased increases in U.S. domestic content under FAST.

Preliminary data from the Nelson Rockefeller Institute indicates U.S. state tax collections increased in the second quarter of 2015 by 6.3 percent over the previous year. State tax collections have increased for 21 of the last 22 quarters. Although the data for the third quarter has not been published, preliminary figures for the third quarter of 2015 indicate weaker growth in state tax collections of 4.3 percent.

Transit ridership in both Canada and the United States has declined slightly.  Although fourth quarter 2015 results are not yet available, the American Public Transportation Association's  ridership report indicated that ridership in the third quarter of 2015 decreased by 1.69% in all modes of U.S. transit ridership compared with the previous year, with a decrease in bus ridership of 3.34%.  The same report indicates Canadian ridership increased by 2.13% in all modes of transit ridership during the same period as compared to the previous year. Specific data regarding Canadian bus ridership however, is not available.

Transit Bus Demand

New Flyer's Bid Universe metric reports active competitions in Canada and the United States, and provides an overall indicator of expected heavy duty transit bus market demand.  It is a point-in-time snapshot of: i) EUs in active competitions, defined as all requests for proposals ("RFP's") received and in process of review at New Flyer plus proposals submitted by New Flyer awaiting customer action, and ii) management's forecast of all expected EUs to be placed out for competition over the next five years. 

The total number of active EUs at the end of Q4 2015 was 7,205 EUs which is an increase of 1,010 EUs over the previous quarter, largely as a result of increased bid activity through the quarter.  The number of EUs in the total Bid Universe at the end of Q4 2015 was 20,614 EUs, which is an increase of 1,194 EUs over Q3 2015.

Management continues to anticipate that bus procurement activity by public transit agencies throughout the U.S. and Canada should remain robust based on expected customer fleet replacement plans and active or anticipated procurements.

New Flyer Aftermarket

Gross orders received by New Flyer's aftermarket business decreased 2.2% compared to Q3 2015, and decreased 25.2% in Q4 2015 compared to the same quarter in 2014. The decline in year over year gross orders is primarily attributed to the completion of the Chicago Transit Authority ("CTA") mid-life bus upgrade program.  Total orders excluding the CTA mid-life bus upgrade program increased by 1.3% in Q4 2015 compared to the same quarter in 2014. 

Total shipments increased 2.0% compared to Q3 2015, and declined by 14.3% in Q4 2015 compared to the same quarter in 2014.  The decline in total shipments compared to prior year is primarily attributed to the completion of the CTA upgrade program. Total shipments excluding the CTA mid-life bus upgrade program increased by 7.1% in Q4 2015 compared to the same quarter in 2014.

NOTE: All dollar amounts are stated in U.S. currency based on an exchange rate of U.S. $1.00 = CAD $ 1.3845 to calculate the value of the Canadian contracts in this release.

About New Flyer

The Company employs over 4,800 team members and 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.

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 (Xcelsior^® and MiDi^® models), 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 42,000 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 sophisticated 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 and convertible unsecured subordinated debentures of the Company are traded on the Toronto Stock Exchange under the symbols NFI and NFI.DB.U, respectively.

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 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.