New Flyer Industries€¦ · NFI Investor Presentation Toronto, May 8, 2014 New Flyer Industries...

NFI Investor Presentation Toronto, May 8, 2014

New Flyer Industries TSX: NFI TSX: NFI.DB.U

Forward Looking Statements: Our remarks and answers to your questions today may contain forward-looking statements relating to New Flyer Industries Inc. and related companies

or to the environment in which they operate, which are based on their operations, estimates, forecasts and projections. These statements are not guarantees of future performance and

involve risks and uncertainties that are difficult to predict, or are beyond New Flyer’s control. A number of important factors could cause actual outcomes and results to differ materially

from those expressed in these forward-looking statements. These factors include those set forth in New Flyer’s Annual Information Form. New Flyer assumes no obligation to update

or revise any forward-looking statements to reflect new events or circumstances, except as required by applicable securities laws. All figures discussed today are in U.S. dollars unless

otherwise noted.

Non-GAAP Measures: For the definition and explanation of EBITDA, ADJUSTED EBITDA and FREE CASH FLOW please refer to Appendix A.

North America’s #1 Heavy-Duty Transit Bus Manufacturer and Parts Supplier

2014 Annual General Meeting


All buses are supported by an industry-leading comprehensive warranty, support and

service network including: regional product support managers, regional service centers and

regional Parts Distribution centers, field training, eLearning, technical publications and New

Flyer Connect real-time bus monitoring capability.

Public company with common shares (NFI) and convertible unsecured subordinated

debentures (NFI.DB.U) traded on the Toronto Stock Exchange.

Founded in 1930. Largest installed base of transit buses in Canada/US.

Offer heavy-duty transit buses built on steel monocoque chassis in all

requisite lengths including 30’, 35’ 40’ and 60’ articulating.

Recently added a medium-sized MiDi® shuttle and transit bus in lengths of

30’ and 35’ for both private and public operators.

Manufacture approx 2,500 Equivalent Units (EUs) per year. On average,

customers are approx 20% in Canada and 80% in the US.

#1 Heavy-Duty Transit Bus manufacturer in Canada/US

2

Market Leader in Volume, Technology, Innovation and Support


NFI Investment Highlights

Total Leverage (not including Convertible Debenture) reduced from 3.5X in 2010 to 1.7X in 2014.

Common Share generally viewed as a balance of income and growth opportunity (annual dividend C$0.585/share).

Distributions paid for 101 consecutive months - since IPO.

Leading market share of: installed fleet, annual bus deliveries (approx 43%) and aftermarket parts (approx 28%).

Market Innovation leader with the greenest propulsion (hybrid, natural gas, electric trolley, all-electric) offering.

Experienced executive team with a track record and significant OpEx and LEAN experience

Leading Heavy Duty Transit Bus Manufacturer and Parts Supplier in North America

Predictable cash flow business model, conservative financing structure. Lower CAPEX needs

Business Sustainability with Growth Prospects

Transit is an essential service generating repeat business in replacement industry. Aging US fleet in recovering

economy. Currently experiencing high bid activity (at Q1-14: Active bids >5,500 EUs, Total Bid Universe > 20,000 EUs).

At Q1-14, total NFI backlog 7,683 EUs ($3.69B). NFI LTM Book-to-Bill Ratio over >100% for the 5th consecutive quarter.

JV with UK’s largest bus builder (Alexander Dennis) to introduce MiDi®, a medium-sized low floor bus in Can/US.

World’s 2nd largest bus builder Marcopolo S.A. made 19.99% strategic equity investment in NFI in 2013, with

operational MOU.

Two acquisitions in 2013 (Orion Parts and NABI) have increased NFI Bus and Aftermarket Parts offering, added

complementary customers, enhanced customer support, and provided synergy potential.

3


Strategically executed transformation Has positioned NFI for Stability, Diversification and Growth

2009 2010 2011 2012 2013

Non-Cash

Rights Offering

to exchange

Equity for Debt

Convertible

Debt Issue

& terminate

remaining IDSs

19.99% equity

sold to

world’s # 2

Bus Builder

Commenced

NF LEAN

Implementation

Acquired Part

Fabrication

Business

Production

Launch of

Xcelsior® bus

MiDi®

JV with Alexander

Dennis Limited

Acquired

Cdn/US Parts

Business

Acquired US

Transit Bus

& Parts Business

4

US based fabricator and supplier of

Interior Lighting and Stanchions

UK’s largest Bus & Coach builder

World leader in Double Deck and Midi-sized bus

Brazillian HQ’d delivers

over 35,000 buses annually

North America’s #4 Bus

Aftermarket Parts Business

North America’s #4 Bus OEM &

#2 Aftermarket Parts Business

2005: NFI launched IPO on the TSX as an Income Deposit Security (IDS)

2011-12: NFI converted from IDS

to Common Share structure

http://www.google.com/url?sa=i&rct=j&q=orion+bus+logo&source=images&cd=&cad=rja&docid=sMum7SpOwTr8UM&tbnid=p4AP3l8_XM2qrM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/File:Orion_Bus_logo.png&ei=0q5ZUdGFHaLoiQL_sIGIBQ&bvm=bv.44442042,d.cGE&psig=AFQjCNHCDIyxX1OA30CKYhvYDgIfya4A_w&ust=1364918350248713


ABC Companies6%

Neopart3%

Mohawk2%

Other Transit Brokers3%

Bus Service/Maintenance Facilities

4%

Engine & Transmission Part Vendors

8%

Local Suppliers9%

Truck/Common Parts Suppliers

8%

Bus Component Vendors Direct

5%

Orion1% **

New Flyer28%

NABI4% *

Gillig9%

Prevost/Nova6%

MCI/UCP4%

North America’s Leading Market Share for both Bus & Parts

Note: NABI and Orion market shares reflect share prior to NF acquisition in 2013.

Source: 2013 New Flyer Database & Management Estimates

Other (incl. El Dorado, Proterra, BYD, etc.)

Heavy-Duty Transit Bus Share

based on EUs delivered in 2013

Aftermarket Parts Share

based on estimated parts sales in 2013

5

NF PARTS

Pro Forma

Share ~34%

NF BUS

Pro Forma

Share ~50%

4%

9%

28%

1%

6%


26%

29% 87%

50%3% 70% 51%

13%0% 71%

59% 45%9% 64%

65% 86%5% 57% 91% 22% 44% 19% 94%

67% 43%

0

1000

2000

3000

4000

5000

6000

New

Yor

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New

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Los

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Other Manufacturers New Flyer Fleet NABI Fleet

6

Complimentary NF and NABI customer base

Metropolitan

Fleets

17 operators

39% of installed fleet

Urban

Fleets

200 operators


Municipal

Fleets

900+ Operators


North American Transit Bus fleet estimated at 80,000 buses

Source: 2013 New Flyer Database & Management Estimates

Segments and primary

target markets

24 of NA’s 25 largest Transit Agencies

operate NF and/or NABI buses

Primary Target market




New Flyer Bus and Aftermarket Locations

Crookston, MN

Bus Assembly

St Cloud, MN

Bus Assembly

Elkhart, IN

TCB Parts Fabrication

Anniston, AL

Bus Assembly

Arnprior, ON

Service Center

Delaware, OH

Parts Distribution Center

Brampton, ON


Hebron, KY

Parts Distribution Center Bus Operations

Aftermarket

Mrii Loma, CA

Service Center

Los Angeles, CA

Service Center

Combined in Q1-14

Canton, OH


Combined and relocated in Q3-13

Winnipeg, MB

New Product Development


Winnipeg, MB

Parts Fabrication

Bus Assembly

Winnipeg Site rationalized from 5 to 2 buildings from 2011- 13

Fresno, CA


Winnipeg CBA expires Mar 15/15

Crookston CBA expires Dec 31/15

St Cloud CBA expires Mar 31/17

Over 3,200 team members. Approx 1,300 covered by CBA

http://www.deadline.com/2013/05/cablevision-calls-cops-as-union-protesters-disrupt-shareholders-meeting/cwa/


Committed to Technology Leadership & Propulsion Options

8

Focused on standardizing to New Flyer’s optimized and robust Xcelsior® platform

New Flyer all-electric Xcelsior® XE40

• Pilot testing complete. Winnipeg Hydro shuttle in service

• 2 Chicago buses to enter service in Q2-14

• 4 SDTC/Winnipeg Transit buses to enter service in Q3-14


341

403

320

245

299

262 241

209 218 236 238

189 175

187 183

225 203

305 320

273

301

5

0

50

100

150

200

250

300

350

400

450

Heavy Duty MiDi

9

Significant improvements made in Operations and Performance

Focused investment on both cultural and physical change

Work-in-Process (EUs) at Quarter End

2009 2010 2011 2012 2013 2014

Reflects addition of NABI

as at June 21, 2013


Service and Aftermarket Parts for market leading installed fleet Five Regional Parts Distribution Centers supplying over 700K PN’s

• Auto-replenishment programs

• Consignment programs

• Electronic Data Exchange

• Kanban / 2 Bin Systems

• Dedicated stock

• Maintenance Kits/Systems

• On-site stockroom management

• Inventory planning services

• Vending Machines

• Volume Rebate Programs

10

Pro Forma In-Service Transit Bus Fleet (EUs)

New Flyer Supply Chain Solutions Comprehensive Product Support


0.01.02.03.04.05.06.07.08.09.0

10.011.0

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M

US CA

-5

0

5

10

15

20

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

% C

han

ge v

s Sa

me

Las

t Y

ear

Personal Income Tax Corporate Income Tax General Sales Tax

6

7

8

9

10

11

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Canada USA

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

20

09

Q1

20

09

Q2

20

09

Q3

20

09

Q4

20

10

Q1

20

10

Q2

20

10

Q3

20

13

Q4

20

11

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

12

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

US Bus Total US Total All Modes CDN Total All Modes

Q

0

1000

2000

3000

4000

5000

6000

7000

0

5000

10000

15000

20000

25000

US

Fed

era

l Fu

nd

ing

($ m

illio

ns)

ISTEA TEA-21 SAFETEA-LU Extension to SAFETA-LU MAP-21 ARRA DRRA Bus Deliveries (EU)

Market Economic Fundamentals continue to Improve

US Qtrly State Tax [YOY % Chg]

Monthly Unemployment Rate Qtrly Transit Ridership % Chg YOY

Source: The Nelson A. Rockefeller Institute State Revenue Reports

Source: US Bureau of Labor Statistics (US) ; Stats Canada (CAD) Source: http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp

Source: CUTA, APTA

http://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-

Book-Appendix-A.pdf

Source: http://www.apta.com/resources/statistics/Pages/ridershipreport.aspx

Annual Avg Crude Oil Price - [US$]

Average Age of Bus [Yrs]

11

US Fed Funding vs Industry Deliveries

2010 2011 2012 2013

Source: http://www.fta.dot.gov & management estimates

http://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdfhttp://www.fta.dot.gov/


0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Q4-0

6

Q1-0

7

Q2-0

7

Q3-0

7

Q4-0

7

Q1-0

8

Q2-0

8

Q3-0

8

Q4-0

8

Q1-0

9

Q2-0

9

Q3-0

9

Q4-0

9

Q1-1

0

Q2-1

0

Q3-1

0

Q4-1

0

Q1-1

1

Q2-1

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1

Q4-1

1

Q1-1

2

Q2-1

2

Q3-1

2

Q4-1

2

Q1-1

3

Q2-1

3

Q3-1

3

Q4-1

3

Q1-1

4

Firm CTA Firm Option CTA Option

0%

50%

100%

150%

200%

250%

300%

350%

0

1000

2000

3000

4000

5000

6000

7000

Q4

2007

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

LTM New Orders (EU) LTM Deliveries (EU) LTM Order Intake/Deliveries

4797

5347

5816

6236

5388

5009

4723

5212

4333

4047

50655284

60325933

5154 5242 5083

935 10501500

18642051

12721731 1871 1585 1422

2115 2164 2258 20251814 1692

2191

0

1000

2000

3000

4000

5000

6000

7000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Actual Deliveries - Total Market New Flyer Deliveries

-

5,000

10,000

15,000

20,000

25,000

12-Ja

n-09

12-F

eb-0

912

-Mar

-09

12-A

pr-0

912

-May

-09

12-Ju

n-09

12-Ju

l-09

12-A

ug-0

912

-Sep

-09

12-O

ct-0

912

-Nov

-09

12-D

ec-0

912

-Jan-

1012

-Feb

-10

12-M

ar-1

012

-Apr

-10

12-M

ay-1

012

-Jun-

1012

-Jul-1

012

-Aug

-10

12-S

ep-1

012

-Oct

-10

12-N

ov-1

012

-Dec

-10

12-Ja

n-11

12-F

eb-1

112

-Mar

-11

12-A

pr-1

112

-May

-11

12-Ju

n-11

12-Ju

l-11

12-A

ug-1

112

-Sep

-11

12-O

ct-1

112

-Nov

-11

12-D

ec-1

112

-Jan-

1212

-Feb

-12

12-M

ar-1

212

-Apr

-12

12-M

ay-1

212

-Jun-

1212

-Jul-1

212

-Aug

-12

12-S

ep-1

212

-Oct

-12

12-N

ov-1

212

-Dec

-12

12-Ja

n-13

12-F

eb-1

312

-Mar

-13

12-A

pr-1

312

-May

-13

12-Ju

n-13

12-Ju

l-13

12-A

ug-1

312

-Sep

-13

12-O

ct-1

312

-Nov

-13

12-D

ec-1

312

-Jan-

1412

-Feb

-14

12-M

ar-1

4

Ongoing Bids Submitted Bids Forecast

Bid Universe, Book-to-Bill & Orderbook have recovered

12

Units delivered in Can/US has flattened out at approx 5,100/yr Total Bid Universe & Active Opportunities has rebounded

NFI Total Backlog has recovered. Firm orders has increased NFI Book-to-Bill has significantly improved. Last 5 Q’s >100%

Source: New Flyer Database & Management Estimates


5048

41

32

39 39 39

36 37 35 3432 33

35

29

33

36

47 46 46 4646

43

47

38

35

42 41

3836

33 3436

34 34

29 30

38

48

44

49

44

1 10

10

20

30

40

50

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Heavy Duty Line Entry Heavy Duty Delivery MiDi Line Entry MiDi Delivery

Average weekly Line Entry & Delivery Rates (EUs)

While it fluctuates with mix, 2014 Line Entry plan (average EUs per production week):

Heavy-Duty = 48, MiDi ® = 1.25

13

2009 2010 2011 2012 2013

Includes activity from NABI Bus

LLC following acquisition by

New Flyer on June 21, 2013.

New Flyer MiDi® commenced

production in Jan-14.

2014


73

57

41

64 62

24

24

20

31 37

0

20

40

60

80

100

120

2010 2011 2012 2013 Q1-14 LTM

Bus Parts

878800

746

984 1027

106

116119

215251

0

200

400

600

800

1000

1200

1400

2010 2011 2012 2013 Q1-14 LTM

Bus Parts

NFI Financial Performance 2014 Bus Margins are expended to be lower than 2013

14

30.1

7.8

27.1

45.1

48.6

19.2

26.0

33.130.7

31.8

0

10

20

30

40

50

60

2010 2011 2012 2013 Q1-14 LTM

Free Cash Flow Dividends

Sales ($US M) Adj EBITDA ($US M)

FCF & Dividends ($US M)

0.50

0.81

0.21

0.52 0.53

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

2010 2011 2012 2013 Q1-14 LTM

Earnings/Share ($US)

In 2011, NFI completed a noncash rights offering to facilitate conversion from an IDS to a traditional common share structure. Shareholders exercised approximately 89% of the Rights issued by tendering approximately C$242.3M

principal amount of Subordinated Notes in exchange for approximately 39 million common shares. In 2013, Marcopolo acquired approximately 11 million newly issued common shares, representing a 19.99% stake in NFI


Transformation from IDS to Common Share Structure complete Reduced Leverage and Interest Costs. Compliant with all covenants

1.5

2

2.5

3

3.5

4

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2010 2011 2012 2013 Q1-14 LTM

IDS Debt Bachelor Bonds Senior Term Loan

Revolver Convertible Debenture Total leverage ratio

$65M Convertible

Debenture issued in Jun-

12. Proceeds used to

redeem Bach Bonds/IDS

Debt in August 2012.

Convert price $US10/share

$115M Revolver facility

used to manage working

capital fluctuations

($30M outstanding)

$142M Senior term loan

@ rate of LIBOR plus

applicable margin

Total Leverage Ratio does not include Convertible Debenture as debt. Senior secured credit facility is in place until April 24, 2017.

Interest on Bach Bonds/IDS Debt = 14% vs Converts = 6.25%

15

Total Debt ($US M)


55.5M Common Shares outstanding.

Annual dividend C$0.585/share paid monthly. Yield approx 5.0%

Distributions paid for 101 consecutive months (since IPO)

New Flyer Share Performance

Conversion price $10.00 US

$65M Convertibles outstanding @ Face Value

Coupon 6.25%. Yield at approx 5.5%

16

NFI (Common Share) NFI.DB.U (Convertible)

NFI Exec Incentive Compensation aligned with Shareholders:

STIP: Adjusted EBITDA = 67.5%

Free Cash Flow = 22.5%

Personal Business Objectives = 10%

LTIP: Restricted Stock Units = 25%

Performance Stock Units (based on ROIC) = 50%

Options = 25%

NFI added to TSX Small Cap Index in 2013

Significant NFI Shareholders:

• Marcopolo S.A. owns approx 19.99%

• Mawer Investment Management Limited owns approx 11.1%

• Coliseum Capital Management, LLC owns approx 10.9%

• Franklin Resources Inc., on behalf of its division,

Bissett Investment Management Ltd. owns approx 10.7%

• NFI Board/Management owns approx 2.05%


References to “EBITDA” are to earnings before finance costs, income taxes, depreciation and amortization; unrealized foreign exchange

losses or gains on non-current monetary items and forward foreign exchange contracts and fair value adjustment to embedded derivatives.

References to “Adjusted EBITDA” are to EBITDA after adjusting for: the effects of certain non-recurring and/or non-operations related items

that have impacted the business and are not expected to recur, including non-recurring transitional costs relating to business acquisitions,

loss on exercise of redemption right, past service pension costs, realized investment tax credits (“ITCs”), stock-based compensation and

costs associated with assessing strategic and corporate initiatives.

Management believes EBITDA, Adjusted EBITDA and Free Cash Flow (as defined below) are useful measures in evaluating the performance

of the Company. “Free Cash Flow” means net cash generated by operating activities adjusted for changes in non-cash working capital items,

interest paid, interest expense, income taxes paid, current income tax expense, effect of foreign currency rate on cash, defined benefit

funding, non-recurring transitional costs relating to business acquisitions, costs associated with assessing strategic and corporate initiatives,

past service pension costs, defined benefit expense, cash capital expenditures and principal payments on capital leases. However, EBITDA,

Adjusted EBITDA and Free Cash Flow are not recognized earnings measures and do not have standardized meanings prescribed by IFRS.

Readers of this presentation are cautioned that EBITDA, 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 New Flyer's performance or to cash flows from operating,

investing and financing activities as a measure of liquidity and cash flows. A reconciliation of net earnings and cash flow to EBITDA and

Adjusted EBITDA, based on the Financial Statements, has been presented In Management’s Discussion and Analysis of Financial Condition

under the heading “Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA” and “Reconciliation of Cash Flow to EBITDA and

Adjusted EBITDA”, respectively. A reconciliation of Free Cash Flow to cash flows from operations is provided under the heading “Summary of

Free Cash Flow”.

New Flyer’s method of calculating EBITDA, Adjusted EBITDA and Free Cash Flow may differ materially from the methods used by other

issuers and, accordingly, may not be comparable to similarly titled measures used by other issuers. Dividends paid from Free Cash Flow are

not assured, and the actual amount of dividends received by holders of Shares will depend on, among other things, the Company's financial

performance, debt covenants and obligations, working capital requirements and future capital requirements, all of which are susceptible to a

number of risks, as described in New Flyer’s public filings available on SEDAR at www.sedar.com.

APPENDIX A

DEFINITIONS OF EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW

New Flyer Industries€¦ · NFI Investor Presentation Toronto, May 8, 2014 New Flyer Industries...

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