WINNIPEG, MB, Jan. 11, 2021 /PRNewswire/ - (TSX:
NFI) NFI Group Inc. ("NFI" or the "Company"), one of
the world's leading independent bus and coach manufacturers,
today:
- reaffirmed its financial guidance for 2020,
including Adjusted EBITDA of $145
million to $155 million;
- announced its financial guidance for 2021, including Adjusted
EBITDA range of $220 million to
$240 million, representing a
potential improvement of over 50% from 2020 expectations; and
- announced longer-term targets for 2025, including Adjusted
EBITDA of $400 million to
$450 million and a Return on Invested
Capital ("ROIC") target above 12%.
The Company will discuss these announcements at its Investor
Day, happening today, January 11,
2021, from 8:30 - 11:30 a.m.
EST. To join the Virtual Investor Day event visit
nfigroup.com/investor-day-2021/. All dollar amounts in this
press release are expressed in U.S. dollars.
For Fiscal 2021, management anticipates revenue growth and
enhanced profitability driven by market recovery, increased sales
of zero-emission buses ("ZEBs"), geographic sales expansion and
continued realization of fixed and variable cost reductions from
its transformational "NFI Forward" initiative.
Fiscal 2021 Financial Guidance
|
2021 Financial
Guidance
|
Revenue
|
$2.8 billion - $2.9
billion
|
ZEB (electric) as
a percentage of manufacturing sales
|
20% - 25%
|
Adjusted
EBITDA(1)
|
$220 million - $240
million
|
Cash Capital
Expenditures – including NFI Forward
|
$50
million
|
Effective Tax Rate
("ETR")
|
~31%
|
Seasonality
|
Year-over-year growth
in
Revenue and Adjusted EBITDA in
Q2, Q3 and Q4, decline in Q1
|
|
(1) Adjusted
EBITDA is not a recognized earnings measure and does not have a
standardized meaning prescribed by IFRS. Therefore, it may not be
comparable to similar measures presented by other issuers. See
"Non-IFRS Measures" at the end of this press
release.
|
|
The guidance provided above is driven
by numerous expectations and assumptions including, but not limited
to, the following:
- Revenue: Growth
is expected to be driven by the Company's solid backlog, new order
growth from the anticipated recovery within North American public
transit markets and the United Kingdom transit market, combined
with an expected increase in sales activity in Asia Pacific and
European markets. In addition, management believes there is
potential for improvement in private coach aftermarket parts
sales.
- ZEB sales:
Growth in ZEB sales is based on the Company's backlog and expected
new orders from increased market demand for zero-emission
vehicles.
- Adjusted
EBITDA: Adjusted EBITDA growth is based on expected revenue
growth, anticipated margins from vehicles in the Company's current
backlog and anticipated new orders, expected increases in the sales
of ZEBs and cost reductions from the NFI Forward initiative. NFI
expects to realize approximately $29 million of savings in 2021
from NFI Forward and to reach cumulative savings of approximately
$47 million since the inception of the program in the third quarter
of 2020. The lower end of the Adjusted EBITDA range is based on
scenarios where production is negatively impacted by slower market
recovery, limited ongoing impacts of COVID-19 and delays in
achieving cost reductions from the NFI Forward
initiative.
- Cash Capital
Expenditures: Fiscal 2020 cash capital expenditures are
expected to be allocated between maintenance and NFI Forward
projects, based on approximately a seventy/thirty percent
split.
- ETR: The
Effective Tax Rate is based on current tax rates in the
jurisdictions in which NFI operates, anticipated financial results,
the Company's corporate structure and the assumption that there
will not be significant changes in applicable tax rates in
2021.
- COVID-19:
We have assumed that the impact of COVID-19 on the Company's
business in 2021 will be significantly lower than in 2020,
including no significant idling of any of the Company's facilities,
increased buying activity from customers and limited supply
disruptions. The overall impact of COVID-19 is expected to reduce
steadily through the end of 2021.
|
Longer-Term Financial Targets
The Company is also providing longer-term financial targets
based on management's market and operations expectations up to
fiscal 2025.
|
2025 Financial
Targets
|
Revenue
|
$3.9 billion - $4.1
billion
|
ZEB (electric)
revenue as a percentage of manufacturing sales
|
35% - 40%
|
Adjusted
EBITDA
|
$400 million - $450
million
|
ROIC(2)
|
>12%
|
|
(2) ROIC is not a
recognized earnings measure and does not have a standardized
meaning prescribed by IFRS. Therefore, it may not be comparable to
similar measures presented by other issuers. See "Non-IFRS
Measures" at the end of this press release.
|
|
The financial targets set out above
are based on the Company's long-term operating plan and represent
performance targets that management is seeking to achieve. They are
driven by numerous expectations and assumptions including, but not
limited to, the following:
- Revenue: Growth
is expected to be driven by the expected recovery in NFI's core
markets, combined with anticipated international sales expansion,
increased sales of ZEBs, market share gains and an increase in
deliveries of ARBOC's low-floor cutaway and medium-duty
products.
- ZEB sales:
Growth in ZEB sales as a percentage of manufacturing sales is based
on NFI expanding its market leading share of ZEB sales, and from
review of customers capital and fleet renewal plans that suggest
there will be a significant increase in their demand for electric
vehicles.
- Adjusted EBITDA:
Adjusted EBITDA growth is based on the expected revenue growth
referred to above, margin expectations on future sales and the
realization of the full amount of the expected cost savings from
the NFI Forward initiative by 2023, resulting in NFI operating with
a lower fixed cost base.
- ROIC: Target is
driven by the factors noted above combined with the expectation
that there will not be significant changes in tax rates from
current levels.
- COVID-19:
Management has assumed that the impact of COVID-19 on the Company's
business will significantly reduce at an accelerating pace through
2021 and 2022, with 2023 and thereafter being
unaffected.
- The targets
exclude any impacts from any future acquisitions during 2021 to
2025.
|
"Today's guidance and longer-term targets reflect the fact that
NFI is on the path to recovery, with solid improvement expected in
2021 as a transition to significant growth expected through 2025,"
said Paul Soubry, President and
Chief Executive Officer. "We see a tremendous opportunity for NFI
to drive profitable growth through market recovery, geographic
expansion and increased sales of zero-emission buses. We also
expect to realize upon the benefits of a lower cost base from the
completion of our NFI Forward initiative."
"While the pandemic continues to impact our customers and our
businesses around the world, we've been very encouraged to see
governments step up their commitment to support essential service
agencies and operators through increased funding to support
operations and capital for eco-friendly, transit buses," Soubry
added. "We look forward to hosting our analysts, investors and
other stakeholders at today's virtual Investor Day where we will
discuss our outlook and showcase how NFI's industry leading green
products and services will drive the evolution to a cleaner,
zero-emission future – or what we call the
ZEvolution."
The above tables outline guidance for selected Fiscal 2021
consolidated financial metrics and longer-term targets for Fiscal
2025. This guidance and these targets take into consideration
management's current outlook and the Company's anticipated Fiscal
2020 results and are based on the assumptions and expectations
noted in this release. The purpose of the financial guidance and
targets is to assist investors, shareholders and others in
understanding certain financial metrics relating to expected Fiscal
2021 financial results and the longer-term 2025 targets in order to
assist in the evaluation of the performance of our business.
The information may not be appropriate for any other purposes.
Information about our guidance and targets, including the various
assumptions and expectations underlying them, is forward looking
and should be read in conjunction with the "Forward-looking
Statements" contained at the end of this press release and
the related disclosure and information about various economic,
competitive and regulatory assumptions, factors and risks in the
Company's other disclosure documents that may cause actual future
financial and operating results to differ from management's current
expectations. There can be no assurance that such guidance or
financial targets will be met and actual performance may differ
materially.
About NFI Group
Leveraging 450 years of combined experience, NFI is leading the
battery-electric transition of mass mobility around the world. With
zero-emission buses and coaches, infrastructure, and technology,
NFI meets today's urban demands for scalable smart mobility
solutions. Together, NFI is enabling more livable cities through
connected, clean, and sustainable transportation.
NFI is a leading independent global bus manufacturer providing a
comprehensive suite of mass transportation solutions under brands:
New Flyer® (heavy-duty transit buses), Alexander Dennis
Limited (single and double-deck buses), Plaxton (motor coaches),
MCI® (motor coaches), ARBOC® (low-floor
cutaway and medium-duty buses), and NFI Parts™. NFI vehicles
incorporate the widest range of drive systems available including:
clean diesel, natural gas, diesel-electric hybrid, and
zero-emission electric (trolley, battery, and fuel cell). In total,
NFI now supports over 105,000 buses and coaches currently in
service around the world.
NFI common shares are traded on the Toronto Stock Exchange under
the symbol NFI. Further information is available at
www.nfigroup.com, www.newflyer.com, www.mcicoach.com,
www.arbocsv.com, www.nfi.parts, and www.alexander-dennis.com.
Non-IFRS Measures
References to "Adjusted EBITDA" are to earnings before interest,
income taxes, depreciation and amortization after adjusting for the
effects of certain non-recurring and/or non-operations related
items that do not reflect the current ongoing cash operations of
the Company as described in the Company's disclosure documents
available on SEDAR at www.sedar.com. References to "ROIC" are
to net operating profit after taxes (calculated as Adjusted EBITDA
less depreciation of plant and equipment, depreciation of
right-of-use assets and income taxes at a rate of 31%) divided by
average invested capital for the last twelve month period
(calculated as to shareholders' equity plus long-term debt,
obligations under leases, other long-term liabilities and
derivative financial instrument liabilities less cash).
Management believes Adjusted EBITDA and ROIC are useful measures
in evaluating the performance of the Company. However, Adjusted
EBITDA and ROIC are not recognized earnings measures under IFRS and
do not have standardized meanings prescribed by IFRS. Readers of
this press release are cautioned that Adjusted EBITDA or ROIC
should not be construed as an alternative to net earnings or loss
or cash flows from operating activities determined in accordance
with IFRS as an indicator of NFI's performance. Historical
reconciliations of net earnings to Adjusted EBITDA has been
provided in the Company's disclosure documents available on SEDAR
at www.sedar.com. NFI's method of calculating Adjusted EBITDA and
ROIC may differ materially from the methods used by other issuers
and, accordingly, may not be comparable to similarly titled
measures used by other issuers.
Forward-Looking Statements
Certain statements in this press release are "forward-looking
statements", which reflect the expectations of management regarding
the Company's future growth, financial performance and results of
operations and the Company's strategic initiatives, plans, business
prospects and opportunities, including the duration, impact of and
recovery from the COVID-19 pandemic. The words "believes", "views",
"anticipates", "plans", "expects", "intends", "projects",
"forecasts", "estimates", "guidance" and "targets", "may", "will"
and similar expressions are intended to identify forward looking
statements. These forward-looking statements reflect management's
current expectations regarding future events (including the
recovery of the Company's markets and the expected benefits to be
obtained through its "NFI Forward" initiative) and the Company's
financial and operating performance and speak only as of the date
of this press release. Forward-looking statements involve
significant risks and uncertainties, should not be read as
guarantees of future events, performance or results, and will not
necessarily be accurate indications of whether or not or the times
at or by which such performance or results will be achieved.
A number of factors that may cause actual results to differ
materially from the results discussed in the forward-looking
statements include: the Company may not be able to achieve its
targets for sales growth, funding may not continue to be available
to the Company's customers at current levels or at all; the
Company's business is affected by economic factors and adverse
developments in economic conditions could have an adverse effect on
the for the Company's products and the results of its operations;
currency fluctuations could adversely affect the Company's
financial results or competitive position; interest rates could
change substantially, materially impacting the Company's revenue
and profitability; an active, liquid trading market for the
Company's common shares (the "Shares") may cease to exist, which
may limit the ability of shareholders to trade Shares; the market
price for the Shares may be volatile; if securities or industry
analysts do not publish research or reports about the Company and
its business, if they adversely change their recommendations
regarding the Shares or if the Company's results of operations do
not meet their expectations, the Share price and trading volume
could decline; in addition, if securities or industry analysts
publish inaccurate or unfavorable research about the Company or its
business, the Share price and trading volume of the Shares could
decline; competition in the industry and entrance of new
competitors; current requirements under "Buy America" regulations
may change and/or become more onerous or suppliers' "Buy America"
content may change; failure of the Company to comply with the U.S.
Disadvantaged Business Enterprise ("DBE") program requirements or
the failure to have its DBE goals approved by the U.S. Federal
Transit Administration; absence of fixed term customer contracts,
exercise of options and customer suspension or termination for
convenience; local content bidding preferences in the United States may create a competitive
disadvantage; uncertainty resulting from the exit of the UK from
the European Union; requirements under Canadian content policies
may change and/or become more onerous; operational risk resulting
from inadequate or failed internal processes, people and/or systems
or from external events, including fiduciary breaches, regulatory
compliance failures, legal disputes, business disruption,
pandemics, floods, technology failures, processing errors, business
integration, damage to physical assets, employee safety and
insurance coverage; international operations subject the Company to
additional risks and costs and may cause profitability to decline;
dependence on limited sources or unique sources of supply;
dependence on supply of engines that comply with emission
regulations; a disruption, termination or alteration of the supply
of vehicle chassis or other critical components from third-party
suppliers could materially adversely affect the sales of certain of
the Company's products; the Company's profitability can be
adversely affected by increases in raw material and component
costs; the Company may incur material losses and costs as a result
of product warranty costs, recalls and remediation of transit buses
and motor coaches; production delays may result in liquidated
damages under the Company's contracts with its customers;
catastrophic events may lead to production curtailments or
shutdowns; the Company may not be able to successfully renegotiate
collective bargaining agreements when they expire and may be
adversely affected by labour disruptions and shortages of labour;
the Company's operations are subject to risks and hazards that may
result in monetary losses and liabilities not covered by insurance
or which exceed its insurance coverage; the Company may be
adversely affected by rising insurance costs; the Company may not
be able to maintain performance bonds or letters of credit required
by its contracts or obtain performance bonds and letters of credit
required for new contracts; the Company is subject to litigation in
the ordinary course of business and may incur material losses and
costs as a result of product liability claims; the Company may have
difficulty selling pre-owned coaches and realizing expected resale
values; the Company may incur costs in connection with regulations
relating to axle weight restrictions and vehicle lengths; the
Company may be subject to claims and liabilities under
environmental, health and safety laws; dependence on management
information systems and cyber security risks; the Company's ability
to execute its strategy and conduct operations is dependent upon
its ability to attract, train and retain qualified personnel,
including its ability to retain and attract executives, senior
management and key employees; the Company may be exposed to
liabilities under applicable anti-corruption laws and any
determination that it violated these laws could have a material
adverse effect on its business; the Company's risk management
policies and procedures may not be fully effective in achieving
their intended purposes; internal controls over financial
reporting, no matter how well designed, have inherent limitations;
there are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and
procedures; ability to successfully execute strategic plans and
maintain profitability; development of competitive or disruptive
products, services or technology; development and testing of new
products or model variants; acquisition risk; reliance on
third-party manufacturers; third-party distribution/dealer
agreements; availability to the Company of future financing; the
Company may not be able to generate the necessary amount of cash to
service its existing debt, which may require the Company to
refinance its debt; the restrictive covenants in the credit
facilities could impact the Company's business and affect its
ability to pursue its business strategies; payment of dividends is
not guaranteed; a significant amount of
the Company's cash is distributed, which may restrict potential
growth; the Company is dependent on its subsidiaries for all cash
available for distributions; future sales or the possibility of
future sales of a substantial number of Shares may impact the price
of the Shares and could
result in dilution; if the Company is required to write down
goodwill or other intangible assets, its financial condition and
operating results would be negatively affected; income tax risk due
to the Company's operations being complex and income tax
interpretations, regulations and legislation that pertain to its
activities are subject to continual change; investment eligibility
and Canadian federal income tax risks; certain U.S. tax rules may
limit the ability of NF Holdings and its U.S. subsidiaries (the "NF
Group") to deduct interest expense for U.S. federal income tax
purposes and may increase the NF Group's tax liability and certain
financing transactions could be characterized as "hybrid
transactions" for U.S. tax purposes, which could increase the NF
Group's tax liability.
Factors relating to the global COVID-19 pandemic include: the
magnitude and duration of the global, national and regional
economic and social disruption being caused as a result of the
pandemic; the impact of national, regional and local governmental
laws, regulations and "shelter in place" or similar orders relating
to the pandemic which may materially adversely impact the Company's
ability to continue operations; partial or complete closures of
one, more or all of the Company's facilities and work locations or
the reduction of production rates (including due to government
mandates and to protect the health and safety of the Company's
employees or as a result of employees being unable to come to work
due to COVID-19 infections with respect to them or their family
members); production rates may be further decreased as a result of
the pandemic; supply delays and shortages of parts and components
and disruption to labour supply as a result of the pandemic; the
pandemic will likely adversely affect operations of customers and
reduce and delay, for an unknown period, customers' purchases of
the Company's products; the anticipated recovery of the Company's
markets in the future may be delayed or increase in demand may be
lower than expected as a result of the continuing effects of the
pandemic; the Company's ability to obtain access to additional
capital if required; and the Company's financial performance and
condition, obligations, cash flow and liquidity and its ability to
maintain compliance with the covenants under its credit
facilities, which may also negatively impact the ability of the
Company to pay dividends. There can be no assurance that the
Company will be able to maintain sufficient liquidity for an
extended period, obtain future satisfactory covenant relief under
its credit facilities, if required, or access to additional capital
or access to government financial support or as to when production
operations will return to previous production rates. There is also
no assurance that governments will provide continued or adequate
stimulus funding during or after the pandemic for public transit
agencies to purchase transit vehicles or that public or private
demand for the Company's vehicles will return to pre-pandemic
levels in the anticipated period of time. The Company cautions that
due to the dynamic, fluid and highly unpredictable nature of the
pandemic and its impact on global and local economies, businesses
and individuals, it is impossible to predict the severity of the
impact on the Company's business, operating performance, financial
condition and ability to generate sufficient cash flow and maintain
adequate liquidity and any material adverse effects could very well
be rapid, unexpected and may continue for an extended and unknown
period of time.
Factors relating to the Company's "NFI Forward" initiative
include: the Company's ability to successfully execute the
initiative and to generate the planned savings in the expected time
frame or at all; management may have overestimated the amount of
savings and production efficiencies that can be generated or may
have underestimated the amount of costs to be expended; the
implementation of the initiative may take longer than planned to
achieve the expected savings; further restructuring and
cost-cutting may be required in order to achieve the objectives of
the initiative; the estimated amount of savings generated under the
initiative may not be sufficient to achieve the planned benefits;
combining business units and/or reducing the number of production
or parts facilities may not achieve the efficiencies anticipated;
and the impact of the continuing global COVID-19 pandemic. There
can be no assurance that the Company will be able to achieve the
anticipated financial and operational benefits, cost savings or
other benefits of the initiative.
The Company cautions that the foregoing factors are not
exhaustive of all potential risks. These factors and other risks
and uncertainties are discussed in the Company's press releases,
Annual Information Form and materials filed with the Canadian
securities regulatory authorities which are available on SEDAR at
www.sedar.com. Due to the potential impact of these and other
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.
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SOURCE NFI Group Inc.