(TSX:NFI, OTC: NFYEF) NFI Group Inc. ("NFI" or the
"Company"), a leader in zero-emission electric mobility solutions,
today announced its unaudited interim condensed consolidated
financial results for 2021 Q1.
Key financial metrics of the quarter are
highlighted below:
|
(in millions except deliveries
and per Share amounts) |
2021 Q1 |
Change(1) |
2021 Q1 LTM |
Change(1) |
|
|
|
|
|
|
|
Deliveries (EUs) |
|
955 |
|
|
(324 |
) |
|
4,047 |
|
|
(1,644 |
) |
|
|
|
|
|
|
|
IFRS Measures |
|
|
|
|
|
Revenue |
$574.1 |
|
$(136.3 |
) |
$2,282.9 |
|
$(753.9 |
) |
|
Net earnings (loss) |
|
7.0 |
|
|
74.2 |
|
|
(83.5 |
) |
|
(57.8 |
) |
|
Net earnings (loss) per
Share |
|
0.11 |
|
|
1.19 |
|
|
(1.32 |
) |
|
(0.91 |
) |
|
|
|
|
|
|
|
Non-IFRS Measures(2) |
|
|
|
|
|
Adjusted EBITDA |
$54.8 |
|
$(1.3 |
) |
$156.5 |
|
$(161.4 |
) |
|
Adjusted Net Earnings
(Loss) |
|
6.1 |
|
|
6.6 |
|
|
(40.6 |
) |
|
(119.6 |
) |
|
Adjusted Net Earnings (Loss)
per Share |
|
0.09 |
|
|
0.10 |
|
|
(0.64 |
) |
|
(1.79 |
) |
|
Free Cash Flow |
|
15.5 |
|
|
1.3 |
|
|
28.8 |
|
|
(113.4 |
) |
|
Liquidity |
$319.0 |
|
|
172.4 |
|
$319.0 |
|
|
172.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Results noted herein are for the 13-week period ("2021 Q1”) and the
52-week period ("LTM 2021 Q1”) ended March 28, 2021. The
comparisons reported in this press release compare 2021 Q1 to the
13-week period ("2020 Q1") and LTM 2021 Q1 to the 52-week period
("LTM 2020 Q1") ended March 29, 2020. Comparisons and comments are
also made to the 13-week period (“2020 Q4”) ended December 27,
2020, and to the 13-week period ended June 28, 2020 ("2020 Q2").
Readers are advised to review the unaudited interim condensed
consolidated financial statements (including notes) (the “Financial
Statements”) and the related Management's Discussion and Analysis
(the "MD&A") that are available at the Company's website at:
https://www.nfigroup.com/investor-relations/performance-reports/
and under the Company's profile on www.sedar.com. |
|
|
(2) |
Adjusted EBITDA, Adjusted Net Earnings (Loss), Adjusted Net
Earnings (Loss) per Share and Free Cash Flow are not recognized
earnings measures and do not have standardized meanings prescribed
by IFRS. Therefore, they may not be comparable to similar measures
presented by other issuers. See “Non-IFRS Measures” and detailed
reconciliations of IFRS Measures to Non-IFRS Measures in the
Appendix of this press release. |
"NFI reached several major milestones in the
first quarter of 2021, including the completion of over 40 million
zero-emission service miles, and the installation of more than 200
EV chargers. In addition, we launched several new electric and fuel
cell-electric vehicle models, plus our first ever Level 4 automated
transit bus. We delivered a solid financial quarter and began to
see the benefits of market recovery with active procurements in
North America up 14% since the end of 2020 and strong backlog
growth in the UK and Europe. Our longer-term outlook continues to
strengthen with multi-billion transportation funding programs
having been announced by governments in Canada, the U.S. and the
UK," said Paul Soubry, President and Chief Executive Officer,
NFI.
"Our full-service mobility solutions offering
includes zero-emission vehicles, charging infrastructure,
telematics, and parts and service aftermarket support, which, when
combined with our strengths in innovation and the ability to
integrate complex technology, position us to lead the evolution to
zero-emission fleets, or ZEvolution. NFI has the
strongest customer relationships, a track record of delivery,
propulsion agnostic production facilities and the industry's
broadest offering of zero-emission vehicles, including the
battery-electric MCI J4500 CHARGE motor coach that we launched just
two days ago," Soubry added.
Segment Results
Manufacturing segment revenue
for 2021 Q1 decreased by $135.9 million, or 22.8%, compared to 2020
Q1. The decrease was primarily driven by lower new vehicle
deliveries, resulting from the lower production rates set in 2020
Q2 in response to the COVID-19 pandemic. The pandemic caused public
customer order deferrals and private customer order delays or
cancellations in 2020 that impacted 2021 Q1 production and
deliveries.
2021 Q1 Manufacturing Adjusted EBITDA increased
by $0.4 million, or 1.1%, compared to 2020 Q1, even with the impact
of lower production volumes. The quarter was positively impacted by
savings achieved under NFI Forward, including reductions in direct
materials, overhead and administrative expenses of $10.9 million,
the receipt of government grants of $21.8 million from the Canadian
Emergency Wage Subsidy ("CEWS") and UK furlough program ("CJRS"),
and continued profitable performance at the KMG part fabrication
facility.
During 2021 Q1, NFI delivered 94
battery-electric and fuel cell-electric vehicles, representing 9.8%
of total deliveries, to customers in the U.S., Canada, the UK and
New Zealand. In addition, NFI recently announced that its
battery-electric and fuel cell-electric vehicles have collectively
travelled more than 40 million zero-emission miles, and that its
Infrastructure SolutionsTM business had reached a milestone of over
200 chargers installed.
Aftermarket segment revenue for
2021 Q1 recovered to pre-pandemic levels, as quarterly revenue of
$114.9 million was relatively consistent with 2020 Q1. Lower
volumes in private and public North American markets were offset by
higher volumes in the Asia Pacific region and by the strong
performance of the Company's Clean and ProtectTM product-line. 2021
Q1 Aftermarket Adjusted EBITDA increased by $1.6 million, or 7.7%,
mostly from the recovery of sales levels, combined with NFI Forward
cost savings.
Net Earnings and Adjusted Net
Earnings
2021 Q1 net earnings of $7.0 million was
positively impacted by savings of $11.6 million generated from the
NFI Forward initiative and the receipt of CEWS and CJRS government
grants of $21.8 million, plus an unrealized mark-to-market gain on
the Company's interest rate swap. These positive impacts were
somewhat offset by one-time non-recurring restructuring charges
associated with the NFI Forward initiative and COVID-19 operating
costs. 2021 Q1 net earnings increased by $74.2 million from the
same period in 2020, mainly due to a goodwill impairment charge of
$50.8 million relating to MCI's private coach operations in 2020 Q1
and a $15.5 million mark-to-market loss (compared to a $3.5 million
gain in 2021 Q1) on the Company's interest rate swap.
2021 Q1 Adjusted Net Earnings of $6.1 million,
or $0.09 per share, improved by $6.6 million from 2020 Q1,
primarily driven by the same factors that impacted net earnings,
normalized for the impact of one-time non-recurring charges,
including $1.2 million in restructuring costs related to the NFI
Forward initiative and COVID-19 operating costs.
Liquidity
The Company's liquidity position, which combines
cash on-hand plus available capacity under its credit facilities as
at March 28, 2021, was $319.0 million, up $172.4 million from 2020
Q1. On March 1, 2021, NFI announced it had completed a bought-deal
equity offering ("Offering") with a syndicate of underwriters
pursuant to which NFI issued 8,446,000 common shares at a price of
C$29.60 per share for gross proceeds to the Company of C$250
million. The Company immediately used the proceeds of the Offering
to reduce outstanding balances under its credit facilities.
NFI believes that its existing liquidity,
together with cash flows from operations, will allow it to pursue
its operational and strategic goals, such as investments in NFI’s
zero-emission products and electric propulsion technology,
investments required under the previously disclosed NFI Forward
cost-reduction initiative and other potential growth opportunities,
in addition to continuing to return capital to shareholders through
dividends. Continuing the quarterly dividend payment reflects the
confidence of the Board of Directors in the Company’s business
while maintaining the financial flexibility required to operate
during this period of continued uncertainty due to the COVID-19
pandemic.
Outlook
Management continues to expect that NFI’s end
markets will continue to be impacted by COVID-19 in 2021; however,
the Company expects improvement in its financial results as markets
recover and the NFI Forward initiative delivers improvements to
operating metrics. Recent multi-billion funding announcements by
governments in NFI's core markets is encouraging for market
recovery and NFI's longer-term outlook.
Management believes recent progress in COVID-19
vaccine distribution and resulting economic responses are positive
for continued market recovery. NFI's end markets' recovery from
COVID-19 will be dependent upon several factors, including
government support, COVID-19 case rates, vaccine distribution, the
length of the pandemic, mutations of the virus, travel
restrictions, and economic reopening activity. These factors will
differ by product line and geography. In addition, the pandemic has
created global supply chain challenges, including supplier factory
shutdowns, shipping and freight delays and a shortage of
semiconductor chips, all of which could have an adverse impact on
NFI’s remaining 2021 production schedule and parts sales.
At its 2021 Investor Day, NFI unveiled its
vision to drive the increased adoption of ZEBs, what the Company is
calling the ZEvolutionTM. NFI projects a growing
adoption of zero-emission vehicles over the next 10 to 15 years as
operators in North America, the UK, Europe and Asia Pacific markets
transition their fleets to zero-emission vehicles. NFI has the
broadest offering of ZEBs, including battery-electric buses and
coaches, hydrogen fuel cell-electric buses and electric trolleys,
and the largest ZEB production capacity in North America and the
UK. Management anticipates that, based on the Company’s leadership
position in core markets, broad product offering, historic
experience and deep customer relationships, NFI is well positioned
to capitalize on the long-term transition to ZEBs in both core and
new markets. Based on the factors noted above and management's
previously disclosed financial guidance, the Company continues to
expect that 20% to 25% of NFI's 2021 production will be
battery-electric and hydrogen fuel-cell buses, growing to 35% to
40% of production by 2025.
NFI continues to forge ahead with its
transformative cost reduction initiative, "NFI Forward," launched
in July 2020, which is expected to drive approximately $67.0
million in annual Adjusted EBITDA savings by the end of 2023 from
2019 levels, plus an additional $10.0 million in annualized Free
Cash Flow generation. In 2021 Q1, NFI Forward realized Adjusted
EBITDA savings of $11.6 million, and a further $0.8 million of Free
Cash Flow savings. Since inception, NFI Forward has achieved $28.6
million in cumulative Adjusted EBITDA savings plus $1.8 million in
additional Free Cash Flow generation. These savings appear in NFI’s
gross margins and Adjusted EBITDA, as a reduction to direct
material costs, manufacturing overhead, and SG&A. See
"Forward-Looking Statements" below.
Financial Outlook
Management reaffirms its previously provided
2021 financial guidance for revenue of $2.8 billion to $2.9 billion
and Adjusted EBITDA of $220 million to $240 million. This range
could represent growth in Adjusted EBITDA of over 50% on a
year-over-year basis when compared to Fiscal 2020 results. The
Company has provided an update on its tax guidance, which is
detailed in the Company's MD&A and associated earnings
presentation (both documents can be found at
https://www.nfigroup.com/investor-relations/performance-reports/).
Management cautions readers that the
consolidated annual results have an element of seasonality due to
the nature of each unique market segment and the varied annual
production and vacation schedule of each production facility. With
the addition of ADL in 2019, this has become even more pronounced
with the third and fourth quarters now being periods with higher
delivery volumes. However, as a result of the ongoing COVID-19
pandemic, management anticipates changes to seasonality in 2021.
Management expects the following revenue and Adjusted EBITDA
seasonality on a year-over-year basis as compared to the same
period in 2020: 2021 Q2 to be significantly higher, 2021 Q3 to be
flat to slightly down, and 2021 Q4 to be higher. Management also
reminds readers that, for 2021, NFI's first quarter, second and
third quarters are 13-week periods, while the fourth quarter is a
14-week period for a 53-week fiscal year.
"Although the COVID-19 pandemic continues to
impact our customers and NFI's operations, we are encouraged by the
ongoing deployment of vaccines and a gradual resumption in travel
and transit ridership," said Soubry. "Acknowledging the critical
role public transit and coach operations play in driving economic
activity, lowering emissions and connecting communities,
governments in all of our core markets have made unprecedented
financial commitments to 'Build Back Better' and drive the adoption
of zero-emission vehicles. We look forward to supporting this
vision by delivering the best vehicles and solutions to our
customers and the end users of all our products."
Corporate Social
Responsibility
As one of the world’s leading independent global
bus and coach manufacturers, a robust environmental, social and
governance (“ESG”) strategy is integral to how the Company conducts
business, and is crucial in the creation of long-term and
sustainable value for all NFI stakeholders. We are committed to
continuing to innovate in order to deliver smarter, safer, more
sustainable, and more connected public transportation. NFI’s
end products are a key driver to enable cities to lower emissions,
decrease congestion and enable economic opportunity. NFI is
committed to employees, customers and shareholders, while also
being responsible to the environment and the communities in which
we live and work.
NFI's 2019 Environmental Social Governance
Report can be accessed on NFI’s website at www.nfigroup.com. NFI's
2020 Environmental Social Governance Report will be released in May
2021.
First Quarter 2021 Results Conference
Call
A conference call for analysts and interested
listeners will be held on May 6, 2021 at 8:00 a.m. Eastern Time
(ET). The call-in number for listeners is 800-773-2954 or
847-413-3731, passcode number 50146101. An accompanying results
presentation will be available prior to the call at:
https://www.nfigroup.com/investor-relations/events-presentations/
A live webcast of the call and presentation will also be
available at: https://edge.media-server.com/mmc/p/v9x4xgp6
A replay of the call will be accessible from 11:00 a.m. ET on
May 6, 2021 until 11:59 p.m. ET on May 5, 2022 at
https://edge.media-server.com/mmc/p/v9x4xgp6. The replay will also
be available on NFI's web site at:
https://www.nfigroup.com/investor-relations/events-presentations/
Annual General Meeting of Shareholders
NFI's Annual General Meeting of Shareholders
will also be held on Thursday, May 6, 2021 at 1:00 p.m. (EST). Due
to the restrictions imposed in connection with the COVID-19
pandemic and in consideration of the health and safety of our
shareholders, team members and the broader community, the meeting
will be held in a virtual meeting format only. Details on how to
join the meeting have been posted on NFI's website at:
https://www.nfigroup.com/investor-relations/annual-general-meeting/.
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 in ten countries 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 PartsTM. 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 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.alexander-dennis.com, www.nfi.parts, and
www.carfaircomposites.com.
For investor inquiries, please contact:Stephen KingP:
204.224.6382Stephen.King@nfigroup.com
Appendix - Reconciliation Tables
Reconciliation of Net Earnings (Loss) to Adjusted
EBITDA
Management believes that Adjusted EBITDA is an
important measure in evaluating the historical operating
performance of the Company. However, Adjusted EBITDA is not a
recognized earnings measure under International Financial Reporting
Standards ("IFRS") and does not have a standardized meaning
prescribed by IFRS. Accordingly, Adjusted EBITDA may not be
comparable to similar measures presented by other issuers. Readers
of this press release are cautioned that Adjusted EBITDA should not
be construed as an alternative to net earnings or loss determined
in accordance with IFRS as indicators of the Company's performance.
See Non-IFRS measures for the definition of Adjusted EBITDA. The
following table reconciles net earnings (loss) to Adjusted EBITDA
based on the historical Financial Statements of the Company for the
periods indicated.
|
(U.S. dollars in thousands) |
2021 Q1 |
|
|
2020 Q1 |
|
|
52-Weeks EndedMarch 28, 2021 |
|
|
52-Weeks EndedMarch 29, 2020 |
|
|
Net earnings (loss) |
$ |
7,033 |
|
|
$ |
(67,239 |
) |
|
$ |
(83,464 |
) |
|
$ |
(25,688 |
) |
|
Addback(1) |
|
|
|
|
|
|
Income taxes |
7,586 |
|
|
4,578 |
|
|
4,652 |
|
|
38,920 |
|
|
Interest expense(12) |
10,123 |
|
|
37,135 |
|
|
56,857 |
|
|
92,432 |
|
|
Amortization |
24,564 |
|
|
30,140 |
|
|
105,208 |
|
|
115,728 |
|
|
(Gain) loss on disposition of property, plant and equipment |
(355 |
) |
|
163 |
|
|
(574 |
) |
|
137 |
|
|
Fair value adjustment for total return swap(5) |
(438 |
) |
|
1,970 |
|
|
(2,290 |
) |
|
2,875 |
|
|
Unrealized foreign exchange loss (gain) on non-current monetary
items and forward foreign exchange contracts |
2,529 |
|
|
(43 |
) |
|
(6,478 |
) |
|
952 |
|
|
Costs associated with assessing strategic and corporate
initiatives(2) |
— |
|
|
— |
|
|
1,396 |
|
|
13,064 |
|
|
Past service costs and other pension costs (recovery)(7) |
— |
|
|
(463 |
) |
|
55 |
|
|
(2,064 |
) |
|
Fair value adjustment to acquired subsidiary company's inventory
and deferred revenue(4) |
— |
|
|
— |
|
|
— |
|
|
31,004 |
|
|
Proportion of the total return swap realized(6) |
447 |
|
|
(940 |
) |
|
862 |
|
|
(1,513 |
) |
|
Equity settled stock-based compensation |
650 |
|
|
14 |
|
|
2,406 |
|
|
1,161 |
|
|
Recovery on currency transactions(8) |
— |
|
|
— |
|
|
— |
|
|
(4,287 |
) |
|
Prior year sales tax provision(9) |
40 |
|
|
(56 |
) |
|
280 |
|
|
4,038 |
|
|
Extraordinary COVID-19 costs(10) |
289 |
|
|
— |
|
|
47,651 |
|
|
— |
|
|
Impairment loss on goodwill(11) |
— |
|
|
50,790 |
|
|
— |
|
|
50,790 |
|
|
Non-recurring restructuring costs (3) |
2,372 |
|
|
22 |
|
|
29,891 |
|
|
387 |
|
|
Adjusted EBITDA(1) |
$ |
54,840 |
|
|
$ |
56,071 |
|
|
$ |
156,452 |
|
|
$ |
317,936 |
|
|
Adjusted EBITDA is comprised
of: |
|
|
|
|
|
|
Manufacturing |
$ |
35,870 |
|
|
$ |
35,442 |
|
|
$ |
102,392 |
|
|
$ |
244,527 |
|
|
Aftermarket |
22,481 |
|
|
20,937 |
|
|
68,292 |
|
|
77,597 |
|
|
Corporate |
(3,511 |
) |
|
(308 |
) |
|
(14,232 |
) |
|
(4,188 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Adjusted EBITDA is not a recognized earnings measure and does not
have standardized meaning prescribed by IFRS. Therefore, Adjusted
EBITDA may not be comparable to similar measures presented by other
issuers. See “Definitions of Adjusted EBITDA, ROIC, Free Cash Flow,
Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss) per
Share” in Appendix A. Management believes that Adjusted EBITDA is a
useful supplemental measure in evaluating performance of the
Company. |
|
|
(2) |
Normalized to exclude non-recurring expenses and recoveries related
to the costs of assessing strategic and corporate initiatives. |
|
|
(3) |
Normalized to exclude non-recurring restructuring costs. The 2021
Q1 costs primarily relate to severance costs and asset impairments
associated with the NFI Forward restructuring initiative. The 2021
Q1 LTM costs are also related to NFI Forward and include severance
costs of $22.2 million, right-of-use asset impairments of $3.6
million, inventory impairments of $1.8 million, property, plant and
equipment impairments of $1.7 million and other miscellaneous costs
of $0.6 million. Free Cash Flow reconciling item is net of
right-of-use asset and property, plant and equipment
impairments. |
|
|
(4) |
The revaluation of ADL's inventory included an adjustment of $31.0
million in Fiscal 2019. These revaluation adjustments relate to
purchase accounting as a result of the related acquisition. |
|
|
(5) |
The fair value adjustment of the total return swap is a non-cash
(gain) loss that is excluded from the definition of Adjusted
EBITDA. |
|
|
(6) |
A portion of the fair value adjustment of the total return swap is
added to Adjusted EBITDA and Free Cash Flow to match the equivalent
portion of the related deferred compensation expense
recognized. |
|
|
(7) |
Costs and recoveries associated with amendments to, and closures
of, the Company's pension plans. |
|
|
(8) |
Recovery of prior period banking fees related to foreign exchange
transactions. |
|
|
(9) |
Provision for sales taxes as a result of an ongoing state sales tax
review. |
|
|
(10) |
Normalized to exclude non-recurring COVID-19 related costs.
COVID-19 costs in 2021 Q1 primarily relate to the purchase of
personal protective equipment and plant sanitation activities. The
2021 Q1 LTM costs include asset impairments of $43.6 million and
operating expenses of $4.1 million. The asset impairments were
primarily attributable to pre-owned coach inventory. Management
will continue to assess the costs for COVID-19 and will make an
assessment of whether they are deemed in fact to be one time and
non-recurring. As more information becomes available,
management may change its assessment. |
|
|
(11) |
Impairment charge with respect to MCI's goodwill. |
|
|
(12) |
Includes fair market value adjustments to interest rate swaps. 2021
Q1 includes a gain of $7.7 million and 2020 Q1 includes a loss of
$22.5 million. |
Reconciliation of Net Earnings (Loss) to Adjusted
Net Earnings (Loss)
Adjusted Net Earnings and Adjusted Earnings per
Share are not recognized measures under IFRS and do not have a
standardized meaning prescribed by IFRS. Accordingly, Adjusted Net
Earnings and Adjusted Earnings per Share may not be comparable to
similar measures presented by other issuers. Readers of this press
release are cautioned that Adjusted Net Earnings and Adjusted
Earnings per Share should not be construed as an alternative to net
earnings, or net earnings per Share, determined in accordance with
IFRS as indicators of the Company's performance. See Non-IFRS
Measures for the definition of Adjusted Net Earnings and Adjusted
Earnings per Share. The following tables reconcile net earnings to
Adjusted Net Earnings based on the historical Financial Statements
of the Company for the periods indicated.
|
(U.S. dollars in thousands, except per Share figures) |
2021 Q1 |
|
|
2020 Q1 |
|
|
|
52-Weeks EndedMarch 28, 2021 |
|
|
52-Weeks EndedMarch 29, 2020 |
|
|
Net earnings (loss) |
7,033 |
|
|
(67,239 |
) |
|
|
(83,464 |
) |
|
(25,690 |
) |
|
|
|
|
|
|
|
|
Adjustments, net of tax (1)
(8) |
|
|
|
|
|
|
Fair value adjustments of total return swap(5) |
(199 |
) |
|
1,359 |
|
|
|
(1,477 |
) |
|
1,878 |
|
|
Unrealized foreign exchange (gain) loss |
1,151 |
|
|
(30 |
) |
|
|
(5,064 |
) |
|
640 |
|
|
Unrealized (gain) loss on interest rate swap |
(3,491 |
) |
|
15,510 |
|
|
|
(6,802 |
) |
|
21,816 |
|
|
Impairment loss on goodwill(11) |
— |
|
|
50,790 |
|
|
|
— |
|
|
50,790 |
|
|
Portion of the total return swap realized(6) |
203 |
|
|
(649 |
) |
|
|
490 |
|
|
(975 |
) |
|
Costs associated with assessing strategic and corporate
initiatives(2) |
— |
|
|
— |
|
|
|
1,396 |
|
|
13,066 |
|
|
Fair value adjustment to acquired subsidiary company's inventory
and deferred revenue(4) |
— |
|
|
— |
|
|
|
— |
|
|
17,943 |
|
|
Equity settled stock-based compensation |
296 |
|
|
10 |
|
|
|
1,507 |
|
|
632 |
|
|
(Gain) loss on disposition of property, plant and equipment |
(162 |
) |
|
112 |
|
|
|
(313 |
) |
|
99 |
|
|
Past service costs and other pension costs (recovery)(7) |
— |
|
|
(319 |
) |
|
|
37 |
|
|
(1,246 |
) |
|
Recovery on currency transactions(9) |
— |
|
|
— |
|
|
|
— |
|
|
(2,481 |
) |
|
Prior year sales tax provision (10) |
18 |
|
|
(39 |
) |
|
|
184 |
|
|
2,330 |
|
|
COVID-19 costs (12) |
131 |
|
|
— |
|
|
|
32,811 |
|
|
— |
|
|
Non-recurring restructuring costs (3) |
1,079 |
|
|
15 |
|
|
|
20,067 |
|
|
226 |
|
|
Adjusted Net Earnings
(Loss) |
$ |
6,059 |
|
|
(480 |
) |
|
|
$ |
(40,628 |
) |
|
79,028 |
|
|
|
|
|
|
|
|
|
Earnings (Loss) per Share (basic) |
$ |
0.11 |
|
|
$ |
(1.08 |
) |
|
|
$ |
(1.32 |
) |
|
$ |
(0.41 |
) |
|
Earnings (Loss) per Share
(fully diluted) |
$ |
0.11 |
|
|
$ |
(1.08 |
) |
|
|
$ |
(1.32 |
) |
|
$ |
(0.41 |
) |
|
|
|
|
|
|
|
|
Adjusted Earnings (Loss) per
Share (basic) |
$ |
0.09 |
|
|
$ |
(0.01 |
) |
|
|
$ |
(0.64 |
) |
|
$ |
1.15 |
|
|
Adjusted Earnings (Loss) per
Share (fully diluted) |
$ |
0.09 |
|
|
$ |
(0.01 |
) |
|
|
$ |
(0.64 |
) |
|
$ |
1.14 |
|
|
|
|
|
|
|
|
1. |
Addback items are derived from the historical Financial Statements
of the Company. |
|
|
2. |
Normalized to exclude non-recurring expenses related to the costs
of assessing strategic and corporate initiatives. |
|
|
3. |
Normalized to exclude non-recurring restructuring costs. The 2021
Q1 costs primarily relate to severance costs and asset impairments
associated with the NFI Forward restructuring initiative. |
|
|
4. |
The revaluation of ADL's inventory included an adjustment of $31.0
million in Fiscal 2019. The after-tax value of the adjustment was
$17.9 million. These revaluation adjustments relate to purchase
accounting as a result of the related acquisition. |
|
|
5. |
The fair value adjustment of the total return swap is a non-cash
(gain) loss that is excluded from the definition of Adjusted Net
Earnings (Loss). |
|
|
6. |
A portion of the fair value adjustment of the total return swap is
excluded from Adjusted Net Earnings (Loss) to match the equivalent
portion of the related deferred compensation expense
recognized. |
|
|
7. |
Costs and recoveries associated with amendments to, and closures
of, the Company's pension plans. |
|
|
8. |
For 2021 Q1, the Company has utilized a rate of 54.5% to tax effect
the adjustments. A rate of 31.0% has been used to tax effect the
adjustments for all other periods. |
|
|
9. |
Recovery of prior period banking fees related to foreign exchange
transactions. |
|
|
10. |
Provision for sales taxes as a result of an ongoing state tax
review. |
|
|
11. |
Impairment charge with respect to MCI's goodwill. |
|
|
12. |
Normalized to exclude non-recurring COVID-19 related costs.
COVID-19 costs in 2021 Q1 primarily relate to the purchase of
personal protective equipment and plant sanitation activities.
Management will continue to assess the costs for COVID-19 and will
make an assessment of whether they are deemed in fact to be one
time and non-recurring. As more information becomes
available, management may change its assessment. |
Appendix - 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. These adjustments include
gains or losses on disposal of property, plant and equipment, fair
value adjustment for total return swap, unrealized foreign exchange
losses or gains on non-current monetary items and forward foreign
exchange contracts, costs associated with assessing strategic and
corporate initiatives, past service costs and other pension costs
or recovery, non-recurring costs or recoveries related to business
acquisition, fair value adjustment to acquired subsidiary company's
inventory and deferred revenue, proportion of the total return swap
realized, equity settled stock-based compensation, recovery of
currency transactions, prior year sales tax provision, COVID-19
costs and impairment loss on goodwill and non-recurring
restructuring costs.
“Free Cash Flow” means net cash generated by or
used in operating activities adjusted for changes in non-cash
working capital items, interest paid, interest expense, income
taxes paid, current income tax expense, principal portion of
finance lease payments, cash capital expenditures, proceeds from
disposition of property, plant and equipment, costs associated with
assessing strategic and corporate initiatives, fair value
adjustment to acquired subsidiary company's inventory and deferred
revenue, defined benefit funding, defined benefit expense, past
service costs and other pension costs or recovery, proportion of
total return swap, recovery on currency transactions, prior year
sales tax provision, non-recurring restructuring costs, COVID-19
costs, foreign exchange gain or loss on cash held in foreign
currency.
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).
References to "Adjusted Net Earnings (Loss)" are
to net earnings (loss) after adjusting for the after tax effects of
certain non-recurring and/or non-operational related items that do
not reflect the current ongoing cash operations of the Company
including: fair value adjustments of total return swap, unrealized
foreign exchange loss or gain, unrealized gain or loss on the
interest rate swap, impairment loss on goodwill, portion of the
total return swap realized, costs associated with assessing
strategic and corporate initiatives, fair value adjustment to
acquired subsidiary company's inventory and deferred revenue,
equity settled stock-based compensation, gain or loss on disposal
of property, plant and equipment, past service costs and other
pension costs or recovery, recovery on currency transactions, prior
year sales tax provision, COVID-19 costs and non-recurring
restructuring costs .
References to "Adjusted Earnings (Loss) per
Share" are to Adjusted Net Earnings (Loss) divided by the average
number of Shares outstanding.
Management believes Adjusted EBITDA, ROIC, Free
Cash Flow, Adjusted Net Earnings and Adjusted Earnings per Share
are useful measures in evaluating the performance of the Company.
However, Adjusted EBITDA, ROIC, Free Cash Flow, Adjusted Net
Earnings and Adjusted Earnings per Share are not recognized
earnings measures under IFRS and do not have standardized meanings
prescribed by IFRS. Readers of this press release are cautioned
that ROIC, Adjusted Net Earnings and Adjusted EBITDA 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, and Free Cash Flow should not be
construed as an alternative to cash flows from operating, investing
and financing activities determined in accordance with IFRS as a
measure of liquidity and cash flows. A reconciliation of net
earnings to Adjusted EBITDA, based on the Financial Statements, has
been provided under the headings “Reconciliation of Net Earnings to
Adjusted EBITDA”. A reconciliation of Free Cash Flow to cash flows
from operations is provided under the heading “Summary of Free Cash
Flow”. A reconciliation of net earnings to Adjusted Net Earnings is
provided under the heading “Reconciliation of Net Earnings (Loss)
to Adjusted Net Earnings (Loss)”.
NFI's method of calculating Adjusted EBITDA,
ROIC, Free Cash Flow, Adjusted Net Earnings and Adjusted Earnings
per Share 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 NFI’s public
filings available on SEDAR at www.sedar.com.
References to NFI's geographic regions for the
purpose of reporting global revenues are as follows: "North
America" refers to Canada, United States, and Mexico; United
Kingdom and Europe refer to the United Kingdom and Europe; "Asia
Pacific" or "APAC" refers to Hong Kong, Malaysia, Singapore,
Australia, and New Zealand; and the "Other" category includes any
sales that do not fall into the categories above.
Forward-Looking Statements
This press release contains “forward-looking
information” and “forward-looking statements”, within the meaning
of applicable Canadian securities laws, which reflect the
expectations of management regarding the Company’s future growth,
financial performance and objectives 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”,
“goals”, “objectives” and “targets” and similar expressions of
future or conditional verbs such “may”, “will”, “should”, “could”,
“would” 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. By their very nature, forward-looking statements require
management to make assumptions and involve significant risks and
uncertainties, should not be read as guarantees of future events,
performance or results, and which give rise to the possibility that
management’s predictions, forecasts, projections, expectations or
conclusions will not prove to be accurate, that the assumptions may
not be correct and that the Company’s future growth, financial
performance and objectives and the Company’s strategic initiatives,
plans, business prospects and opportunities, including the
duration, impact of and recovery from the COVID-19 pandemic, will
not occur or 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’s business,
operating results, financial condition and liquidity may be
materially adversely impacted by the ongoing COVID-19 pandemic;
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
which could have an adverse effect on the demand 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 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;
compliance with international trade regulations, tariffs and
duties; dependence on limited sources or unique sources of supply;
a disruption of the supply of components containing microprocessors
and other computer chips could materially adversely affect the
production and sale of the Company’s vehicles and certain other
products; 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 Company’s
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; NFI 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
resulting from 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 New Flyer Holdings, Inc. 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.
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 shipping and freight delays, 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.
Factors relating to the Company’s January 11,
2021 financial guidance (the "Guidance") include, in addition to
the factors set out above, the degree to which actual future events
accord with, or vary from, the expectations of, and assumptions
used by, NFI’s management in preparing the Guidance and the
Company’s ability to successfully execute the “NFI Forward”
initiative and to generate the planned savings in the expected time
frame or at all.
Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that could
cause actions, events or results not to be as anticipated,
estimated or intended or to occur or be achieved at all. Specific
reference is made to “Risk Factors” in the Annual Information Form
for a discussion of the factors that may affect forward-looking
statements and information. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements and information. The forward-looking
statements and information contained herein are made as of the date
of this press release (or as otherwise indicated) and, except as
required by law, the Company does not undertake to update any
forward-looking statement or information, whether written or oral,
that may be made from time to time by the Company or on its behalf.
The Company provides no assurance that forward-looking statements
and information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers and investors should not
place undue reliance on forward-looking statements and
information.
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