(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 Q2.
Key financial metrics of the quarter are
highlighted below:
(in millions except deliveries
and per Share amounts) |
2021 Q2 |
Change(1) |
2021 Q2 LTM |
Change(1) |
|
|
|
|
|
Deliveries (EUs) |
|
989 |
|
82 |
|
% |
|
4,491 |
|
|
(11 |
) |
% |
|
|
|
|
|
IFRS Measures |
|
|
|
|
Revenue |
$583 |
|
75 |
|
% |
$2,532 |
|
|
(6 |
) |
% |
Net earnings (loss) |
|
3 |
|
103 |
|
% |
|
(7 |
) |
|
94 |
|
% |
Net earnings (loss) per
Share |
|
0.04 |
|
103 |
|
% |
|
(0.12 |
) |
|
93 |
|
% |
|
|
|
|
|
Non-IFRS Measures(2) |
|
|
|
|
Adjusted EBITDA |
$52 |
|
315 |
|
% |
$233 |
|
|
9 |
|
% |
Adjusted Net Earnings
(Loss) |
|
9 |
|
115 |
|
% |
|
29 |
|
|
350 |
|
% |
Adjusted Net Earnings (Loss)
per Share |
|
0.12 |
|
113 |
|
% |
|
0.43 |
|
|
339 |
|
% |
Free Cash Flow |
|
15 |
|
136 |
|
% |
|
87 |
|
|
51 |
|
% |
Liquidity |
$389 |
|
(11 |
) |
% |
$389 |
|
|
(11 |
) |
% |
(1) |
Results noted herein are for the 13-week period ("2021 Q2”) and the
52-week period ("LTM 2021 Q2”) ended June 27, 2021. The comparisons
reported in this press release compare 2021 Q2 to the 13-week
period ("2020 Q2") and LTM 2021 Q2 to the 52-week period ("LTM 2020
Q2") ended June 28, 2020. Comparisons and comments are also made to
the 13-week period (“2021 Q1”) ended March 28, 2021. 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 at www.sedar.com. |
|
|
(2) |
Adjusted EBITDA, Adjusted Net Earnings (Loss), Adjusted Net
Earnings (Loss) per Share and Free Cash Flow are not recognized
earnings or cash flow 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 Appendix B of this press release. |
“The second quarter of 2021 saw NFI execute on
several milestones, including continued expansion into
international markets and advancement of the transformational NFI
Forward cost reduction initiative. Despite supply chain challenges
impacting production and parts sales, we delivered a solid quarter
with major improvements in year-over-year financial performance and
a stronger balance sheet. We see encouraging signs of market
recovery with a significant increase in order activity. Our team is
working diligently to deliver our 2021 guidance while managing
through ongoing challenges created by the COVID-19 pandemic,
including global supply chain issues, inflationary pressures, and
timing delays on orders as customers' ridership recovers and they
update their fleet renewal plans,” said Paul Soubry, President and
Chief Executive Officer, NFI.
“NFI's strategy to lead the
ZEvolution to zero-emission electric mobility
continues to be a tremendous success,” Soubry continued. “During
the past seven months, we secured the largest-ever electric bus
orders in both the UK and in Ireland, delivered our 500th electric
bus in the UK, entered the Australian EV market via a strategic
partnership, launched seven new electric vehicles, and were
selected as the supplier of choice for the highest amount of U.S.
Federal Transit Administration Low-No grant awards. NFI is proving
itself as the leader in electric buses and coaches, and we look
forward to continuing this journey of providing cleaner, safer,
more accessible solutions for our customers around the world.”
“Our longer-term outlook is also strengthening,
supported by recent and historic government funding announcements
in all of our key markets, the ongoing rollout of COVID-19
vaccines, and encouraging trends, with some U.S. and UK communities
seeing ridership improvement of more than 80 percent over early
2020 levels. While this will help support topline revenue growth,
the transformational NFI Forward initiative is providing us with a
lower fixed cost base to improve margins and deliver enhanced
returns on invested capital as we grow,” Soubry concluded.
Segment Results
Manufacturing segment revenue
for 2021 Q2 increased by $211 million, or 85%, compared to 2020 Q2.
The increase was primarily driven by improved new vehicle
deliveries, as the Company had idled production for nearly two
months in 2020 Q2. 2021 Q2 Manufacturing Adjusted EBITDA increased
by $54 million, or 166%, compared to 2020 Q2. The increase was
driven by increased new vehicle deliveries, the benefit of cost
reductions associated with NFI Forward, including 2021 Q2 savings
of $12 million for this segment, and receipt of government wage
subsidies to assist in retaining skilled personnel.
Quarterly infrastructure solutions revenue grew
by 279%, on a year-over-year basis. The Company has completed ZEB
charging infrastructure solutions projects in seven different
cities in fiscal 2021 and currently has projects in-progress in a
further 20 different cities.
Aftermarket segment revenue of
$124 million reached a record level in 2021 Q2, with 46%
year-over-year growth. The increase was driven by record volumes in
the Asia Pacific region and volume growth in North America, the UK
and Europe. 2021 Q2 Aftermarket Adjusted EBITDA reached a record
level of $25 million, a $13 million, or 107%, year-over-year
increase, due to increased sales, a favourable product mix and NFI
Forward cost reductions.
Net Earnings and Adjusted Net
Earnings
2021 Q2 net earnings of $3 million increased by
$77 million, or 104%, from 2020 Q2 due to higher sales volumes,
savings generated from the NFI Forward initiative, lower
extraordinary COVID-19 expenses, benefits from government wage
support to retain skilled people and lower interest expense.
2021 Q2 Adjusted Net Earnings of $9 million, or
$0.12 per share, improved by $66 million compared to 2020 Q2. The
improvement in Adjusted Net Earnings was primarily driven by the
same factors relating to net earnings adjusted for the impact of
the revaluation of deferred tax balances due to the increase in the
UK corporate tax rate from 19% to 25%.
Liquidity
The Company's liquidity position, which combines
cash on-hand plus available capacity under its credit facilities as
at June 27, 2021, was $389 million, up $70 million from 2021 Q1 and
$156 million from 2020 Q4.
Outlook
Management continues to expect that 2021 will be
a transition year as NFI’s end markets and customer order activity
are expected to be impacted by the COVID-19 pandemic throughout the
remainder of the year. The second quarter saw strong recovery in
bidding activity, which management expects will drive delivery and
backlog growth in the second half of 2022 and beyond.
The second quarter of 2021 was impacted by
global supply chain challenges resulting from the COVID-19
pandemic, which had an adverse impact on NFI’s 2021 Q2 production,
and is expected to continue to impact production and deliveries
through the remainder of 2021. Although the Company anticipates
these global supply chain challenges to be transitory, they are far
reaching and very difficult to predict, impacting the automotive
and transportation industry broadly.
The Company expects to see improvements in its
financial results in 2022 and beyond as NFI capitalizes on
government investments in public transportation, and as the NFI
Forward initiative continues to deliver improvements to operating
metrics. 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. 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
manufacturing sales will be battery-electric and hydrogen fuel-cell
buses, growing to 35% to 40% of manufacturing sales by 2025.
Financial Outlook
Management reaffirms its 2021 financial guidance
published on January 11, 2021 and affirmed on May 6, 2021 with
respect to revenue, Adjusted EBITDA and Cash Capital expenditures,
as well as the updated tax guidance for 2021. Management does,
however, note that the tax impact of currency and non-monetary
foreign exchange gains and losses can fluctuate and have a material
impact on quarterly and annual tax rates. Readers should refer to
the related assumptions and explanations contained in the
MD&A.
Management cautions readers that NFI's quarterly
and 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 acquisition
of ADL, this has become even more pronounced, with the third and
fourth quarters now generally being periods with higher delivery
volumes.
As a result of the ongoing COVID-19 pandemic,
however, management anticipates changes to seasonality in 2021.
Management expects the following seasonality on a year-over-year
basis as compared to the same period in 2020: revenue and Adjusted
EBITDA for 2021 Q3 will be down and will be similar to 2021 Q2;
while revenue and Adjusted EBITDA for 2021 Q4 will 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, making a 53-week fiscal
year.
Environmental, Social & Governance
("ESG")
In May 2021, NFI released its ESG Report
("Report") for 2020. Highlights include updated performance
indicators, a matrix outlining NFI’s ESG priorities for 2021, and
case studies outlining some of the specific projects and
initiatives the Company undertook in 2020. The Report focuses on
the three main components of NFI’s Sustainability Pledge: “Better
Product. Better Workplace. Better World”, which guides the
Company’s daily actions and long-term planning. The ESG Report also
introduces NFI’s four pillar approach, including vehicles,
infrastructure, smart, connected technology and workforce
development, which directly supports the evolution of zero-emission
technology, the need for equitable access to mobility, and the
people development that will drive a more sustainable future.
NFI's ESG Report for 2020 can be accessed on
NFI's website at: www.nfigroup.com.
Second Quarter 2021 Results Conference
Call
A conference call for analysts and interested
listeners will be held on August 4, 2021 at 8:00 a.m. Eastern Time
(ET). The call-in number for listeners is 661-567-1097 or
833-562-0121, passcode number 4593555 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/umbmscur
A replay of the call will be accessible from 11:00 a.m. ET on
August 4, 2021 until 11:59 p.m. ET on August 3, 2022 at
https://edge.media-server.com/mmc/p/umbmscur. The replay will also
be available on NFI's website at:
https://www.nfigroup.com/investor-relations/events-presentations/
About NFI Group
Leveraging 450 years of combined experience, NFI
is leading the electrification 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.
With 8,000 team members in nine countries, NFI
is a leading global bus manufacturer of mass mobility solutions
under the brands New Flyer® (heavy-duty transit
buses), MCI® (motor coaches), Alexander
Dennis Limited (single and double-deck buses),
Plaxton (motor coaches), ARBOC®
(low-floor cutaway and medium-duty buses), and NFI
Parts™. NFI currently offers the widest range of
sustainable drive systems available, including zero-emission
electric (trolley, battery, and fuel cell), natural gas, electric
hybrid, and clean diesel. In total, NFI supports its installed base
of over 105,000 buses and coaches 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 A - 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 an indicator 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 Q2 |
2020 Q2 |
52-WeeksEnded June27, 2021 |
52-WeeksEnded June28, 2020 |
Net earnings (loss) |
$ |
2,587 |
|
$ |
(74,050 |
) |
$ |
(6,827 |
) |
$ |
(108,245 |
) |
Addback(1) |
|
|
|
|
Income taxes |
8,040 |
|
(12,907 |
) |
25,599 |
|
20,144 |
|
Interest expense(12) |
13,930 |
|
16,890 |
|
53,899 |
|
84,355 |
|
Amortization |
23,503 |
|
28,146 |
|
100,565 |
|
121,476 |
|
(Gain) loss on disposition of property, plant and equipment |
10 |
|
229 |
|
(793 |
) |
351 |
|
Fair value adjustment for total return swap(5) |
(264 |
) |
(275 |
) |
(2,279 |
) |
3,400 |
|
Unrealized foreign exchange loss (gain) on non-current monetary
items and forward foreign exchange contracts |
2,107 |
|
(2,163 |
) |
(2,208 |
) |
1,147 |
|
Costs associated with assessing strategic and corporate
initiatives(2) |
— |
|
1,231 |
|
165 |
|
957 |
|
Past service costs and other pension costs (recovery)(7) |
— |
|
48 |
|
7 |
|
(2,016 |
) |
Fair value adjustment to acquired subsidiary company's inventory
and deferred revenue(4) |
— |
|
— |
|
— |
|
22,314 |
|
Proportion of the total return swap realized(6) |
91 |
|
(529 |
) |
1,482 |
|
(2,472 |
) |
Equity settled stock-based compensation |
502 |
|
551 |
|
2,356 |
|
1,154 |
|
Unrecoverable insurance costs (8) |
718 |
|
— |
|
718 |
|
— |
|
Prior year sales tax provision(9) |
— |
|
(30 |
) |
310 |
|
214 |
|
Extraordinary COVID-19 costs(10) |
465 |
|
17,557 |
|
30,559 |
|
17,557 |
|
Impairment loss on goodwill(11) |
— |
|
— |
|
— |
|
50,790 |
|
Non-recurring restructuring costs (3) |
167 |
|
1,075 |
|
28,981 |
|
1,462 |
|
Adjusted EBITDA(1) |
$ |
51,856 |
|
$ |
(24,227 |
) |
$ |
232,534 |
|
$ |
212,587 |
|
Adjusted EBITDA is comprised
of: |
|
|
|
|
Manufacturing |
$ |
21,297 |
|
$ |
(32,356 |
) |
$ |
156,044 |
|
$ |
150,261 |
|
Aftermarket |
24,936 |
|
12,059 |
|
81,169 |
|
67,783 |
|
Corporate |
5,623 |
|
(3,930 |
) |
(4,679 |
) |
(5,457 |
) |
- 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 B. Management believes that Adjusted EBITDA is a useful
supplemental measure in evaluating performance of the Company.
- Normalized to
exclude non-recurring expenses and recoveries related to the costs
of assessing strategic and corporate initiatives.
- Normalized to
exclude non-recurring restructuring costs. The 2021 Q2 costs
primarily relate to severance costs and asset impairments
associated with the NFI Forward restructuring initiative.
- The revaluation of
ADL's inventory included an adjustment of $22.3 million in 2020 Q2
LTM. These revaluation adjustments relate to purchase accounting as
a result of the related acquisition.
- The fair value
adjustment of the total return swap is a non-cash (gain) loss that
is excluded from the definition of Adjusted EBITDA.
- 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.
- Costs and
recoveries associated with amendments to, and closures of, the
Company's pension plans.
- Normalized to
exclude non-recurring costs related to an insurance event that are
not recoverable.
- Provision for sales
taxes as a result of an ongoing state sales tax review.
- Normalized to
exclude non-recurring COVID-19 related costs. The 2021 Q2 LTM costs
include asset impairments of $27.9 million and operating expenses
of $2.6 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.
- Impairment charge
with respect to MCI's goodwill.
- Includes fair
market value adjustments to interest rate swaps. 2021 Q2 includes a
gain of $3.8 million and 2020 Q2 includes a loss of $1.3
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 Q2 |
2020 Q2 |
52-WeeksEnded June27, 2021 |
52-WeeksEnded June28, 2020 |
Net earnings (loss) |
2,587 |
|
(74,050 |
) |
(6,827 |
) |
(108,247 |
) |
|
|
|
|
|
Adjustments, net of tax (1)
(8) |
|
|
|
|
Fair value adjustments of total return swap(5) |
(120 |
) |
(189 |
) |
(1,408 |
) |
2,207 |
|
Unrealized foreign exchange (gain) loss |
958 |
|
(1,493 |
) |
(2,613 |
) |
639 |
|
Unrealized (gain) loss on interest rate swap |
(1,736 |
) |
868 |
|
(9,406 |
) |
14,834 |
|
Impairment loss on goodwill(11) |
— |
|
— |
|
— |
|
50,790 |
|
Portion of the total return swap realized(6) |
42 |
|
(365 |
) |
897 |
|
(1,619 |
) |
Costs associated with assessing strategic and corporate
initiatives(2) |
— |
|
1,231 |
|
164 |
|
957 |
|
Fair value adjustment to acquired subsidiary company's inventory
and deferred revenue(4) |
— |
|
— |
|
— |
|
12,331 |
|
Equity settled stock-based compensation |
228 |
|
380 |
|
1,355 |
|
665 |
|
(Gain) loss on disposition of property, plant and equipment |
5 |
|
158 |
|
(466 |
) |
246 |
|
Past service costs and other pension costs (recovery)(7) |
— |
|
33 |
|
4 |
|
(1,213 |
) |
Unrecoverable insurance costs(13) |
327 |
|
— |
|
327 |
|
— |
|
Recovery on currency transactions(9) |
— |
|
— |
|
— |
|
287 |
|
Prior year sales tax provision(10) |
— |
|
(20 |
) |
204 |
|
(140 |
) |
Other tax adjustments(14) |
6,118 |
|
3,695 |
|
6,118 |
|
3,695 |
|
Extraordinary COVID-19 costs (12) |
212 |
|
12,114 |
|
20,909 |
|
12,114 |
|
Non-recurring restructuring costs (3) |
76 |
|
742 |
|
19,401 |
|
968 |
|
Adjusted Net Earnings
(Loss) |
$ |
8,697 |
|
(56,896 |
) |
$ |
28,659 |
|
(11,486 |
) |
|
|
|
|
|
Earnings (Loss) per Share (basic) |
$ |
0.04 |
|
$ |
(1.18 |
) |
$ |
(0.12 |
) |
$ |
(1.74 |
) |
Earnings (Loss) per Share
(fully diluted) |
$ |
0.04 |
|
$ |
(1.18 |
) |
$ |
(0.12 |
) |
$ |
(1.74 |
) |
|
|
|
|
|
Adjusted Earnings (Loss) per
Share (basic) |
$ |
0.12 |
|
$ |
(0.91 |
) |
$ |
0.43 |
|
$ |
(0.18 |
) |
Adjusted Earnings (Loss) per
Share (fully diluted) |
$ |
0.12 |
|
$ |
(0.91 |
) |
$ |
0.43 |
|
$ |
(0.18 |
) |
|
|
|
|
|
-
Addback items are derived from the historical Financial Statements
of the Company.
-
Normalized to exclude non-recurring expenses related to the costs
of assessing strategic and corporate initiatives.
-
Normalized to exclude non-recurring restructuring costs. Costs
primarily relate to severance costs and asset impairments
associated with the NFI Forward restructuring initiative.
-
The revaluation of ADL's inventory included an adjustment of $22.3
million in 2020 Q2 LTM. The after-tax value of the adjustment was
$12.3 million. These revaluation adjustments relate to purchase
accounting as a result of the related acquisition.
-
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).
-
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.
-
Costs and recoveries associated with amendments to, and closures
of, the Company's pension plans.
-
For 2021, 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.
-
Recovery of prior period banking fees related to foreign exchange
transactions.
-
Provision for sales taxes as a result of an ongoing state tax
review.
-
Impairment charge with respect to MCI's goodwill.
-
Normalized to exclude non-recurring COVID-19 related costs.
COVID-19 costs in 2021 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.
-
Normalized to exclude non-recurring costs related to an insurance
event that are not recoverable.
-
Includes the impact of changes in deferred tax balances as a result
of substantively enacted tax rate changes. The 2021 Q2 balance
includes the impact of the revaluation of deferred tax balances due
to the increase in the UK corporate tax rate from 19% to 25%. The
2020 Q2 balance results from the reversal of previously enacted UK
tax rate decline.
Appendix B - 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 or cash flow 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 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 events or conditional verbs such as “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 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 or having to isolate or quarantine as a result
of coming into contact with infected individuals); 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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