New Flyer Industries Inc., the largest transit bus and motor coach manufacturer and parts distributor in North America, announced its order activity and backlog update for the 13-week period ended April 2, 2017 (Q1 2017).
The order and delivery activity and backlog for Q1 2017 reported in this release includes activity for heavy-duty transit buses manufactured by the company’s subsidiaries, New Flyer Industries Canada ULC and New Flyer of America Inc. (together, New Flyer), and motor coaches manufactured by its subsidiaries, Motor Coach Industries Limited and Motor Coach Industries, Inc. (together, MCI).
The order and delivery activity and backlog as reported excludes pre-owned motor coaches. Year-over-year comparisons reported in this release, compare Q1 2017 to the 14-week period ended April 3, 2016 (Q1 2016). Q1 2016 was the first full fiscal quarter that included both New Flyer and MCI activity.
Deliveries, Order Activity, and Option Expiry
The company delivered 892 equivalent units (EUs) in Q1 2017, an increase of 63 EUs compared to 829 EUs delivered in Q1 2016. The Q1 2017 deliveries decreased 101 EUs compared to the fourth fiscal quarter of 2016 (Q4 2016), primarily as a result of the seasonality of private market coach deliveries. Total bus and coach inventory at April 2, 2017 was 547 EUs, an increase of 52 EUs from the previous quarter.
The company’s new transit bus and coach orders (firm and options) in Q1 2017 totaled 708 EUs. Order activity in the period included:
- New firm orders for 534 EUs (valued at $267.2 million)
- New option orders for 174 EUs (valued at $68.7 million)
- 218 EUs of Options were converted to firm orders (valued at $99.9 million)
The company’s last 12 months (LTM) Book-to-Bill ratio (defined as new firm and option orders divided by deliveries) was 120% and has been greater than 100% for 16 of the last 17 quarters, demonstrating overall growth in the company’s total backlog.
In addition, 1,054 EUs of new firm and option orders were pending from customers at the end of the period, where approval of the award to the company had been made by the customer’s board, council, or commission, as applicable, but purchase documentation had not yet been received by the company and therefore not yet included in the backlog. Subsequent to the end of the period, MCI received a notice-to-proceed from NJ TRANSIT to manufacture and deliver 185 commuter coaches for the second year of its six year contract. These units are included in Q1 2017 option backlog shown below, details of this option conversion were included in a separate press release issued on April 11, 2017.
In 2013, the U.S. Federal Transit Administration (FTA) issued a Dear Colleague letter to the transportation industry providing guidance on joint procurements and the assignment of options to purchase buses (referred to as piggybacking), limiting the amount of goods and services an agency can specify to that amount required to meet its expected needs. The majority of public transit contracts have a term of five years. The table below shows the number of option EUs that have either expired or been exercised annually over the past 5 years, as well as the current backlog of options that will expire each year if not exercised.
Total Backlog and 2017 Production
At the end of Q1 2017, the company’s total backlog was 9,984 EUs (valued at $5.09 billion) compared to 10,187 EUs (valued at $5.23 billion) at the end Q4 2016, and 9,718 EUs (valued at $5.00 billion) at the end of Q1 2016.
The company’s backlog consists of 30-, 35-, 40- and 60-ft. medium- and heavy-duty transit buses, and 45-ft. motor coaches primarily for public customers. Buses incorporating clean propulsion systems (such as natural gas, diesel-electric hybrid, electric-trolley, and battery-electric) represent approximately 42% of the total backlog. Zero-emission buses (battery-electric, fuel-cell and electric-trolley) represent approximately 4.3% of total backlog.
The company’s master production schedule combined with current backlog and orders anticipated to be awarded by customers under new procurements is expected to enable the company to deliver approximately 3,650 EUs in fiscal 2017, an increase of 4% compared to fiscal 2016, with production rates increased for both heavy-duty transit buses and motor coaches. Production rates will vary from quarter to quarter due to product mix and award timing.
Market Demand
The company’s Bid Universe metric reports active public sector competitions in Canada and the United States, and provides an overall indicator of active bid activity and expected heavy-duty transit bus and motor coach market demand. It is a point-in-time snapshot of: (i) EUs in active competitions, defined as all requests for proposals received and in process of review plus bids submitted and awaiting customer action, and (ii) management’s forecast based on public customer projection of expected EUs to be placed out for competition over the next 5 years.
At the end of Q1 2017 the number of active EUs was 8,084 EUs and total Bid Universe was 22,144 EUs, which are 23% and 4.7% respectively higher than the previous quarter.
Procurement of transit buses and motor coaches by the public sector is typically accomplished through formal multi-year contracts, while procurement by the private sector is typically accomplished through transactional sales. As a result, the company does not publish a forecast metric for private sector buses and motor coaches.
Management continues to expect that transit bus and motor coach procurement activity by public transit agencies throughout the U.S. and Canada should remain robust based on an aging fleet, improved overall economic conditions, expected customer fleet replacement plans and active or anticipated procurements. Management also expects stable private sector demand for motor coaches through 2017 given healthy market dynamics including the general economy, travel trends and credit markets.
Aftermarket
Total shipments by the company’s aftermarket business for Q1 2017 increased by 10.6% compared to the previous quarter, however decreased by 8.5% compared to Q1 2016. New gross orders received in Q1 2017 increased by 4.2% compared to the previous quarter, while decreasing by 14% compared to Q1 2016. The year-over-year decrease in quarters is primarily related to the 14-week period in Q1 2016 versus the 13-week period in Q1 2017 and normal order fluctuations.
![Sandman Retouched 7 23[61][38][26]](https://img.oemoffhighway.com/files/base/acbm/ooh/image/2024/07/Sandman_Retouched_7_23_61__38__26_.66a163213440e.png?auto=format%2Ccompress&fit=crop&h=135&q=70&w=240)
