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TRANSCRIPT
NFI AGM - May 9-13
New Flyer IndustriesTSX: NFI TSX: NFI.DB.U
Forward Looking Statements: Our remarks and answers to your questions today may contain forward-looking statements relating to New Flyer Industries Inc. and related companies or
to the environment in which they operate, which are based on their operations, estimates, forecasts and projections. These statements are not guarantees of future performance and
involve risks and uncertainties that are difficult to predict, or are beyond New Flyer’s control. A number of important factors could cause actual outcomes and results to differ materially
from those expressed in these forward-looking statements. These factors include those set forth in New Flyer’s Annual Information Form. New Flyer assumes no obligation to update or
revise any forward-looking statements to reflect new events or circumstances, except as required by applicable securities laws. All figures discussed today are in U.S. dollars unless
otherwise noted.
North America’s #1 Heavy-Duty Transit Bus Manufacturer and Parts Supplier
NFI AGM - May 9-13
Bus manufacturing plants in Manitoba and Minnesota and a Part
Fabrication plant in Elkhart. 2,200 employees
Parts Distribution Centers in Manitoba, Ontario, Kentucky and California
Service Center in Arnprior with another being established in LA
New Product Development Center in Winnipeg.
Over 32,500 buses delivered, with 24,000 still in operation
Offer heavy-duty buses from 35’, 40’, to 60’ articulating buses.
Commence 30’and 35’ medium-duty (MiDi) bus manufacturing in 2014
Long standing tradition as the #1
Heavy-Duty Transit Bus manufacturer in Canada & US
2
Founded in Winnipeg in 1930. Market Leader in Technology and Innovation
NFI’s next generation Transit Bus with advanced
styling that is lighter, quieter and more fuel efficient.
First delivery was in 2010. Targeting >90% of bus
production for 2103
NFI AGM - May 9-13
Source: New Flyer Database & Management Estimates based on EUs delivered
Industry Leading Market Share in both Bus & Parts
32% Transit Bus Market Share ~25% Pro Forma Parts Market Share
April 2012
Daimler announced Orion to close by YE2012.
NYCT & Seattle bus contracts assigned to NFI.
March 2013
NFI announces the acquisition of Orion
Parts Business from Daimler Bus
3
New Flyer18%
Orion7%
NABI9%
Gillig9%
EngDealers8%
Locals7%
Muncie6%
Nova6%
Truck5%
Suppliers Direct
4%
MCI4%
Neopart3%
Other14%
32%
29%
7%
18%
10%
4%
Other
NFI AGM - May 9-13
NFI backlog provides visibility of Near-to-Medium term sales
Backlog has now started to recover
4
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Firm Deferred Order Firm Option Deferred Order Options
NFI plan maintains a Line Entry production rate of 36 EUs/Production week
Backlog proved crucial in period of
low Industry activity
NFI AGM - May 9-13
NFI Financial Performance (US$)
Adversely impacted by Volume & Price during economic crisis
Parts
Bus
5
Sales Adjusted EBITDA
804865
992
878810
754 768
83
96
108
106
116
119 125
$0
$200
$400
$600
$800
$1,000
$1,200
2007 2008 2009 2010 2011 2012 2013
Q1
LTM
7873 76 73
57
42 41
1720
2424
23
20 19
$0
$20
$40
$60
$80
$100
$120
2007 2008 2009 2010 2011 2012 2013 Q1
LTM
NFI AGM - May 9-13
New Flyer Strategy:
a diversified Full-Service Bus ManufacturerP
rivate
Pu
blic
Canada/US International
Bus OEM,
Parts &
Services
LEAN & Quality roadmap
Increase Strategic and In-Sourcing
Cost reduction and competiveness
Full scope offering: Bus, Parts & Services
Increase % of aftermarket
Migrate to new Xcelsior platform & launch MiDi
Expand beyond HD Transit and compete in more
than one market (product and/or geography)
Current or potential for leading market share
Opportunity for cost synergy based on scale (OpEx,
purchasing, and overhead) plus ability to leverage
R&D, technology and platforms
Vertical integration potential for key or strategic
value-added operations
6
1. Focus on Core Market/Business/Operations
2. Seek Diversification & Growth
3. Investment/Acquisition Criteria
NFI AGM - May 9-13
Committed to propulsion options & technology leadership
Focused on optimizing New Flyer’s next-gen Xcelsior platform
NF eBus
Maiden Voyage:
Apr 20-12, 1:05 pm
Diesel
Hybrid
Gas
Trolley
Fuel Cells
All-Electric
eAccessories
Natural Gas
NF eAccesory Bus
Delivered to MN Metro
July 2012
NF Hydrogen FC Fleet
Delivered fleet to BC Transit
Jan 2010
NF CNG Propulsion
First delivered
in 1994
NF Hybrid Bus
First delivered
in 2000
NF eTrolley Bus
First delivered in
1993
7
NFI AGM - May 9-13
NFI transformed to Common Share Structure
Reducing Leverage and Interest Costs
8
2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
3.60
3.80
4.00
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2007 2008 2009 2010 2011 2012 2013 Q1
IDS Debt Bachelor BondsSenior Term Loan RevolverConvertible Debenture Total leverage ratio
Total Debt (US $million)
• $65M Convertible
Debenture issued in Jun-
12. Proceeds used to
redeem Bach Bonds/IDS
Debt in August 2012.
Convert price $10/share.
• $90M Revolver facility
used to manage working
capital fluctuations
($49M outstanding)
$122M Senior term loan @
rate of LIBOR plus
applicable margin.
Expires in Apr-14.
• 49.3M shares outstanding. 6.2 M shares to be added from Treasury once full Marcopolo investment complete.
• NFI Board/Management currently owns 1.1M Shares (or 2.3%).
Interest on Bach Bonds/IDS Debt = 14% vs Converts = 6.25%
NFI AGM - May 9-13
0.9
1.5
2.22.5
3.2
3.8
0
1
2
3
4
2008 2009 2010 2011 2012 2013
Significant improvements made in Operations
Focused management on both cultural and physical change
CME Annual LEAN Assessment (out of 5)
341
403
320
245299
262 241209 218 236 238
189 175 187 183225 203
0
50
100
150
200
250
300
350
400
450
9
Substantially reduced Bus WIP (EUs)
NFI AGM - May 9-13
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual Ridership % Chg YOY
US Bus Total US Total All Modes CDN Total All Modes
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Crude Oil Price - Annual Average
-30
-25
-20
-15
-10
-5
0
5
10
15
20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4E
% C
han
ge
vs S
ame
Las
t Yea
r
USA Quarterly State Tax Revenue YOY % Change
Personal Income Tax Corporate Income Tax General Sales Tax
Macro-economic Fundamentals continue to Improve
Which bodes well for investment in public transit
10
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F
US CA
US Qtrly State Tax Revenue [YOY % Change]
Monthly Unemployment RateAnnual Avg Crude Oil Price - [US$]
Average Age of Bus [Yrs]
Annual Transit Ridership % Chg YOY
2012201120102009
Source: The Nelson A. Rockefeller Institute State Revenue Reports
Source: US Bureau of Labor Statistics (US) ; Stats Canada (CAD)
201220112010
Source: http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp
Source: http://www.apta.com/resources/statistics/Documents/FactBook/2012-
Fact-Book-Appendix-A.pdf
Source: http://www.apta.com/resources/statistics/Pages/ridershipreport.aspx
NFI AGM - May 9-13
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
12-J
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12-F
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9
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12-J
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-12
12-F
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-12
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2
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2
12-J
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-13
12-F
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3
12-M
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13
12-A
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13
Ongoing Bids Submitted Bids Forecast
The NFI Bid Universe has shown Significant Recovery
5 year total >15,200 EUs. Active Opportunities >7,300 EUs
11
EUs Bids in Progress
EUs for Bids Submitted
Units forecasted to come out for Competition
Federal Stimulus investments
contributed to surge in 2010
Reflects increased
competitions in process
NFI AGM - May 9-13
NFI Book-to-Bill Ratio (Intake/Deliveries) has rebounded
Now back to >100% of LTM deliveries
12
0%
50%
100%
150%
200%
250%
300%
-
1,000
2,000
3,000
4,000
5,000
6,000
LTM New Orders (EUs) LTM Deliveries (EUs) LTM Order Intake / Deliveries
NFI AGM - May 9-13
North America’s largest Heavy Duty
Transit Bus and Parts company
+
13
UK’s largest Bus & Coach builder
and world leader in midi-bus
Strategic Rationale
10 Year Bus targeted at both Public & Private
applications
Lighter and quieter than Heavy-Duty buses with
materially different operating economics
Enhanced styling and passenger comfort
Prototypes are currently being manufactured with
testing in Q2-Q3 2013. Production build to
commence in Dec-13
Launched a JV with Alexander Dennis Limited in 2012
A medium-duty (MiDi) Bus for North America
NFI AGM - May 9-13
NFI AGM - May 9-13
Marcopolo S.A. strategic Investment in NFI - February 2013
Launches a strategic relationship and provides growth capital to NFI
North America’s largest Heavy Duty
Transit Bus and Parts company
+The world’s 2nd largest Bus builder
delivering over 35,000 buses annually
Provides significant equity capital to NFI at an attractive price (Approx 26% premium to 60-day VWAP)
Enhances NFI’s financial flexibility to further pursue growth and diversification opportunities
Strategic value of knowledgeable, sophisticated, like-minded investor
Opportunity to strengthen North American market position and competitiveness through commercial
agreements with a leading global bus manufacturer
Access to MP products, know-how, relationships and technology sharing to enhance NFI’s product
offerings and profitability
Opportunity to seek markets outside North America where NFI intellectual property may be exported
15
Strategic Rationale
NFI AGM - May 9-13
NFI Strategic Investment in expanding Aftermarket - March 2013
acquisition of Orion’s Parts business from Daimler Bus
North America’s #1 Bus
Aftermarket Parts Business
+North America’s #4 Bus
Aftermarket Parts Business
Strengthens NFI leadership position as the largest provider of aftermarket parts in the North American
transit bus industry. Pro-forma 25% bus parts market share.
Broadens exposure to large transit agencies, and further enhances NFI’s relationship with various
transit authorities
Highly attractive revenue stream from the proprietary parts business serving over 10,000 Orion buses
currently in service
Immediately accretive to earnings and cash flow with added value through combined scale, footprint
and overhead utilization
Significant potential for incremental growth by leveraging scale and broader product offering to
increase penetration into North America’s installed fleet of all OEM makes and models
16
Strategic Rationale
NFI AGM - May 9-13
NFI Investment Thesis
17
Predictable cash flow business model, conservative financing structure, relatively low CAPEX needs
Income instrument with Yield currently at approx 6.0% (annual dividend at C$0.585/share. Distributions
have been paid for 91 consecutive months (since IPO). Management believes dividend is sustainable.
#1 Market Share of delivered buses and #1 Market Share of aftermarket bus part sales
Market Innovation leader with the broadest green product offering
High quality diversified customer base generating repeat business in replacement industry
Experienced Executive team with a track record and significant OpEx and LEAN experience
#1 Manufacturer of Heavy Duty Transit Bus Manufacturer in North America
Conversion to Common Share Structure complete. Lower leverage & Interest Cost
Prospects for Growth
Transit is an essential service with an aging US fleet (avg age >7.8 yrs vs. avg target life of 12 yrs)
After three years of a very difficult market, now experiencing record bid activity (Active bids >7,300 EUs,
Bid Universe >15,200 EUs) with loss of one competitor (Orion).
NFI backlog has returned to growth ($3.3B and 7,527 EUs) Book-to-Bill Ratio is recovering (LTM is
211% vs 31% for 2012 Q1 LTM)
JV launched with Alexander Dennis to introduce MiDi bus in North America. Marcopolo 19.99%
Strategic Investment in NFI with operational MOU. Parts and service offering business continues to
grow through acquisition of Orion Bus Parts Distribution business.