NFI Investor Update North America's leading Transit Bus & Motor Coach Manufacturer and Parts Distributor - NFI Group
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as at May 12, 2017 0
NFI Investor Update
North America’s leading Transit Bus & Motor Coach Manufacturer and Parts Distributor1
NFI Group Company Highlights
Fiscal 2017 Q1 LTM Performance:
Revenue: US $2.3B
Adj EBITDA: US $292.4M
Return on Sales: 12.8%
Net Debt: $474M
Leverage: 1.67X • North America’s:
(Converts treated as Equity)
• #1 Transit Bus & Motor Coach manufacturer and parts supplier
ROIC: 14.5%
FCF: US $158.3M • Leading installed base (nearly 70,000 vehicles or ~50%)
Payout Ratio: 28.0% • ~5,100 employees
Fully Diluted Market Cap: ~$C 3.3B (3)
Current Backlog (at Q1 2017): Common Share (TSX:NFI) Convertible Debt (TSX:NFI.DB.U)
Firm: 3,302 EU, $1.7B Shares Outstanding: 62.0M Principal Outstanding: US $6.1M
Options: 6,682 EU, $3.4B 60-day average Daily Volume: ~ 230K 60-day average Daily Volume: ~US $3K
LTM Book-to-Bill Ratio: 120% Dividend = C$1.30/share(1), Yield: ~2.5%(3) Coupon: 6.25%, Yield: ~ 1.7%(3)
TSR(2): ‘17 YTD = 31% ‘16 = 47% ‘15 =115% Matures: June 30, 2017
Dec 18-15: NFI added to S&P/TSX Composite Index
Mar 14-16: NFI added to S&P/TSX Equal Weight Industrials Index
Mar 11-16: NFI Equity Options commenced trading on Montreal Exchange
Apr 24-17: NFI added to S&P/TSX Composite Shareholder Yield Index,
(1) Effective May 10, 2017 the Dividend increased from C$0.95 to C$1.30 per share annually. Paid quarterly.
(2) Total Shareholder’s Return (“TSR”) is calculated by the growth in capital assuming the dividends are reinvested each time they are paid.
(3) Calculated using closing TSX market price as at May 8, 2017
Forward Looking Statements and Non-GAAP Measures are defined in APPENDIX B.2
NFI Group + NFI Investment Thesis
North Americas’ #1 heavy-duty transit bus brand, #1 motor coach brand and #1 aftermarket
Scale combined parts and service supplier
with Leading Share Leading installed bus fleet with >70,000 vehicles (transit buses and motor coaches) currently
in Diversified in service or ~50% share of Canadian and US installed base
Markets Compliant with Buy-America and Canadian content policies (with 2/3’s of productive capacity
located in the US). Integrated aftermarket parts and services operations.
Founded in the 1930’s, NFI and MCI have established relationships with nearly all domestic
Deep Relationships transit authorities and specifically 24 out of 25 of the largest agencies
with High Quality
Customer Base Strong reputation and long standing relationship with hundreds of motor coach operators in
Canada and US operating MCI or SETRA (Daimler) motor coaches
Broad Leading in-house engineering and new product development capability
Product Offering
with Technology Offer the industry’s widest range of green propulsion options: clean diesel, diesel-electric
Leadership hybrid, natural gas, and zero-emission (electric trolley, battery-electric and fuel cell).
Experienced Successful track record of positioning the business for growth, increased profitability and
Team focused on proven cash flow generation
Growth & Extensive LEAN transformation and OpEx experience with demonstrated ability to complete
Diversification accretive acquisitions and achieve synergies
Business operates in USD with ~90% revenue in USD Flexible cost base with 89% of
Strong Financial expenses variable
flexibility and Proven financial performance and low leverage (~2X). Strong/Predictable cash flow with
performance proven de-levering and consistent dividends paid.
Experience M&A and solid integration experience3
NFI Group + Business Strategy
Our Facilities, Our Market Our Business Our Revenue,
Processes & Leading Positions and Revenue EBITDA and
Products in Bus/Coach/Parts Stream CashFlow
Optimize, Defend, Diversify & Grow
1. Offer Canadian and US operators the industry’s best buses, services and value
Migrate from selling buses to providing solutions and deliver best value and support for life of our products
focusing on lowest Total Cost of Ownership
Provide complete offering: Bus (“Workhorses of the Fleet”) supported by Parts, Service & Valued Added services
Lead the market in innovation, reliability and quality
Excel at customer support, response and follow up with emphasis on aftermarket parts and services
2. Operate as a world class OEM using LEAN principles, a Quality Roadmap and a Safety Culture
Be recognized as an Employer of Choice with an industry leading safety culture
Excel in engineering, supply chain, strategic sourcing and appropriate in-sourcing
Continuous pursuit of eliminating waste and cost reduction to improve competiveness
Operate as a responsible, sustainable and environmentally conscious business
3. Perform while seeking Diversification and Growth
Lead the North American transit bus and motor coach industries and deliver strong TSR
Operate with an appropriate and flexible capital structure, pay and appropriate dividend and grow the business
Seek to diversify over long term to ensure longevity and sustainability: Product (type of bus) and/or Market
(Public vs Private) and/or Geography (North America vs International).4
NFI Group Strategic Plan and Execution has delivered TSR
Total Shareholder Return(1) Cultural & Structural Change
900.0
Adopted Stakeholder Model.
846.8
800.0 Commitment to Culture, People & LEAN operations
Migrated Capital Structure from Income Deposit Security
700.0 (Yield) to Common Share (Growth and Yield) in 2011
600.0 Strategic Acquisitions
Total Return
500.0
Investment in NFI NFI's first acquisition in 2010 enhanced
US part fabrication capability and capacity
400.0
Equity investment in NFI by a leading
global bus and coach body manufacturer
300.0
NFI acquired Orion’s parts business from
200.0 Daimler in 2013
149.3
NFI acquired US manufacturer of heavy-
100.0 S&P/TSX Composite
duty transit buses and parts distributor in
2013
--
Aug-12 Aug-13 Aug-14 Aug-15 Aug-16
NFI acquired North America’s leading
manufacturer of motor coach and
parts/service support in 2015
Source: FactSet, Company filings
1. Total shareholder return includes capital appreciation and dividends paid.
2. Calculated using closing TSX market price as at May 8, 20175
NFI Group Proven Leadership with extensive Industry Experience
Paul Soubry Wayne Joseph Ian Smart Brian Dewsnup
President & CEO, NFI Group President ,Transit Bus President ,Motor Coach President, Aftermarket Parts
Joined New Flyer in 2009 as President and CEO after Joined New Flyer in 2008 as VP Operations and then Joined New Flyer in 2011 as EVP Aftermarket and prior Forrmely NABI’s CFO since 2006 (which NFI acquired
24 years with Standard Aero. Holds a Bachelor of assumed responsibility as EVP Transit Bus. Prior held held various executive positions at Standard Aero for in 2013), and then VP Business Development of New
Commerce, attended Exec Ed at Harvard Business executive positions in bus manufacturing for over forty 15 years - one of the world’s largest independent Flyer. Led the acquisition of MCI and became VP &
School and the Institute of Corporate Directors. years with NABI, Blue Bird and Flxible, and then at aviation service companies. GM Aftermarket. Prior served as Controller of Johns
BAE Systems. Manville's-Waterville operations, and held various
In 2003, was named a recipient of ‘Canada’s Top 40 Lead the project to privatize and conduct LEAN capacities at Ford Motor and Visteon.
under 40’ award, inducted into the CME Manufacturing Holds a Bachelor of Science in Business Administration implementation at a United States Air Force Base.
Hall of Fame in 2014, and recognized as Canada’s and an Accounting Degree and is Certified in Holds a Bachelor's in Mechanical Engineering, Masters
2016 CEO of the Year by the Financial Post. Production and Inventory Management (CPIM). Holds a Bachelor of Science in Industrial Engineering. in Mechanical Engineering, and an MBA in Finance.
Glenn Asham
CFO, NFI Group
Joined New Flyer in 1992. Obtained chartered
accountant designation and holds a Bachelor of
Commerce. Prior worked with Deloitte providing client
services in the areas of accounting, auditing, taxation
and management consulting
Colin Pewarchuk,
General Counsel, NFI Group
Joined New Flyer in 2006. Prior practiced law with
Aikins, Macauley and Thorvaldson and was a Banking
Officer with Royal Bank of Canada. Holds a Bachelor
of Commerce in Finance and a Bachelor of Laws.
Janice Harper
EVP HR, NFI Group
Joined New Flyer in 1998. Holds a Diploma in Creative
Communications, a Certificate in Human Resources, is
a Charterer Professional in Human Resources (CPHR)
and holds a Human Resources Compensation
Committee management designation.
David White
EVP Supply, NFI Group
Joined New Flyer in 1998 as Corporate Controller, and
moved into Supply Management as Vice President in
2002. Prior worked for Deloitte as a Chartered
Accountant. Holds a Bachelor of Commerce in Finance
and obtained Chartered Accountant designation.6
+ Annual Deliveries and Market Demand
Transit Bus EUs delivered in Can/US Motor Coaches delivered in Can/US
Total New Flyer Market Share MCI Industry Market Share
7,000 80%
6,236
7,000 80%
6,032
5,933
5,816
5,795
5,533
70%
5,388
5,347
70%
5,284
6,000
5,212
6,000
5,154
5,128
5,109
5,065
5,009
5,010
4,797
4,723
60% 60%
4,333
5,000 5,000
4,047
50% 50%
4,000 4,000
2,990
2,824
40% 40%
2,485
2,416
2,381
2,330
2,311
3,000
2,099
3,000
2,048
1,926
1,852
1,820
30%
1,773
1,752
30%
1,584
1,566
1,543
1,475
1,343
1,208
2,000 2,000
20% 20%
1,862
1,767
1,000
1,514
1,492
1,479
10%
1,292
1,000
1,190
1,022
1,050
1,056
1,012
10%
1,050
1,500
1,864
2,051
1,272
1,731
1,871
1,585
1,422
2,115
2,164
2,258
2,025
1,814
1,656
1,868
2,437
2,457
2,569
753
811
633
592
686
821
802
856
942
935
0 0%
0 0%
Public Bid Universe & Active Transit Bus Opportunities (EUs) US Federal Funding for Transportation
ISTEA TEA-21 SAFETEA-LU
Bids submitted NFI forecasted
EU buys in
Extension to SAFETA-LU MAP-21 ARRA
Operator RFPs by NFI and EUs awaiting
selection next 5 years DRRA FAST Bus Deliveries (EU)
Issued. EUs for Proposals 25,000 8000
25,000 in development
US Federal Funding ($ millions)
20,000 20,000
6000
15,000 15,000
4000
10,000 10,000
5,000 2000
5,000
-
0 0
Ongoing Bids Submitted Bids Forecast Source: NFI/MCI Database & Management Estimates7
#1 Market Share in Transit Bus
Heavy-Duty: Xcelsior®
Launch in 2009 based on >20 years experience with low floor transit buses.
Primary targets is metropolitan & urban fleets
Offered in 35’, 40’, and 60’ lengths
Typical sale price of ~US $450K for 35’/40’ and US $700K for 60’ articulated
HD Transit Bus Share (2016 market is ~5,800 units) Active Canada/US HD Transit Bus Coach Fleet ~85,000
California
1% Average Age of the HD Transit Fleet: US = 7.8 years, Canada = 7.3 years
Owned by REV Group Source: APTA Public Transportation Factbook 2016
5%
19% Montreal and New York
Owned by Volvo Truck & Bus
30%
California
Privately Owned by
Henry Crown and Company Orion Parts and NABI acquired by NFI in 2013
45%
Source: New Flyer Database & Management Estimates8
Transit Bus Market Segments in Canada and US
Transit Market Segments 24 of the 25 largest Transit Agencies
and primary targets operate NF supported transit buses
Metropolitan Urban Municipal
Fleets Fleets Fleets
900+ Operators
17 operators 200 operators
39% of installed fleet 45% of installed fleet 16% of installed
fleet
New market entrants focusing only on battery-electric buses:
Source: New Flyer Database & Management Estimates9
#1 Market Share in Motor Coaches
New Coach – Private New Coach – Public Pre-Owned Coach
J Model 407 D Model
417
Targets the mid-range to luxury segments Targets the mid-range segment Trade-in option to support new coach sales
J Model #1 selling coach in N.A. private market “Buy America” compliant (~350 annually)
NA Distributor of Daimler’s SETRA coaches D Model is the #1 selling coach of all time in N.A. Coaches are refurbished at MCI’s service
centers and various 3rd parties
Motor Coach Share: 2016 market ~2,400 units Active Canada/US Motor Coach Fleet ~55,500 units
Turkey Average Age of the Motor Coach Fleet: US and Canada = 9 years
Owned by Sabanchi Group Source: ABA Motorcoach Census, published February 2016
7% Quebec and New York
28% 50% 1% 26% 23%
Belgium & Macedonia
26% Mexico
Privately owned
Owned by Volvo Truck & Bus
Source: MCI Database & Management Estimates
39% Negligible Deliveries
Spain & Mexico US
MCI Share increased
by 1% in 2016 over 201510
Motor Coach Market in Canada and US
Market Segments and primary targets Private Market Segment Definitions
Fixed Route/ Tour &
Transit Conversion
Line Haul Charter
12% of 2% of
34% of 52% of
installed fleet installed fleet
installed fleet installed fleet
Public Private Private Private
Source: MCI Database & Management Estimates11
+ Environmental Commitment
Battery Electric/
Clean Diesel Natural Gas Electric Trolley Hybrid Electric Fuel Cell
Xcelsior
35’, 40’, 60’
D Model
40’, 45’
eCoach in
J Model 45’ Development
with 35’ in
development12
New Flyer Leadership in Zero Emissions
NF estimates 283 zero emission buses (“ZEBs”) were delivered by the industry in 2016
NF delivered 241 equivalent units (“EUs”) ZEB (8.3% of NF’s total transit production), with 85% ZEB
market share. Increase of 48% from 144 EU’s delivered by NBF in 2015. NF has now delivered >6,400
transit buses powered by electric motors (including hybrids).
Current Status of NF Battery-Electric Bus
NF battery-electric buses have been delivered to transit agencies in Washington, Chicago, & Winnipeg.
NF currently has 52 electric bus orders in-process including: LA Metro, AC Transit, MBTA (Boston), Utah
Transit Authority, Tri-Met (Portland), OCTA (Orange County), SunLine Transit (Palm Springs)
NF current ZEB bid pipeline of 893 EU’s. Total bid universe relating to ZEB buses is 1,519 EU’s or 8%.
NF ZEB Differentiators
NF is the only NA Bus manufacturer to offer all ZEB types (battery-electric, trolley-electric, and fuel cell)
NF unmatched design and manufacturing capability allows operators ability to customize and optimize
charging method, infrastructure and range capability
All NF ZEBS are based the proven Xcelsior® transit bus platform and utilize shared and common electric
accessories. MCI zero emission coach (ZEC) now in development
All public data indicates NF electric buses can match or exceed the energy storage capability of
competitor electric buses, but with the ability to carry significantly more passengers13
NFI Group + Manufacturing, Fabrication and Service Footprint
MCI - Winnipeg, MB
Parts Fabrication, MCI D Model Shell Assembly NFI - Winnipeg, MB Montreal, PQ
Complete J Model manufacture Parts Fabrication and Bus Shell Assembly MCI Service Center
New Product Development New Product Development
Frank Fair Fiberglass Fabrication
AB
Renton, WA SK MB Arnprior, ON
QC
NFI Service Center
NFI Service Center ON
ND Jamestown, NY
MN Part Fabrication/Assembly
NY
` PA NJ Blackwood, NJ
MCI Service Center
Hayward, CA
MCI Service Center
CA IL IN OH
Opening Q3-17 WV
KY
Ontario, CA
NFI Completion
& Service Center
AL
Los Alamitos, CA
Winter Garden, FL
MCI Service Center
Pembina, ND TX FL MCI Service Center
MCI D Shell Completion
Des Plaines, IL
MCI Service Center
St Cloud, MN
NFI Bus Manufacture
Dallas, TX Anniston, AL
Crookston, MN Elkhart, IN NFI Bus Manufacture
NFI Bus Completion MCI Service Center TCB Part Fabrication14 NFI Group + Industry’s most comprehensive Parts offering Widest bus and motor coach product assortment, industry leading distribution network with shortest delivery times. Added value through unique offerings (Kits, Mid-life upgrade programs, Vendor Managed Inventory, KanBan, etc). New MCI website offering state of the art on-line sales and distribution features.
15
NFI Group + Financial Performance
Sales ($M US) Adjusted EBITDA ($M US)
250 0 350
2,274 2,293
289 293
381 300
200 0
409
250 81 79
1,451 1,539
150 0
322 200
1,199 319 151
865
215 150
100 0 95
1,865 1,912 107
119 61
100 208 214
61
1,132 1,217 31 50
500 984
746 50 20 90
64 57
41
0 0
201 2 201 3 201 4 201 5 201 6 201 7 Q1 LTM 2012 2013 2014 2015 2016 2017 Q1 LTM
Bus Aftermarket Bus Afterm arket
Quarterly Adjusted EBITDA ($M US) Return on Invested Capital
289 292 ROIC = Net operating profit after tax
300 Average invested capital for the period
280 257
260
16% 1400
229 14.3% 14.5%
240 14% 1200
220
188 12.2%
200 12% 8.5% 1000
180
Millions
160 141
151 10% 8.6%
Millions
131 800
140 119
108 110 107 8% 6.2%
120 95 99 600
100 75 71 6% 1,078 1,173
71
80 63 61 59 61
400
60 80 77 71 4% 641 707 712
40
68 64 548
45 2% 200
20 24 37 20 27 26 35 31 39 36
16 16 14 14 15 18
0 0% 0
2012 2013 2014 2015 2016 2017
2012 2013 2014 2015 2016 2017 Q1 LTM
Adjusted EBITDA LTM Adjusted EBITDA Average Invested Capital for the period Return on Invested Capital16
NFI Group + Operating Performance
Deliveries of new Bus and Coach Equivalent Units (EUs) Adjusted EBITDA per new EU delivered ($000 US)
3,5113,574 $70 66.5
1,200
LTM Deliveries 3,207 3,500
59.2 56.5
1,100 3,055 $60 56.0 56.4
993
1,000 2,737 3,000
912 892
2,4712,480 $50
900 2,348 2,3922,4372,4552,467 45.3
829 2,500 43.0
2,1912,255
777
800 1,943 $40 37.7
1,7851,7951,739 689 2,000 34.1 34.6
1,6561,704
1,752 680
700 635 625
621
572 594
582 $30 27.5
577 25.6 24.9 26.3 25.8
600 554 1,500 21.6 23.9
23.1
490 489 20.2 20.2
500 442 441 $20
1,000 14.0
386 387
400
500 $10
300
200 0 $0
Aftermarket EBITDA Margin %
Aftermarket Adjusted EBITDA / Aftermarket Revenue
21.8%
22%
20.5% 20.6%
20.2%
19.8%
20%
18.6%18.8% 18.6% 18.6%
18.3%
18%
17.1%
16.3%
16.2%16.0%
16% 15.4%
14.8%14.7%14.6%14.6%
14.2%
14.0%
14%
12%17
+ Public Customer Book-to-Bill and Backlog
Book-to-Bill consistently >100% for 16 of last 17 Quarters
Order Intake vs Deliveries
6,000 300%
5,000 250%
4,000 200%
3,000 150%
2,000 100%
1,000 50%
- 0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1
LTM New Orders (EUs) LTM Deliveries (EUs) LTM Order Intake / Deliveries
Total Backlog (Firm and Option EUs) Option History and Current Status (EUs)
10,000 MCI Public backlog 3,000 100%
added in Q4-15
9,000 92% 90%
Options = 6,682 EUs
2,500
8,000 80%
79%
7,000 70%
73%
Equivalent Units
2,000
6,000
60%
5,000
1,500 54% 50%
4,000
Firm = 3,302 EUs
40%
3,000 1,000
35% 30%
2,000
1,000 20%
500
0 10%
- 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Firm Deferred Order Firm Option Deferred Order Option Options expired Options exercised Current option expiry Conversion rate
US Customer deferred Order was removed from backlog IN 2013 following 5 years of inaction. Conversion rate % is calculated as, Options exercised / (Options expired + Options exercised)18
NFI Group + Cash Flow Performance
2017 Q1 LTM Adjusted EBITDA to Free Cash Flow ($M) Free Cash Flow and Dividends (C $M)
350 250.0
216.3 208.4
292.4
300
200.0
250 21.4 208.4
50.2
200
81.6 158.3 150.0 108.3
150
28.0 3.5 0.4
100 100.0 65.5
45.1
50
27.1
-
50.0
54.0 58.3
33.1 30.7 32.5 33.8
0.0
2012 2013 2014 2015 2016 2017 Q1 LTM
Free Cash Flow Dividends
Free Cash Flow and Net Earnings ($/share) Free Cash Flow and Dividends ($US)
$4.00 $200 80%
3.64
3.42 165.2 70%
$3.50 57%
158.3
55% 55% 54%
$3.00 $150 60%
46%
45%
$2.50 50%
1.95 $100 40%
$2.00 2.3 83.4
2.1
59.1 30%
$1.50 1.18
43.4 41.1 44.2
0.87 $50 33.1 29.6 29.3
20%
$1.00 0.61 27.1 26.3
0.97 10%
$0.50 0.81
0.48 $0 0%
$0.00 0.21
2012 2013 2014 2015 2016 2017 Q1
2012 2013 2014 2015 2016 2017 Q1 LTM
LTM
Free Cash Flow ("FCF") Dividends Declared FCF as a % of Adjusted EBITDA
Free Cash Flow per share (C$) Earnings per share (US$)19
NFI Group + Strong Balance Sheet with low Leverage
Majority of Convertible Debentures issued in 2012 have now converted
Total Leverage does not include Convertible Debenture as debt.
Under NFI Senior Credit Agreement, Total Leverage Ratio
must be maintained below 3.75X Adj EBITDA, reducing to 3.5X
effective January 1, 2018.
Total Debt ($US M) Total Leverage Ratio
$1,000 3.5
$900
3 $6M Convertible Debentures
$800 issued in Jun-12 @ 6.25%.
$700 2.5 Convert price $US10/share
$600 2
$500 $343M Revolver Facility
1.5 used to manage working
$400 capital fluctuations ($18M
$300 outstanding)
1
$200 $482M Senior Secured
0.5 Term Loan
$100
$0 0
2010 2011 2012 2013 2014 2015 2016 2017
Q1
LTM
IDS Debt Bachelor Bonds Senior Term Loan
Revolver Convertible Debenture Total leverage ratio20 NFI Group + Additional Growth, Combination & Margin Opportunities New US Administration focus on Infrastructure spending, US economic health and tax reform could assist with further rejuvenation of aging bus/coach fleet Potential for NFI/MCI to grow market share in core bus and coach OEM business New product offerings already in development (35’ coach, zero-emission bus and motor coaches announced Dec 2016) Proven LEAN manufacturing and OpEx expertise deployment continues company-wide which has cost reduction and working capital benefits, plus improved competitiveness Significant progress made and continued investment planned for critical parts fabrication both for bus and coach Overhead and cost synergies resulting from common IT platform across NFI and MCI in process (announced June 2016) Potential for additional aftermarket share with added cost and Working capital benefits from combining the NFI and MCI parts businesses into one (announced Dec 2016) Continue M&A opportunities being investigated: Vertical (part fabrication, supply chain and aftermarket) and Horizontal (other bus types or other bus markets)
21
NFI Group + Capital Allocation Policy
Invest in current Maintain balance sheet Return capital to
business and growth flexibility shareholders
Growth includes both Prudent use of Common Share
Organic and M&A Leverage Dividend
• Invest in LEAN manufacturing • Provide liquidity for fluctuating • Sustainable distributions. Paid
to improve quality & cost working capital requirements consistently since IPO in 2005.
effectiveness Now paid quarterly.
• Seek normal operations
• Invest in vertical integration of between 2-2.5X leverage 160%
critical supply Annual dividend rate (C$) 2017 Q2, $1.30 140%
Dividend Payout Ratio
• Add leverage to fund accretive $0.70
$0.95 120%
$0.62
• Four acquisitions completed acquisitions capable of reducing $0.585
100%
80%
from 2010 to 2015. Seeking leverage through earnings 60%
additional M&A (Tuck-in and 40%
Growth). 20%
0%
Foundation of Capital Allocation Policy is built on a strong balance sheet
and an operating model providing consistent and predictable cash flow22
APPENDIX A
Bus Market Segment Summary (April 2016)
GLOBAL BUS MARKET ~420K/YR CANADA/US BUS MARKET ~56K/YR23
APPENDIX B
+ FORWARD LOOKING STATEMENTS,
FINANCIAL TERMS, DEFINITIONS AND CONDITIONS
FORWARD LOOKING STATEMENTS
This investor presentation contains forward-looking statements relating to expected future events, including the integration of the acquired business into New Flyer’s existing business and expected synergies, the
diversification and growth of the combined bus and aftermarket parts businesses. Although the forward-looking statements contained in this investor presentation are based upon what management believes to be
reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. Actual results may differ materially from
management expectations as reflected in such forward-looking statements for a variety of reasons, including risks related the ability to implement the operational changes necessary to achieve the intended
synergies, acquisitions, joint ventures and other strategic relationships with third parties (including liabilities relating thereto), the covenants contained in the Company’s new senior credit facilities could impact the
ability of the Company to fund dividends, market and general economic conditions and economic conditions of and funding availability for customers to purchase buses and to purchase parts or services, customers
may not exercise options to purchase additional buses, the ability of customers to suspend or terminate contracts for convenience and the other risks and uncertainties discussed in the materials filed with the
Canadian securities regulatory authorities and available on SEDAR at www.sedar.com. Due to the potential impact of these factors, the Company disclaims any intention or obligation to update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.
FINANCIAL TERMS, DEFINITIONS AND CONDITIONS
References to “EBITDA” are to earnings before interest, income taxes, depreciation and amortization, gains or losses on disposal of property, plant and equipment and unrealized foreign exchange losses or gains
on non-current monetary items. References to “Adjusted EBITDA” are to EBITDA after adjusting for: the effects of certain non-recurring and/or non-operations related items that have impacted the business and are
not expected to recur, including non-recurring costs relating to business acquisitions, product rationalization costs, impairment loss on equipment and intangible assets, equity settled stock-based compensation, past
service costs, fair value adjustment to MCI’s inventory and deferred revenue, proportion of the total return swap realized, loss on derecognition of long-term debt and costs associated with assessing strategic and
corporate initiatives. Return on Invested Capital “ROIC” is calculated by dividing Net Operating Profit After Tax by Average Invested Capital for the period. References to “Net Operating Profit After Tax” are to
Adjusted EBITDA less depreciation of plant and equipment and income taxes. References to “Invested Capital” are to shareholders’ equity plus long-term debt, obligations under finance leases, other long-term
liabilities, convertible debentures and derivative financial instrument liabilities less cash.
Management believes EBITDA, Adjusted EBITDA, ROIC and Free Cash Flow (as defined below) are useful measures in evaluating the performance of the Company. “Free Cash Flow” means net cash generated by
operating activities adjusted for changes in non-cash working capital items, interest paid, interest expense, income taxes paid, current income tax expense, effect of foreign currency rate on cash, past service costs,
defined benefit funding, non-recurring transitional costs relating to business acquisitions, costs associated with assessing strategic and corporate initiatives, product rationalization costs, defined benefit expense,
cash capital expenditures, fair value adjustment to MCI’s inventory and deferred revenue, proceeds from disposition of property, plant and equipment, gain received on total return swap settlement, proportion of the
total return swap realized and principal payments on capital leases. However, EBITDA, Adjusted EBITDA, ROIC and Free Cash Flow are not recognized earnings measures and do not have standardized meanings
prescribed by IFRS. Readers of this presentation are cautioned that EBITDA, and Adjusted EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an
indicator of New Flyer'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 and cash flow to EBITDA and Adjusted EBITDA, based on the Financial Statements, has been presented In Management’s Discussion and Analysis of
Financial Condition under the heading “Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA” and “Reconciliation of Cash Flow to EBITDA and Adjusted EBITDA”, respectively. A reconciliation of Free
Cash Flow to cash flows from operations is provided under the heading “Summary of Free Cash Flow”.
New Flyer’s method of calculating EBITDA, Adjusted EBITDA, ROIC and Free Cash Flow 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 New Flyer’s public filings available on
SEDAR at www.sedar.com.
All figures are in U.S. dollars unless otherwise noted.You can also read
