Grande West Transportation (BUS-V) Watch Your Blind Spot, BUS is Flying in the Vicinity Initiating Coverage BUY $2.50 January 30, 2017 Last Price $1.77 Ahmad Shaath, CFA, MBA 12-month Target Price $2.50 Analyst - (416) 507-3964 Potential Return 41% [email protected] Dividend Yield 0.0% 52 Week Price Range $0.35 - $1.99 We are initiating coverage of Grande West Transportation Group with a Estimates BUY rating and a target price of $2.50. In summary, our YE: Dec 31st FY16E* FY17E FY18E recommendation is based on the following: Revenue ($MM) $14.5 $73.3 $105.8 EBITDA ($MM) ($3.5) $8.1 $12.5 A Bus By Transit for Transit: Grande West’s Vicinity bus was born as FD EPS ($0.09) $0.10 $0.15 a result of a partnership between Grande West and BC Transit, * 16 months year ending Dec. 31st, includes stub quarter ignited by the latter’s need for a bus that is the “right size” to deploy on routes and communities with lower density. The Vicinity Valuation * was developed with continuous input and feedback from BC FY16E FY17E FY18E Transit, completing a 21-month beta test program throughout BC’s EV/Sales 7.7x 1.5x 1.1x various terrains and weather conditions. EV/EBITDA nmf(neg) 13.9x 8.9x P/E nmf(neg) 17.0x 12.1x Snuck In From the Blind Spot: We believe GW is on the cusp of Stock Data (MM) establishing a foothold in an industry with high barriers to entry, Shares Outstanding which makes it a great investment opportunity. The company Basic 62.6 Assumes conversion of debentures leveraged its partnership to record its first sales into Canadian FD 70.5 public transit agencies, then successfully continued to gauge Market Cap interest and feedback to develop new offerings (30 and 35-foot) Basic $110.8 that have been quickly adopted by the market. The company FD $124.8 capitalized on an opportunity that was ignored by incumbents, successfully growing its order book to over 175 buses for delivery in Net Debt $0.90 Pro-forma 2017. EV $111.7 The Need for Fleet Optimization: Public transit agencies in the U.S. About the Company carry on average less than 11 people, while their fleets’ average capacity is 58 passengers, yielding a utilization level of 18%. Grande West Transportation Group is a Canadian company that design, engineers and manufactures heavy-duty, medium-sized buses Additionally, they rely heavily on public funding for capex (95%) for public transits and private entities in Canada and the U.S. The and ppex (62%). Faced with limited options to optimize their company's main product is the Vicinity bus which comes in 27.5, 30 service network, we believe their operations could be optimized and 35-foot sizes and was developed in cooperation with BC Transit. by streamlining their fleet to better match their capacity needs similar to their Canadian counterparts. We believe the target All prices in C$ unless otherwise indicated market for this opportunity is at least 7,800 vehicles. Stock Performance On The Cusp of Immense Growth: GW’s Vicinity bus just qualified for “Buy America” program, opening up the federally-funded public transit bus market. With new infrastructure spending measures expected to continue to grow at 4% CAGR, and a need for fleet optimization by a significant number of U.S. Public transit agencies, GW sits on the cusp of immense growth trajectory that could lead it to a revenue run-rate of at least ~$175 million. Consequently, we are initiating coverage with a BUY rating and a $2.50 price target using a DCF12% approach. We believe the company sits in a “once-in-a-life time” opportunity to become an established transit bus provider.
Beacon Securities Ltd.| 66 Wellington Street West, Suite 4050, Toronto, Ontario, M5K 1H1 |416.643.3830|www.beaconsecurities.ca
Grande West Transportation
Table of Contents
Investment Thesis ...... 3 Public Transit In North America ...... 4 Company Overview ...... 9 Market Opportunity ...... 16 Competitive Landscape ...... 18 Financial Analysis ...... 20 Valuation: What’s It Worth? ...... 22 Potential Catalysts ...... 22 Key Risks ...... 23 Initiating Coverage with a BUY Rating and a $2.50 Target Price ...... 24 Appendix A: Consolidated Financials ...... 25 Appendix B: Management & Board ...... 26 Appendix C: Anecdotes from Vicinity’s Initial Trials ...... 28 Appendix D: Summary of the U.S. Largest Public Transit Agencies by Bus Fleet ...... 31
January 30, 2017 |Page 2 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Investment Thesis
The strain that public transit exerts on government budgets is undeniable. U.S. transit agencies spent nearly US$50 billion to fund their capex and opex in 2015. What is alarming is that these agencies rely on this funding not only to cover their capex, but also to fund more than 62% of their opex. This, however, should not be surprising when one considers that public transit buses in the U.S. carry less than 11 people on average, a mere 18% utilization rate. As transit agencies are an arm of the government, however, bankruptcy is not an option and they have much less freedom, if any, in deciding their service networks. They must provide service to the public, on many uneconomical routes as well. However they do have freedom in choosing what bus fleet to operate. Today, more than 65% of their fleet is comprised of 40-foot and larger buses, vehicles with capacity for more than 60 passengers. However, this old format maybe in the process of changing dramatically.
We believe Grande West Transportation Group (“GW” or “Company”) with its Vicinity bus, a medium-sized, agile yet heavy-duty vehicle, gives transit agencies a compelling option to streamline their fleets. The company started in cooperation with BC Transit to address this very specific issue, simply “right sizing”. The Vicinity has been very successfully adopted by many Canadian transit agencies serving less-dense areas, helping them cut operational costs by more than 20%, in addition to allowing them to expand their service during off-peak hours or by adding new routes. Having initially entered the market with 27.5-foot bus, Grande West successfully grew its offerings to 30 and 35-foot size, offering the same advantages with great success. Grande West’s current order backlog sits at 175 buses in Canada and the U.S. private market alone. Having recently qualified for “Buy America” program allowing it to bid for public transit tenders in the U.S., we believe Grande West is just starting its growth trajectory towards delivering more than ~400 buses annually and $175 million in revenue over the next 5 years. At that point, with an installed base of more than 1,500 vehicles, the company’s second leg of growth (ie. parts) should start, with both incremental revenues and, more importantly, margin expansion.
We believe Grande West offers investors a unique opportunity to participate in an organically growing bus manufacturer with exposure to highly lucrative and stable publicly funded transit bus market. We are initiating coverage of Grande West Transportation Group with a BUY rating and $2.50 Price targets, using a DCF approach and 12% discount rate.
January 30, 2017 |Page 3 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Public Transit In North America
Reliance on Tax-payer’s Dollars
North American transit agencies rely on public sources of capital for the majority of their capital needs, with fare and other revenue providing minimal support. In the U.S., transit agencies have consistently sourced 95% of their capex needs over the past 10 years from public funds (e.g. U.S. transit agencies sourced rolling stock, stations, equipment etc.), peaking at ~US$19 billion in 2015. 95% of their capex and 62% of This reliance stretches to operating expenses as well as U.S. transit their opex in 2015 from public agencies claimed US$29 billion of public funds to support their operations funds, for a total just shy of US$50 in 2015, covering more than 62% of their opex. Additionally, both capital billion. and operating funding have registered a ~5% CAGR over the last decade, and with current commitments under the Fixing America's Surface Transportation Act (“FAST” Act), this trend is expected to continue. In Canada, the trend has been similar, with capex funding growing at 17% CAGR, albeit Canadian transit agencies seem to be more efficient as they only rely on public funding to cover ~37% of their opex.
Exhibit 1. Public Transit Reliance on Public Funding in Canada (left) and the U.S. (right) C$6,000 US$20,000 102% Period CAGR: 17.0% Period CAGR: 4.8% Avg. Funding % of CapEx: 95.3% US$18,000 100% C$5,000 US$16,000 98%
US$14,000 C$4,000 96%
US$12,000 94%
C$3,000 US$10,000 Transit Buses In Canada InBuses Transit
- 92%
US$8,000
US Public Transit (excl. rural, all modes) all rural, (excl. Transit Public US - C$2,000 90%
US$6,000 Expenses Operating of % As
88% Capital Funding Capital US$4,000 C$1,000
US$2,000 86% Operating FundingOperating
C$0 US$0 84% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Capital Funding Capital Funding As % of total CapEx Avg. Capital funding % of Total CapEx C$4,500 40.0% US$35,000 64.0% Period CAGR: 7.9% Period CAGR: 5.2% Avg. Funding % of OPEX: 36.8% Avg. Funding % of OPEX: 61.9% C$4,000 39.0% US$30,000 63.0%
C$3,500 38.0%
US$25,000 62.0% C$3,000 37.0%
C$2,500 36.0% US$20,000 61.0%
Transit Buses In Canada InBuses Transit - C$2,000 35.0%
US$15,000 60.0%
US Public Transit (excl. rural, all modes) all rural, (excl. Transit Public US -
C$1,500 34.0% As % of Operating Expenses Operating of % As US$10,000 59.0%
C$1,000 33.0% Operating Funding Operating As % of Operating Expenses (excl. Depreciation) (excl. Expenses Operating of % As US$5,000 58.0%
C$500 32.0% Operating FundingOperating
C$0 31.0% US$0 57.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Operating funding As % of OPEX Avg. Op. Funding % of Opex Capital Funding As % of OPEX Avg. Op. Funding % of Opex Source: StatsCanada, NTD, Beacon Securities. Notes: Data for Canada is for transit bus and bus activities in non-bus industries. Data for the U.S. is for all public transportation agencies and for all modes of transportation (ie. bus, rail, light rail etc.). Notes: Excluding 2014 data points in Canada due to new method of reporting. 2014 funding level was C$3.3 billion (29.2% of OPEX). Prior to 2014, StatsCanada data set included depreciation under “other operating expenses”, data shown excludes depreciation assuming a similar % of OPEX as for 2014 data points.
January 30, 2017 |Page 4 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
…Comes at a Price
The return that tax payers expect from their transit agencies is having a reliable and efficient transportation system. Ultimately, residents want enough routes (ie. spatial coverage) with frequent enough service to maximize the possibilities of moving from point A to point B as promptly as possible. Consequently, this has resulted in service on many routes that can be considered, by for-profit business measures at least, uneconomical. This, in large part, explains the increasing reliance on public funding. A result of this issue resembles itself in Exhibit 2 below, which shows that the national average passenger load, ie. number of passengers on a public transit bus (in the U.S.) has been less than 11 people.
Exhibit 2. Average Number of Passengers on U.S. Public Transit Buses 10.8
10.6
10.4
Total Bus Total -
10.2
10.0 Average Passenger Load Passenger Average
9.8
9.6 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Passengers Average Source: NTD, Beacon Securities. Notes: Total Bus includes Bus, Bus Rapid Transit and Commuter Bus modes. Average passenger load is defined as the average number of passengers aboard a vehicle for its entire time in revenue service including late night and off-peak hour service as well as peak rush hour service; calculated by dividing passenger miles by vehicle revenue miles.
Vehicle Operations and Maintenance Costs Keep Rising
While this underutilization has caused the need for public operating funding, the issue is magnified when one takes into consideration that the average operations and maintenance expenses per bus in the U.S. has been increasing at CAGR of ~4% over the last 10 years. Interestingly, this growth rate is almost equal to the growth rate of public operating funding seen in Exhibit 2.
January 30, 2017 |Page 5 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Exhibit 3. Raising Costs of Operations for U.S. Public Transit Buses US$500k
US$450k
US$400k
US$350k
US$300k
US$250k
US$200k
US$150k
US$100k
US$50k
US$0k 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Maintenance Expense per Vehicle Operations Expenses per Vehicle Total Opex per Vehicle Source: NTD, Beacon Securities.
Since vehicle operating and maintenance (ie. excluding overhead such as staff salaries) costs represent 79% of total operating costs for buses in the U.S., we believe examining fleet characteristics and operations should provide meaningful insights behind any operating inefficiencies. As shown in Exhibit 4, the average capacity of a bus in U.S. public transportation agencies fleets from latest data available (2015) shows bus capacity of 58 passengers, seated and standing. This yields a national “utilization” for public transportation buses at ~18% (ie. 11/58). Utilizing data points available regarding passenger miles and vehicle revenue miles, coupled with our estimation of national average of bus capacity, we also can approximate a national transit bus load factor figure of ~18%.
Exhibit 4. US Public Transit Bus fleet Composition 80k 80
70k 100% 70
60k 60
50k 50
58% 40k 40
30k 30 Number of Vehicles of Number
20k 20
16% Standing) and (Seated Capacity Average 10k 11% 10 7% 7%
0k 0 National Bus Larger than 40 Larger than 35 35 Foot 30 foot and less Shorter than 30 Cutaways Fleet Foot foot and up to than 35 foot foot 40 foot Number of Vehicles Avg. Capacity Source: NTD 2015, Beacon Securities. Notes: Data indicate percentage of national fleet in that category. Cutaways are a separate category not included in the national bus fleet. January 30, 2017 |Page 6 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Furthermore, we analyzed load factors of the top 100 transit agencies (by fleet size) and the service areas they are mandated to cover. Demonstrated in Exhibit 5, we have plotted these agencies’ estimated load factors and service area densities. The conclusion is that there seems to be an “optimal” density level given the current fleet characteristics. For agencies serving areas with densities below 2,000 people per square kilometer, we notice that the vast majority of those agencies have a below-average load factor, while the opposite is true for agencies serving areas of densities larger than 2,000 people per kilometer square. Note that most Canadian cities, where the Vicinity has been successful, have densities well below 2,000 people per square kilometer. Latest census data from Statistics Canada show that all major Canadian cities have population densities of below 1,000 people per square kilometer.
Exhibit 5. The Inefficiency of U.S. Transit Agencies’ Bus Fleets (Refer to Appendix D for detailed data points) 50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0% National Average Load Factor 18.4% Transit Agency Estimated Loaf Factor Loaf Estimated Agency Transit
15.0%
10.0% 74% of agencies serving areas with densities below 2,000 people per km2 have below average load factor 5.0%
0.0% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Population Density of Service Area Source: NTD 2015, Beacon Securities estimates.
Conclusion – Most Transit Agencies Have Suboptimal Bus Fleets
While many factors play a role in the operating inefficiencies, we believe a major one is that transit agencies operate suboptimal bus fleets. As an example of an agency with right-sized fleet, we highlight the King County Department of Transportation serving Seattle, Washington. Our analysis of its fleet shows that it is almost evenly split between traditional 40-foot transit buses and 30-foot and smaller vehicles. The agency serves both Seattle’s metropolitan area, where a 40-foot bus is justified, and its surrounding suburbs and rural areas, which justifies a smaller vehicle. King County leads the U.S. with an estimated load factors of 43.1% and has one of the highest recovery ratios at 30.5% (ie. fare to operating expenses ratio). Consequently, we believe the current fleet mix for a significant number of U.S. transit agencies could be streamlined (ie. “right sized”). A
January 30, 2017 |Page 7 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
fleet that more matches their demand should help these agencies reduce their operating costs, which in turn will result in more funds available that could be put to better use, such as expanding coverage (spatial or frequency) or alternatively reducing the burden on tax payers.
January 30, 2017 |Page 8 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Company Overview
Grande West Transportation Group is a bus manufacturer based in Aldergrove, British Columbia. The Company designs, engineers and manufactures mid-sized transit buses for sale to public transit agencies and private entities such as airports and car rental companies (ie. shuttle service) in Canada and the U.S. The company’s main product is the Vicinity model, which is currently offered in 27.5, 30 and 35-foot sizes. The Company was born as a result of a partnership with BC Transit in 2008 due to the latter’s need for mid-sized buses to deploy on its community and low-density routes. Grande West forged a partnership with WeiChai Power (000338.SZ, not rated) to bring a competitive product to the market in less than 5 years. To date, there have been ~100 Vicinity buses deployed, mainly with public transit agencies in Canada. At the start of 2017, the Company qualified for “Buy America” program, allowing it to bid for federally-funded public tenders in the U.S. The Company has a strong management team. Led by CEO Mr. William Trainer and VP Jean-Marc Landry, a bus industry veteran with substantial business development experience with Nova Bus. Grande West’s Board includes public transit veteran Mr. Yves Devin, former CEO of STM (Montreal Transit System) and count on Mr. Michael Roschlau, former CEO of the Canadian Urban Transportation Association (“CUTA”), as a strategic advisor.
How It Started: Working With BC Transit
Not satisfied with its van-based, cutaway fleet deployed on its community and shuttle service, BC Transit, in cooperation with TransLink (metro Vancouver transit agency) and OC Transpo (Ottawa transit agency) posted a joint expression of interest to the market for a 27.5-foot bus in late 2008. BC Transit is considered one of the leaders in public transit innovation in North America. It was the first agency to deploy low-floor buses, the first to deploy high-capacity double-decker buses and the first to deploy hydrogen-cell buses. With this expression of interest, BC Transit was seeking to find a solution for the issue it was facing with operating the cutaways on its community and shuttle service (see Page 20 for Cutaways). BC Transit was seeking cost-effective, reliable and low-floor accessible vehicle that can host seated passengers to replace the Ford Polar cutaway, that is more suitable and cost-effective than the 30 and 35-foot Dennis Dart models it had (Exhibit 6).
January 30, 2017 |Page 9 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Exhibit 6. BC Transit’s 35-foot Dennis Dart (left) and Ford Polar (right)
Source: CPTDB
The request was ignored by incumbents who were running at high utilization levels on their main product (the 40-foot standard transit bus) and had no interest in pursuing new R&D initiative at the start of the “great recession”. Developing a new bus platform is a consuming process. While initial capex required could be relatively small, the time and effort to go through the testing and licensing for public transit is an extensive process that could take up to 4-5 years. Leveraging his experience in working with import/export in China, Mr. William Trainer, Grande West’s founder and current CEO, proposed to design, engineer and manufacture the 27.5-foot bus in collaboration with BC Transit. Mr. Trainer and his partners offered to provide capital funding and asked BC Transit to provide only its time, giving its expertise and detailed feedback to help develop the platform that best suits its, and similar transit agencies’, needs.
Partnering with Weichai, Grande West delivered its first 27.5-foot Vicinity bus in February 2010. The bus was put under beta-testing program, deployed first for BC Transit’s enhanced service for testing during the Vancouver Winter Olympics. The original single-door, 27.5-foot bus was tested over the following 21 months period under various weather and terrain conditions, completing 60,000 kilometers in Nelson, Penticton, Quesnel and Dawson Creek. The feedback from BC Transit and its local agencies commended the Vicinity, highlighting the bus’s maneuverability, accessibility (ie. kneeling bus), ride comfort, reduced noise level and the enhanced capacity (ie. having space for standing passengers) as much- needed features for their service. Most significantly, in our opinion, the feedback ignited local transit agency leaders’ interest in expanding the service to areas that are in much need of service but could not justify the deployment of regular-sized, more-expensive to buy and operate buses. Local transit agencies envisaged deploying the Vicinity not only as replacement for the cutaways, but also on new routes and on existing routes served by traditional buses but during off-peak times where less capacity is required. (See Appendix C for anecdotes from this feedback). After completing trials in October 2011, Grande West received certification by the Canada Motor Vehicle Safety Standard (“CMVSS”), Transport Canada, and the British Columbia Ministry of Transportation for the Vicinity bus.
January 30, 2017 |Page 10 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Exhibit 7. 27.5-foot Vicinity During Tests by BC Transit in Prince George, BC.
Source: PGCitizen.CA
Vicinity Gains Market Traction, Successfully Expands Offerings
From its first sale of fifteen 27.5-foot buses valued at $3.8 million to BC Transit in 2013, GW has been very successful with its Vicinity bus with confirmed orders totaling 265 buses (FY17 and beyond) from customers across Canada and the U.S. The company started with only 27.5-foot model, and due to increasing market demand for the Vicinity, GW added a 30-foot and 35-foot models, both of which currently dominate its order book. The company has confirmed orders for 175 buses with expected revenue of more than $70 million for FY17.
Exhibit 8. Key Millstones in the Development of Vicinity
Source: Company reports.
January 30, 2017 |Page 11 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Exhibit 9. The Vicinity Fleet Across Canada
Source: Company reports.
Partnership In China
Unable to find a North American partner to manufacture its initial small order of 27.5-foot buses, Grande West sought partnerships in Asia. Founded in 1946, Weichai is one Leveraging his 20 years of experience conducting business with partners in of the largest commercial China, Mr. William Trainer was able to manufacture his first demonstration vehicle, engine and equipment buses with Weichai in East China. Weichai, through its subsidiaries, was just manufacturing groups in the emerging from buying back Mercedes-Benz’s share of their joint venture, world with approximately 55,000 Yaxing-Benz, which lasted 10 years. Daimler had to exit the JV due to employees and total revenues of US$16B. regulatory reasons, as there were limits on the number of partnerships a foreign auto maker could have in China. Given these limits, Mercedes- Benz was looking to form a new partnership to be able to manufacture a wider array of vehicles (heavy-duty trucks, smaller vans, luxury coaches etc.), and it exited its Yaxing-Benz JV in “good faith and friendship”. Over that 10-year period of the JV with Mercedes-Benz, Weichai gained invaluable experience in high-quality production, with many of its senior staff and engineers gaining training with Mercedes-Benz in Germany.
What started as a small order in 2008 grew to a full long-term production A monocoque frame is a type of contract with Weichai Group, which was signed in Summer of 2016. The vehicle construction where the agreement gave Grande West dedicated production capacity of 15 both the bus body and the chassis forms a single unit. This buses a month at minimum, for an annual run-rate of 180 buses, with an type of construction improves option to double that capacity. The signing of this agreement allowed safety, ride quality, and reduces GW to ensure sufficient production capacity, achieving scale and overall vehicle weight. boosting its gross margins. The partnership is based on GW providing all major components for assembly (engine, transmission, etc..) and Weichai providing the monocoque bus structure and assembling all parts. Weichai’s extensive experience in the bus manufacturing business has been a key factor in enabling GW to expand its offerings and produce
January 30, 2017 |Page 12 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
high-quality vehicles to the exact specifications that were designed with BC Transit’s continuous input and feedback.
Establishing a Foothold in the U.S. & Making Vicinity “Buy America” Certified
In order sell into the U.S. market Grande West had first to gain Federal Motor Vehicle Safety Standards (FMVSS) test, which took the company a little over a year to achieve. This certification allowed Grande West to enter into the U.S. private market. The company signed an exclusive distribution agreement with The Alliance Bus Group (“ABG”) in May 2015. In order to sell into the U.S. ABG placed its first order only 4-months later, for 50 30-foot Vicinity buses public transit market, GW had to at an announced value of $16.0 million, 13 of which are destined for gain FMVSS certified, pass the Hartsfield-Jackson Atlanta International Airport for delivery in 2017. Altoona Test and qualify for “Buy America” (ie. 60% U.S. content). The process took GW ~3 years. Exhibit 10. Alliance Bus Group’s Footprint in the U.S.
Source: Alliance Bus Group.
To gain access to the federally-funded public transit market in the US however, the Vicinity bus had to pass the Federal Transit Bus Test, commonly known as the Altoona test, and become “Buy America” certified as well. A process that took 9 months to complete, the Altoona test is a rigorous testing process that put Vicinity through 500,000 miles test run, equivalent of a 12-year operating cycle. The process tests the bus’s structural durability and integrity, accessibility, reliability, safety, fuel economy, interior and exterior noise levels, and emissions. The Vicinity passed the test with many best-in-class results, most notable of which is having the lowest number of major failures compared to its peers (Exhibit 11).
January 30, 2017 |Page 13 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Exhibit 11. Altoona Test Bus Comparables
Source: Alliance Bus Group. * Partial test, no durability test was conducted. ** 10 year test.
The majority of the Vicinity’s In addition, the federal government funding requirements mandates components are North buses to be certified for “Buy America” by the Federal Transit American, with the exception of Administration (“FTA”). In order to qualify, the steel, iron, and the monocoque frame. GW manufactured goods used in any rolling stock (e.g. bus, van, and ferry) qualified for “Buy America” must be produced in the U.S. The requirements for FY16-FY17 is that 60% of program in January 2017 and these costs must meet this criteria, escalating to 65% in FY18-FY19 and 70% currently working on securing a in FY20 and beyond. Additionally, final assembly of the product must be facility for final assembly in the U.S. conducted in the U.S. Grande West qualified for the “Buy America” program in January 2017, and we understand the company is currently in the process of securing a U.S. based facility for final assembly. As noted earlier, only the Vicinity’s monocoque structure is manufactured in China, with the bulk of the components being North American (e.g. Cummins engine, Allison transmission).
Success in Attracting Talent from Competitors
In addition to being led by its founder Mr. William Trainer, which under his leadership GW managed to bring a totally new bus platform to North America in under 5 years, Grande West managed to bolster its management and Board, attracting talent with successful track records in established bus manufacturers and North American public transit agencies. We highlight:
1) Jean-Marc Landry – VP of Business Development: Hired in December 2013, Mr. Landry has been a major driving force behind the company’s growing order book. He joined Grande West with only one order on its books, a BC Transit order of 15 buses for “further testing” around the province. Since then, he has been instrumental in expanding Grande West’s footprint and product portfolio successfully helping grow the company’s sales into Canadian Public Transit market and the U.S. private market, and becoming “Buy America” certified. Mr. Landry has leveraged his 20 years of experience in business January 30, 2017 |Page 14 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
development, most notable of which were 8 years at Nova Bus (division of Volvo , not rated) as its VP of Sales in North America, helping grow its market share in Canada from 15% to 50%.
2) Yves Devin – Director: Joining shortly after Mr. Landry, Mr. Devin brought extensive knowledge of North American public transit agencies, leveraging his experience as the former CEO of Société de transport de Montréal (“STM”) from 2006 to 2012. Mr. Devin’s most notable achievements include leading STM to win the best Transportation Company in North America 2010, awarded by the American Public Transportation Association, and the best Transportation Company with a commitment to sustainable development (2010-2011-2012) by the London Metro Awards.
3) Michael Roschlau - Strategic Advisor: Formerly president and CEO of the Canadian Urban Transit Association (“CUTA”). At CUTA, Michael led “Canada’s voice for public transit” and was instrumental in creating Transit Vision 2040, a long term vision and strategy for Canada’s public transit. He holds a PhD in transport geography from the Australian National University.
Please refer to Appendix B for additional details on GW’s current Management and Board.
Exhibit 12. Current Management & Board, and Their Ownership Name Title/Role Common Shares % of total Joseph Miller Director 5,220,000 8.3% William Trainer President & CEO 3,291,125 5.3% John Wang VP - Engineering 1,000,000 1.6% John LaGourge Director 312,000 0.5% Yves Devin Director 180,000 0.3% Jean-Marc Landry VP - Business Development 102,000 0.2% Andrew Imanse Director 0 0.0% Aaron Triplett CFO 0 0.0%
Total 10,105,125 16.1% Source: Company reports.
January 30, 2017 |Page 15 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Market Opportunity
The U.S. Under the FAST Act, federal grants for bus and bus facilities increased 63% y/y in 2016, reaching US$696 million. This funding level is expected to continue to increase ~4% CAGR over the coming 4 years, reaching US$809 million in 2020. Note that federal funding cannot exceed 80% of any capital project’s cost, and agencies rely on state and local government funding in addition to revenue sources to cover the remaining 20%. The U.S. Public Transit - Buses Annual bus deliveries for public transit in the USA have ranged from 4,000 to 5,500 units over the past decade. Data from the National Transit Database’s (“NTD”) latest vehicle The 35-foot and shorter public inventory (2015) shows that public transit agencies in the U.S. currently transit bus market opportunity represents ~1,200 vehicles per operate a fleet of ~69,000 bus vehicles, inclusive of contingency year opportunity, with further vehicles, which are usually 10-20% of the overall fleet. The overall upside coming for capturing average age of these vehicles is just below 10 years. market share from the 40-foot (4,000-5,500 vehicles annually) The FTA recommends replacing buses that are 12 years of age or bus and the aged cutaway older, or have clocked 500,000 miles. fleet. Our analysis shows that 23,200 vehicles (~34%) of this fleet are 35-foot long or shorter, with a combined average age of ~9 years. Further, of these ~23,200 vehicles, more than 5,700 vehicles (~25%) are 12 years old or older. Overall then, more than 5,000 vehicles in the 35-foot and shorter category should be up for replacement over the coming 5 years, indicating a potential market size of ~1,100-1,200 vehicles per year for this category alone. We note that this analysis excludes the market opportunity for capturing some of the 40-foot bus down-sizing potential. According to the American Public Transportation Association (“APTA”), there are more than 12,000 full-sized (30-foot and larger) transit buses in need of replacement as of 2016, with another ~19,000 In its annual transit review, BC needing replacement within 5 years. Using these data points, the transit indicated that 22% of its market size for full-sized buses over the coming 5 years is ~6,000 service does not carry the vehicles, at the higher end of historical figures. acceptable level of riders per hour or trip. We believe the The U.S. Public Transit - Cutaways smaller Vicinity bus can help stimulate ridership by allowing Vehicles categorized as “cutaways” in NTD vehicle inventory total transit agencies right-size and/or ~27.5,540 vehicles, with average age of 6.8 years. Depending on their expand coverage (spatial and type, cutaways have nameplate useful life anywhere from 2 years for frequency) at a cost-effective smaller models, to 5-7 years for medium-duty models up to 10 years for manner. larger models. Narrowing our analysis to include only cutaways that are deployed on fixed route service, we see a total of ~5,100 vehicles with an average age of 13.6 years. Establishing 7 years as a cut-off useful life age, we conclude that there more than 2,700 (54%) cutaway vehicles deployed on fixed route January 30, 2017 |Page 16 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
service that are ripe for replacement. We believe this represents the low-hanging fruit for Grande West’s Vicinity 30-foot and 35-foot models to replace. Exhibit 13. Potential Market Opportunity in the U.S. U.S. Public Transit Agencies Fleet Analysis Bus Cutaways Overall Fleet1 Overall Fleet1 # of Vehicles 69,000 28,500 Average age (years) 10 - 11 6 - 8 Useful Life (years) 12 7 Est. # of Vehicles ripe for Replacement 27,500 14,600 as % of total fleet 40% 53% Fixed Route, 35-Foot and Smaller2 Fixed Route3 # of Vehicles 15,300 5,100 Average age (years) 9 - 10 7 Useful Life (years) 12 7 Est. # of Vehicles ripe for Replacement 5,100 2,700 as % of total fleet 33% 56% Market Opportunity - Replacement Only 7,800 1)Info unavailable for 1,023 bus vehicles and 808 cutaway vehicles, included only in total number of vehicles. Figures rounded to the nearest 100 2)For buses, the following modes of transportations were excluded: demand response, rapid transit, vanpool and commuter bus 3)For cutaways, the following modes of transportation were excluded: demand response Source: NTD, Beacon Securities.
The U.S. – Private Market The opportunity on the private side of the market is driven mainly by shuttle services for airports (passengers to gate), car rental shuttles and hotel shuttles. Grande West, through its resale partner ABG, has already established its presence this market with a first order for 50 buses, 13 of which are slated for delivery to Hartsfield-Jackson Atlanta International Airport in FY17.
Canada The 2016 Canadian government budget has allocated $120 billion over the coming 10 years to spend on infrastructure. Phase 1 of this plan, which is for 2017-2018 period, prioritizes investments to “modernize and rehabilitate public transit”. Of the $11.9 billion allocated to Phase 1, $3.4 billion is earmarked to “upgrade and improve public transit systems across Canada”. With an established fleet of ~100 vehicles on the field across Canada already, Grande West has quickly built its reputation and credibility in the Canadian market and will continue to build its market share. We note that many of GW’s Canadian orders have been repeat orders, and the company’s current order book has 175 deliveries in FY17.
January 30, 2017 |Page 17 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Competitive Landscape
Current offerings in the market are predominately converted 40-foot bus platforms, cut for a shorter size. Compared to the Vicinity these offerings have longer overhang (hindering maneuverability), higher exterior and interior noise levels and heavier structure that hampers fuel economy. We believe Grande West’s Vicinity will face competition from the following offerings, with New Flyer (NFI-T, not rated) representing the toughest competition due to its established presence (fleet unification risk). We note, however, that the Vicinity comes at a substantial price advantage to New Flyer’s Xcelsior model with comparable heavy-duty features, while Vicinity has a very high (>90%) win ratio against MiDi and the Eldorado EZ- Rider in Canada. New Flyer MiDi (MD30 & MD35) The New Flyer MiDi is produced in a JV with Alexander Dennis of the UK, based on the latter’s Enviro200 platform. The bus, introduced in 2013, has sold in relatively small volume in the US, with NTD data showing only 34 vehicles in operations in the US public transit market. The MiDi costs $425k- $500k. New Flyer Xcelsior New Flyer also sells a smaller version of its heavy-duty Xcelsior platform, which was launched in 2008 as a 40-foot model. U.S. public transit agencies currently operate a fleet of less than 1,000 New Flyer in 35-foot and smaller models, most of which are 35-foot. The current average age of this fleet is 11 years, with >50% of them older than 12 years (mostly older D35LF and C35LF models). The Xcelsior 35-foot bus costs ~$550k-$600k. Gillig Low Floor (LF) The Gillig low-floor (also referred to as “Advantage”) is a 20-years old platform, with chassis (stainless steel) that is separate from the body (aluminum). The bus comes in 29, 30, 32, 35 and 40-foot sizes and is widely deployed in the U.S. market. U.S. public transit agencies currently operate ~6,600 Gillig LFs in these sizes (including the retired Phantom platform), with average age of 9.4 years with ~32% (>2,100 vehicles) of the current fleet 12 years or older. Eldorado EZ Rider II & EZ Rider II MAX The Vicinity’s closest competitor in terms of pricing (~$400k-$450k), the EZ Rider is a 15 years old platform available in 30, 32 and 35-foot sizes. The bus is available with diesel, propane and CNG options. U.S. transit agencies currently operate 800 EZ Riders (all variations), with average age of 9 years and >21% (>170 vehicles) of them 12 years or older. Cutaways We believe cutaways, especially the vehicles deployed on fixed-routes, represent the biggest opportunity for the Vicinity to capture market share. The cutaways are based on a truck or van chassis, with useful life of 7-10 years at best. They are considered medium or light duty by transit standards, and they range in size going up to 37-foot models (Exhibit 15). In our opinion, the following disadvantages make them the prime target for the Vicinity:
January 30, 2017 |Page 18 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
a) Limited accessibility: cutaways are high-floor refitted vans, representing a challenge for the elderly and passengers with disabilities. For example, the entry of a person with a disability would require a process that could take up to 5-7 minutes and could require freeing of up to 4 seats, in worst cases, where on- board passengers might have to be disembarked and the transit authority would be required to dispatch a separate vehicle for them to complete their trip.
b) Capacity issues: the cutaways can only accommodate seated passengers, which puts a limit on capacity to 25-30 passengers at best.
c) Costs: with life expectancy of half of that of a medium and heavy duty bus, cutaways pose capital cost risks for transit agencies. The fact that they are refitted-vans rather than a product built from the ground up for public transit operations, operating costs of cutaways could be as high as 2-3x that of a transit bus on fixed route.
Additionally, we note that our in depth look at the NTD vehicles inventory shows a substantial number of vehicles categorized as “bus” that are smaller than 30-foot that are in fact cutaway models. The prominent cutaway brands include El Dorado, Goshen Coach, Startrans and Glaval.
Exhibit 14. Cutaways - Glaval Legacy (top left), Starcraft Allstar (top right) and El Dorado Passport (bottom)
Source: Google images.
January 30, 2017 |Page 19 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Financial Analysis
Exhibit 15. Financial Summary (in $000s unless otherwise noted) Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 2017E 2018E 2019E 2020E 2021E Buses Delivered 200 264 300 350 400 ASP ($000s) $361 $393 $400 $408 $412
Bus Sale Revenue $72,220 $103,695 $120,000 $142,800 $164,832 Parts Revenue $1,083 $2,074 $4,800 $8,568 $14,835 Consolidated Revenue $73,303 $105,769 $124,800 $151,368 $179,667 Gross Profit $13,659 $20,583 $24,660 $30,488 $37,293 % 18.6% 19.5% 19.8% 20.1% 20.8% EBITDA $8,063 $12,518 $15,144 $19,135 $23,818 % 11.0% 11.8% 12.1% 12.6% 13.3% Net Income $7,353 $10,298 $10,948 $13,965 $17,416 Free Cash Flow ($4,889) $7,154 $9,145 $9,485 $13,094 DCF Summary Terminal Value Calculation Discount Rate 12% Method: Exit Multiple PV of FCF $160,094 EV/EBITDA Multiple 9.0x Net Debt (Q4/FY17) $6,285 EBITDA $23,818 S/O (MM) 62.6 EV $214,364 $2.50 Share Value Source: Thomson Reuters, Company reports, Beacon Securities.
For our forecast period we assume: o For FY17 the company currently has firm orders of 175 buses for 2017 deliveries, with management guiding that current bidding activity supports 200 buses. At that scale, GW should record gross margins in the 18-20% range. We keep our pricing assumptions for FY17 relatively in line with recent trends at $360k per bus (blended 30 and 35-foot). o We expect GW to win its first U.S. public transit order for delivery in FY18, which should be the start of accelerated growth for the company as it gains credibility in the marketplace. Our assumptions for bus sales reflect 10-20% market share captured, with the majority of it coming from “replacement cycle” market we delineated earlier (replacing similar sizes or cutaways only, Exhibit 13). o Significant upside to our analysis would come from capturing market share from the 40-foot transit bus market, which we currently do not factor. o Over our forecast period, our assumptions for pricing remain conservative, with blended ASP trending upward, peaking $412k in FY21. We await to see the company’s first U.S. public transit sale and the level of pricing it realizes given the completion and its “new entrant” status. We note that
January 30, 2017 |Page 20 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
average cost of similar sized buses to U.S. transit agencies is currently in the range is at ~US$346k ($455k) at minimum, Upside: As GW grows its installed base, parts revenue becomes more meaningful. Such revenue could represent ~10-20% of bus sales revenue, at a higher gross margin (30% to 40%), which will provide margin expansion.
Exhibit 16. Cost of Buses to U.S. Transit Agencies (2014/2015 figures) Category 30-foot Transit 35-foot Transit 40-foot Tranist Intercity Bus1 Suburban Bus2 Average Cost US$422,278 US$533,776 US$503,722 US$555,148 US$345,733 1) >=32'6", 1 door, luggage bays 2)>=27'6", 1 door, no luggage bays Source: APTA.
January 30, 2017 |Page 21 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Valuation: What’s It Worth?
Grande West Currently trades at: o An EV/FY17E EBITDA multiple of 13.9x (peers are at 11.8). o An EV/FY18E EBITDA multiple of 8.9x (peers are at 9.8x). In our opinion, the valuation premium is warranted given the company’s above-average growth expectations and industry-leading margins. Our $2.50 target price for Grande West is derived by a DCF. We employ a DCF analysis as we believe it best captures the growth profile for GW and the value arising from the high-margin parts- revenue, which only starts adding significant value in in the later stages of our forecast period. (Exhibit 15) We believe our 12% discount rate is appropriate as the GW’ story has been significantly de-risked after achieving its first sale in the U.S. private market and recently gaining access to U.S. public transit market. We will revisit our discount rate assumptions once GW secures its manufacturing facility and record its first public transit sale in the U.S.
Exhibit 17. Market Comparables Grande West's Market Comparables
Sales EBITDA EPS (FD) EV/EBITDA P/E
Market EV (MM, in Net Debt Net Debt/ Company Ticker Currency Year End Last Price Cap. reporting 2016E 2017E 2018E 2016E 2017E 2018E 2016E 2017E 2018E 2016E 2017E 2018E 2016E 2017E 2018E (MM) Capitalization (MM) currency)
Grande West Transportation Group Inc BUS.V CAD Aug 1.77 111 1 112 1% 14.5 73.3 105.8 (3.5) 8.1 12.5 (0.09) 0.10 0.15 - 13.9x 8.9x - 17.0x 12.1x Manufacturing & Packaging Companies Blue Bird Corp BLBD.O USD Dec 16.95 383 100 533 26% 937 991 1,033 71 74 82 0.96 1.26 1.47 7.5x 7.2x 6.5x 17.7x 13.5x 11.5x Daimler AG DAIGn.DE EUR Dec 70.72 75,656 94,247 176,216 125% 164,587 168,153 172,410 20,556 21,321 21,529 8.94 9.21 9.19 8.6x 8.3x 8.2x 8.5x 8.2x 8.2x Eicher Motors Ltd EICH.NS INR Dec 23,482.65 638,812 (147) 9,236 0% 2,270 1,056 1,287 361 390 486 7.08 9.31 11.83 25.6x 23.7x 19.0x 48.7x 37.1x 29.2x Man SE MANG.DE EUR Dec 96.16 13,556 4,770 19,355 35% 15,146 15,762 N/A N/A N/A N/A 1.23 2.54 N/A - - - 83.4x 40.5x - Marcopolo SA POMO4.SA BRL Dec 2.95 1,707 256 830 15% 792 906 1,103 43 67 100 0.07 0.05 0.08 19.3x 12.5x 8.3x 14.4x 18.2x 12.0x Navistar International Corp NAV USD Dec 28.58 2,335 4,054 6,396 174% 8,215 8,005 8,563 560 546 692 (0.50) 0.20 1.44 11.4x 11.7x 9.2x - 145.4x 19.9x New Flyer Industries Inc NFI.TO CAD Dec 42.72 2,640 578 2,586 22% 2,279 2,374 2,404 292 310 310 2.18 2.48 2.48 8.9x 8.3x 8.4x 14.9x 13.1x 13.1x PACCAR Inc PCAR.O USD Dec 67.59 23,693 5,664 29,356 24% 16,134 15,269 16,642 1,973 1,868 2,137 3.90 3.52 4.02 14.9x 15.7x 13.7x 17.3x 19.2x 16.8x Spartan Motors Inc SPAR.O USD Dec 9.35 322 (35) 286 -11% 583 644 671 21 24 34 0.33 0.35 0.56 13.6x 12.1x 8.5x 28.6x 26.7x 16.6x Volvo AB VOLVb.ST SEK Dec 112.90 174,595 6,384 27,982 4% 33,391 33,702 35,025 3,914 4,008 4,258 0.74 0.80 0.87 7.1x 7.0x 6.6x 17.3x 16.0x 14.6x Average 41% 13.0x 11.8x 9.8x 27.9x 33.8x 15.8x Median 11.4x 11.7x 8.4x 17.3x 18.7x 14.6x Source: Company reports, Thomson Reuters, Beacon Securities estimates.
Potential Catalysts
Securing a facility for final assembly in the U.S. First order in the US public transit market. New bus models. Larger orders necessitating production capacity increase with Weichai Quarterly results.
January 30, 2017 |Page 22 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Key Risks
Limited adoption by the public transit market in the U.S. While the Vicinity bus has had excellent acceptance and adoption in the Canadian public transit market, the bus is yet to win an RFP in the US public transit market. While it has only recently qualified to bid for such opportunities, there are no guarantees that the bus would be adopted by transit agencies in the U.S. Recall risk. As the company sources the majority of the components of its buses from third party manufacturers, there is risk for faulty parts similar to what the auto industry has suffered from in recent years. Additionally, this risk could be magnified since it involves the safety of the public. Durability risk. Grande West’s oldest, on-the-field buses are only 4 years old. While the Vicinity has been tested for 12 years and 500,000 miles of operations, and has experienced real-life scenario testing in BC over the course of 3 years, there still exists risk as the company yet to complete a full cycle of for a meaningful number of buses in real-life operations. Warranty risk. While major components such as engines and axles’ warranty is provided by their respective manufacturers, GW still provides a bumper-to-bumper warranty for two years. Mass faulty equipment (e.g. wirings, panels etc.) could bring unexpected and elevated one-time costs to the company that could hamper its profitability and reputation in the market. Unions. GW had faced outcries from unions such as Unifor due to its manufacturing in China and bus drivers unions due to reduced wages potentially being paid to smaller-bus drivers vs regular-sized bus drivers. Similar issues could arise in the future that could require the company to adjust its business model, potentially hampering its margins. Additionally, the company plans contract manufacturing in the US, and it could face unionization there.
January 30, 2017 |Page 23 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Initiating Coverage with a BUY Rating and a $2.50 Target Price
We are initiating coverage of Grande West Transportation Group with a BUY rating and a target price of $2.50. In summary, our recommendation is based on the following: A Bus By Transit for Transit: Grande West’s Vicinity bus was born as a result of a partnership between Grande West and BC Transit, ignited by the latter’s need for a bus that is the “right size” to deploy on routes and communities with lower density. The Vicinity was developed with continuous input and feedback from BC Transit, completing a 21-month beta test program throughout BC’s various terrains and weather conditions. Snuck In From the Blind Spot: We believe GW is on the cusp of establishing a foothold in an industry with high barriers to entry, which makes it a great investment opportunity. The company leveraged its partnership to record its first sales into Canadian public transit agencies, then successfully continued to gauge interest and feedback to develop new offerings (30 and 35-foot) that have been quickly adopted by the market. The company capitalized on an opportunity that was ignored by incumbents, successfully growing its order book to over 175 buses for delivery in 2017. The Need for Fleet Optimization: Public transit agencies in the U.S. carry on average less than 11 people, while their fleets’ average capacity is 58 passengers, yielding a utilization level of 18%. Additionally, they rely heavily on public funding for capex (95%) and ppex (62%). Faced with limited options to optimize their service network, we believe their operations could be optimized by streamlining their fleet to better match their capacity needs similar to their Canadian counterparts. We believe the target market for this opportunity is at least 7,800 vehicles. On The Cusp of Immense Growth: GW’s Vicinity bus just qualified for “Buy America” program, opening up the federally-funded public transit bus market. With new infrastructure spending measures expected to continue to grow at 4% CAGR, and a need for fleet optimization by a significant number of U.S. Public transit agencies, GW sits on the cusp of immense growth trajectory that could lead it to a revenue run-rate of at least ~$175 million. Consequently, we are initiating coverage with a BUY rating and a $2.50 price target using a DCF12% approach. We believe the company sits in a “once-in- a-life time” opportunity to become an established transit bus provider.
January 30, 2017 |Page 24 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Appendix A: Consolidated Financials
Grande West Transportation Inc. Income Statement (C$000's) 2017E 2018E Period Ended Dec-17 Dec-18
Bus Sales (# of Buses delivered) 200 264 ASP ($000's) $361 $393
Bus Sales 72,220 103,695 Parts 1,083 2,074 Total Revenues 73,303 105,769
Cost of Sales 59,645 85,185 Gross Profit 13,659 20,583 Gross Margin 18.6% 19.5%
Salaries and Wages 1,747 2,513 Research and Development 733 1,058 G&A and Other 3,115 4,495 Bad debt expense - - EBITDA 8,063 12,518 EBITDA Margin 11.0% 11.8%
Depreciation 31 31 Share-based Compensation 194 213 Other - - EBIT 7,839 12,274 EBIT margin 10.7% 11.6%
Financing charges 486 340 FX Loss (gain) - - EBT 7,353 10,298
Income Taxes - 1,636
Net Income 7,353 10,298
EPS (FD) $0.10 $0.15 Total Shares Outstanding (FD) (MM) 70,487 70,487
Source: Company filings, Beacon Securities
January 30, 2017 |Page 25 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Appendix B: Management & Board
Yves Devin – Director Yves Devin has over 30 years of experience with several major corporations and has worked extensively in the transportation industry, most notably as the former CEO of the Montreal Transit System, the second largest transit organization in Canada. During his tenure, STM record-breaking results with 405 million trips reported in 2011 and won in 2010 American Public Transportation Association award as Outstanding Public Transportation System in North America. Joseph Miller - Director Joe Miller has over 30 years of experience in the construction field and manages a large diverse construction company based in British Columbia with projects across North America and the South Pacific. He specializes in ground improvement bringing new technologies to use around the world. William R Trainer – President & CEO Mr. Trainer has served as the President, Chief Executive Officer and Director of Grande West its incorporation. He has extensive experience in the import and export business. Mr. Trainer has owned and managed heavy construction dealerships across Western Canada where he has extensive experience in dealing with foreign manufacturers in Japan and Korea. John Lagourgue - Director John LaGourgue joined the Company’s board in June, 2016 and brings with him over 20 years of management, sales, financial and investment experience in public and private companies. He has served in senior management and directors’ roles for listed companies from 2009 to present. Mr. LaGourgue graduated from the University of Hawaii with a bachelor's degree in Finance with honours. Andrew Imanse - Director Andrew Imanse is a retired President of the Thor Bus Group and was instrumental in developing the bus market for Thor Industries. Mr. Imanse has been a prominent figure in the bus industry for over 20 years. Prior to his role in the bus industry, Mr. Imanse worked in the recreational vehicle sector as a senior executive of several companies, including a Vice President position with Canadian Recreational Vehicles and Housing Division of the Bendix Corporation. Jean-Marc Landry - VP, Business Development Mr. Jean-Marc Landry has over 20 years of experience in management and business development, primarily focused on the public transit industry. Jean-Marc spent the last decade in senior management positions in the Transit Vehicle manufacturing industry. At Nova Bus, a division of Volvo Corporation, he served as Vice President of Sales - North America, and at Cubic Transportation Systems, Vice President of Sales and Marketing – Americas. Throughout his career, he has been instrumental in generating significant sales growth. John Wang - Vice-President & Chief Engineer
January 30, 2017 |Page 26 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Mr. John Wang has over 25 years of experience in project engineering and design consulting throughout Canada and Asia, and has been an Officer of Grande West Transportation since 2008. Mr. Wang has played a vital role in the designing, testing and manufacturing of the Vicinity Bus. John has extensive knowledge of the import/export business and Chinese, as well as North American business practices. Aaron Triplett - CFO Mr. Aaron Triplett joined Grande West Transportation in 2015, and was also a Senior Manager of a mid-size accounting firm, which specialized in auditing public companies. Aaron holds a Bachelor of Business Administration in Accounting from Thompson Rivers University, and is a Chartered Accountant (CA).
January 30, 2017 |Page 27 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Appendix C: Anecdotes from Vicinity’s Initial Trials
Date County Context Feedback Source
Kevin Schubert - Regional Transit Manager: "You couldn’t go to a smaller bus without sacrificing people standing on the side and not getting on a bus during those peak hours" Manuel Achadinha - President of BC Transit: "Every community we’ve Replaced 6 buses with Nova 40-foot models, brought it into, it’s been a huge success. When we were in Quesnel, they only because the larger size was needed during were trying to grab it and make sure we didn’t take it out of the peak demand periods (morning and afternoon Mar-11 Nelson, BC community, they loved it so much. There’s huge demand for this type of Nelsonstar.com school runs). Buses were running empty during product.” off-peak times, hence BC Transit proposed “The Nova buses are good pieces of equipment and they work, the testing the 28-foot Vicnity bus in Nelson. challenge is that they’re big pieces of equipment. So what we’re trying to do is find the right size, the right piece of equipment to fit this community.”
Mike Doherty - General Manager of Kewlona's Regional Transit Systme's operator: “This (bus) is coming just at the right time”. He said in addition to replacing the existing eight 24-seat community buses made by Ford that are used here now, the new Vicinity buses could be used to provide service to areas where service is needed but Demonstration of 28-foot Vicnity prototype to May-11 West Kelowna, BC there is not enough demand for larger buses. KelownaCapNews.com transit and local officials. Gord Milsom - West Kelowna concil: “We want to make riding the bus an economic attraction,” said Milsom, adding his council also wants to the system to be “cleaner and greener.” All three of those goals could be achieved with the Vicinity bus, he said.
"When Penticton council narrowly approved the purchase of eight new former-Olympic buses last year, one of the concerns raised was that the city’s buses often run well-under capacity, necessitating huge civic subsidies for most trips." Dan Ashton - Mayor: “The bus would be good for us because of their Demonstration of 28-foot Vicnity prototype to small size for getting around,” said Ashton. “They are substantially more transit and local officials. The mayor was fuel-efficient. So there is quite a lot of fuel cost savings there we could May-11 Penticton, BC pentictonwesternnews.com competing to get selected for prototype testing benefit from.” “BC Transit has never had a bus that would meet our as well. criteria,” he said. “These buses are designed for the rigmaroles and wear and tear and everything else.” “They said there would be big demand for it but that they would take it under consideration,” Ashton reported. “There is a lot of different routes that we have in Penticton so hopefully we will get an opportunity to have one of those buses and try it out.”
Manuel Achadinha - President of BC Transit: “Here’s a community that transit is incredibly popular but the 40-foot (Novabus) vehicle might be too big and in the past we haven’t had a bus that is the right size for this type of community.” “We’re very comfortable with the size of the new Vicinity Bus and think it fits the community itself and believe it will be well served,” “I think the biggest challenge with transit we hear in every survey is and when we talk with customers its always about convenience and 28-foot bus delivered for testing at local transit reliability,” Achadinha explains. Sep-13 Nelson, BC agency. First community to receive buses for Trailchampion.com testing. “It’s not possible to put transit on every street. But one of the things we’ve done in the last couple years in Nelson is we spent an awful lot of time talking to the public about what an integrated system would look like because what we’re really trying to run is not just a local community but a connected regional system.
“We just launched that recently and now what we’re looking for is that feedback from the customer as to how well we’re doing.”
Meribeth Burton - BC Spokesperson: "It is really slick, very European," "Which just means there is greater flexibility for carrying capacity and the type of ridership we see in Penticton." Garry Litke - Mayor: "This is all about the future, your future," "We know 28-foot bus delivered for testing at local transit climate change is a reality, so in Penticton we are trying really hard to Oct-13 Penticton, BC Castanet.net agency. establish a public transportation system, so people don't have to drive their cars." Feedback from riders: "A couple of my friends and I all agreed that it felt like we were floating," "It was very smooth, like riding on a hovercraft."
Source: Various (see right-most column)
January 30, 2017 |Page 28 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Appendix D: The Vicinity Bus
Monocoque, galvanized or stainless steel structure: Grande West’s Vicinity bus is a heavy-duty, low-floor transit bus, rated for 12 years and 500,000 miles of operations. The bus is built on a monocoque (ie. the frame and A monocoque frame is a type of chassis are integrated), where the bus’s body is load-bearing, as opposed vehicle construction where the both the bus body and the to body-on-chassis structure where the frame of the bus provides less chassis forms a single unit. This support to the bus’s load. In addition to having a single-piece structure, type of construction improves the Vicinity’s frame is uniformly built with anti-corrosive, galvanized steel as safety, ride quality, and reduces standard and stainless steel as an option at extra cost. This differentiates overall vehicle weight. This is a the Vicinity from its competitors at that category, most of which are built standard in 40-foot, heavy-duty on body-on-chassis structure with either mild steel (ie. carbon steel) or buses. stainless steel chassis, combined with an aluminum body. The aforementioned structure increases the risk of corrosion, both oxidization corrosion (in the case of mild steel) and galvanic corrosion (ie. contact between aluminum and steel). This reduces durability, with industry experts indicating aluminum body on steel chassis (widely used in cutaways and medium-duty buses) hard to reach the 500,000 miles mark. In addition, while aluminum body is lighter, its ability to withstand loads is much lower than a galvanized or stainless steel body (such as the case of the Vicinity).
Industry-standard components: GW uses standard heavy-duty bus components that are widely used by the majority of North American transit buses such as engines from Cummins, transmission from Allison and easily-replaceable composite outer body panels. This makes the Vicinity easier to integrate into North American transit agencies’ existing fleet from operations and maintenance perspective. Additional advantage of this comes in form of reduced staff training costs for agencies, as the majority of transit agencies conduct their maintenance in house. We believe this has been a key factor of its adoption by Canadian transit agencies, and should make its entry into the U.S. market easier. The Vicinity has already clocked over 2 million in passenger revenue kilometers in Canada. Vicinity Bus Basic Features – 30-foot Model
Source: Company reports.
January 30, 2017 |Page 29 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Suitability: Given it has been developed with close cooperation with BC Transit, the Vicinity bus is tailored for community/suburban and shuttle use cases, making it much more suitable than current bus and cutaway offerings. The Vicinity bus is low-floor bus with kneeling features, making it accessible to the elderly and people with disabilities, as opposed to high- floor cutaways. The bus has been especially welcomed on community and shuttle routes, where its maneuverability, reduced noise level and accessibility has been a key differentiating factor. The bus can house up to 30 seats, with room for addition 26 standing passengers. The Vicinity comes with diesel and natural gas engine options. The bus is currently offered in 27.5, 30 and 35-foot sizes.
January 30, 2017 |Page 30 Ahmad Shaath | 416.507.3964 | [email protected] Grande West Transportation
Appendix D: Summary of the U.S. Largest Public Transit Agencies by Bus Fleet
Service Area Information Fleet Size Average Fleet Capacity Bus Fleet Distribution
Estimated Recovery Cutaways to Larger than 30 foot and Load Factor Ratio Smaller than Bus Ratio > 40 foot 35 foot and 35 foot less than 35 30 foot Area Density up to 40 foot foot Agency Name City State (sq miles) (per sq km) Buses Cutaways Seated Standing Total King County Department of Transportation - Metro Transit Division Seattle WA 2,134 383 846 0 25 11 36 43.1% 30.5% 0.0% 48.5% 0.2% 5.2% 46.1% 0.0% Los Angeles County Metropolitan Transportation Authority dba: Metro Los Angeles CA 1,513 2,201 2,426 0 41 11 52 37.4% 27.2% 30.5% 67.4% 0.0% 2.1% 0.0% 0.0% Denver Regional Transportation District Denver CO 2,340 475 1,165 8 26 17 43 31.3% 24.4% 3.3% 56.0% 0.0% 1.2% 39.5% 0.7% City and County of Honolulu Department of Transportation Services Honolulu HI 277 1,329 408 171 40 23 63 30.4% 29.4% 0.0% 91.2% 4.4% 2.5% 2.0% 41.9% Nassau Inter County Express Garden City NY 285 1,815 442 0 37 18 55 28.8% 40.5% 0.0% 81.2% 0.0% 0.0% 18.8% 0.0% Golden Gate Bridge, Highway and Transportation District San Francisco CA 145 2,314 248 14 49 10 59 27.6% 4.0% 53.2% 45.2% 0.0% 1.6% 0.0% 5.6% Regional Transportation Commission of Southern Nevada Las Vegas NV 280 2,770 205 401 34 22 56 27.4% 52.0% 0.0% 100.0% 0.0% 0.0% 0.0% 195.6% Westchester County Bee-Line System Mount Vernon NY 450 814 251 49 41 29 70 26.8% 36.6% 0.0% 91.6% 0.0% 8.4% 0.0% 19.5% Tri-County Metropolitan Transportation District of Oregon Portland OR 534 1,129 683 253 39 17 56 25.6% 29.0% 0.0% 94.4% 0.0% 2.3% 3.2% 37.0% MTA New York City Transit New York NY 321 10,285 3,599 585 37 34 71 25.0% 32.7% 0.0% 100.0% 0.0% 0.0% 0.0% 16.3% Metropolitan Bus Authority San Juan PR 198 2,295 157 0 34 30 64 24.9% 6.4% 0.0% 10.2% 83.4% 6.4% 0.0% 0.0% Santa Monica's Big Blue Bus Santa Monica CA 51 3,471 167 2 39 28 66 24.2% 19.4% 0.0% 91.0% 0.0% 9.0% 0.0% 1.2% Prince George's County Transit Largo MD 487 717 145 0 27 14 41 24.2% 7.0% 0.0% 0.0% 55.9% 1.4% 42.8% 0.0% New Jersey Transit Corporation Newark NJ 5,325 768 1,253 361 42 18 60 23.6% 43.9% 1.0% 95.9% 0.0% 3.1% 0.0% 28.8% Blue Water Area Transportation Commission Port Huron MI 700 90 125 0 21 11 32 23.5% 10.3% 1.6% 5.6% 0.8% 32.0% 40.8% 0.0% Pace - Suburban Bus Division Arlington Heights IL 3,519 618 1,273 146 26 16 42 22.7% 20.2% 0.0% 37.8% 7.2% 18.1% 36.9% 11.5% San Francisco Municipal Railway San Francisco CA 49 6,592 407 0 40 38 79 22.6% 28.4% 0.0% 91.6% 0.0% 7.4% 0.0% 0.0% Space Coast Area Transit Cocoa FL 262 817 136 0 27 10 37 22.0% 18.5% 0.0% 17.6% 39.7% 4.4% 38.2% 0.0% Stark Area Regional Transit Authority Canton OH 581 249 129 0 23 11 34 21.4% 14.1% 0.0% 11.6% 16.3% 0.8% 71.3% 0.0% Long Beach Transit Long Beach CA 98 3,138 236 0 38 23 61 21.0% 21.0% 14.8% 85.2% 0.0% 0.0% 0.0% 0.0% Mass Transit Department - City of El Paso El Paso TX 251 1,235 243 35 32 17 50 20.9% 15.2% 0.0% 63.8% 13.2% 0.0% 23.0% 14.4% Maryland Transit Administration Baltimore MD 2,560 1,178 1,115 0 31 34 64 20.5% 20.2% 0.0% 69.5% 0.0% 0.0% 30.5% 0.0% Miami-Dade Transit Miami FL 306 3,150 779 4 39 33 72 20.5% 25.8% 89.9% 10.1% 0.0% 0.0% 0.0% 0.5% Santa Clara Valley Transportation Authority San Jose CA 346 2,099 487 0 36 20 56 20.5% 12.2% 0.0% 77.4% 4.5% 8.8% 9.2% 0.0% Capital Metropolitan Transportation Authority Austin TX 535 839 457 18 31 20 51 20.4% 14.3% 0.0% 55.8% 26.3% 7.0% 10.9% 3.9% The Greater Cleveland Regional Transit Authority Cleveland OH 458 1,190 551 13 31 22 53 20.2% 21.3% 0.0% 73.0% 0.4% 0.0% 26.7% 2.4% Metropolitan Atlanta Rapid Transit Authority Atlanta GA 504 1,053 759 99 36 20 55 20.1% 29.4% 5.0% 72.9% 7.2% 0.1% 14.8% 13.0% Broward County Transit Division Plantation FL 410 1,760 320 167 38 19 58 19.4% 31.4% 7.5% 91.3% 0.0% 0.0% 1.3% 52.2% MTA Bus Company New York NY 244 12,195 740 0 38 33 71 19.4% 32.7% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% Metro Transit System Madison WI 72 1,374 232 0 35 16 51 19.3% 28.1% 0.0% 92.7% 0.0% 0.0% 7.3% 0.0% Mass Transportation Authority Flint MI 640 252 195 78 36 20 56 19.2% 30.1% 1.0% 80.0% 0.0% 3.1% 15.9% 40.0% Board of County Commissioners, Palm Beach County, PalmTran, Inc. West Palm Beach FL 365 1,342 216 201 32 18 50 19.2% 19.0% 0.0% 69.4% 7.9% 0.0% 1.9% 93.1% Capital Area Transportation Authority Lansing MI 136 816 145 0 32 22 54 19.1% 21.6% 0.0% 75.2% 0.0% 0.0% 24.8% 0.0% Suburban Mobility Authority for Regional Transportation Detroit MI 1,074 1,231 264 155 33 14 47 18.3% 15.9% 0.0% 46.6% 32.2% 0.0% 21.2% 58.7% City of Detroit Department of Transportation Detroit MI 144 1,914 359 0 39 20 59 18.3% 20.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% San Mateo County Transit District San Carlos CA 97 2,934 287 28 36 18 54 17.6% 15.8% 0.0% 77.0% 13.9% 0.0% 9.1% 9.8% Metropolitan Transit Authority of Harris County, Texas Houston TX 1,303 1,293 768 0 35 19 54 17.4% 9.9% 0.0% 93.9% 0.0% 0.0% 6.1% 0.0% City of Tucson Tucson AZ 239 1,028 249 113 38 22 60 17.3% 20.9% 0.0% 100.0% 0.0% 0.0% 0.0% 45.4% Delaware Transit Corporation Dover DE 1,949 185 231 303 36 22 58 17.2% 17.2% 0.0% 65.8% 3.5% 1.3% 28.1% 131.2% Charlotte Area Transit System Charlotte NC 688 617 734 0 33 19 53 17.2% 25.9% 0.0% 70.8% 0.0% 0.0% 29.2% 0.0% Southwest Ohio Regional Transit Authority Cincinnati OH 262 1,246 460 0 38 22 60 16.9% 33.6% 0.0% 84.3% 0.0% 0.9% 14.8% 0.0% Memphis Area Transit Authority Memphis TN 338 863 203 10 31 14 46 16.7% 17.9% 0.0% 67.0% 2.5% 15.8% 14.8% 4.9% Pioneer Valley Transit Authority Springfield MA 302 705 193 123 37 16 52 16.6% 21.2% 0.0% 56.0% 29.5% 6.7% 7.8% 63.7% Chicago Transit Authority Chicago IL 314 4,114 1,794 0 38 39 77 16.6% 36.8% 0.0% 97.8% 0.0% 2.2% 0.0% 0.0% Washington Metropolitan Area Transit Authority Washington DC 950 1,512 1,763 0 39 27 67 16.6% 23.4% 78.6% 15.3% 0.0% 6.1% 0.0% 0.0% San Diego Metropolitan Transit System San Diego CA 720 1,321 482 239 36 20 56 16.5% 45.5% 0.0% 94.4% 2.9% 2.7% 0.0% 49.6% CNY Centro, Inc. Syracuse NY 248 727 185 33 39 18 57 16.5% 32.8% 0.0% 85.9% 3.2% 5.4% 0.0% 17.8% Riverside Transit Agency Riverside CA 2,725 241 241 145 37 24 61 16.5% 20.2% 44.8% 40.2% 0.0% 5.0% 10.0% 60.2% Rhode Island Public Transit Authority Providence RI 1,436 282 207 134 39 19 58 16.3% 22.1% 0.0% 90.3% 9.7% 0.0% 0.0% 64.7% Regional Transit Service, Inc. and Lift Line, Inc. Rochester NY 293 915 235 49 38 21 60 16.3% 35.8% 0.0% 100.0% 0.0% 0.0% 0.0% 20.9% Central Florida Regional Transportation Authority Orlando FL 2,540 305 375 154 37 27 64 16.2% 29.7% 0.0% 66.9% 16.3% 0.0% 11.5% 41.1% Ride-On Montgomery County Transit Rockville MD 495 758 429 0 31 17 48 16.1% 20.6% 0.0% 50.6% 17.7% 0.0% 31.7% 0.0% Niagara Frontier Transportation Authority Buffalo NY 407 931 315 117 37 19 57 16.1% 32.7% 0.0% 93.0% 0.0% 7.0% 0.0% 37.1% Foothill Transit West Covina CA 327 1,790 300 0 39 18 57 16.0% 26.5% 59.3% 35.7% 4.0% 0.0% 0.0% 0.0% Alameda-Contra Costa Transit District Oakland CA 524 1,050 482 0 33 33 66 15.9% 20.3% 0.0% 79.3% 0.0% 18.7% 2.1% 0.0% Orange County Transportation Authority Orange CA 465 2,550 1,232 0 30 34 64 15.7% 24.1% 0.0% 71.3% 0.0% 0.0% 21.5% 0.0% Port Authority of Allegheny County Pittsburgh PA 775 705 586 0 39 34 72 15.7% 27.8% 1.2% 92.7% 6.1% 0.0% 0.0% 0.0% Southeastern Pennsylvania Transportation Authority Philadelphia PA 839 1,748 1,289 442 39 42 81 15.7% 29.0% 97.1% 0.0% 0.2% 1.6% 1.0% 34.3% Massachusetts Bay Transportation Authority Boston MA 3,244 370 998 0 39 54 92 15.7% 23.7% 0.0% 98.9% 0.7% 0.0% 0.4% 0.0% Hillsborough Area Regional Transit Authority Tampa FL 255 1,326 211 28 35 29 64 15.6% 23.5% 5.7% 82.0% 0.0% 0.0% 12.3% 13.3% Metropolitan Transit Authority Nashville TN 484 523 193 98 37 15 52 15.5% 23.0% 0.0% 88.1% 11.9% 0.0% 0.0% 50.8% Central Ohio Transit Authority Columbus OH 337 1,239 417 12 32 10 42 15.0% 18.8% 0.0% 61.4% 16.5% 7.7% 14.4% 2.9% Greater Dayton Regional Transit Authority Dayton OH 274 788 221 0 26 19 45 14.9% 18.1% 0.0% 52.9% 3.6% 1.8% 41.6% 0.0% Pierce County Transportation Benefit Area Authority Tacoma WA 292 737 167 106 37 21 58 14.9% 16.6% 5.4% 77.8% 0.0% 16.8% 0.0% 63.5% New Orleans Regional Transit Authority New Orleans LA 75 1,901 141 1 34 13 48 14.9% 20.6% 0.0% 58.9% 29.8% 0.0% 11.3% 0.7% City of Los Angeles Department of Transportation Los Angeles CA 465 4,027 376 44 33 11 44 14.8% 15.6% 0.0% 27.4% 6.1% 51.3% 15.2% 11.7% Clark County Public Transportation Benefit Area Authority Vancouver WA 142 1,043 187 50 41 18 58 14.6% 14.8% 0.0% 81.3% 11.2% 1.1% 6.4% 26.7% Metro Transit Minneapolis MN 653 1,086 719 0 39 33 72 14.5% 23.6% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% Spokane Transit Authority Spokane WA 248 637 126 125 38 20 59 14.3% 17.1% 0.0% 74.6% 20.6% 4.8% 0.0% 99.2% Milwaukee County Transit System Milwaukee WI 237 1,558 418 0 38 19 57 14.3% 27.3% 0.0% 98.6% 0.0% 0.0% 0.0% 0.0% Transit Authority of Northern Kentucky Fort Wright KY 267 403 141 0 31 15 46 14.1% 22.6% 0.0% 68.8% 5.0% 0.0% 26.2% 0.0% Jacksonville Transportation Authority Jacksonville FL 798 484 309 0 28 31 59 14.0% 15.4% 0.0% 44.7% 7.8% 16.8% 30.7% 0.0% Fort Worth Transportation Authority Fort Worth TX 350 910 138 38 28 12 40 13.9% 12.8% 0.0% 50.0% 21.7% 23.2% 5.1% 27.5% Transit Authority of River City Louisville KY 357 873 243 4 37 19 56 13.8% 18.5% 0.0% 79.4% 4.1% 16.5% 0.0% 1.6% Utah Transit Authority Salt Lake City UT 737 987 691 0 29 18 47 13.8% 15.4% 0.0% 56.7% 9.1% 0.0% 34.2% 0.0% Connecticut Department of Transportation - CTTRANSIT - Hartford Division Hartford CT 664 495 253 0 39 19 58 13.8% 20.7% 0.0% 93.3% 2.0% 4.7% 0.0% 0.0% Snohomish County Public Transportation Benefit Area Corporation Everett WA 260 1,073 196 24 34 11 45 13.8% 13.4% 0.0% 79.1% 0.0% 6.6% 14.3% 12.2% Capital Area Transit Raleigh NC 125 1,074 126 0 41 20 61 13.6% 14.1% 0.0% 99.2% 0.0% 0.8% 0.0% 0.0% Sacramento Regional Transit District Sacramento CA 231 1,731 205 15 35 28 63 13.5% 19.6% 0.0% 96.1% 0.0% 2.9% 1.0% 7.3% Regional Public Transportation Authority, dba: Valley Metro Phoenix AZ 732 1,914 309 0 33 17 49 13.5% 17.5% 2.6% 78.3% 0.0% 1.3% 17.8% 0.0% Kansas City Area Transportation Authority Kansas City MO 456 668 287 85 35 19 55 12.9% 13.6% 0.0% 70.4% 0.0% 0.7% 28.9% 29.6% City of Albuquerque Transit Department Albuquerque NM 235 1,087 152 70 39 22 61 12.7% 9.3% 0.0% 100.0% 0.0% 0.0% 0.0% 46.1% LACMTA - Small Operators Los Angeles CA 565 2,429 375 28 25 13 38 12.1% 11.4% 0.0% 7.2% 13.6% 25.9% 39.5% 7.5% City of Phoenix Public Transit Department dba Valley Metro Phoenix AZ 519 1,137 418 220 36 34 70 12.1% 22.7% 13.4% 85.6% 0.0% 0.0% 1.0% 52.6% Omnitrans San Bernardino CA 463 1,213 290 0 31 37 68 12.0% 23.9% 57.2% 5.5% 0.0% 3.8% 33.4% 0.0% Capital District Transportation Authority Albany NY 2,195 147 231 36 38 27 65 12.0% 26.6% 0.0% 85.7% 0.0% 7.8% 0.4% 15.6% Bi-State Development Agency of the Missouri-Illinois Metropolitan District, d.b.a.(St. Louis)St. Metro Louis MO 558 1,122 454 0 39 29 68 11.7% 20.9% 0.0% 74.2% 22.7% 2.6% 0.4% 0.0% METRO Regional Transit Authority Akron OH 420 498 197 20 29 15 43 11.4% 10.2% 0.0% 54.8% 7.6% 0.0% 37.6% 10.2% VIA Metropolitan Transit San Antonio TX 1,213 568 448 0 37 34 71 10.9% 13.2% 0.0% 95.5% 0.9% 3.1% 0.4% 0.0% Fairfax Connector Bus System Fairfax VA 407 1,068 284 0 36 13 49 10.7% 14.5% 0.0% 71.8% 17.3% 10.9% 0.0% 0.0% Gainesville Regional Transit System Gainesville FL 76 833 128 23 40 33 72 10.5% 64.2% 0.0% 92.2% 7.8% 0.0% 0.0% 18.0% Pinellas Suncoast Transit Authority St. Petersburg FL 348 1,048 227 8 36 37 73 10.1% 22.2% 0.0% 55.5% 31.7% 4.8% 7.9% 3.5% Toledo Area Regional Transit Authority Toledo OH 140 1,010 256 0 26 18 44 10.0% 24.9% 0.0% 27.3% 30.1% 0.0% 42.6% 0.0% Transportation District Commission of Hampton Roads Hampton VA 431 1,025 422 41 28 36 64 10.0% 18.6% 0.0% 32.2% 22.0% 3.8% 41.9% 9.7% North County Transit District Oceanside CA 403 814 143 64 36 36 73 9.4% 19.5% 0.0% 83.9% 7.0% 9.1% 0.0% 44.8% Greater Richmond Transit Company Richmond VA 227 765 147 90 39 36 75 9.3% 23.1% 0.0% 90.5% 5.4% 0.0% 4.1% 61.2% Dallas Area Rapid Transit Dallas TX 650 1,398 878 107 38 22 59 8.9% 13.2% 0.0% 80.2% 0.0% 7.3% 12.5% 12.2% Interurban Transit Partnership Grand Rapids MI 185 1,007 204 75 33 48 81 8.8% 24.7% 0.0% 61.3% 12.3% 2.5% 8.3% 36.8% Suffolk County Department of Public Works - Transportation Division Yaphank NY 912 636 157 192 35 21 56 8.6% 17.7% 0.0% 0.0% 100.0% 0.0% 0.0% 122.3% Indianapolis and Marion County Public Transportation Indianapolis IN 396 905 158 0 38 45 82 7.0% 18.9% 0.0% 92.4% 7.6% 0.0% 0.0% 0.0% Transit Authority of Omaha Omaha NE 178 1,219 129 32 36 19 55 6.5% 17.8% 0.0% 45.0% 55.0% 0.0% 0.0% 24.8% Source: NTD, Beacon Securities estimates.
January 30, 2017 |Page 31 Ahmad Shaath | 416.507.3964 | [email protected]
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As at December 31, 2016 #Stocks Distribution Buy 67 77% Buy Total 12-month return expected to be > 15% Speculative Buy 12 14% Speculative Buy Potential 12-month return is high (>15%) but given elevated risk, investment could result in a material loss Hold 3 3% Hold Total 12-month return is expected to be between 0% and 15% Sell 0 0% Sell Total 12-month return is expected to be negative Under Review 5 6% Tender 0 0% Tender Clients are advised to tender their shares to a takeover bid or similar offer Total 87 100%
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