North America’s #1 Transit Bus Manufacturer and Parts Supplier
Forward Looking Statements: May contain forward-looking statements relating to New Flyer Industries Inc. and related companies or to the environment in which they operate, which are based on their operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond New Flyer’s control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in New Flyer’s Annual Information Form which is available on SEDAR at www.sedar.com. New Flyer assumes no obligation to update or revise any forward-looking statements to reflect new events or circumstances, except as required by applicable securities laws. All figures are in U.S. dollars unless otherwise noted.
Non-GAAP Measures : For the definition and explanation of EBITDA, ADJUSTED EBITDA and FREE CASH FLOW please refer to Appendix A.
May 7, 2015 2
New Flyer Strategy: Optimize, Defend, Diversify & Grow
Performance Bus Market Share: 48% (#1) Parts Market Share: 33% (#1) Employees : ~3,400 LTM Sales: US $1.51B 1. Offer North American bus operators the best buses, services and value in the industry ¢ Provide complete offering: Bus (“Workhorse of the Fleet”) supported by Parts & Services LTM Adj EBITDA: US $119.1M ¢ Lead the market innovation Leverage: 1.34 (Converts not included) ¢ Migrate to the Xcelsior platform for all Heavy Duty buses LTM FCF: US $59.4M ¢ Offer MiDi for community shuttle, small transit agencies and private operators LTM Payout Ratio: 48% ¢ Increase focus on Aftermarket parts and services 2. Operate as a world class manufacturer using LEAN principles and a Quality Roadmap Common Share (TSX:NFI) ¢ Migrate from selling buses, to providing solutions… that deliver best bus value and Fully Diluted Market Cap: ~ C $900M support for life Shares Outstanding: 55.5 M ¢ Be recognized as an Employer of Choice ¢ Excel in supply chain, strategic sourcing and appropriate in-sourcing 2 Month Avg Daily Volume: ~ 111,700 ¢ Continuous pursuit of eliminating waste and cost reduction to improve competiveness Current Yield: ~4.1% ¢ Excel at customer support, response and follow up
Convertible Debt (TSX:NFI. DB.U) 3. Perform while seeking Diversification and Growth ¢ Operate with an appropriate capital structure to grow the business Principal Outstanding: US $64.6 M ¢ Seek to diversify beyond single product/market (Heavy Duty Transit buses) to compete 2 Month Avg Daily Volume: ~ US $100K in more than markets: Product (type of bus) and/or Market (Public vs Private) and/or Geography (NA or International) Current Yield: ~ 5.2%
May 7, 2015 3
Transition from IDS to Common Share. Focused on the future
15.00 C $102M 3.0 Secondary Offering @ $11.20/unit 14.00 C$110M C $100M Secondary Secondary Acquired Announced Offering @ Offering @ TCB Fabrication Rationalization $11.70/unit $11.40/unit Business of NABI into NF 2.5 13.00 Launched First Xcelsior MiDi Bus JV Platform with ADL 12.00 Production $242M Launched Acquired Non-cash OpEx Orion Parts Rights Offering & Initiative from Daimler 2.0 C $200M issue Common 11.00IPO as IDS Share $65M @ $10/unit Convert Debenture & 10.00 terminate IDS 1.5 9.00 Share Price ($C) ($C) Price Price Share Share 8.00 Acquired 1.0 NABI from Cerberus 7.00 Deferral of US (millions) (millions) Traded Traded Shares Shares Customer order for 1,800 EU 6.00 Marcopolo SA 0.5 19.9% equity Investment in 5.00 NFI
4.00 - 19-Aug-05 19-Aug-06 19-Aug-07 19-Aug-08 19-Aug-09 19-Aug-10 19-Aug-11 19-Aug-12 19-Aug-13 19-Aug-14
Combined Volume NFI Common NFI IDS
May 7, 2015 4
#1 Market Share for both HD Transit Buses & Parts
Heavy-Duty Transit Bus Share Aftermarket Parts Share based on EUs delivered in 2014 in Can/USA based on estimated parts sales in 2014
Other (incl. El Dorado, Proterra and BYD) MCIMCI ABC Companies 4% 4% (Muncie -Baker) Prevost/Nova 5% Neopart 6% 2% Mohawk 5% 2% Other Transit Brokers 2% Gillig Bus Service Facilities 10% 4%
6% 33% Engine & Transmission Part Vendors 10% 10%
47.5% 33%
Local Suppliers 9%
New Flyer 33% Truck/Common Parts 15% Suppliers 8%
Bus Component Vendors Direct 5%
New Flyer acquired Orion Parts in February 2013 and NABI in June 2013.
Source: 2014 New Flyer Database & Management Estimates May 7, 2015 5
North American Transit Bus Market & Segments
Market Segments 8000 24 of the 25 largest Transit Agencies Other Orion New Flyer NABI and primary targets 7000 operate NF supported buses
6000
Metropolitan Urban Municipal Fleets Fleets Fleets 5000 17 operators 200 operators 900+ Operators 39% of 45% of 16% of installed fleet installed fleet installed fleet 4000
3000 Primary Target market
2000
Primary Target market 1000
0 Primary Target market Miami Boston Seattle Ottawa Everett Denver Toronto Newark Calgary Phoenix Chicago Houston Montreal Baltimore NewYork Pittsburgh Edmonton Las Vegas Las Vancouver Minneapolis Los Angeles Los Philadelphia San Francisco San Orange County Orange Washington D.C. Washington *Quantities in Equivalent Units (EUs) New market entrants focusing on battery-electric buses:
Current US & Canada Active Transit Bus Fleet >80,000 buses
Other
31% 10% 12% 21% 9% 17%
Source: 2014 New Flyer Database & Management Estimates May 7, 2015 6
Significant Investment has been made in LEAN. We call it OpEx.
Key Operational Improvements since 2010:
° Build in Station (by task) improved from 87% to 95% ° Average Labour Efficiency increased from 71% to 89% ° Days in Customer Acceptance reduced from 21 to 16
Focused investment on both cultural, physical and process change
May 7, 2015 7
New Flyer Transit Bus Models
New Flyer Xcelsior ® New Flyer MiDi ® NABI BRT & LFW (1)
LFW
BRT
¢ Production launch in 2009 based ¢ Joint venture with ADL to bring ¢ 31’ and 40’ (LFW ) and 42 ’ and 60’ on >20 years experience with low MiDi ® to North American market (BRT) buses
floor transit buses ¢ Production launch in 2014 ¢ Propulsion using clean diesel,
¢ Offered in 35’, 40’, and 60’ lengths ¢ 30’ and 35’ low-floor bus electric-hybrid, and natural gas
¢ >12-year, 500,000 miles life ¢ >12-year, 500,000 miles life ¢ Estimated installed fleet: 10,000
¢ Multiple propulsion systems ¢ Clean diesel propulsion and options: diesel, hybrid, natural gas, currently investigating natural gas (1) Both LFW and BRT are being phased out ® trolley and battery-electric and battery-electric and replaced with the New Flyer Xcelsior platform in 2015 . ¢ Primary targets are metropolitan ¢ Primary targets are municipal and and urban fleets commercial shuttle markets
¢ Typical sale price of approx $450K ¢ Typical sale price approx $300K US US for 35’/40’ bus and $700K US for 60’ articulated bus
May 7, 2015 8
Market Leader in Technology & Propulsion Options
Battery-Electric Single platform - multiple propulsion options
Hybrid-Electric
Natural Gas
Electric-Trolley
New Flyer’s battery-electric Xcelsior ® ° Pilot bus testing complete and in service. Clean Diesel ° 2 electric buses delivered to Chicago in 2014 ° 4 buses delivered to Winnipeg in 2014 °60’ artic with Fuel Cell range extender in development
Focused on New Flyer’s optimized and robust Xcelsior ® platform
May 7, 2015 9
Industry’s most comprehensive Parts & Support Services
Aftermarket Parts Product Support Services
¢ With addition of Orion Parts and NABI, New Flyer is the ¢ Publications: Wide range of customized parts, maintenance recognized leader in both size and quality of service with an and operational documentation. New Flyer publications are the estimated market share of 34% in 2014. industry standard.
¢ Key competitive advantages include: widest product ¢ Service Support: Product acceptance, field support, field assortment (parts for products manufactured by New Flyer, engineering and warranty management.
NABI, Orion, as well as other bus manufacturers) and industry ¢ Product Training: Operator and maintenance training leading distribution network with shortest delivery times. provided in connection with new bus sales or aftermarket
¢ Exclusive product distribution: support (On-the-job, Classroom, eLearning, etc.
° NFI proprietary line of service parts under the “Kinetik” brand ¢ New Flyer Connec t : On-board system that permits real-time monitoring of the bus driver and vehicle performance to help ° Exclusive license for Xtended Life TM brake kits which improve driver safety, driving efficiency and fuel and increases life of brakes, thereby reducing vehicle maintenance costs operating/maintenance costs ° Unique offerings (Kits, Mid-life upgrade programs, Vendor Managed Inventory, KanBan, etc).
Well positioned to maximize market share of parts and life cycle support services
May 7, 2015 10
Manufacturing, Service and Parts Locations
3,400 team members with approx 1,300 covered by CBA Parts Distribution
Winnipeg, MB Manufacturing & Service Winnipeg CBA expires Mar 31/18 Headquarters NFI Parts Fabrication and Bus Assembly Buses Built /Week Crookston CBA expires Dec 31/15 New Product Development NFI Parts Distribution Center St Cloud CBA expires Mar 31/17
BC PE Arnprior, ON AB Service Center SK MB QC NB ON NS ME Renton, WA WA Service Center 18 MT ND VT Brampton, ON MA MN NH NFI Parts Distribution Center OR NY ID RI SD 21 WI MI CT WY PA ` NJ IA DE Elkhart, IN Fresno, CA NV NE MD TCB Part Fabrication IN OH NFI Parts Distribution Center IL WV UT VA DC CA CO KS MO KY NC TN Delaware, OH SC AZ OK NABI Parts Distribution Center NM AR GA Los Angeles, CA AL MS 12 Service Center Hebron, KY NFI Parts Distribution Center TX LA
FL
Anniston, AL Crookston, MN St Cloud, MN NABI Bus Assembly NFI Bus Assembly NFI Bus Assembly
Parts & Service locations to provide best-in-class support and response
May 7, 2015 11
Market Economic Fundamentals Stabilizing
US Fed Funding vs Industry Deliveries US Quarterly State Tax Collections [YOY % Chg]
ISTEA TEA-21 SAFETEA-LU Extension to SAFETA-LU MAP-21 ARRA DRRA GROW AMERICA Bus Deliveries (EU) 25000 7000 12
6000 20000 10
5000 8 15000 4000 6
3000 10000 4 US FederalUSFunding ($millions) 2000
5000 2
1000 Change % Same vs Last Year 0 0 0
-2 20142014Q1 Q1 20142014Q2 Q2 20142014Q3 Q3 2011 Q1Q1 20112011 Q2Q2 20112011 Q3Q3 20112011 Q4Q4 20112011 2010 Q4 20102010Q4Q4 20122012Q1Q1 20122012Q2Q2 20122012Q3Q3 20122012Q4Q4 20132013Q1Q1 20132013Q2Q2 20132013Q3Q3 20132013Q4Q4 2010 Q3 20102010Q3Q3 State Tax Revenue YoY Change Source: http:// www.fta.dot.gov & management estimates Source: The Nelson A. Rockefeller Institute State Revenue Reports
Average Age of of Transit Buses [years] QtrlyQ Transit Ridership % Chg YOY 8.00% Canada USA 12 6.00%
11 4.00%
10 2.00%
9 0.00% 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2013 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 -2.00% Q1 2009 8 Q3 2013 7 -4.00% -6.00% 6 US Bus Total US Total All Modes CDN Total All Modes 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: CUTA, APTA http://www.apta.com/resources/statistics/Documents/FactBook/2013-Fact-Book-Appendix-A.pdf Source: http://www.apta.com/resources/statistics/Pages/ridershipreport.aspx
May 7, 2015 12
Market Size, Book-to-Bill, Bid Universe and Backlog
EUs delivered in Can/US has flattened out. Slow growth NFI Book-to-Bill >100% for last 8 out of 9 quarters 7000 7000 350% 6236 6032 5933 6000 5816 6000 300% 5347 5388 5284 5128 5212 5154 5009 5065 5109 5083 5000 4797 4723 5000 250% 4333 4047 4000 4000 200%
3000 3000 150%
2000 2000 100%
2257 2437 1000 50% 1000 2051 2003 2164 2023 2191 1864 1731 1938 1811 1500 1583 1442 1656 1050 1272 935 0 0% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q4 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Actual Deliveries (EU) - Total Market New Flyer Deliveries 2008 Q1 2008 Q2 2008 Q3 LTM New Orders (EU) LTM Deliveries (EU) LTM Order Intake/Deliveries
NFI backlog has recovered in 2013-14 Improved NFI Bid UniverseHeavy Duty Bid & UniverseActive Opportunities (Eus)
10000 25,000 Bids submitted 9000 by NFI awaiting selection 20,000 8000 Forecasted bus buys in 7000 Next 5 years 15,000 Operator RFPs issued. 6000 Proposals in development 5000 10,000
4000
5,000 3000
2000 - 1000 10 10 10 11 11 11 12 12 12 13 13 13 14 14 14 15 10 10 11 11 12 12 13 13 14 14 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 10 10 10 11 11 11 12 12 12 13 13 13 14 14 14 ------Jul Jul Jul Jul Jul Jan Jan Jan Jan Jan Jan Jun - Jun - Jun - Jun - Jun - Oct Oct Oct Oct Oct Apr Apr Apr Apr Apr Feb Sep Feb Sep Feb Sep Feb Sep Feb Sep Feb Dec Dec Dec Dec Dec Aug Aug Aug Aug Aug Nov Nov Nov Nov Nov ------Mar Mar Mar Mar Mar Mar ------May May May May May ------4 4 4 4 4
------0 - - - - - 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 ------Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Firm Deferred Order Firm Option Deferred Order Option
Ongoing Bids Submitted Bids Forecast Note: Deferred Order was removed in Dec 2013 following 5 years of inaction. May 7, 2015 13
Average Weekly Line Entry & Delivery Rates (EUs)
2011 2012 2013 2014 2015
52 50 50 48 49 48 49 47 46 46 46 46 47 44 44 45 45 40 38 3736 36 36 35 34 3435 34 33 32 33 33 30 29 30
20
10
22 2 0 0 10 11 1 00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Heavy Duty Line Entry Heavy Duty Delivery MiDi Line Entry MiDi Delivery
Includes activity from NABI Bus LLC following acquisition by New Flyer in June 2013. New Flyer MiDi ® commenced production in Jan 2014.
2015 plan to maintain average Line Entry rate (EUs/Production Week): Heavy-Duty = 50, MiDi ® = 1.25
May 7, 2015 14
NFI 5-year Financial Performance
Sales ($M US) Adj EBITDA ($M US) Free Cash Flow/Share ($C)
1600 140 $1.40 1.1804 1.212 1400 120 336 $1.20 319 1200 100 $1.00 215 55 0.8682 1000 80 31 50 $0.80 116 0.6102 800 119 24 0.5592 60 $0.60 600 20 1,132 1,172 984 40 $0.40 64 64 400 800 746 57 57 20 41 $0.20 200
0 $0.00 0 2011 2012 2013 2014 2015 Q1 LTM 2011 2012 2013 2014 2015 Q1 LTM 2011 2012 2013 2014 2015 Q1 LTM Bus Parts Bus Parts *Bus Includes Corporate Overhead 2015 Q1 LTM Adj EBITDA to Free Cash Flow ($M) Free Cash Flow and Dividends ($M C)
140 80.0 119.1 67.3 120 70.0 65.5
Millions 100 12.4 60.0 80 67.3 50.0 59.4 45.1 36.0 60 40.0 32.5 32.5 9.4 1.9 7.8 33.1 30.7 40 30.0 26.0 27.1 20 20.0 - 10.0 7.8 0.0 2011 2012 2013 2014 2015 Q1 LTM Free Cash Flow Dividends
In 2011, NFI completed a noncash rights offering to facilitate conversion from an IDS to a traditional common share structure. Shareholders exercised approximately 89 % of the Rights May 7, 2015 issued by tendering approximately C$242.3M principal amount of Subordinated Notes in exchange for approximately 39 million common shares. In 2013, Marcopolo S.A. acquired approximately 11 million newly issued common shares, representing a 19.99% stake in NFI. 15
Reduced Leverage and Interest Costs
Total Debt ($US M) Total Leverage Ratio
$450 4
$400 3.5 $65M Convertible Debenture $350 issued in Jun-12. Proceeds used to 3 redeem Bach Bonds/IDS Debt in $300 August 2012. Convert price 2.5 $US10/share $250 2 $115M Revolver facility used to Total Leverage Ratio $200 manage working capital does not include Convertible 1.5 Debenture as debt. Senior $150 fluctuations secured credit facility is in ($13M outstanding) place until Apr 24-17 $100 1 $142M Senior term loan $50 0.5 $0 0 2010 2011 2012 2013 2014 2015 Q1 LTM IDS Debt Bachelor Bonds Senior Term Loan Revolver Convertible Debenture Total leverage ratio Interest Rates: Bach Bonds/IDS Debt = 14% Converts = 6.25% Senior Debt = LIBOR + margin
May 7, 2015 16
Investment Thesis Summary
Leading North ° Approximately 48% of heavy-duty delivered buses in 2014 (equivalent units) American Market Share ° Approximately 33% aftermarkets parts market share based on 2014 sales Deep Relationships ° Established relationships with well over 380 transit authorities who operate approximately 87% of the with High Quality heavy-duty transit buses in the U.S. and Canada in 2014. 24 out of 25 largest transit agencies operate Customer Base New Flyer, NABI or Orion buses
Leadership in Product ° Market leader with a proven next generation Xcelsior transit bus platform Offering and ° Most transit propulsion options: diesel, natural gas, electric trolley, diesel-electric hybrid & battery-electric Technology ° Leading in-house engineering and new product development capabilities ° With approximately 80,000 heavy-duty transit buses currently in service (Can/US), the company supports Well Positioned the l argest installed base with over 50% being New Flyer, NABI or Orion buses Against Competitors ° Integrated aftermarket parts and services operation ° Compliance with Buy-America legislation and Canadian provincial policies regarding Canadian content ° Focused on completing the integration of NABI into New Flyer providing overhead and supply synergies Multi-Faceted Growth ° Growth of “clean technology” aligned with New Flyer product offering and engineering capabilities Strategy ° Monitor a robust pipeline of M&A opportunities to diversify product offerings and geographic footprint
° Deep industry experience and track record to position the business for growth and increased profitability Experienced ° Proven ability to complete and integrate strategic acquisitions Executive Team ° Extensive LEAN transformation and operational experience
° Strong/Predictable free cash flow supported by attractive EBITDA margin and high cash conversion ratio Strong Free Cash Flow Generation ° Low operating leverage with fixed costs representing approximately 10% of total bus manufacturing cost structure
Source: Company filings, management estimates
May 7, 2015 APPENDIX A
DEFINITIONS OF EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW
References to “EBITDA” are to earnings before interest, income taxes, depreciation and amortization, 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 transitional costs relating to business acquisitions, product rationalization costs, impairment loss on equipment and intangible assets, realized investment tax credits (“ITCs”), stock-based compensation and costs associated with assessing strategic and corporate initiatives.
Management believes EBITDA, Adjusted EBITDA 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, 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, realized ITCs and principal payments on capital leases . However, EBITDA, Adjusted EBITDA 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, Adjusted EBITDA and Free Cash Flow 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 or to cash flows from operating, investing and financing activities 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 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.
May 7, 2015