Investor Presentation Altacorp Capital WHO IS NFI?
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MARCH 30, 2020 Investor Presentation AltaCorp Capital WHO IS NFI? Bus Design and Manufacture Part Fabrication Aftermarket and Service Carfair Composites is a leader in North America’s most Founded in 1930, the North fiber-reinforced plastic (FRP) comprehensive parts American Leader in Heavy-Duty design and composites organization, providing Transit buses technology parts, technical publications, training, and support for its OEM Started in 1941 in Winnipeg, NFI’s dedicated internal parts- product lines North America’s largest fabrication facility launched in manufacturer of Motor Coaches 2017 in Shepherdsville, KY UK’s leading bus parts distributor and aftermarket service Tracing its roots to 1892 with the support network Dennis, Alexander and Plaxton companies, ADL is a global manufacturer of double deck Supports eMobility and single deck buses and projects from start to motor coaches headquartered in finish Larbert, Scotland Founded in 2008 in Middlebury, Indiana ARBOC is a leader in low- floor cutaway and medium-duty shuttles 2 OUR MISSION OUR VISION To design and deliver To enable the future of exceptional transportation mobility with innovative solutions that are safe, and sustainable solutions accessible, efficient and reliable PROVEN STRATEGIC GROWTH AND DIVERSIFICATION • Proven LEAN operations track record Acquired US OEM of low-floor • Demonstrated margin expansion cutaway and medium-duty buses • Strategic part fabrication capability • Accretive acquisitions Acquired assets of US • Proven ability to integrate Fiberglass supplier Acquired UK market leader and global leader on Double Deckers $3,172 Acquired US manufacturer of HD transit buses & parts distributor Acquired FRP Supplier Acquired North America’s $279 leading Coach manufacturer $2,519 $2,382 Acquired Orion (transit bus $2,274 parts business) from Daimler Pro forma Global bus body manufacturer ADL(2) equity investment in NFI $1,539 $1,451 Acquired US part NFI converted from fabricator in 2010 IDS to Common Share $1,199 $984 $926 $865 $331 $289 $318 $315 $151 $9 $97 $80 $61 $95 $107 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenue ($M) Adj. EBITDA ($M) 1) See “Non-IFRS measures” on Slide 16 and Forward Looking Statements on Side 17 2) Pro-forma combined business for the period December 31, 2018 to December 29, 2019. ADL information related to the periods before the Acquisition Date are based on audited financial statements of ADL provided to NFI, which were prepared on the basis of UK GAAP. NFI has not independently verified such statements. ADL’s reported results above have been conformed to IFRS. 3) 2019 figures reflect the adoption of IFRS 16 4 A DIVERSE GLOBAL BUSINESS MODEL 2019 Pro-Forma Revenue (1) (1) By Customer(1) By Region By Product Transit Buses Public 64% 70% APAC 4% North America 81% UK and Europe Motor Coaches Private 15% 20% 30% Medium Aftermarket Duty and 14% Low-Floor Cutaway 2% (1) Pro-forma combined business for the period December 31, 2018 to December 29, 2019. ADL information related to the periods before the Acquisition Date are based on audited financial statements of ADL provided to NFI, which were prepared on the basis of UK GAAP. NFI has not independently verified such statements. ADL’s reported results above have been conformed to IFRS. 5 A GLOBAL BUS BUSINESS Canada 3 manufacturing facilities 6 parts and service facilities United Kingdom 4 manufacturing facilities 3 parts and service facilities China Zuhai - 3rd party manufacturing USA Germany Hong Kong – APAC Head Office 6 manufacturing facilities 1 parts and service facility 15 parts and service facilities Singapore 1 parts and service facility Mexico Malaysia 1 parts and service facility 3rd party manufacturing Latin America Strategic Partnership with New Zealand 1 parts and service facility 6 2000 2007 6,236 2,544 2001 5,388 NFI TARGET MARKETS TARGET NFI 2008 2002 3,220 5,009 (2) (1) 2003 2009 4,723 Source: American Bus Association reported AssociationBusreported Source: American data Management combination in with Estimates Source: Management and Estimatesdata reported to Metro Magazine 3,532 2004 Canada and U.S. Transit Market andTransit U.S.Canada UK Bus and Coach Market andCoach Bus UK 5,212 2005 2010 2,284 4,333 2006 2011 4,047 2,571 2007 5,055 2008 2012 3,025 5,284 2009 6,032 2013 2,731 2010 5,933 2011 2014 2,485 5,154 2012 5,109 2015 2,956 2013 5,010 (3) 2014 2016 5,128 2,734 2015 5,373 (1) 2017 2016 2,536 5,795 2017 2018 6,336 2,017 2018 6,504 2019 2019 1,799 6,753 (4) Source: Management Source: (4) Management reported and Source: Manufacturers Society data (3) of Management Motor combinedTraders with Estimates 2000 10,000 15,000 20,000 25,000 30,000 5,000 2,385 - 2001 2,324 Q4 2011 2002 Q1 2012 2,048 Market Coach andMotor U.S.Canada Estimates and Discussions with Agencies with Transit and EstimatesDiscussions Q2 2012 2003 Q3 2012 1,479 Q4 2012 2004 Canada and US Bid Universe andUSBid Canada Q1 2013 1,341 Bids in Process Bids in Q2 2013 2005 Q3 2013 1,756 2006 Q4 2013 2,092 Q1 2014 2007 Q2 2014 1,852 Q3 2014 2008 Q4 2014 1,825 Bids Submitted Q1 2015 2009 Q2 2015 1,581 Q3 2015 2010 Q4 2015 1,184 Q1 2016 2011 Q2 2016 1,510 Q3 2016 2012 5 Year Forecast 5 Year Q4 2016 1,648 2013 Q1 2017 1,783 Q2 2017 2014 Q3 2017 1,918 Q4 2017 2015 Q1 2018 2,274 (4) Q2 2018 2016 Q3 2018 2,357 Q4 2018 2017 Q1 2019 2,470 (2) Q2 2019 2018 Q3 2019 2,305 Q4 2019 2019 2,053 7 BACKLOG IS A POSITION OF STRENGTH (1) Book-to-Bill (New Firm Orders plus Options Converted / Deliveries) 10,742 EUs 85% 6,000 160% 140% Total Backlog at Dec. 29, 2019 Q4 2019 LTM 5,000 (1) 120% (Firm Orders and Options)(1) Book to Bill ratio 4,000 100% 3,000 80% 60% 2,000 40% 4,694 EUs 27,648 EUs 1,000 20% Active Bids at Dec. 29, 2019 Total Bid Universe(1) - 0% (1) 2014 2015 2016 2017 2018 2019 (Bids in Process and Submitted) LTM New Orders (EUs) LTM Deliveries (EUs) LTM Order Intake / Deliveries Total Backlog (Firm and Option EUs)(1) Option History, Conversion and Current Status (EUs)(1) ARBOC Public backlog ADL added in Q4-17 backlog 12,000 MCI Public backlog added in Q2-19 added in Q4-15 2,500 10,000 81% 79% 75% 2,000 73% 71% 8,000 1,500 6,000 4,000 1,000 2,000 500 0 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 Firm Option Options Expired Options Exercised (1) Data includes ADL from the period of June 30, 2019 onwards Option by Year of Expiry Annual Conversion Rate 8 HISTORIC FINANCIAL PERFORMANCE Revenue by Segment Adjusted EBITDA and % Margin 2015 – 2019(1) $2,893 2015 – 2019(1)(2) $2,519 $417 $2,382 $2,274 13.4% $377 12.7% 12.5% $369 $383 11.1% 9.8% $322 $1,539 $318 $315 $75 $322 $289 $72 $74 $2,476 $76 $2,013 $2,142 $1,891 $151 $1,217 $61 $246 $242 $256 $181 $90 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Manufacturing Aftermarket Total Manufacturing Aftermarket Adj. EBITDA % 1) 2019 figures reflect the adoption of IFRS 16. ADL figures only included from the period of May 28, 2019 onwards in 2019 results 2) Management changed presentation of segmented reporting by separating unallocated costs and corporate SG&A from Manufacturing and Aftermarket as such the totals for 2019 will not tie 9 STRONG FREE CASH FLOW GENERATION Free Cash Flow, Cash Capital Expenditures and ROIC 2015 – 2019(1) CASH FLOW ($MM) 15.8% 14.3% 13.7% (1) 2018 2019 12.3% $165.2 $161.2 $159.7 $160.4 Adjusted EBITDA $315.4 $322.2 9.7% Interest Expense ($23.5) ($50.5) Current Income Tax ($56.3) ($61.3) Cash Capital Expenditures plus Lease ($76.1) ($50.2) Proceeds from disposition of property $0.2 $0.2 $76.1 Other - - $59.1 $56.9 Free Cash Flow (USD) $159.7 $160.4 $50.2 FX Rate 1.3183 1.3180 $27.9 Free Cash Flow (CAD) $210.5 $211.4 $10.5 Dividends (CAD) $90.3 $105.5 2015 2016 2017 2018 2019 Payout Ratio 43% 50% FCF Cash PPE ROIC 1) 2019 figures reflect the adoption of IFRS 16. ADL figures only included from the period of May 28, 2019 onwards in 2019 results 10 IMPACT OF COVID-19 ON THE BUSINESS Supply Chain Transit Deliveries Production Private Coach Production staff Parts and Potential Potential for idled due to health inspection and Significant Service disruption from and safety slowdown in Continues under government customer concerns and to acceptance delays private coach as business as usual mandated allow for customers vehicles process – private shutdowns and due to travel production restrictions and are idled, coach parts sales shelter-in-place coordination especially in tour likely to be rulings. shelter-in-place rulings. Impact is a and charter space impacted Tier 1 and Tier 2 timing issue, rather suppliers may be than market impacted concern 11 IMMEDIATE RESPONSE TO COVID-19 Production Idling Cash Management • Measure to ensure health and safety of • Implemented freeze of Hiring and 2020 production staff salary increases • ~85% of NFI’s costs of goods are variable • Suspended payment of Board Director related to direct production Fees • Will continue to complete work-in-progress • Capital expenditures limited to health and vehicles during production idling with focus safety projects and some maintenance on continuing customer deliveries • Temporary cut to quarterly dividend • Idling will burn down vacation accrual in • Temporary withholding of Executive Earned most cases 2019 bonuses • Approx.