Highlights:

  • Total order backlog of $3.3 billion increased by 17.7% compared to December 30, 2007.
  • 2008 Q2 consolidated revenue of $260.4 million and Adjusted EBITDA of $25.9 million, increased 13.4% and 3.8% respectively, as compared with 2007 Q2 results. YTD consolidated revenue of $484.9 million and YTD consolidated Adjusted EBITDA of $52.9 million, increased 3.8% and 14.5% respectively, as compared to 2007 YTD results.
  • Increased bus deliveries of 586 equivalent units in 2008 Q2 compared to 531 equivalent units in 2007 Q2, which represents an increase of 10.4%. Quarterly reduction of 12.2% in equivalent units in work in process during 2008 Q2.

  • Continued growth of aftermarket operations resulted in 2008 Q2 revenue and Adjusted EBITDA increase of 22.3% and 19.0%, respectively, compared to 2007 Q2. Aftermarket operations opens new U.S. distribution center.

  • Excess Distributable Cash of C$4.3 million during 2008 Q2 representing a payout ratio 75.7%. 2008 YTD the Company generated excess Distributable Cash of C$10.5 million representing a payout ratio of 71.8%.

WINNIPEG, August 5, 2008 - New Flyer Industries Inc. (TSX:NFI.UN), the leading manufacturer of heavy-duty transit buses in Canada and the United States, today announced its results for the 13-week period ("2008 Q2") and for the 26-week period (“2008 YTD”) ended June 29, 2008. Full financial statements and Management's Discussion and Analysis (the "MD&A") are available at the Company's web site at: www.newflyer.com/index/financialreport. References in this press release to “New Flyer” or the “Company” are to New Flyer Holdings, Inc. (“NFL Holdings”) and its consolidated subsidiaries immediately prior to, and to New Flyer Industries Inc. (“NFI”) and its consolidated subsidiaries immediately following, the consummation of the transactions described in note 1 of the consolidated annual financial statements of NFI for the period ended December 30, 2007 under “July 12, 2007 transaction”. All amounts are referred to in U.S. dollars unless otherwise noted.

Increased bus production and delivery levels in response to the Company’s growing bus order backlog and continued robust growth in aftermarket operations resulted in consolidated revenue for 2008 Q2 of $260.4 million, which represents an increase of 13.4% compared to consolidated revenue for the second quarter of 2007 (“2007 Q2”) of $229.7 million. Bus manufacturing revenue in 2008 Q2 of $234.8 million increased by 12.5% compared to bus manufacturing revenue of $208.7 million in 2007 Q2. Total bus deliveries in 2008 Q2 were 586 equivalent units, which represents a volume increase of 10.4% compared to 2007 Q2 deliveries of 531 equivalent units. 2008 Q2 aftermarket operations revenue of $25.6 million increased by 22.3% compared to $20.9 million in 2007 Q2. The continued strong growth in aftermarket operations is a result of increase in market share as New Flyer buses continue to represent a larger share of the active installed fleet in the combined United States and Canadian market.

Consolidated Adjusted EBITDA for 2008 Q2 totaled $25.9 million compared to $24.9 million in 2007 Q2, which represents an increase of 3.8%. This increase in consolidated Adjusted EBITDA is a result of continued revenue and profit growth in aftermarket operations. 2008 Q2 bus manufacturing operations Adjusted EBITDA of $21.0 million decreased by 3.3% compared to bus manufacturing operations Adjusted EBITDA of $21.7 million in 2007 Q2 as a result of lower margins related to product sales mix. On a quarterly basis, Adjusted EBITDA from bus manufacturing operations per equivalent unit can be volatile due to sales mix. Increased production levels and deliveries resulted in a 12.2% quarterly reduction of equivalent units in work in process, however, lower production efficiencies were realized related to this reduction in work in process. The Company incurred an additional non-recurring $0.7 million charge as a result of a revision to a warranty estimate which relates to past deliveries of a product unique to one specific customer. 2008 Q2 aftermarket operations Adjusted EBITDA of $5.1 million (19.9% of revenue) increased by 19.0% compared to $4.3 million (20.4% of revenue) in 2007 Q2. During 2008 Q2, a new distribution center in Kentucky was successfully opened to provide further growth opportunities. While this operation did not have any substantial sales in 2008 Q2, $0.3 million of start-up costs were incurred during the quarter which has negatively impacted Adjusted EBITDA margins in aftermarket operations.

The Company reported a net loss of $10.7 million in 2008 Q2 compared to a net loss of $85.0 million in 2007 Q2. With consolidated Adjusted EBITDA of $25.9 million in 2008 Q2 compared to $24.9 million in 2007 Q2, the decrease in net losses is a result of lower non-cash charges offset by interest costs. In 2008 Q2, non-cash charges totaled $18.6 million compared to non-cash charges included in 2007 Q2 earnings of $87.5 million. This change in non-cash items included in earnings related to fair value adjustments to assets and liabilities, unrealized foreign exchange gains, and amortization.

The Company generated Distributable Cash of C$18.0 million during 2008 Q2 and declared distributions of C$13.6 million, which represents a 2008 Q2 payout ratio of 75.7%. During 2008 YTD, New Flyer generated Distributable Cash of C$37.3 million and declared distributions of C$26.8 million, representing a payout ratio of 71.8%. As a result, over the twelve month period ended June 29, 2008, the Company has recorded excess Distributable Cash of C$15.6 million representing a payout ratio of 77.2%.

The Company’s positive cash flow from operations has resulted in a net cash inflow of $9.2 million during 2008 Q2. As a result, the Company’s liquidity position as at June 29, 2008 totaled $69.6 million comprised of cash balances of $29.6 million and a $40.0 million revolving credit facility, which was undrawn as at June 29, 2008. In comparison, the Company’s liquidity position as at December 30, 2007 was $65.3 million.

The total order backlog (including firm orders and options) of approximately $3.3 billion (representing 7,960 equivalent units) as at June 29, 2008 increased by 17.7% compared to the total order backlog of approximately $2.8 billion (representing 6,916 equivalent units) as at December 30, 2007. Based on the significant increase in order activity in 2006 and 2007, and the current robust bid activity in the U.S. heavy-duty transit bus market, management believes that the market demand will remain strong for the remainder of 2008 and into 2009 and that the Company’s solid product positioning will continue to grow market share.

As a result of new order activity and deliveries during 2008 Q2, the firm order backlog as of June 29, 2008 is $1.2 billion, which represents 37.1% of the total backlog. The firm order backlog, which represents 2,754 equivalent units of production, provides the Company with the order visibility to efficiently plan production and supports the current and planned increases to production levels slated for the second half of 2008 and first half of 2009.

Conference Call

A conference call for analysts and interested listeners will be held on Wednesday, August 6th, at 3:00 p.m. (ET). The call-in number for listeners is 800-591-7539 or 416-644-3428. A live audio feed of the call will also be available at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2356200

A replay of the call will be available from 5:00 p.m. (ET) on August 6th until 11:59 p.m. (ET) on August 13th. To access the replay, call 416-640-1917 or 877-289-8525, enter pass code number 21279044, followed by the pound sign. The replay will also be available on the Company's web site at www.newflyer.com.

Non-GAAP Measures

Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization and other non-cash charges, adjusted for certain costs related to securities offerings and certain other non-recurring charges as set out in the MD&A. Management believes Adjusted EBITDA and Distributable Cash (as defined below) are useful measures in evaluating the performance of the Company. “Distributable Cash” means cash flows from operations adjusted for changes in non-cash working capital items, and effect of foreign currency rate on cash and increased for withholding taxes related to capital transactions, defined benefit funding, distributions on Class B and Class C common shares, costs related to securities offerings, fair market value adjustment to inventory, fair market value adjustment to prepaid expenses, proceeds on sale of redundant assets, and interest on subordinated notes forming part of the income deposit securities (“IDSs”) and decreased for defined benefit expense, maintenance capital expenditures, fair market value adjustment to deferred revenue, fair market value adjustment to accounts payable and accrued liabilities and principal payments on capital leases. Adjusted EBITDA and Distributable Cash are not earnings measures recognized under GAAP and do not have standardized meanings as prescribed by GAAP. Therefore, Adjusted EBITDA and Distributable Cash may not be comparable to similar measures presented by other entities. Investors are cautioned that Adjusted EBITDA and Distributable Cash should not be construed as an alternative to net income or loss determined in accordance with GAAP as an indicator of New Flyer's performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.

About New Flyer

New Flyer is the leading manufacturer of heavy-duty transit buses in Canada and the United States. The Company's three facilities - in Winnipeg, MB, St. Cloud, MN and Crookston, MN - are all ISO 9001, ISO 14001 and OHSAS 18001 certified. With a skilled workforce of approximately 2,300 employees, New Flyer is a technology leader in the heavy-duty transit market, offering the broadest product line in the industry, including drive systems powered by clean diesel, LNG, CNG and electric trolley, as well as energy-efficient gasoline-electric and diesel-electric hybrid vehicles. All of New Flyer's products are supported by an industry-leading, comprehensive parts and service network. The IDSs are listed on the Toronto Stock Exchange under the symbol NFI.UN.

Forward-Looking Statements

Certain statements in this press release are “forward‑looking statements”, which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. The words “believes”, “anticipates”, “plans”, “expects”, “intends”, “projects”, “estimates” and similar expressions are intended to identify forward‑looking statements. These forward‑looking statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Such differences may be caused by factors which include, but are not limited to, competition in the heavy-duty transit bus industry, availability of funding to the Company's customers at current levels or at all, material losses and costs may be incurred as a result of product warranty issues, material losses and costs may be incurred as a result of product liability claims, changes in Canadian or United States tax legislation, the Company's success depends on a limited number of key executives who the Company may not be able to adequately replace in the event that they leave the Company, the absence of fixed term customer contracts and the termination of contracts by customers for convenience, the current "Buy-America" legislation may change and/or become more onerous, production delays may result in liquidated damages under the Company's contracts with its customers, currency fluctuations could adversely affect the Company's financial results or competitive position in the industry, the Company may not be able to maintain performance bonds or letters of credit required by its existing contracts or obtain performance bonds and letters of credit required for new contracts, third party debt service obligations may have important consequences to the Company, the covenants contained in the senior credit facility and subordinated note indenture of New Flyer Industries Canada ULC could impact the ability of the Company to fund distributions and take certain other actions, interest rates could change substantially and materially impact the Company's profitability, the dependence on limited sources of supply, the Company's profitability and performance can be adversely affected by increases in raw material and component costs and the availability of labour could have an impact on production levels. The Company cautions that this list of factors is not exhaustive. These factors and other risks and uncertainties are discussed in the Company’s materials filed with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com.

Although the forward‑looking statements contained in this press release are based upon what management believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward‑looking statements, and the differences may be material. These forward‑looking statements are made as of the date of this press release and the Company assume no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws.

For further information:
Glenn Asham
Chief Financial Officer
Tel: (204) 224-1251
E-mail: investor@newflyer.com