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NEW FLYER ANNOUNCES ACQUISITION OF AFTERMARKET PARTS BUSINESS FROM DAIMLER BUSES NORTH AMERICA

theaveragejoe

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theaveragejoe

theaveragejoe

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NEW FLYER ANNOUNCES ACQUISITION OF AFTERMARKET PARTS BUSINESS FROM DAIMLER BUSES NORTH AMERICA FOR APPROXIMATELY $29 MILLION

Strengthens leadership position of Company as the largest provider of aftermarket parts for the Canadian and US transit bus industry

Added value through combined scale, footprint and overhead utilization and management expects transaction to be accretive to earnings and cash flow

Winnipeg, Manitoba, Canada – March 1, 2013: (TSX:NFI; TSX:NFI.DB.U) New Flyer Industries Inc. (“New Flyer” or the “Company”) announced today that it has acquired certain assets from Daimler Buses North America (“DBNA”) relating to its Orion aftermarket parts business for heavy-duty transit buses.

 

DBNA’s Orion parts business generated revenue in 2012 of approximately $54 million, a portion of which was from supporting the nearly 10,000 Orion buses currently in operation in Canada and the United States. The purchase price for the assets was approximately $29 million (which includes an estimated $6.5 million for the purchase of accounts receivable) and is subject to post-closing adjustments for working capital which are normal and customary for these types of transactions. The purchase price was funded by using proceeds from the recently announced equity investment by Marcopolo S.A., one of the world’s leading global bus manufacturers, which made the first tranche of its investment in New Flyer, totaling C$51.7 million, on February 15, 2013.

 

Under the terms of the transaction with DBNA, New Flyer has:

 

• acquired DBNA’s Orion aftermarket parts inventory, accounts receivable and assumed certain obligations under its parts contracts with transit customers,

 

• acquired an exclusive license to use DBNA’s proprietary part designs for Orion buses in connection with New Flyer’s aftermarket parts business, and

 

• entered into an arrangement under which New Flyer will be the exclusive supplier of parts required by

DBNA for customer warranty support, under Orion bus purchase contracts and pre-closing parts contracts.

 

The companies have also entered into a transition services agreement for an interim period following the purchase, during which time the business will be prudently and efficiently integrated into New Flyer’s business systems and four existing parts distribution centers in Canada and the US.

 

“This announcement follows on the co-operative relationship we have developed with Daimler Buses North America,” explained Paul Soubry, New Flyer’s President and Chief Executive Officer. “In the last eight months we have assumed two Orion bus manufacturing contracts: one for New York City Transit and the other for King County Metro in Seattle for a total of 194 firm bus orders and options for an additional 291 buses (for a total of 485 equivalent units).” Mr. Soubry went on to explain, “This acquisition is consistent with our strategic plan and enables New Flyer to further diversify and grow our aftermarket parts business.”

 

Bernd Voigt, President and CEO of Daimler Buses North America added, “It was important to DBNA that we have a market leader such as New Flyer supporting the Orion buses currently in service in Canada and the US with high quality parts and proven service. Further, DBNA required a reliable source of spare parts as we fulfill our bus warranty and support obligations to Orion customers under bus purchase contracts. Together with New Flyer, we will make sure a robust service infrastructure continues to provide a high level of service and support.”

 

New Flyer will provide further details and insights into its transition and integration plan as part of the next investor call scheduled for 9:00 am (Eastern time) on March 22, 2013, following the release of its 2012 year-end results. Orion customers will receive direct communication from DBNA and New Flyer regarding the transition of the business, and are asked to continue working directly with the Orion Aftermarket Parts Service Organization as usual, until further advised.

 

http://newflyer.com/index/2013_03_01_parts_aftermarket_acquisition_from_daimler

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It's a damn shame, indeed. -_-

That summed up my attitude. Furthermore, its a good thing New Flyer makes great buses and has been successful in the past (yes I know about that NYC order backed out years ago). I like the design of their buses and the way they sound and run, but I just hope they don't start rushing orders here and there, and the buses don't last as long, run as strong or start falling apart.

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FlyerD901

FlyerD901

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NFI has control over all Orion porduct parts. Orion I to Orion VII 3rd Gen. It also says they can make parts for those models too. Sounds like they can make a Orion Bus, but I doubt it.

 

Lots of loyal Orion Customers I gues will go to NFI, but Nova seems to already have them. MTA LFSA, TTC LFSA, Houston LFSA, etc. Nova got in where they could fast.



Orion could have stayed has their own company and let DBNA  go back to where they're from, instead of screwing around with peoples livelihood.

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theaveragejoe

theaveragejoe

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Now I wonder if the intellectual property on the Orion 8 and 9 engineering and design is going to be sold. Would be a shame to throw it away.

 

Those were all scrapped

 

That summed up my attitude. Furthermore, its a good thing New Flyer makes great buses and has been successful in the past (yes I know about that NYC order backed out years ago). I like the design of their buses and the way they sound and run, but I just hope they don't start rushing orders here and there, and the buses don't last as long, run as strong or start falling apart.

 

 

Look in the future of Daimler to buy a stake of New Flyer

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Culver

Culver

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Those were all scrapped

 

 

 

 

Look in the future of Daimler to buy a stake of New Flyer

Oh hell. They could've at least made some money selling that IP. Daimler looks worse by the day with this Orion mess.

 

If only they had waited a damn year for the DD11 to become EPA2013 certified, they would've had the best bus+engine package available in NA to sell to the MTA; and they most likely would've won, too.

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theaveragejoe

theaveragejoe

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This is no different than MCI buying the Flxible parts business back in 1996.  Selling aftermarket parts is usually far more profitable than selling the original item.

 

 

Dam straight New Flyer will do well with this as well as Daimler in selling it off!

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youngblaze

youngblaze

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Dammn, all I can say is I'm investing in New Flyer stock in the near future.

 

They only trade on the Toronto stock exchange so you can buy but you face what is called "currency risk" if your dollar completely bottoms out compared to the Canadian dollar you going to lose quite a lot.

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Via Garibaldi 8

Via Garibaldi 8

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They only trade on the Toronto stock exchange so you can buy but you face what is called "currency risk" if your dollar completely bottoms out compared to the Canadian dollar you going to lose quite a lot.

lol... Good point... I remember when I used to go up to Montréal I would get about $1.50 Canadian for every US$.  Now the Canadian dollar is almost as strong as than the US$ so you get maybe $1.05 Canadian for every US$...  <_<

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Orion VII 4 Life

Orion VII 4 Life

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One has to wonder what this means for the Oriskany facility that is currently doing aftermarket support---will that now close and heavy work on Orion buses under warranty instead be done at JFK Airport?

I guess since this is New Flyer's game now that could very well happen. I know they're doing work on the BAE HybriDrive up there right now, and IIRC BAE is based near the Oriskany plant so they might just let BAE finish their work up there and then close up shop.

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RailBus63

RailBus63

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One has to wonder what this means for the Oriskany facility that is currently doing aftermarket support---will that now close and heavy work on Orion buses under warranty instead be done at JFK Airport?

 

Re-reading the announcement, it says that New Flyer will be the 'exclusive supplier of parts' for warranty support - it's possible Daimler will continue to provide the actual warranty work using those NFI parts

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theaveragejoe

theaveragejoe

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Re-reading the announcement, it says that New Flyer will be the 'exclusive supplier of parts' for warranty support - it's possible Daimler will continue to provide the actual warranty work using those NFI parts

 

 

Bingo also says "New Flyer Industries Inc. (“New Flyer” or the “Company”) announced today that it has acquired certain assets from Daimler Buses North America (“DBNA”) relating to its Orion aftermarket parts business for heavy-duty transit buses"

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Grand Concourse

Grand Concourse

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lol... Good point... I remember when I used to go up to Montréal I would get about $1.50 Canadian for every US$.  Now the Canadian dollar is almost as strong as than the US$ so you get maybe $1.05 Canadian for every US$...  <_<

lol, or remember when $1 = 1.25 euro or something? I should've converted like $1000+ then into euros.

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Via Garibaldi 8

Via Garibaldi 8

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lol, or remember when $1 = 1.25 euro or something? I should've converted like $1000+ then into euros.

Oh God... You know the Euro came in shortly before I moved to Europe... I remember when the dollar was LESS than the Euro... However by the time I was ready to move, the friggin Euro had jumped by a good .30 cents and kept climbing all the way to about 1.40 for every U.S. dollar!! I'm serious, one morning, I checked the conversion rates, and it went down several cents. I immediately ran over to the agency I was using for my apartment and went and paid my rent for like 3 months and saved quite a bit.  Rent was 1,200.00 €/month for this one bedroom I had, but the exchange rate had fallen from about 1.40 to about 1.34, so instead of paying $1,680.00 per month for those three months in advance, I paid $1,608.00 per month or so, saving me about $216.00, which looking back on it, I didn't realize it was that much that I saved...  The other thing I got killed with was taking out money because back then I was using just one bank back in the States, so not only did I pay the exchange rate, but then the additional bank fees for taking out cash...  <_< Had the exchange rate been better I could've done so much more traveling, but even so I still went to over 30 cities, so I can't complain I guess.

 

Thinking about it now, I wonder how those contract agreements work with the (MTA) and New Flyer since they're Canadian...?? In the old days, when you did business with Canadians, they would take lower wages if you paid them in US dollars since that meant more Canadian dollars, but now the Canadian dollar is almost stronger than the U.S. dollar...

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