New Flyer Industries (NFI.UN)Annual General Meeting
2010 CEO UpdatePaul Soubry
Toronto ���� May 12, 2011
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Forward Looking Statements: Our remarks and answers to your questions today 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 statementsare 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 importantfactors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forthin New Flyer’s Annual Information Form. New Flyer assumes no obligation to update or revise any forward-looking statements to reflect new events orcircumstances, except as required by applicable securities laws. All figures discussed today are in U.S. dollars unless otherwise noted.
� #1 Heavy Duty Transit Bus manufacturer (34% share) & Parts Provider (16% share) in Can and US
• Market Innovation leader offering the widest range of products and green propulsion options.• 3 manufacturing plants (in Manitoba and Minnesota) with Fabrication plan in Elkhart, IN• 3 Parts Distribution Centers (Manitoba, California, Kentucky) and 2 Service Centers (Arnprior & NY)• Successful and experienced Executive Leadership team with significant Operational Excellence and
LEAN expertise
� The industry’s largest order Backlog ($3 548B at Mar 31 11) allowing for longer term perspective
A Proud History. A Bright Future.Established in Winnipeg in 1930
� The industry s largest order Backlog ($3.548B at Mar 31-11) allowing for longer term perspective
• Transit is an essential service. Continued urbanization trends in congested cities. Increased green. • Transit Buses are largely a replacement business having a targeted life of 12-18 years. • Bid Universe of over 13,000 units (Bid Universe = Bids awaiting decision + Bids in Process + Bids
Coming to market)
� Yield oriented investment . Current Dividend/Interest Yield of approx 11%
• IPO in 2005 on TSX. • Income Deposit Security (IDS) is a stapled security. NFI is an IDS (not an Income Trust). • Payout Ratio since IPO averages <80%. Distributions paid for 66 consecutive months.
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Low Floor (LF)
Transit’s Broadest Product OfferingMore lengths… propulsion types… styling options.
Low Floor Restyle (LFR)
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Propulsion Options: Clean Diesel, Gas or Diesel Electric Hybrid, Electric Trolley, CNG/LNG, Hydrogen Fuel Cell
LFA/Bus Rapid Transit (BRT) Xcelsior
Over 110 ‘next generation’ Buses delivered 652 Excelsior’s ordered from 25 different customers
L h C t B t ON
60’ Xcelsior Prototype Currently in Testing Phase
40 on order from 2 customers.First production order starts in H2-11
Improved:
• Exterior Styling• Passenger Experience
� Accessibility� Larger Windows� More seats
• Driver Experience� Improved controls� Instrument Panel
• Maintenance Access
Reduced:
• Weight (approx 10%)• Noise Levels• Operating Costs• Emissions
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Launch Customer Brampton, ON
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North America’s #1 Market Share in Bus & Parts
New Flyer delivered 34% of the Heavy Duty Transit buses in 2010
New Flyer has a 16% share of Bus Spare Parts Market
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5Source: New Flyer Database & Management Estimates
16%
9%
9%4%
5%
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A broad and diversified Customer BaseOver 30,000 buses delivered with 22,000 still in operation
NF maintains relationships with 273 transit authorities, including 21 of the 25 largest
Average key customer relationship approximately 14 years; 89% repeat sales
4,000
5,000
6,000
7,000���
Source: Metro Magazine/Management Dtaabase
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0
1,000
2,000
3,000
Other OEMs New Flyer
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% Percentage of New Flyer Buses
*New customer as of 2010; delivery expected to begin in late 2011
Significant improvement in OperationsChange Management for sustainable processes
Warehouse Elimination
Real Time Shop Floor DataAutomated Consumable Control
Tool Shadow Boards
Measures of Performance
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Shop Floor Transformation
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Operating with a broader Business DefinitionFollowing a roadmap for Production Innovation and Optimization
To Deliver the Best Bus
On time, on Spec and on Budget
Latest Technology with Superior
Quality
To Deliver the Best Bus Value and Support for Life
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Price-Quality
Alignment
Data, Parts and services
Buses are designed for
12-18 years life
With an Expanded Customer Support offering“It’s not JUST about the bus”
Consigned Kits
ReliabilityUsed Buses
2010 landmark contract with Ottawa
• Trade-in of 226 mid-life Used Buses• Build of 308 new D60LFR buses• Installation of SmartBus technology• Reliability Engineering services• Parts Kit Consignment• LEAN Consulting/Training• Extended warranty• Local Service/Warranty Center
Service TrainingPubs
Parts
Kits
Engineering
Service Ctr
Buses
TrainingArnprior Service Center added in Q1-10
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The Bus
New Flyer deliveries maintained at over 2,000/yrTotal New Flyer Backlog over 8,700 EU’s ($3.68B) at Dec 31
New Flyer Bus Deliveries (EU’s)
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14762189
2844 2498 2082 1897
4271 3124
4072
70336908
6815
0
2000
4000
6000
8000
10000
12000
2005 2006 2007 2008 2009 2010
Firm & Option Backlog (Equivalent Units)
Option
Firm
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2010 Year in Review
Sales: $984M (10.6% lower than 2009)
Deliveries: 2023 EU’s (2,257 in 2009)2010 was a 52 week period compared to 53 in 2009
Adjusted EBITDA: $97.1M (2.9% lower than 2009)Bus down 4.1% Aftermarket up 1 3%Aftermarket up 1.3%
Distributable Cash: C$73.3M (7.3% less than 2009)
Payout Ratio: 78.5% (72.8% in 2009)
In Compliance: With all Debt and Credit covenants.
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� Operational Excellence transformation to Reduce Costs and Inventory• Company wide 5S completed and commenced Value Stream Mapping. • Quality systems redesign delivering build improvement, productivity increase (+8%) and overtime reduction (-5%)• Designed and launched New Flyer Institute for training and development. Technical and Leadership• Formalized Strategic Sourcing team for cost reduction and alternate supply development• Reduced personnel by over 100 in last 4 months
� EBITDA enhancement through Strategic Initiatives• Acquiring and Developing IP (eg. Acquired TCB in 2010 to offer New Flyer Stanchions and Lights)• Life Cycle Roadmap in process (eg. SmartBus, Service Contracts, Vendor Managed Inventories)
Competing in a Challenging MarketInvesting to compete and grow
e Cyc e oad ap p ocess (eg S a t us, Se ce Co t acts, e do a aged e to es)• Opened NY and Ottawa Services Centers to manage warranty and campaign costs. Now adding service revenue.• Exhaustive Make-Buy assessment in process. Commenced facility rationalization efforts.
� EBITDA through Product Excellence and Focus• Migrating complete product portfolio to next generation platform (Xcelsior) by 2013. • 35’ & 40’ Xcelsior production launched in 2010. 60’ prototype in testing• From ‘Customization’ to ‘Configuration’. Faster and more accurate engineering. Reference Buses now in use.
� Enablers:• Investigating and exploring other products and international markets• Product Lifecycle Management (PLM) implementation on schedule. • Enterprise Risk Management (ERM) design and Implementation in process• Employee Satisfaction and Engagement (84% of employees completed 2010 survey)
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SALES Adj EBITDA
1720
2424
80
100
120
8396
108
106
800
1000
1200
New Flyer Performance (US$) Demonstrated growth since IPO in 2005
Parts
14
63
45
78 73 76 73
10
14
0
20
40
60
2005 2006 2007 2008 2009 2010
537 540
804865
992878
53 67
0
200
400
600
2005 2006 2007 2008 2009 2010
Bus
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Focused on FundamentalsThroughput, WIP Reduction & EBITDA Generation
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In Compliance with Covenants
Leverage Ratios (Debt to Adjusted EBITDA)
Fixed Charge Coverage (Adjusted EBITDA less Capex and current taxes over debt service)
3 0
4.0
5.0
6.0
ed E
BIT
DA
Covenant reset at Credit Renewal
2.00
Covenants were set in 2005 to allow for issuance of IDS
to redeem Class B&C
16 16
-
1.0
2.0
3.0
2008 2009 Q1
2009 Q2
2009 Q3
2009 2010 Q1
2010 Q2
2010 Q3
2010 Q4
Deb
t /
Ad
just
e
Senior Leverage Total Leverage
Senior Leverage Covenant Total Leverage Covenant
1.00
1.50
2008 2009 Q1
2009 Q2
2009 Q3
2009 2010 Q1
2010 Q2
2010 Q3
2010 Q4
Fixed Charge Coverage Dividend Suspension
Interest Deferral Fixed charge covenant
Current Debt Structure:IDS Debt ($C) $261MBachelor Bonds ($C) $ 43MTerm Loan ($US) $ 90MRevolver $ 0M
Payout Ratio has averaged 80% since IPONew Flyer has paid 66 consecutive months of distributions
� Current Yield approx 11.3%� IDS distribution paid monthly at an effective
annual rate of C$1.17 (since Jul-07). � New Flyer is a Corporate issuer and therefore
not impacted by 2011 SIFT rules (ie. no conversion required).
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Each NFI.UN IDS unit consists of:
One common share of New Flyer Industries Inc.
C$ 5.53 principal amount of 14% Subordinated Notes
* CAW went on strike in 2006 in Winnipeg for approx 4 weeks
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NA HD Transit Bus Deliveries (EU’s) are cyclicalHowever US Federal transit funding has continued
5
10
US Fed
Funds ($ m
illions) (E
U's)
1000
2000
3000
4000
5000
6000
7000
Deliveries (E
U's)
TEA 21 SAFETEA-LU Extension Cdn/US Deliveries
2010-11 ForecastDelivery Range
Can/US Deliveries
US Federal Funding
01998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011
0Source: US Federal filings, Management Estimates
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� US Transit market experiencing in turbulence. Current US funding bill extended to Sept 2011 (at 2010 levels). No clarity on 6-yr Authorization Bill. Concern in certain US local jurisdictions over securing annual operating funds.
� Both Market Bus Deliveries and Parts Markets were down in 2010. Expect to continue in 2011.� Resulting in significant pricing pressure. Two competitors (with facilities both in Canada and US) experiencing
substantial work reductions. A third has extended shutdown.
Positive Factors
� Increased Urbanization. Congested cities.� Push for green and cleaner propulsion� Aged fleet in Can/US averaging more than mid-point life� Unemployment has leveled off. That combined with rising
fuel costs should help stabilize ridership in the US. � Ridership is rising slightly in Canada
Challenges
� Cyclical industry� Fare Box only generates 30-70% of operating costs for the
Transit Agencies� General state of the economy could impact on ridership
going forward.� Reduced State/Province revenue collections adds pressure
to Transit Authority operating budgets
Bid Universe remains above 12,000 EU’sExpecting 2011 opportunities to be primarily fleet replacements
2008 2009 2010
Data not tracked
continuously Pre 2009
Forecast 9813 EUs
Bids in Progress 828 EUs
Bids Submitted 1848 EUs
Pipeline Subtotal 12489 EUs
Options in Process 977 EUs
Total Pipeline 13466 EUs
as of March 31, 2011
• 2008 was the peak of the HD Transit Bus order cycle.
Several multi-year procurements were awarded.
• Stimulus funding helped in H1-2010
• Some significant fleet replacement competitions expected
in H2-2011 (LA, SEPTA, Montreal, TTC, Baltimore, etc.)19
Sales: $214.3M (down 11.8% over Q1-10)
Deliveries: 468 EU’s (453 in Q1-10)
Adjusted EBITDA: $22.0M (4.8% higher than Q1-10)Bus up 12.7% Aftermarket down 13.0%
Distributable Cash: C$14 3M (2 5% lower than Q1-10)
Q1-11 Performance Highlights
Distributable Cash: C$14.3M (2.5% lower than Q1-10)
Payout Ratio: 101.1% (99.2% in Q1-10)
In Compliance: With all Debt and Credit covenants.
It’s challenging Times, but we’re not sitting still:
1. Appointed Dealers: Girardin (Quebec and Canadian Private) & National Bus Sales (US Private)2. Engaged an international bus agents on used bus resale opportunities3. Closed first 2 customer orders for used Ottawa buses. Delivery started in Q2-114. Announced plans to open Ontario Parts Distribution Center in H2-115. Launched electric bus development initiative with Manitoba Government, Red River College, Mitsubishi6. Invested $1M in Q1-11 exploring strategic alternatives/structure/acquisition opportunities
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