NFI Group Inc.

Paul Soubry - President, CEO Glenn Asham - CFO

Chris Murray - AltaCorp Capital Inc. Dave Tyerman - Canaccord Genuity

Thank you, Tanya, and good afternoon ladies and gentlemen. Welcome to the 2014 fourth quarter results conference call for New Flyer Industries.

Joining me on the call today is Glenn Asham, our Chief Financial Officer. And for your information, this call is being recorded and a replay will be made available shortly after the call.

As a reminder to all of our participants and others regarding this conference call, certain information provided today may be forward-looking and based on assumptions and anticipated results that are subject to uncertainties. Should any one or more of these uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary significant from those expected.

You are advised to review the risk factors found in the company's press release and further public filings with securities administrators for more details. In a moment Glenn will take you through the highlights of our financial results for the fourth quarter of 2014 and fiscal 2014.

Following that, I will provide you some insight into our 2015 outlook and areas of focus and then we will open up the call to your questions. Before handing it over to Glenn, I thought I'd share with you my perspective on our company and our 2014 performance.

Since private equity investors exit New Flyer at the end of 2008, our strategy and our execution plan have been very simple and quite clear; first, we wanted to delever the company and migrate the capital structure of New Flyer from an income deposit security to a common share; second, we wanted to invest in New Flyer both our bus and our aftermarket businesses, so that we can defend our market leading market positions; and three, to put New Flyer in a position to seek opportunities for growth and long-term diversification. At that time, we adopted a stakeholder model of focusing on and balancing the needs of our employees, our customers and our shareholders.

And our mission became that to pursue – in pursuit to becoming a market leading and diversified profitable bus company that did three things. That offered the North American transit industry the highest quality buses with the latest technology that are supported by a comprehensive suite of parts and services to deliver to our customers best bus value for their life.

Two, to operate as a world-class manufacturer that's using lean principles and deploying a comprehensive quality roadmap with an enterprise risk management, oversight framework in place. And three, to provide our shareholders with solid returns and an appropriate capital structure and leverage framework.

So in 2013, we successfully welcomed the Marcopolo as a significant strategic shareholder in New Flyer and following that acquisition – following that we had the acquisition of the parts business of Orion Bus and then North American Bus Industries or what we call NABI. So in 2014, we were able to complete a number of strategic initiatives and activities based on those acquisitions that are critical to enhancing our competitiveness and achieving our objective of growth and diversification.

So let me highlight a few of our success within 2014. First, early in the year actually late in 2013, we signed a significant multiyear bus contract with Los Angeles Metro.

That included the establishment of a local completion in our service center, very close to the LA Metro facilities. So we located a facility, we combined with NABI service center team and since then we delivered 8 buses a week, every week since the first quarter of 2014 to Los Angeles Metro.

We have been also able to use this facility to assist with many of the California customers that operate New Flyer products and NABI product to support our warranty and campaign progress. Second, in early 2014, we began delivery of our first MiDi buses and we opened our distribution channels for private operators for both Xcelsior and MiDi both in Canada and the United States.

Third, we continued our electrification agenda of transit buses by delivering six battery electric zero emission Xcelsior buses that are capable of providing significant operating range and capable of being able to be charged either at plug-in at the depot or an on route charge and we are very pleased with the progress of our electrification initiatives. Next, after nearly a year of detailed analysis, we finalized our plan to rationalize the NABI bus models and decided to convert the NABI manufacturing facility in Anniston, Alabama into a facility that builds the New Flyer Xcelsior platform and a little bit more about that later.

And finally, we are able to continue to grow our aftermarket parts business something that we set out to do and want to continue to do, which also included the completion of approximately 70% of the Chicago Transit Authority or CTA Midlife Bus Overhaul program, which involved over 1000 New Flyer buses. Now, when we started 2014, we have projected that North American heavy-duty bus market to be approximately 5200 equivalent units.

Now, that we have gone through the data and it's tabulated, we calculate the industry actually delivered about 5125 in use, which is up very slightly from 2013. And so while the U.S.

economy continues to show strong signs of overhaul recovery, the transit bus market has been relatively flat since 2011 and we currently project 2015 to be not much different than 2014, which really reflects the replacement nature of our current marketplace. For 2014, we delivered – New Flyer delivered 2437 equivalent units, which translate into a bus market share based on equivalent units delivered to above 48%, which is a 5% increase from what New Flyer and NABI combined delivered in 2013 or a market share of 43%.

We also continued our commitment to operational excellence which is contributed to positive financial results in 2013 and again in 2014. In fact, we improved our lean assessment score which is conducted independently by the Canadian Manufactures and Export Association for the sixth consecutive year.

We now score 4.1 out of 5 on lean readiness and something we are very proud off. Now, early in 2014 we ultimately communicated to our shareholders that New Flyer had a few large quantity low margin bus contracts that were bid in 2012 and 2013.

So through targeted cost savings, efficiency and quality improvements, expense management and some great strategic sourcing activities we were able to deliver better than expected results in 2014 all of this in the face of headwinds caused by a rapid and significant Canadian and U.S. dollar movement and a significant customer contract that experienced unanticipated inspection and acceptance delays through most of 2014.

With respect to our aftermarket segment in 2014, we calculated our parts market share to have increased by approximately 5% to 33% in 2014. I should point out that our parts market size and share counts excludes the revenue from the CTA midlife contract as we believe that to be a non-recurring program.

And it will finish up in mid-year 2015. So now, I will hand it over to Glenn, but in short we are very pleased with our Q4 and our full year 2014 results.

It is very gratifying after hard work, after investments in our OpEx and targeted improvements. And with that, I will turn it over to Glenn to tell you about the fourth quarter and about 2014, the year.

Thank you, Paul, and good afternoon everyone. I will be highlighting certain 2014 fourth quarter results and provide comparisons to the same period last year.

I will focus my commentary on this call to providing key financial insights that will then allow more time and attention on our market, business and strategic efforts. I would like to direct you to the company's full financial statements and management's discussion and analysis of financial statements that are available on SEDAR or the company's Web site.

I will remind you that New Flyer's financial statements are presented in U.S. dollars, the company's functional currency, and all amounts are referred to, are in U.S.

dollars unless otherwise noted. Revenue from bus operations increased 7.5% for the fourth quarter of 2014 compared to the fourth quarter of 2013.

The increase is a result of 7.1% increase in total bus deliveries and 0.3% increase in average selling price. Revenues from bus operations increased 15% for fiscal 2014 compared to fiscal 2013.

Deliveries increased 11.2% during fiscal 2014 primarily as a result of the acquisition of NABI effective June 21, 2013 and the increased number of equivalent units produced per week in the fourth quarter 2014 versus the 13-week period or fourth quarter of 2013. The average selling price increased 3.4% during fiscal 2014 due to the product sales mix.

The average selling price can be volatile when comparing quarters as a result of sales mix and propulsion type. 2014 fourth quarter aftermarket revenue increased 22.6% compared to 2013 fourth quarter primarily a result of increased core parts volumes and the incremental revenue from the Chicago Transit Authority midlife overall program.

Fiscal 2014 aftermarket revenue increased 48.4% primarily as a result of the increased volumes, CTA midlife overall program and the acquisitions of both the Orion and NABI aftermarket parts businesses in 2013. The aftermarket revenue generated from the CTA midlife upgrade program represented approximately 14.8% of the total aftermarket revenue during fiscal 2014.

This stream of revenue is expected to conclude by June of 2015. Adjusted EBITDA from bus operations in 2014 fourth quarter and fiscal 2014 decrease 15.1% and 9.9% respectively.

The adjusted EBITDA decrease where bus was expected as we had previously provided guidance a few lower than average margin contracts. 2014 Q4 adjusted EBITDA also decreased as a result of one-time accounting provision made for the expected payment of $2.4 million regarding pro forma share units.

Bus operations adjusted EBITDA for the fiscal 2014 was 5.1% of bus revenue, a decrease compared to 6.5% of bus revenue during fiscal 2013. Management had continued its efforts to recover margins through cost reductions and improve the efficiencies to mitigate the impact of the lower margins on plan productions throughout fiscal 2014.

As well as the company recognized 11.7 million of investment tax credit in fiscal 2014 as compared to 8.1 million in fiscal 2013. As of December 28, 2014 only $200,000 of the ITCs remain unemployed with the related tax credit program now ended and it will not be reviewed for 2015 going forward.

For 2015, we expect margin improvement resulting from OpEx, Projects United, product rationalization and normalized pricing to mitigate the lack of adjusted EBITDA derived from ITCs. 2014 Q4 and fiscal 2014 aftermarket operations adjusted EBITDA increased 24.6% and 61.1% respectively compared to 2013 respective period primarily a result of increased volumes and margins on core parts business, which have more than offset lower than average margins generated by the CTA midlife overall program.

Also, fiscal 2014 adjusted EBITDA increased due to a full year of earnings from the acquisitions of NABI and the Orion aftermarket parts businesses when compared to fiscal 2013. 2014 fourth quarter and fiscal 2014 net earnings decreased by $6.3 million and $0.1 million respectively.

New Flyer reported net earnings of $7.4 million in 2014 fourth quarter compared to net earnings of $13.7 million during the fourth quarter of 2013 resulting from higher amortization expense a consequence of the company's plan to rationalize NABI's product through a common Xcelsior platform. The estimated useful life of the related equipment and intangible assets have been adjusted to align with the final production dates and depreciation and amortization has been accelerated accordingly.

The company's net earnings per share in 2014 fourth quarter was $0.13, a decrease on net earnings per share of $0.25 generated in 2013 fourth quarter. Fiscal 2014 net earnings of $26.7 million remain substantially unchanged from fiscal 2013 even though fiscal 2014 net earnings were negatively impacted by the $4.8 million impairment loss and the $7.8 million increase in amortization.

The impairment and accelerated amortization as noted earlier is a result of our decision to rationalize NABI's products to a common New Flyer Xcelsior platform. While this decision results in short-term costs, we believe this decision improves our competitiveness and future profitability that Paul will speak about later.

Net earnings per share in fiscal 2014 of $0.48 decreased compared to $0.52 generated during fiscal 2013 primarily as a result of having more shares outstanding after issuing 11.1 million shares to market pool in fiscal 2013. In 2014 fourth quarter, the company generated free cash flow of $21.1 million Canadian, while generating dividends of $8.1 million Canadian, which compares to $15.7 million Canadian of free cash flow and declared dividends of $8.1 million Canadian in the fourth quarter of 2013.

The free cash flow payout ratio was 49.6% in fiscal 2014 materially better than the 68.1% during fiscal 2013. As a result, management continues to believe that sufficient free cash flow will be generated to maintain the current annual dividend rate of $0.585 per share.

With that, I will turn it back to Paul.

Thanks Glenn. So New Flyer is committed to our stakeholder model for long-term success by maintaining a balance of the needs of the shareholders, employees and the customers, while we have great people in our company and we believe in our team and we believe in our strategy.

Candidly, we are also very proud of the fact that New Flyer paid dividends to shareholders for 113 consecutive months or since the company's IPO in August of 2005. It's comforting to see the shareholders continue to show confidence in New Flyer with our common share recently trading at new highs.

But, it's not lost on us that while investors and street analysts who cover our stock, determine our day-to-day share price only we can determine our long-term value by doing the right things and doing things right. Overall, feedback has been really positive and I continue to hear from our customers that they have seen a change in our company physically and culturally and probably most importantly in our quality.

We remain committed to making all parts at New Flyer a great place to work and we will continue to focus on investing safety, trading, employee surveys, social committees and the like to build employee engagement. The results are noticeable with employee [absenteeism] [ph], turnover, grievances and safety incidences all continuing to improve.

For 2015, our annual operating plan is focused on executing the project to phase out the production of NABI bus models and complete the transition to the Xcelsior platform, a project that we call United. And it encompasses the implementation of all New Flyer policies, operating methodologies and information technology systems at the Anniston, Alabama manufacturing facility.

Project United is proceeding on schedule and on budget and is targeted to be completed during the second half of 2015. We expect the transition to allow for improved competitiveness by leveraging combined bus volume and purchasing for greater efficiencies and synergies.

We also expect to streamline our design and sourcing and our overhead for better product control such as eliminating option redundancy and future cost of designing products including refreshment buses, propulsion platforms, testing, engineering and alike. We also anticipated, we will enable further product enhancement and optimize our aftermarket and parts for the program to better serve our customers.

As we announced earlier, in total we plan to invest about US$20 million in direct cost of CapEx in Project United and utilizing our operating cash flows in our current credit facilities. As at the end of 2014, we had spent approximately $3.0 million.

Now, we anticipate this investment to pay back through captured cost reductions and synergies. And at this point, we forecast our annualized EBITDA enhancement to be approximately $12 million once the project is complete.

We continue to believe that market pricing and certain bus competitions has normalized and we expect bus margins realize during 2015 to be on average slightly higher than those we are experiencing in 2014 as Glenn described earlier. While we have fewer competitors than we did a few years ago, I wouldn't say that competitive intensity has dropped off.

And notwithstanding the improved big universe and the number of active competitions, we continue to find it challenging to fill open slots with a necessary lead time to ensure engineering and sourcing can be done effectively and efficiently. Just like us, our competitors are not standing still.

Two issues to point to, first, Gillig, the number two market share participant is in the process of building a brand new facility with substantially more manufacturing capacity. On the other side of the coin, Proterra and BYD continue invest heavily in designing and launching their electric transit bus offerings and have been successful at sourcing government support programs to do so and are winning some work.

So we will continue to pursue costs and overhead savings in daily operations through ongoing OpEx and continue to improve on initiatives. We anticipate that improved bus margins for fiscal 2015 will mitigate the loss of adjusted EBITDA derived from the ITCs as Glenn spoke about of which were substantially realized in fiscal 2014.

As of today, we have approximately 80% of our fiscal 2015 bus production slots filled which is very similar to where we were last year at this time. The New Flyer backlog and orders anticipated to be awarded under new procurements are expected to enable us to continue to operate at our current line rate for an average rate of approximately 51 we use per production week for fiscal 2015.

And as we always cautioned production rates and deliveries will vary quarter-by-quarter due to sales mix and this year complicated a little bit by the introduction and transition of the Xcelsior program into the Anniston, Alabama facility. Now, many have asked about the status of the U.S.

Federal Government programs and funding and the intensions of the Buy American and U.S. content requirement.

Unfortunately there is not really much new to report here. A Second Go America Act was proposed with healthy funding increase for transportation spending.

But, it also included the proposed increase in U.S. content requirements.

While an aging fleet and increases in federal budget bodes well for properties that need to buy buses, the potential increase in U.S. material cost have remained an obvious concern.

And as we have stated, this is an industry issue not just a New Flyer issue. And we continue to be very active in Washington and with our trade associations to make sure that we are at the forefront of that conversation.

With respect to our aftermarket business, we forecast core aftermarket parts revenue to grow by approximately 5% during fiscal 2015. And just like the New Flyer and the NABI bus businesses, we have decided to rationalize our aftermarket parts business into a combined entity and we will work to identify efficiencies over time through operations and IT system synchronization.

This project we call convergence, which has just commenced and likely to be completed in early 2016. As I have said many times before, we are committed to create our future and not simply let it unfold.

New Flyer will not standstill. So while much as gone right, a few of our projects like Xtended Life Brakes or the MiDi program or Standard Reference Bus Adoptions are proving to be far more difficult than we anticipated, but we are staffed resources committed to ensure that they successful over the long-term.

We can and we will continue to lead this industry. And while we are committed to seek additional diversification and growth for New Flyer bus aftermarket and supply chain and quite honestly we have continued to look at new opportunities for M&A and investment.

Our priority for 2015 is to successfully complete our investments in Project United and Project Convergence, which will improve our overall performance enhance our competitiveness. We are continuing to work to become cheaper, faster, smarter and better.

We continue to have active discussions around the board table on our capital structure and the appropriate leverage for our company and how it fits with our dividend policy. And now, that we are in a very different – the company is in a very different place, it makes for some interesting dialog.

The conversion from IDS to common share has allowed us to transition from a pure yield place to growth yield company which is very exciting. As we all know change is a journey not a destination, but I can safely say on behalf of the Board and the New Flyer team that we are very pleased with our 2014 and very pleased with where we are today.

We are proud of our history and we are really excited about our future. In fact, recently we adopted a simple tagline that aspirationally defines the goals of our company, our products and our service.

New Flyer built to rely on. I look forward to talking to you again at our AGM in May in Toronto.

Thanks for listening today. And with that we will invite your questions.

Tanya back over to you to provide instructions to our callers.

Thanks guys. Good afternoon.

Hi, Chris.

My first question is, looking at the backlog the numbers that were actually in there were kind of surprising, so when I look at your firm backlog, you are running roughly 530,000 for EU one, I mean, the total backlog is down around 500,000 that's probably the highest level, I can remember it ever being. How much of that is – and if I look at the bookings, there wasn't seen to be anything really unusual in terms of propulsion systems or design.

A lot of that just indicative of some of the margin improvement you talked about that we should see unwinding in 2015?

Well, there is a couple of things that play there Chris. First of all, the buses continue year-over-year-over-year regardless of the propulsion to get more and more electronics on them, cameras, monitors, AVL systems and so forth.

And those things are cheap. I mean every one of those things can add $20,000, $30,000, $40,000 per unit in their own.

The second issue is mix. The current backlog compared to say two years ago or so as a higher percentage of trolley, so we want to contract with Seattle and San Francisco that have trolleys and those are very expensive components.

And we also have a batch over the next in a while, a hybrid that as you know are 200 something thousand dollars a piece more than an average bus.

Okay. So I guess maybe I will just ask and maybe in a more direct way.

I mean when we were thinking about your comment about margin expansion in manufacturing for 2015, is that more on an EBITDA per EU basis or on a percentage basis. And maybe directionally can you give us an idea how you think that's going to play out?

I will say it's on an EBITDA per EU basis, or you can look at it on an EBITDA margin basis. I guess, rather we look so directly I guess the guidance I tell you is what we said in our MD&A.

We think that our margin we can achieve in 2015 will offset the loss of the fuel tax credit. So the fuel tax credit or ITCs that we had for approximately $11 million in 2014.

So the way to think about it that guys figure that you are just going to have flat EBITDA year-over-year, is that the best way to think about it in the bus group?

I think that's a fair assessment. I mean, while the margins are moving up, they are not moving up rapidly.

We think we can cover half of the ITCs. Once again, we can continue to have OpEx programs that we look at for further cost savings, but at this point can't really predict what those all will be.

Okay, great. And then just, I guess my question is just looking at the revenue contribution in Chicago and how that's going to play out.

So you gave us some interesting guidance for 2014, about 15% of revenue, I guess. Should we just think that that run rate will probably be good through to the end of June?

And can you give us any rough idea of how much that actually impacted EBITDA like maybe what percentage of EBITDA that worked out?

It won't be – it will sort of fall off during the second quarter. So it won't run – it won't be like getting to Christmas fall away, right?

So they will taper off in the second quarter, so the second quarter will not have as much revenue as the first quarter. And in terms of how much EBITDA that will fall off that I can't tell you because we haven't publicly disclosed that information.

So is it fair to think that your overall margins should biasing back up a little bit higher because there is some dilution from Chicago?

I'm sure the margin on that CTA work was lower than sort of the core part sales.

So Chris, think of it this way. We try to get a little bit of guidance that we thought the core parts sales is going to go up at 5%, it has better margins than the CTA program which is going to face its way out.

Okay. And then in terms of aftermarket is there anything other – is there any other type of growth that we might be thinking about over the next a little while other than just parts?

No. It's really focused around getting this Project Convergence get into the business together looking at the overhead associated with the two, the purchasing and sourcing synergies if they are available.

We were hoping we see loss programs like CTA; they are few and far between of that nature. We bid on a couple of smaller ones or maybe we can pick those off.

We continue to work on unique little programs like vendor-managed inventory. We won a contract the other day to do some repair and overhaul work on some inverters.

And that kind of stuff at our Ontario service center, but nothing of any difference other than really parts or parts related type work and anything around that kind of a kit programming strategy.

Okay, great. And then I guess my final question, just maybe a more just sort of an update.

You sort of alluded to the fact you got a couple of competitors working on electric bus. But now, you have the electric bus I guess in service in a couple of jurisdictions so far.

Any thoughts or feedback about sort of the early learnings on that one and any opportunities in the near future for more sales?

Yes. There are.

We continue to actively bid on – again, most if not all of these are two bus, five bus, six bus, nine bus type demo or proof of concept type things. I don't know the exact number.

But, I would be surprised there is more than 100 buses by the end of this year in total in operations that are electric or all electric or primarily electric. So we are going to continue to do what we are doing.

The learnings around it, there has been some issues as we can all imagine around interior heat. And how to keep the temperature of the bus appropriate, so some of that is programming, some of that is deck and definition of components.

The range that we have projected in the different configuration seems to be proving out the way we have anticipated which is good. The reliability of the components and the charging for the most part has been good.

There has been a lot of people asking how an electric bus is going to operate in a cold environment. But, keep in mind that the whole battery pack is a temperature controlled kind of box if you will that keeps that a constant temperature either hot or cold.

So surprisingly to sum the performance of the actual battery system has gone very, very well. There has been some learning around charging protocols rate interface in fact New Flyer is taking a very, very active lead with some of the standard associations with the trade association in helping to drive charging and connectivity type protocols.

We fundamentally believe that that this is a game where customers are going to want the ability to use multiple bus types on common electric type charging infrastructures and so we are really, really pushing kind of those standards which will only help us in the long-term we believe. So keep in mind, even if there is 100 new electric buses next year out of 5200.

We think electrification is happening, but it is not going to lose the needle in short order.

Okay. But, you still believe that you got a competitive product against either Proterra or BYD?

Absolutely. And keep in mind too that we have been very prudent in partnering with our customers on the R&D.

And so we are accessing, funding more is available. We are using the customers as well as our money rather than anyone partner being extended too far in this stuff.

And as you know that the reality of a transit bus is, its much about the reliability of the propulsion system, it is the reliability of the bus platform and that's one area, doors, signs, seating rails, configuration, maintenance where we think we got a leg-up on those.

Okay, great. Thanks guys.

Thank you.

Good morning guys. Sorry, afternoon guys.

Hi, Dave.

So first question is on the non-cash working capital. You did improve the situation in Q4, but you are still running a pretty high level of non-cash working capital, my number says its $136 million.

I'm wondering does that come down materially this year and is there a number that we should be thinking as of the standard rates, you should be running after the acquisitions and maybe the low 100s range. So maybe down $20 million from where we are now that makes sense as a longer term kind of goals.

Yes. You can't see to that – it really becomes mixed dependent as to what has been our production.

And it gives you a clue when you look at the average selling price in Q4 relative to the average selling price for the year. So if you look at our selling price in Q4 of this year, it was roughly $495,000 a vehicle.

Our average selling price for the full year was $450,000 vehicle. So you can just see the content of the products that we had in production in the year was one of the primary contributors for the increase in the working capital investment.

So if we come back and sort of look at $450,000 has been an average although volatility around that, it would go back similar to what we have seen back when our working capital was – when our production mix was close to that $450,000 per bus selling price. I guess, one area that I have touched on is on the progress payments that we received from customers.

Now, we did have some significant progress payments in 2014. At the end of 2013, which pretty well all got realized in 2014, so that's really has become an increase in the working capital allocated by the business.

I think that came down probably in the neighborhood of $30 million to $40 million this year.

Okay. So just to understand that most of that you are talking about is affecting the inventory then I take it.

And then it flows through the receivables, so that if you stayed at a 450 range eventually it would reflect in both those lines that's the idea?

That's correct. And I guess the other item which contributed to high work, high investment in 2014 was this one contract that we really had delayed in getting services and deliveries, which really impacted us starting in June of 2014 and we didn't fully recover on that right until the end of the year.

Right. So Glenn based on that conversation and the firm order backlog as Chris said around 500,000 right now is at a fairly high level per EU.

Would that imply for the time being do you likely to have higher working capital?

For ones there were exceptions. We spoke about the trolley contract that we have.

Yes.

It's really the trolley propulsion equipment that really drives that price up. We have an agreement with our supplier on that equipment so they get paid and we get paid.

So on that contract we will not see an increase in working capital investment.

Okay. But, would it prevent the number from coming down much the working capital EU – like with the working capital?

When you look at it really what we are financing is just a base bus shell, okay? Because all the propulsion equipments being financed by the supplier.

Okay.

So that actually should be a contributor to reduce working capital.

Right. Got you.

Okay. That's really helpful.

Just on the bus margins just to make sure I understand what you are saying are you saying that the EBITDA per EU is going to be flat or the actual EBITDA for bus manufacturing is full for the year?

Yes. So I guess I look at it as the EBITDA per EU for bus manufacturing during 2015.

Okay. But you are expecting more units so presumably that should push up the overall EBITDA?

I think it helped us a little bit, yes.

Yes. Okay.

Fair enough. And then just on the overall bus outlook maybe just a little bit more commentary on that.

It sounds like from what you are saying Paul, it's still competitive, but we are probably better than we were a few years ago. Is there any expectation that things could improve either from the demand side to be able to push up the build rates at some point here or to provide any kind of margin push at some point?

Well, I wish I had a crystal ball on this one. I guess from a positive perspective there are less major players, right?

And I say we choose our words and be very careful, but between us and Owen and Gillig, there is three very aggressive players with capacity that they want to try and fill. So it's not like we got a walk in the park bids with big margins and so forth.

The reality though is that because of the market isn't really growing in terms of sheer size. Yes, the bids universe is getting better, yes, the number of active stuff in bids is getting bigger.

But, that isn't translating yet into us being able to increase our production rate at a steady clip. There are weeks and months where we can go up and go down.

We are also hypersensitive this year where we don't want to screw up the transition of the NABI facility into build Xcelsior product. It's not a light switch, right?

We are facing out the NABI builds and we are facing in the Xcelsior builds. And so we are hypersensitive to making sure we do that well.

So in 2015 for us, we are kind of projecting relatively flat volumes with maybe a little bit up tick. We are working like hell on the cost side to make sure we capture every possible synergy we can, but we are not expecting any real price lift.

Now, depending on what happens with the Federal funding, we may see because there is pent up demand. There is an aging fleet.

We may see in 2016 and 2017 scenarios where you could see the overall market size increase. But, at this point, we don't see it that way.

We think our growth in EBITDA is going to come from our cost performance, our synergies, and then really from continued growth in the aftermarket business.

Okay. Fair enough.

Then the last couple of questions I had capital spending for this year, do you have sense of what we should be thinking?

Yes. That is what we have clearly said is, it's about $20 million that we need to spend on the product rationalization at the Anniston facility.

So that would be the bulk of it. Other than that maybe $7.5 million to $10 million of maintenance type items.

And to be quite honest, we will see how things go because obviously it is ease to commit to this spend but to get everything done on a timely basis, getting all this capital on place on Project United may limit how much of the maintenance we get done.

Okay. So just on $20 million, it says both when in your tax and MD&A it goes through both the CapEx line and also through the –

There is some commitment cost.

When I'm thinking of the CapEx?

Well, actually what I speak to this both. The majority is CapEx and because that is one that goes through the P&L or we excluded it from the adjusted EBITDA number.

Okay. Okay.

That's fine. And then on the taxes side, what should we be thinking about in terms of the actual paid taxes versus the current tax number?

So if you look at the total tax provision for this year was an effective rate around 29%. The biggest timing difference not that is only timing difference, but the biggest timing difference is the amortization of the intangibles which is not tax deductible – deduction in the deferred tax asset.

So really what I – if you take your earnings number, say 29% of your total tax back out the piece that you have that would be the tax on the amortization that would be the best estimate I can give you for current tax.

Okay. But, the relationship between current and actual like when I'm looking at your –

Yes. It's been very, very bumpy up and down the last couple of years.

2013 we had a lot of noise in our tax number related to some of the acquisitions and some deductions that we got there that brought our effective rate very low. And similarly in 2012 and in 2011, as we went through our capital conversion process there were some noise in our tax numbers which really made it hard to be – provide any sort of comparable numbers.

So we do normally expect taxes paid equal at current?

Over time for sure.

Okay.

There is no real lumpy installment payments that I can think that we are either ahead on or behind on. So I would estimate that they should stay fairly close together.

Okay. Fair enough.

And the last question I had and Paul, you alluded, it sounds like you are still thinking about it as a firm and on the board, but, you guys like your position – you have been using a lot of cash in the last number of years on working cap, but it looks you are positioned to kind of be at the end of that. So you should generate even more free cash going forward, just wondering what your view is on the potential suspended internally versus on things like shareholder value enhancement either dividend increases or buybacks or however, you want to do it.

I'm going to scratch my head and wonder what can you spend your money on in the business, since you are such a big player and I'm not sure what you can do on vertical integration since the biggest component really that things you can buy. Any thoughts you have on that would be helpful.

No. Since it's a great question and candidly a good portion of our board meeting today was on exactly on this topic.

So you are absolutely right, the last 12, geez, I will give 4 or 5 years, 6 years, we have been spending it on fundamentally trying to investment in our business and done a lot there. We are focused dead serious this year as we talked about on this Project United on the bus side Project Convergence on the parts side.

Project Convergence isn't going to be a huge cash drag more it is around systems and processes that just going to take time to get done. We – without telling stories at the school, we continue to look at opportunities where we can acquire and/or invest in new programs.

And so we have done that very aggressively and very prudently to look at scenarios that makes sense for us, some inside our space, some adjacent to our space. So as we evaluate some of those scenarios as we look at the leverage of the business, as we execute now on United for the first part of this year, it's not out of the realm that we would look at shareholder value enhancement, right now we want to get through this next chapter before make a decision on that.

But, we are in a way better place as you know to be able to have that conversion today than we were two years ago than we were six years ago. So that one is a little bit of kind of wait and see for a little bit, but very, very pleased about our ability to have the conversation.

Okay, very good. I will stay tuned.

Thanks very much guys.

Thanks Dave.

Great. Thank you very much, Tanya.

We really appreciate your time, ladies and gentlemen. We look forward to giving you an update in not too far away on the May 7 as we publish our results for the first quarter at our Annual General Meeting.

Thank you very much.