NFI is still aiming for increased revenue and profit margins due to robust demand.

NFI is still aiming for increased revenue and profit margins due to robust demand.

After fresh orders caused the bus and coach manufacturer’s backlog to soar by 22% to roughly $8 billion since the end of the third quarter of 2023, NFI Group anticipates turning a profit this year and lowering debt leverage measures.

Paul Soubry, President and Chief Executive, said on Wednesday that the firm had a successful year-end as a consequence of actions taken to lessen a disruption in supply and boost manufacturing output, which led to a 19% increase in deliveries over 2022 and a decrease in work-in-progress inventory.

NFI reported a 19% increase in deliveries in the fourth quarter of last year to 1,227 equivalent units, and a 32% increase in deliveries for the whole year to 4,001 units. The firm aims to achieve between $2.7 billion and $2.8 billion in revenue and $45 million to $65 million in adjusted profits before interest, taxes, depreciation, and amortisation by 2023, which surpasses the middle of the expectations set by the company. In 2022, the company’s sales was $2.05 billion, with an adjusted loss before interest, taxes, and depreciation of $59 million.

NFI said that while it has reduced its adjusted EBITda projection range from $250 million to $300 million, it still expects sales of $3.2 billion to $3.6 billion for the next year.

Even so, the company stated that it anticipates a notable rise in deliveries and robust performance from its aftermarket segment in 2024. However, this will be somewhat offset by the fulfilment of legacy contracts that are impacted by inflation, some of which were scheduled for delivery in 2023, as well as labour inefficiencies as NFI increases manufacturing.

According to NFI, it still projects generating over $4 billion in sales and more than $350 million in adjusted EBITDA in 2025.

Send letters to robb.stewart@wsj.com for Robb M. Stewart.

NFI updates information on orders, delivery, backlog, and financial forecasts for the fourth quarter of 2023.

WINNIPEG, Manitoba, January 17, 2024 (GLOBE NEWSWIRE) – NFI Group Inc. (“NFI” or the “Company”), a leading independent global bus and coach manufacturer and a pioneer in electric mass mobility solutions, gave an update on its deliveries for the 13-week period that ended on December 31, 2023 (“2023 Q4”), as well as an update on its orders, backlog, and financial guidance as of the end of 2023 Q4.2. The information included in this press release about 2023 Q4 and Fiscal 2023 is unaudited and will be finalised before NFI’s audited financial results are published.

Paul Soubry, President and Chief Executive Officer of NFI, said, “NFI finished 2023 strong as our team delivered buses, coaches and aftermarket parts in line with our expectations.” “We reduced work-in-process inventories and increased manufacturing productivity in order to reduce supply interruption and boost year-over-year deliveries by 19%. With fresh orders generating a 22% increase in the backlog1 since the end of 2023 Q3, to over 10,500 units valued at approximately $8 billion, the demand climate is still extremely strong. From a demand and award standpoint, we anticipate the first quarter of 2024 to be even busier. We may record our largest number of quarterly awards ever, further solidifying our position as the market leader.

“NFI is well-positioned for Fiscal 2024, with significant increase in Adjusted EBITDA1, a return to net profit, and lower debt-to-leverage ratios anticipated. Our revised range of $240 million to $280 million for Fiscal 2024 Adjusted EBITDA1 estimate reflects our expectations for a significant uptick in deliveries and robust performance from the Aftermarket business. The delivery of legacy contracts affected by inflation, some of which were scheduled for delivery in 2023, and labour inefficiencies in our operations as we ramp up manufacturing capacity to meet increased demand and clear our secured backlog, slightly offset these advantages. We are still optimistic about our medium-term goals, which call for over $4 billion in sales by 2025, with a quarterly run rate in the fourth quarter of that year that would generate $400 million in Adjusted EBITDA1 on an annualised basis.

Highlights of Initial Delivery, Aftermarket, Liquidity1, Order, and Backlog 1

NFI supplied 4,001 equivalent units (or “EUs”) in Fiscal 2023 and 1,227 EUs in Q4 of 2023, representing increases of 32% and 19% from Fiscal 2022 and Q4 of 2022, respectively.
Predicted work-in-process inventory at the conclusion of the 2023 Q4 quarter will be 914 EUs, down 211 EUs from the 2023 Q3.
The Aftermarket division is anticipated to generate over $500 million in sales and over $100 million in Adjusted EBITDA1 for the Fiscal Year 2023, marking the highest performance in NFI’s history.
With an anticipated closing liquidity1 position of $180 million, up from $169 million at the end of 2023 Q3, expect positive total cash flows in Q4 of 2023.
In 2023 Q4, NFI received over 2,100 EUs in orders; as a result, there was an ending backlog1 of over 10,500 EUs, of which more than half were firm orders.
Nearly $8 billion was the total backlog1 value at the end of 2023 Q4, up around 22% from 2023 Q3.
Over 3,800 EUs of new firm and option orders that were pending at the end of 2023 Q4 are not included in the total backlog1. In these cases, the customer’s board, council, or commission, as appropriate, had approved the award to NFI, but NFI had not yet received purchase documentation, so the orders were not included in the backlog1.

As management completes its year-end and quarter-end financial operations, the Company now warns that the above-mentioned data are preliminary, unaudited, and subject to change.

Update on Guidance

For the fiscal year 2023, the company’s projected revenue and Adjusted EBITDA1 are anticipated to exceed the midpoint of the guidance ranges it provided in a news release dated November 8, 2023. NFI projects revenue in the range of $2.7 billion to $2.8 billion (unchanged) and Adjusted EBITDA1 in the range of $45 million to $65 million (unchanged) for Fiscal 2023.

After conducting a thorough financial analysis of its backlog, anticipated new awards, anticipated Aftermarket performance, supply chain conditions, and investments in new products and operations, NFI has decided to update its Adjusted EBITDA1 guidance range from $250 million to $300 million to $240 million. The company is keeping its overall revenue guidance for Fiscal 2024 at $3.2 billion to $3.6 billion.

The following anticipated effects have led to a revision in Adjusted EBITDA1 projection for Fiscal 2024:

the fulfilment of outstanding legacy contracts with inflationary pressures (which now account for 10% of deliveries in the first half of 2024).
The timing of certain zero-emission bus awards is pushing back some deliveries until 2025.
Demand for buses and coaches has surged, and NFI has decided to keep running its Pembina, North Dakota facility—which was initially scheduled to close in 2023—in order to meet this demand.
Longer-term expenditures to bring double deck bus manufacture back to North America (with 2025 and beyond forecasts of positive Adjusted EBITDA1 contribution).
Based on 2023 outperformance, expected gains in the Aftermarket sector performance.
increased profits on bus and coach contracts signed in 2023 as well as the advantages of initiatives to reduce overhead costs.
NFI expects its current and expected liquidity1 to be sufficient to fund operations (including working capital), capital investments, and bonding requirements in 2024 and the longer term. This expectation is based on expected revenue growth and associated investments in working capital, Adjusted EBITDA1 guidance, cash capital expenditures, lease payments, and cash taxes. Rather of making large debt repayments, NFI anticipates that Adjusted EBITDA1 growth will reduce its total debt leverage ratios by 2024.

NFI continues to aim for $4 billion in sales for the fiscal year 2025, and it now projects Adjusted EBITDA1 of more than $350 million, with modifications made for the timing of the ramp-up in manufacturing output and the delivery of certain electric vehicles. By the fourth quarter of 2025, NFI anticipates reaching an annualised run rate of $400 million in Adjusted EBITDA1. Together with the presentation of its audited Fiscal 2023 results, NFI will provide further information about its outlook, Fiscal 2024 forecast, and 2025 financial objectives.

The aforementioned aims and guidance are based on a number of presumptions and expectations. Kindly refer to the November 8, 2023, news release and the 2023 Q3 Management’s Discussion and Analysis (or “MD&A”) from NFI, as well as the March 1, 2023, press release and the Fiscal 2022 MD&A. The guidance and targets are also dependent on a number of assumptions and factors, such as the performance of the supply chain, the availability and training of labour on a consistent basis, a higher percentage of sales of zero-emission buses (“ZEB”), which provide a higher revenue and dollar margin benefit, the reduction of inflationary pressures, the recovery of end markets in line with management’s expectations, growth in international markets, sales of aftermarket parts, and initiatives for The company’s filings on SEDAR at www.sedarplus.ca and the forward-looking statements include a list of the risks and other factors that might affect the guidance and objectives.

Leading the ZEvolutionTM is NFI

With electric cars in operation or on order in more than 150 cities across six countries, NFI is a pioneer in zero-emission transportation. With more than 140 million EV service miles under their belts, NFI has the largest selection of battery- and fuel cell-electric buses and coaches that are emission-free.

Through its mobility solution ecosystem, which comprises buses and coaches, infrastructure, parts and service, technology, workforce development and training, and vehicle finance, NFI provides expanding North American communities with scalable, clean, and sustainable transportation solutions. Additionally, NFI runs the Vehicle Innovation Centre (“VIC”), the first and only innovation lab of its type with a focus on workforce development and the advancement of bus and coach technology. Over 350 interactive events and 7,000 industry professionals have attended EV and infrastructure training at the VIC since its late 2017 inauguration.

Concerning NFI

With 450 years of combined knowledge, NFI is driving global electrification of public transit. With its infrastructure, technology, and zero-emission buses and coaches, NFI satisfies modern urban needs for scalable smart transportation solutions. Combined, NFI’s clean, sustainable, and networked transportation is making cities more livable.

NFI is a top global bus manufacturer of mass mobility solutions, operating under the brands New Flyer® (heavy-duty transit buses), MCI® (motor coaches), Alexander Dennis Limited (single- and double-deck buses), Plaxton (motor coaches), ARBOC® (low-floor cutaway and medium-duty buses), and NFI PartsTM. NFI has over 8,200 team members spread across ten countries. Presently, NFI provides the greatest selection of environmentally friendly driving systems on the market, encompassing clean diesel, natural gas, electric hybrid, and zero-emission electric (trolley, battery, and fuel cell). NFI provides global installation assistance for more than 100,000 buses and coaches. NFI’s convertible unsecured debentures (also known as “Debentures”) and common shares (also known as “Shares”) are both listed and traded under the symbols NFI and NFI.DB on the Toronto Stock Exchange (TSX). The websites www.nfigroup.com, www.newflyer.com, www.mcicoach.com, nfi.parts, www.alexander-dennis.com, arbocsv.com, and carfaircomposites.com provide news and information.

For questions, please get in touch with:
Stephen M. King
P: 204.792.1300
King, Stephen.@nfigroup.com

Statements Regarding the Future

Within the meaning of applicable Canadian securities laws, this press release includes “forward-looking information” and “forward-looking statements” that express management’s expectations for the company’s future growth, financial performance, and liquidity1 as well as its strategic initiatives, plans, business prospects, and opportunities, including the COVID-19 pandemic’s duration, impact, and recovery, supply chain disruptions, and strategies to address them. To identify statements that look ahead, look for words like “believes,” “views,” “anticipates,” “plans,” “expects,” “intends,” “projects,” “forecasts,” “estimates,” “guidance,” “goals,” “objectives,” and “targets,” as well as similar expressions of what’s to come or conditional verbs like “may,” “will,” “should,” “could,” and “would.” These forward-looking statements are a reflection of management’s current expectations for the company’s financial and operating performance as well as future events (such as the temporary nature of supply chain disruptions and operational challenges, investments in operations and new products, production improvement, labour shortages and labour training, the company’s markets’ recovery, and the anticipated benefits of cost mitigation efforts). They speak only as of the press release date. The nature of forward-looking statements necessitates the making of assumptions and involves a great deal of risk and uncertainty. As a result, there is a chance that the management’s expectations, projections, plans, and conclusions regarding future events, performance, or results may not come to pass, that the assumptions may be incorrect, and that the company’s future growth, financial situation, ability to maintain sufficient liquidity and generate cash flow, as well as its strategic initiatives, objectives, plans, and business prospects, including the company’s expectations regarding the duration, impact, and recovery from the COVID-19 pandemic, supply chain disruptions, and operational challenges,

A number of factors that may cause actual results to differ materially from the results discussed in the forward-looking statements include: the Company’s business, operating results, financial condition and liquidity1 may be materially adversely impacted by the aftermath and ongoing impacts of COVID-19 pandemic and related supply chain and operational challenges, inflationary effects and labour supply and labour rate challenges; the Company’s business, operating results, financial condition and liquidity1 may be materially adversely impacted by ongoing conflicts in Ukraine, Russia, Israel and Palestine, due to factors including but not limited to further supply chain disruptions, inflationary pressures and tariffs on certain raw materials and components that may be necessary for the Company’s operations; funding may not continue to be available to the Company’s customers at current levels or at all; the Company’s business is affected by economic factors and adverse developments in economic conditions which could have an adverse effect on the demand for the Company’s products and the results of its operations; currency fluctuations could adversely affect the Company’s financial results or competitive position; interest rates could change substantially, materially impacting the Company’s revenue and profitability; an active, liquid trading market for the Shares and/or the Debentures may cease to exist, which may limit the ability of security holders to trade Shares and/or Debentures; the market price for the Shares and/or the Debentures may be volatile; if securities or industry analysts do not publish research or reports about the Company and its business, if they adversely change their recommendations regarding the Shares or if the Company’s results of operations do not meet their expectations, the Share price and trading volume could decline, in addition, if securities or industry analysts publish inaccurate or unfavorable research about the Company or its business, the Share price and trading volume of the Shares could decline; competition in the industry and entrance of new competitors; current requirements under U.S. “Buy America” regulations may change and/or become more onerous or suppliers’ “Buy America” content may change; failure of the Company to comply with the U.S. criteria of the “DBE” programme, or the fact that the U.S. government has not authorised the program’s DBE aims. FTA; absence of fixed term customer contracts, exercise of options and customer suspension or termination for convenience; local content bidding preferences in the United States may create a competitive disadvantage; requirements under Canadian content policies may change and/or become more onerous; the Company’s business may be materially impacted by climate change matters, including risks related to the transition to a lower-carbon economy; operational risk resulting from inadequate or failed internal processes, people and/or systems or from external events, including fiduciary breaches, regulatory compliance failures, legal disputes, business disruption, pandemics, floods, technology failures, processing errors, business integration, damage to physical assets, employee safety and insurance coverage; international operations subject the Company to additional risks and costs and may cause profitability to decline; compliance with international trade regulations, tariffs and duties; dependence on unique or limited sources of supply (such as engines, components containing microprocessors or, in other cases, for example, the supply of transmissions, batteries for battery-electric buses, axles or structural steel tubing) resulting in the Company’s raw materials and components not being readily available from alternative sources of supply, being available only in limited supply, a particular component may be specified by a customer, the Company’s products have been engineered or designed with a component unique to one supplier or a supplier may have limited or no supply of such raw materials or components or sells such raw materials or components to the Company on less than favorable commercial terms; the Company’s vehicles and certain other products contain electrical components, electronics, microprocessors control modules, and other computer chips, for which there has been a surge in demand, resulting in a worldwide supply shortage of such chips in the transportation industry, and a shortage or disruption of the supply of such microchips could materially disrupt the Company’s operations and its ability to deliver products to customers; dependence on supply of engines that comply with emission regulations; a disruption, termination or alteration of the supply of vehicle chassis or other critical components from third-party suppliers could materially adversely affect the sales of certain of the Company’s products; the Company’s profitability can be adversely affected by increases in raw material, component and labour costs; the Company may incur material losses and costs as a result of product warranty costs, recalls, failure to comply with motor vehicle manufacturing regulations and standards and the remediation of transit buses and motor coaches; production delays may result in liquidated damages under the Company’s contracts with its customers; catastrophic events, including those related to impacts of climate change, may lead to production curtailments or shutdowns; the Company may not be able to successfully renegotiate collective bargaining agreements when they expire and may be adversely affected by labour disruptions and shortages of labour; the Company’s operations are subject to risks and hazards that may result in monetary losses and liabilities not covered by insurance or which exceed its insurance coverage; the Company may be adversely affected by rising insurance costs; the Company may not be able to maintain performance bonds or letters of credit required by its contracts or obtain performance bonds and letters of credit required for new contracts; the Company is subject to litigation in the ordinary course of business and may incur material losses and costs as a result of product liability and other claims; the Company may have difficulty selling pre-owned coaches and realizing expected resale values; the Company may incur costs in connection with regulations relating to axle weight restrictions and vehicle lengths; the Company may be subject to claims and liabilities under environmental, health and safety laws; dependence on management information systems and cyber security risks; the Company’s ability to execute its strategy and conduct operations is dependent upon its ability to attract, train and retain qualified personnel, including its ability to retain and attract executives, senior management and key employees; the Company may be exposed to liabilities under applicable anti-corruption laws and any determination that it violated these laws could have a material adverse effect on its business; the Company’s risk management policies and procedures may not be fully effective in achieving their intended purposes; internal controls over financial reporting, no matter how well designed, have inherent limitations; there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures; ability to successfully execute strategic plans and maintain profitability; development of competitive or disruptive products, services or technology; development and testing of new products or model variants; acquisition risk; reliance on third-party manufacturers; third-party distribution/dealer agreements; availability to the Company of future financing; the Company may not be able to generate the necessary amount of cash to service its existing debt, which may require the Company to refinance its debt; the Company’s substantial consolidated indebtedness could negatively impact the business; the restrictive covenants in the Company’s credit facilities could impact the Company’s business and affect its ability to pursue its business strategies; in December 2022, the Board made the decision to suspend the payment of dividends given credit agreement constraints and to support the Company’s focus on improving its liquidity1 and financial position and the resumption of dividend dividends is not assured or guaranteed; a significant amount of the Company’s cash may be distributed, which may restrict potential growth; the Company is dependent on its subsidiaries for all cash available for distributions; the Company may not be able to make principal payments on the Debentures; redemption by the Company of the Debentures for Shares will result in dilution to holders of Shares; Debentures may be redeemed by the Company prior to maturity; the Company may not be able to repurchase the Debentures upon a change of control as required by the trust indenture under which the Debentures were issued (the “Indenture”); conversion of the Debentures following certain transactions could lessen or eliminate the value of the conversion privilege associated with the Debentures; future sales or the possibility of future sales of a substantial number of Shares or Debentures may impact the price of the Shares and/or the Debentures and could result in dilution; payments to holders of the Debentures are subordinated in right of payment to existing and future Senior Indebtedness (as described under the Indenture) and will depend on the financial health of the Company and its creditworthiness; if the Company is required to write down goodwill or other intangible assets, its financial condition and operating results would be negatively affected; and income and other tax risk resulting from the complexity of the Company’s businesses and operations and the income and other tax interpretations, legislation and regulations pertaining to the Company’s activities being subject to continual change.

Factors relating to the aftermath and ongoing effects of the global COVID-19 pandemic include: ongoing economic and social disruptions; production rates may not increase as planned and may decrease; ongoing and future supply delays and shortages of parts and components, and shipping and freight delays, and disruption to or shortage of labour supply may continue or worsen; the pandemic has adversely affected operations of suppliers and customers and those effects may continue or worsen; the increase in customers’ purchase of Company’s products may not continue and may reverse; the supply of parts and components by suppliers continues to be challenged and may deteriorate; the recovery of the Company’s markets in the future may not continue and demand may be lower than expected; the Company’s ability to obtain access to additional capital if required may be impaired; and the Company’s financial performance and condition, obligations, cash flow and liquidity1 and its ability to maintain compliance with the covenants under its credit facilities may be impaired. There is no guarantee that the Company will be able to get further funding or government assistance, or that it will be able to retain enough liquidity1 for an extended length of time. Additionally, there is no guarantee as to when or if production operations will resume at their pre-pandemic levels. Furthermore, there is no guarantee that governments will continue to offer public transit agencies sufficient stimulus money to buy transit vehicles or that demand for the company’s vehicles from the general public or businesses will consistently return to pre-pandemic levels within the projected time frame. The company issues a warning that more pandemics or other incidents might occur, or that the COVID-19 pandemic could recur or become worse. The Company’s operations, markets, and prospects may be severely and significantly impacted by such occurrences, which are by their very nature unexpected.

There may be other factors that could cause actions, events, or results not to be as anticipated, estimated, or intended, or to occur or be achieved at all, even though the Company has made an effort to identify significant factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements. For a discussion of the variables that might effect forward-looking statements and facts, please refer specifically to “Risk Factors” in the Company’s Annual facts Form. The actual outcomes might differ significantly from the information and statements that are forward-looking if any of these risks or uncertainties come true, or if the underlying assumptions turn out to be false. Except as required by law, the Company makes no commitment to update any forward-looking statement or information, whether written or oral, that may be made from time to time by the Company or on its behalf. The forward-looking statements and information contained herein are made as of the date of this press release (or as otherwise indicated). In light of the possibility that actual outcomes and future events may diverge significantly from those predicted in such statements, the Company makes no guarantees about the accuracy of such forward-looking statements and information. As a result, investors and readers shouldn’t rely too heavily on forward-looking information and comments.

For a number of reasons, including the risks and uncertainties covered in the materials filed with the Canadian securities regulatory authorities and accessible on SEDAR at www.sedarplus.ca, actual results may differ materially from management expectations as projected in such forward-looking statements.

1 Liquidity and Backlog are additional financial metrics, while Adjusted EBITDA is a non-IFRS term. The lack of recognition and standardised interpretations of such measurements under International Financial Reporting Standards (“IFRS”) may make it unreliable to compare NFI to other firms. For an explanation of how NFI has defined these metrics and comprehensive historical reconciliations to the relevant IFRS measures, refer to the organization’s most recent interim and annual MD&A.

2 The release compares 2023 Q4 to the 13-week period ending January 1, 2023 (“2022 Q4”) and the 13-week period ending October 1, 2023 (“2023 Q3”), based on year-over-year comparisons. When we talk about Fiscal 2023, we mean the 52-week period that ends on December 31, 2023, and when we talk about Fiscal 2022, we mean the 52-week period that ends on January 1, 2023. When we speak about Fiscal 2024, we mean the 52-week period that concludes on December 29, 2024. There hasn’t been an audit of any of the Q4 and FY 2023 data.