Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NFI Group Inc (NFYEF, Financial) achieved its highest-ever zero-emission deliveries in Q1 2025, reflecting strong demand for sustainable transportation solutions.
- The company entered into a new $845 million senior secured credit agreement, providing improved covenants, increased liquidity, and lower interest costs.
- NFI Group Inc (NFYEF) reported an 84% year-over-year increase in quarterly adjusted EBITDA, demonstrating significant financial improvement.
- The total backlog reached a record $13.7 billion, driven by strong demand from North American public transit agencies and coach operators.
- The company has successfully reduced its high-risk, high-impact suppliers from 50 in 2022 to just two, indicating improved supply chain health.
Negative Points
- NFI Group Inc (NFYEF) experienced a net loss of $6.5 million in Q1 2025, although this was an improvement from the previous year.
- The UK market faced tough conditions with very few new awards, impacting the company's international performance.
- The company continues to face disruptions from its largest North American transit bus seat supplier, affecting production rates.
- Aftermarket segment saw a decline in EBITDA due to reduced sales volume, primarily from North America program revenue.
- The evolving tariff environment poses a risk, with potential cost increases that may not be fully recoverable from customers.
Q & A Highlights
Q: Can you provide details on the new refinancing package and its implications for NFI Group?
A: Brian Dewsnup, CFO, explained that the new credit agreement increases liquidity and reduces interest expenses. It includes a senior secured facility with the potential for a second phase to further reduce interest expenses and increase liquidity. The company is exploring options to replace higher-interest debt, aiming for improved financial flexibility.
Q: Is the target leverage ratio of 2 to 2.5 times still achievable by year-end?
A: Brian Dewsnup confirmed that the target remains achievable, with the current leverage ratio just under 4%. The company expects to reach the target by year-end, although working capital fluctuations could impact this.
Q: How is NFI Group addressing the backlog and production rates for 2025 and beyond?
A: Paul Soubry, CEO, stated that the company is effectively sold out for 2025 and is booking into 2026. The backlog is strong across various segments, with New Flyer and motor coach markets showing robust demand. The UK market faces challenges, but efforts are underway to improve competitiveness.
Q: What are the current challenges with the seating supplier, and how is NFI managing them?
A: Paul Soubry explained that the seating supplier faced operational issues, including MRP system challenges and cash flow problems. NFI is working closely with the supplier and competitors to resolve these issues. The situation is improving, and it does not affect the company's guidance.
Q: How is NFI Group handling potential tariff impacts on its supply chain?
A: Paul Soubry noted that while direct tariffs are minimal, indirect tariffs on components are a concern. The company is reviewing its supply chain to mitigate impacts and has informed customers about potential tariff-related cost increases. Adjustments to the supply chain are more long-term.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
