NFI Announces Third Quarter Results

Executive Summary

• NFI Group reported Q3 2025 revenue of $879.9 M (+23.7% YoY) and Adjusted EBITDA of $80.9 M (+52.1% YoY).
• Net loss widened to $140.9 M (‑$1.18 per share) driven primarily by a $229.9 M battery‑recall warranty provision.
• The company tightened FY 2025 guidance, lowering revenue and Adjusted EBITDA ranges while maintaining the 9%–12% ROIC target.

Key Details

• Deliveries: 1,114 equivalent units (EUs); 27.6% were zero‑emission buses (ZEBs).
• Revenue: $879.9 M vs. $711.3 M in Q3 2024.
• Gross Loss: $114.3 M; would have been a $115.6 M gross profit without battery‑recall provisions, yielding a 13.1% gross margin.
• Net Loss: $140.9 M; Net loss per share $1.18 (impacted by recall).
• Adjusted Net Earnings: $12.1 M; Adjusted EPS $0.10.
• Adjusted EBITDA: $80.9 M (+52.1% YoY).
• Free Cash Flow: $14.8 M (up from $2.0 M YoY).
• Backlog: $13.2 B (5,774 firm EUs + 9,832 option EUs); ZEBs represent 35.1% of backlog; book‑to‑bill ratio 108.5%; average EU price $0.85 M (+3.2%).
• Liquidity: $386.0 M cash & facility capacity (↑169.0% YoY).
• ROIC: 9.1% (up from 5.3% YoY).

Segment Highlights

• Manufacturing: Revenue +$164.2 M (+29.4% YoY); Net loss $131.9 M (warranty provision offsetting margin gains). Adjusted EBITDA up $36.1 M YoY.
• Aftermarket: Revenue $157.1 M (+2.8% YoY); Adjusted EBITDA down $6.0 M (‑17.5%) due to mix and tariff impacts.

Battery Recall

• Voluntary recall of ~700 battery‑electric buses/coaches (primarily New Flyer) due to XALT Energy battery modules.
• Warranty provision recorded: $229.9 M for full battery replacements; replacement campaign expected 18–24 months starting H1 2026.
• Term sheet with XALT in place; alternative battery supplier already providing units since 2023.

Guidance Update (FY 2025)

Guidance tightened due to lower ZEB deliveries, supply disruptions, and tariff impacts; management expects record Adjusted EBITDA in Q4 2025.

Tariff & Supply Issues

• New 10% U.S. import tariff on buses/coaches effective 1 Nov 2025; company plans to pass costs to customers where contractually possible.
• Ongoing seat‑supply disruption and labor shortages affecting production schedules.

CEO Comments (selected)

“Improvements in delivery performance and revenue translated into significant growth in Adjusted EBITDA and Free Cash Flow, reinforcing our focus on deleveraging and liquidity.” – Paul Soubry, President & CEO

“We are in detailed discussions with the battery supplier to resolve recall costs; a joint‑venture acquisition of American Seating assets will stabilize our supply chain.”

Notable Quotes

• “Our aftermarket business remains strong despite lower retrofit margins; we see upside as growth initiatives mature.” – Paul Soubry
• “Tariff impacts are being managed through contractual pass‑throughs, though private coach pricing may feel pressure.” – Paul Soubry

Materiality: Material – Neutral (significant earnings release with guidance change and large recall provision).