NFI delays deliveries, issues battery recall in Q3

Executive Summary

• NFI Group Inc. provided an operational update for the third quarter of 2025, highlighting significant delivery delays shifting into the fourth quarter due to seat supply challenges and a battery recall.
• The company announced a recall of approximately 680 delivered buses and a small number of motor coaches equipped with battery modules from a supplier, citing potential cell short circuits or faults.
• NFI expects to record a material, non-recurring warranty provision in its Q3 2025 results due to the recall, though it remains confident in its liquidity and full-year guidance.

Key Details

• Delivery Delays: Planned third-quarter vehicle deliveries have shifted to the fourth quarter of 2025. The majority of these delayed deliveries are from NFI's firm backlog and are nearly complete.
• Causes for Delay: Delays are attributed to the battery recall, timing of certain zero-emission buses, continuing seat supply challenges, and timing of private coach deliveries.
• Seat Supply: NFI is working with a challenged seat supplier and has diversified sourcing to alternative suppliers, who will represent a higher proportion of total bus seats in Q4 2025.
• Battery Recall Scope:
  • Impacts approximately 680 delivered buses and a small number of motor coaches.
  • Expected to impact only 37 vehicles currently in production for planned delivery in 2025.
  • Reason: Potential of a cell short circuit or other cell fault in battery modules from a supplier.
  • Interim safety measures provided to customers, including actions to reduce battery stress and enhance monitoring.
• Financial Impact:
  • NFI expects a material warranty provision to be recorded in Q3 2025 results.
  • The provision is being finalized while working with the supplier and independent experts on a permanent solution and cost recovery plan.
  • NFI expects to include adjustments to adjusted EBITDA and adjusted net earnings to normalize for this non-recurring warranty provision.
  • The recall is not expected to have a material impact on NFI's remaining 2025 bus and coach deliveries or its current financial guidance.
• Backlog and Guidance:
  • Backlog remains near-record levels at $13.5 billion as of June 30, 2025.
  • NFI expects Q4 to be a strong contributor to 2025 financial results with significant year-over-year improvements in delivery volumes and financial performance.
  • Guidance: Approximately 60% of annual adjusted EBITDA of $320 million to $360 million is expected to be delivered in the second half of the year.
  • Market demand in the United Kingdom has shown marked improvement, expected to support backlog growth into 2026.
• Liquidity: NFI cites a strong total liquidity position of over $370 million to navigate the recall.
• Upcoming Events:
  • Third Quarter 2025 Financial Results: Released on Nov. 6, 2025, after market close.
  • Conference Call/Webcast: Nov. 7, 2025, at 8:30 a.m. Eastern Time.

Notable Quotes

• "Following a strong first half of 2025, where we continued to capitalize on our improved backlog to drive margin performance, we've experienced delivery delays in the third quarter that we expect to adversely impact our quarterly results... We expect that most of these essentially complete vehicles will be delivered in the fourth quarter driving significant volume growth and margin improvements as we end the year." — Paul Soubry, President and CEO
• "We recently launched a recall for certain zero-emission bus models that include batteries from one of our suppliers, due to the potential of a cell short circuit or other cell fault. As the safety of our customers and their passengers remains a top priority, we felt it necessary to issue this recall." — Paul Soubry, President and CEO