NFI Group (NFI) Q3 2024 earnings summary

Executive summary

• Achieved record $12 billion backlog, up over 50% year-over-year, with 41% zero-emission buses (ZEBs) in backlog and 24% of Q3 deliveries being ZEBs.

• Adjusted EBITDA rose 375% year-over-year to $53 million, with significant improvements in gross margin and net loss, despite ongoing seat supply disruptions.

• Aftermarket segment delivered $153 million in revenue and $34 million in adjusted EBITDA, both up 7–8% year-over-year.

• New orders reached 1,050 EUs in Q3, up 8% year-over-year, with 7,585 EUs awarded YTD, positioning 2024 as another record year.

• Facing supply chain disruption from a key North American seat supplier, impacting deliveries and working capital.

Financial highlights

• Q3 2024 revenue was $711.3 million, nearly flat year-over-year; manufacturing gross margin improved to 12.2% from 7% YoY.

• Adjusted EBITDA increased to $53.2 million from $11.2 million, and net loss narrowed to $15 million, a 62% improvement year-over-year.

• Free cash flow turned positive at $2 million, compared to negative $43 million in Q3 2023.

• ROIC improved to 5.3%, up 6.3 percentage points year-over-year.

• Leverage ratio declined to 5.19x, with a target of below 2.5x by end of 2025.

Outlook and guidance

• 2024 adjusted EBITDA guidance raised to $210–$240 million on $3.1–$3.3 billion revenue, reflecting seat supply disruption.

• 2025 target remains >$350 million adjusted EBITDA and ROIC above 12%, with ZEBs expected to be 40% of volumes.

• Q4 expected to be strong, but guidance range is wide due to uncertainty in seat supplier recovery pace.

• All delayed North American transit deliveries in 2024 are contractually sold and will be shipped in 2025.

• Targeting leverage below 2.5x by end of 2025, with plans to reposition debt and lower interest expenses.